World Politics

Review Articles

Inequality, Growth, and Democracy

Dimitri Landaa1 and Ethan B. Kapsteina2*

a1 University of Minnesota

a2 University of Minnesota

Philippe Aghion and Jeffrey G. Williamson. Growth, Inequality and Globalization. New York: Cambridge University Press, 1998, 207 pp.

Robert Barro. Determinants of Economic Growth. Cambridge: MIT Press, 1997, 145 pp.

Inter-American Development Bank. Facing Up to Inequality in Latin America. Washington, D.C.: Distributed by the Johns Hopkins University Press for the Inter-American Development Bank, 1998, 204 pp.

Dani Rodrik. The New Global Economy and Developing Countries: Making Openness Work. Washington, D.C.: Overseas Development Council, 1999, 168 pp.

Vito Tanzi and Ke-young Chu, eds. Income Distribution and High Quality Growth. Cambridge: MIT Press, 1998, 417 pp.

Abstract

The analysis of the relationship between inequality and economic growth in distinct politi-coeconomic environments has been one of the central preoccupations of the extensive theoretical and empirical work on growth in the last decade. The authors argue that the empirical evidence available to date strongly indicates the relevance of this work for understanding the elusive causal connection between economic development and democracy. The state of the literature suggests considerable sophistication in conceptualizing the direct economic effects of inequality and contains critical insights into politically unconstrained policy-making aimed at the alleviation of their negative economic impact. However, the political feasibility of the recommended policy measures and the politically mediated effects of inequality and redistributive policy on growth and on the strength and stability of democratic regimes are understood less well. The authors discuss the critical factors influencing these effects and sketch several approaches to creating a comprehensive politicoeconomic account of the interaction between inequality, redistributive policy-making, and political regimes.

Dimitri Landa is a Ph.D. candidate in the Department of Political Science at the University of Minnesota. His current research projects include the epistemology of democratic deliberation in pluralist societies, the political economy of inequality and democratization, and the philosophical grounds of rational actor explanations.

Ethan B. Kapstein is Stassen Professor of International Peace at the Humphrey Institute and Department of Political Science, University of Minnesota. He is the author of The Insecure Alliance: Energy Crises and Western Politics since 1944 (1990), The Political Economy of National Security (1992), Governing the Global Economy: International Finance and the State (1994), and Sharing the Wealth: Workers and the World Economy (1999). His current research focuses on the effects of economic liberalization on domestic institutions in emerging market economies.

* We thank Catherine Hafer, an anonymous reviewer, and seminar participants at Dartmouth, Harvard, Minnesota, Wisconsin, and the World Bank for comments and suggestions on material related to the arguments presented in this article and the National Endowment for Democracy and the Stassen Center for International Peace, University of Minnesota, for financial support. Ethan Kapstein also thanks INSEAD and the French Institute for International Relations for their support of the project.