ABSTRACT
This chapter explains the principal differences between the various types of democracies and autocracies, and discusses their effects on economic development. It talks about the political institutions that play a key role in society because they determine the allocation of political power between different groups of citizens. It discusses the process of democratization, or how countries come to overthrow an autocratic regime and establish a democracy in its place, and what are the difficulties presented by these processes. It is possible the causality might run the other way the introduction of democracy might lead to significant improvements in education. Autocracy, in contrast to democracy, does not redistribute income to the poor and it erects barriers to market entry for new businesses. And barriers to social mobility. While we know that the elite may accept democratization and even propose it in response to revolutionary threats, we still have not addressed why there should be more democratization when income inequality is lower.
