Democratization, Political Performance, and Income Distribution in Argentina and Brazil

Abstract

This research examines the effects of democratization and political performance on the functional distribution of income in Argentina and Brazil from the end of their authoritarian periods to the present. The existing literature tends to focus on the impacts of democratization and political performance on the economic growth of the country as a whole or on changes to per capita income. This analysis focuses on the equality of economic development in less developed countries because growth is not necessarily distributed equally and poverty and inequality are both endemic to many less developed countries and also negatively impact development as a whole as well as the consolidation of democracy. To examine the effects of democratization and political performance on the shape of economic development, this thesis utilizes the Polity IV index as a measure of democracy, Relative Political Extraction as a proxy for political performance, and labor's share of national income as a measure of income inequality. Theoretically, a more democratic regime should enact policies that allow for a more equitable distribution of income because democratization increases popular representation and makes the provision of public goods preferable to the provision of private goods. Similarly, a regime with higher political capacity should be better equipped to enact whatever policies and development strategies it chooses, thereby reducing income inequality if the regime deems equitable development a priority. The main finding of this research is that political performance has had a significant impact on the shape of economic development in Argentina and Brazil, whereas the effect of democratization on the shape of development is less clear. A stronger, more effectively performing government will be better able to deliver equitable development regardless of its level of democracy than will a poorly performing government of any type.