Democratization and the dynamics of income distribution in low- and middle-income countries

Abstract

Redistribution of income in developing countries for the sake of human development and economic growth is a major, but under-studied challenge. Recently released high-quality data on the dynamics of income distribution in developing countries allow us to test whether democratization has helped the median voter and her class allies to improve their income share, as predicted by the median-voter hypothesis (MVH). Using decade sharegains of the third and first (poorest) quintiles as dependent variables, and controlling for prominent political and economic features of developing countries, the MVH is found to be an inaccurate guide to the effects of democratization. The MVH underestimates the consequences of power concentration and the effects of hegemony, and assumes too glibly that the median income earner is also an influential voter. The decisive voter in developing countries lies in the richest quintile that gains most from the introduction of competitive elections, fiscal redistribution, and from economic liberalization in general. Redistribution does not flow automatically from the introduction of democracy and economic liberalization, but must be targeted specifically.