Exit, Voice, and Loyalty. The Role of Migration in the Process of Development and Democratization

Bachelor Thesis, 2014

92 Pages, Grade: 1,7


Table of Content

1. List of Illustrations and Tables
1.1 Illustrations
1.2 Tables

2. Introduction
2.1 Introduction to the topic
2.2 Definition of key-terms
2.2.1 Democracy
2.2.2 Development
2.2.3 The Exit-Voice-Loyalty Framework

3. Empirical Analysis

4. Discussion
4.1 Development Theories
4.1.1 Modernization Theory
4.1.2 Structural View
4.2 Exit and Voice
4.2.1 Exit
4.2.2 Voice

5. Ramifications of Migration on Development

6. Conclusion

7. Appendix

8. Bibliography

9. Illustrations

10. Tables

1. List of Illustrations and Tables

1.1 Illustrations

Illustration 1: Generalized Method of Moments Free & OecdMR & GDP

Illustration 2: Generalized Method of Moments FreeAC & PopOecd & GDPRC

Illustration 3: Generalized Method of Moments FreeT & Defoot2 & GDP

Illustration 4: Generalized Method of Moments Free & PopOecd & GDP

Illustration 5: Generalized Method of Moments PolityRC & PopOecdRAC & GDPRC

Illustration 6: Generalized Method of Moments PolityRE & PopOecd & GDPRC

Illustration 7: Granger-causality test

Illustration 8: Coefficient of correlation between PolityAC & PopOecd

Illustration 9: Coefficient of correlation between PolityAC & Defoot2

Illustration 10: Coefficient of correlation between FreeAC & PopOecd

Illustration 11: Coefficient of correlation between FreeAC & Defoot 2

Illustration 12: Percentage of Skilled Workers Living in OECD Countries, (1990-2000)

Illustration 13: Emigration rates and per capita GDP, 2000

Illustration 14: Sources of External Financing for Developing Countries, 1990-2008

Illustration 15: Correlates with other indicators

Illustration 16: Authority Coding 1

Illustration 17: Authority Coding 2

Illustration 18: People Rights and Civil Liberty Checklist Questions – Political Rights

Illustration 19: People Rights and Civil Liberty Checklist Questions – Civil Liberties

1.2 Tables

Table 1: Waves of democratization

Table 2: Rostow’s 5 stages of economic growth

Table 3: Used variables

2. Introduction

2.1 Introduction to the topic

The following thesis will examine the process of Development and Democratization. More precisely, it will prove whether Albert O. Hirschman’s “Exit, Voice, and Loyalty” (EVL)-framework allows for a more coherent explanation of the transitional mechanisms.[1]

In 1992 Paul Krugman raised the motion to rethink and resurrect the “high development theory” of the years prior to 1960. His “counter-counterrevolution” opposed the dominant neoclassical approach towards development and urged the scholarship to leave the intellectual parochialism and to take up the thread, laid out by scientists like Rosenstein-Rodan or Hirschman.[2]

Down to the present day, the scientific community of the development-science hasn’t been able to produce a “universally accepted doctrine or paradigm. Instead (there is) a continually, evolving pattern of insights and understandings that together provide the basis for learning the possibilities of contemporary development […].”[3]

The four predominant theories in the history, namely Modernization Theory, Structural-Change, Dependency School and the Neoclassical Market-Fundamentalism will be introduced and shown how the role of migration is integrated respectively.

Hereinafter the EVL-concept will be explained and whether it can give further insights into the nexus of development and democracy.

The set-up hypothesis, which will be tested, is the following: The initial point is an authoritarian regime. Once a country achieved a certain threshold of development, the people do not only have the inherently volition of freedom but also the ability to articulate their demands. If we assume that the former mentioned concept of “Exit, Voice, and Loyalty” can be applied, the people have three options to do so. They can go literally or metaphorically on the streets and raise their voice against the incumbent regime or they can migrate from their home-country to another state, where a modern political system is already in place. The last alternative is that they do neither and continue with their ordinary life, staying loyal to the current government. To encapsulate, we should be able to spot a higher degree of democracy in a particular country if the rate of emigration is lower, than in a country where the people just leave their patria.

2.2 Definition of key-terms

2.2.1 Democracy

“Where once democracy seemed like a small island in a sea of authoritarian states, with an uncertain future, it now is proclaimed as the inevitable endpoint of human political evolution.”[4]

It seems appropriate to give a short historic sketch of state-types in order to introduce the concept of democracy. In his classical work “Leviathan”, Hobbes described the development of statehood. By handing over their political rights to an undivided monarch, men can escape the state of nature, where all fought against all.[5] However the arisen contractarian-state bears new problems for the people, due to the fact that the rulers tend to establish predatory states. Hence the conflict between men is being replaced by the conflict between the citizens and the state. Rousseau, Locke and other scholars of the Age of Enlightenment recognized that flaw and campaigned for a more selective delegation of rights to the sovereign. Although they weren’t explicitly demanding the representative democracy, as we know it today, they had laid the conceptual groundwork for the first democracy, which was established in 1776.[6]

Democratization can be defined as “a dynamic process that always remains incomplete and perpetually runs the risk of reversal” and as overall objective it aims at the establishment of a full-fledged democracy.[7] Some scholars adjudge a successful democratization exclusively to those countries where the new political system has been consolidated.[8] Huntington’s “two turnover test” declares a country only a democracy if a total change in the composition of the democratic-elected government has taken place in succeeding elections.[9] Due to data-restrictions this prerequisite won’t be taken into consideration in the empirical part of this thesis.

To this day the definition of democracy remains a highly contested one among political scientists.[10] Tilly provides four different patterns for defining democracy.[11] First the constitutional approach which merely demands a democratic-values containing state-constitution. The substantive explanation requires policies which are favoring the mass-population. The procedural one takes a look at a narrow range of governmental practices, like the competitiveness of elections or the presence of referenda, recalls or petitions. The last one is the process-oriented, which demands certain processes to be continuously available. One of the most recognized definitions of democracy derives from the opus of Robert Dahl.[12] Pursuant to him, seven democracy-elements have to be realized so that a state merits the word “polyarchy”. Such a Liberal Democracy is based on two pillars, namely contestation/competition and participation/inclusiveness.[13] Both are constituted respectively by three to four attributes, which are free and fair elections, universal adult suffrage, ex ante irreversibility of election’s result, passive and active right of vote, freedom of expression and information, and finally the freedom of association.[14] This concept is, with some curtailments, best conceptualized by the democracy indicator, annually published by the Freedom House research institute, which is one of the two datasets, used in the subsequent passage.[15]

Accordingly to the Washington-based institute today, 63% of the countries which populate the globe are electoral democracies. Albeit only 45% of the states can be considered as “free”.[16] Believe Huntington, 1992 was the first year in human history when the absolute number of democratic countries exceeded the one of authoritarian-governed states. In his work “The Third Wave” the scholar depicted three distinct waves of democratization, occurring during the last 200 years.[17] (see Illustration 1)

2.2.2 Development

Accordingly to Alan Thomas development is based on three pillars. It can be described as a vision, measure of the state of being of a desirable society or as a historical process of social change in which societies are transformed and eventually as a deliberate effort, aimed at the improvement of various agencies, governments, organizations and social movements.[18]

The origins of the development thinking are traced back to the 18th century Enlightenment Era, when phrases like “sapere aude” were coined.[19] Development was related to progress towards a more civilized, liberal and modern world.

After 1945 the two rival ideologies, liberalism and socialism were struggling for the global intellectual hegemony. At this time the Modernization Theory dominated the scientific field of development in the western hemisphere.[20]

Modernization Theory can be introduced by the quote: “All good things go together” or to make it more comprehensible: “[…] a conception in which society, economy and polity are systematically interrelated, integrated by an overarching value consensus and subject to increasing specialization and differentiation of social structures”.[21]

The “Exit-Voice-Loyalty”- framework could be integrated into the process of the “progressive accumulation of social changes that ready a society to proceed to its culmination, democratization.”[22] The modernized individual will face one’s in his life the decision whether to demand his political rights (voice) or to search for them abroad (exit). The focal point of the examination will lie on this development-theory due to its prevalence in the scientific field.[23]

The direct evolutionary concept came under attack from two sides in the 1960s, namely from Institutionalism and from the Dependency School.

Adherents of the Structural-Change doctrine corrected a flaw of the Modernization Theory, that not every country possesses the same institutions.[24] Accordingly to them, economic development can be constrained by certain patterns of the society. The examination of the institutions which have to be adapted or even eradicated so that the process of modernization is unleashed, was the main contribution of this theory. The distinction in regard to the former doctrine is the break-up of the direct evolution and the replacement by a conditional deliberative institutional change.[25]

As in the former context, people will face the EVL-decision when the institutional change and thus subsequent improvements fail to materialize. In “Political Order in Changing Societies”, Samuel P. Huntington contested the strict unlinear stage-model and proposed a conditional process, still based on the assumptions given by Modernization scholars. According to his theory, economic development implies political decay. Because the more complex the industries are, the less the incumbent elites will be able to exert sufficient control and new institutions, which sustain the development progress, are needed. This build-up of liberal institutions deprives the elites off their powerbase and democratization becomes likely. With the integration of conditions between the mean, economic development, and the end, democracy, Huntington created a hybrid-model, constituted by the Modernization Theory and the institutional side.[26] This modus operandi shall be the template for this paper.

The Dependency School, outlined by André Gunder Frank and continued by Immanuel Wallerstein, is based on the Singer-Prebisch Theorem of deteriorating terms of trade for developing countries. It assumes a disadvantaging of the underdeveloped countries, which is inherent to the structure of the international capitalist system. Human capital can be seen as another productive factor which is subtracted by the Western developed-world from the low-income countries. Whether today’s Brain-Drain inhibits the economic development of the migrant-sending countries and therefore stands in accordance with this Dualistic Development Thesis will be the content of Chapter four.

The emergence of the neoclassical counterrevolution of the 1980s has to be seen against the backdrop of new conservative governments in the US, the UK and the FRG.[27] The market fundamentalists postulated supply-side macroeconomic policies and by implication a withdrawal of the state from the economic realm.[28] The public-choice theory stated that governments are inherently inefficient and corrupt due to the usage of their power for a personal agenda. The neoclassical theory doesn’t mention any favorable political system but rather emphasizes the need for a minimal government, as the best government. Consequently neoclassical economics prefers good governance instead of a good government. The compatibility-school states that democracy can serve as a safeguard of the private sphere (property rights) and economic freedom, which in return stimulates investment.[29] On the other side, the conflict-perspective fears the populist redistribution-effects of democracy when the median voter possesses less than the mean.[30] As there is no consensus about a nexus between development and democracy and due to the reason that this theory is rather descriptive- a form of economic knowledge, without any process-tracing, it isn’t taken into further consideration in this paper.[31]

The strong focus on economic growth, which also justified short-term hardship of the paupers led to the creation of alternative theories.

From 1960 to 1970, the UN promulgated the first “UN Development Decade” which shifted the priority from economic growth towards the improvement of the quality of life.[32] In 1987, the Brundtland Commission Report introduced the sustainable development approach with the phrase: “[sustainable] development […] meets needs of the present without compromising the ability of future generations to meet their own needs.”[33] The most recent proposal was made by Armatya Sen with his Capability-approach. He describes development as an increase in the options which are available to draw for an individual. With this definition, development and democracy are not merely interdependent, like seen in the former suggestions; rather democracy became a part of development.[34]

This thesis will try to prove the validity of the claims made within the Modernization Theory and Structural Change Models. The unilinear nexus between development and democracy is complemented by the Exit-Voice-Loyalty (EVL) framework, presented by Albert O. Hirschman. To make it more vivid, one can envisage the EVL as a switch between development and democracy. If the people use their voice and clamor democracy, the switch is closed and the unilinear Development-Democracy connection is feasible. In the opposite, if people leave the country, the switch stays open and development won’t be succeeded by a political transition.

2.2.3 The Exit-Voice-Loyalty Framework

Hirschman applied his “Exit, Voice, and Loyalty”- framework primarily on the economic market of goods, but also exerted it onto the state-level.[35] While in the company-customer array the latter is more likely to exit to another firm, if the assumption of full competition and therefore substitution of goods holds true; the person on the political level will rather raise his voice than drawing the exit-option.[36] The loyalty issue won’t be taken into deeper consideration because it rather serves as an explanation for the decision whether to exit or to voice, than a genuine third option.[37]

The theoretical relationship between exit and voice is yet not entirely clarified. In the 1970 book, Hirschman presumed that both mechanisms have to be seen as exclusive factors, where “the presence of the exit alternative can (…) atrophy the development of the art of voice.”[38]

However with the unfolding debate about the concept, reviewers exposed more interactions and finally in 1993, with his journal article “Exit, Voice, and the Fate of the GDR”, Hirschman abandoned the uniform relationship for a continuous one.[39]

During the years, other mechanisms, as neglect or silence, were added and new conceivable interactions between Exit and Voice have been found.

As seen, “the theory can be stated in a few words but at the same time has an unlimited range of application.”[40] On the subsequent pages it will be appropriated on the state-level in order to gain an insight into the process of democratization.

3. Empirical Analysis

First the three different methods, which were used in order to track-down the nexus between the distinct data sets, will be described. Followed by the display of the data sources and concluding with the received results.


The used method in order to examine the relationship between the level of democracy, the state of development and the degree of migration will be the Generalized Method of Moments (GMM), which receives its popularity from the nesting of many common estimators.

Democracyt = β0 Democracyi, t-1 + β1 Migrationi, t-7 + β2 Developmenti, t-x + εi,t

This formula tries to explain the state of democracy in period t, with the help of the democracy in the preceding period, the rate of migration in seven periods before the point of reference and the economic development.

The second applied method to the data is the Granger-causality test. It tries to find a correlation, or being more precise, a “predictive-causality” between two different time-series.[41] The simplicity of the model derives from the assumption, that if the levels of a variable are almost entirely explained by prior levels of a second variable, exogenous factors can have no strong casual impact (little variance is left for them to explain).[42] However the Nobel laureate Clive Granger is also an abrasive critic of his own instrument and found many papers published outside of economics “ridiculous”.[43]

The third offered analysis is the observation of the correlation of the average annual changes of the indicators.

The utilized data for democracy will be the Polity IV and the Freedom House Index. Development will be represented by the GDP, deriving from the Maddison Project. Lastly the migration data was offered by the OECD. (For a discussion of the data, see Appendix 1)


Regarding the first data-analysis, the GMM, the outcome stands in accordance with the hypothesis outlined beforehand, namely that both political indices are negatively correlated with the lagged migration-data. Only the ratio of tertiary educated migrants in relation to the total population displays a positive relationship with regard to democracy. However a correlation between lagged GDP values and democracy indices exhibits different relations. The respective t-values indicate a statistical significant outcome. (see Illustrations 1-6)

The conducted survey, due to data-unavailability, lacks time-specific, as well as country-specific control variables. For instance, the religious composition of a country, the geographical distance to OECD countries, cumulative networks effects of migration or communist history, are often used in other studies.[44]

The Granger causality test offers a limited insight in which direction the two compared variables are interacting. The migrant flow to OECD countries with regard to the overall population in the sending country Granger-causes with a lag of seven periods the FHI index. (see Illustration 7)

The examination of the correlations between the average change of the annual values of the political indices and the rate of migration, respectively the rate of tertiary educated migrating to the OECD states, revealed a statistical significant positive correlation in three out of four cases. Alas in no model the R2 was superior to 1%, which portends of a low influence of migration on the state of the polity. (see Illustrations 8-11)

Conceivably a reverse causality problem could occur. For example the degree of migration can have an influence on the state of economic development and by implication only indirectly on the democratization of a country. To eschew such a critic, this possible relationship will be considered theoretically in Passage four.

4. Discussion

The empirical results allow for two distinct directions as valid in order to explain their outcome.

First, as outlined beforehand, that the EVL framework bridges the gap between development and democracy. In this context people in a slightly developed country will face at a certain time the decision whether to raise their voice and demand their political rights and liberty or cross the borders to get abroad. As the assumption goes, a lower migration rate, ergo a higher amount of people, who are staying in the country, is conducive to political ameliorations, whereas emigration can be detrimental to the evolvement of Voice.

Secondly, migration could step into this process much earlier. If migration hinders development, it also delays or even inhibits the political transition, assuming Modernization Theory holds true. Therefore the last chapter will focus on the effects of migration on the economic institutions of a country and shows that migration might be not only crucial for the development of political institutions but also for the economic ones.

4.1 Development Theories

4.1.1 Modernization Theory

While modernity provides stability, modernization does the complete contrary, namely instability.[45] Modernization Theory’s task is to find the transitional-link between the starting point, the traditional society and the end, the modernized society.[46]

The process of “modernization consists of a gradual differentiation and specialization of social structures that culminates in a separation of political structures from other structures and makes democracy possible. The specific causal chains consist of sequences of industrialization, urbanization, education, communication, mobilization, and political incorporation, among innumerable others: a progressive accumulation of social changes that ready a society to proceed to its culmination, democratization.”[47]

Modernization Theory’s core is the assumption that the realization of certain measurements at the right time will foster economic development and contribute to the start of an unstoppable cascade, whereby industrialization acts as a catalyst, as the crucial factor to release the power of the take-off phase.[48]

Three interconnected branches of Modernization Theory evolved over the years.[49] Lipset, Rostow and Cutright Phillips represent the structural socio-economic one, where “all the various aspects of economic development- industrialization, urbanization, wealth, and education- are so closely interrelated as to form one major factor which has the political correlate of democracy.”[50] Lerner, Pye, Inkeles and Smith found a system of communications as decisive to overcome the parochialism of traditional society. The scholars Almond and Verba judged development as being conducive to liberal social-factors and to a democratic political system in the wake.[51]

First written down by Seymour Martin Lipset in 1959 in his book “Political Man”, which outlined the relationship between economic development, a value change and a subsequent political transition, the scholar drew widely on the tradition of Aristotle, de Tocqueville and Weber.[52]

The first conceptualization was delivered by W. W. Rostow with his “Stages of Economic Growth”.[53] Every country, he explained, will follow inevitably an unilinear track, consisting of five stages. When the preconditions for the take-off are fulfilled the particular country will leave the “Traditional society” stage and via the “Take-off”, will plane in the stage “Drive to Maturity”. The final stage is dubbed “The Age of Mass Consumption”, where a functioning democratic system is established and a political reallocation of resources for overall welfare and security takes place. (see Table 2) In the 1960s all fourteen countries, which were situated in this very stage, were also democracies.[54]

Accordingly to Rostow, the take-off phase is caused by the rise of the savings-rate, ergo the investments, from 5% to 10% of the national income. Already at this early stage the shape of the economy can influence the political realm. An increase in investments always substitutes today’s consumption for tomorrow’s well-being. However those who are not able to sacrifice any resources in order to survive in the present, will contest this future-preference decision.

Brown reviewed that democracy is incompatible with this early stage of economic development due to the demands for redistribution, phrased by the working class. It would drain off investments and inhibit further economic growth. After the take-off, the capital endowment of the economy might be high enough, to compromise growth for democracy.[55]

A prerequisite for leaving the hierarchical society with its natural output ceiling is an endogenous-developed or exogenous-implemented political centralization of the state. This also applies as a condition for the creation of a democracy.[56]

The investment rate doubles again in the following stage and the labor force which is employed in the agricultural sector, further drops. For the new occupations in the industry, education and technical skills are necessary.[57] In the factories the workers will be able to strengthen their demands for “higher wages and greater security of employment and welfare, if they organize and make their presence in the society. “[58] It is agreed upon, since de Tocqueville, that a “civil society”, constituted of voluntary democratic-regulated organizations, acts as one of the main drivers of democratization.[59]

The crucial point of capitalist development is the change of economic power from the landlords to the new economic elites and to the numerically superior working class.[60] The divergence of social-born and economic income via social and geographical mobility creates people out of class (“déclassé”). Some rise above their initial class (“nouveau riches”) and some get poorer (“nouveaux pauvres”). While the former try to use their economic power in order to change the system, so that their political power henceforth resembles their economic one, the latter are resentful to their poverty. [61]

On the elite-side the societal changes also leave their mark. Economic development leads to an increased share of assets that can’t be appropriated by means of force. Further the higher wages for the middle class decrease the income inequality and thus the threat of radical redistribution.[62] A fight over the political power would also deteriorate the already build-up capital stock and with the knowledge, that dictators rather want to live in a rich democracy than in a poor dictatorship, the likelihood of a peaceful step-down soars.[63] The replacement of the hierarchical social structure in behalf of a polyarchical one, favored by the new economy, is needed for a sound democracy.[64]

“Economic development then can gradually render non-democratic countries more and more ‘ripe for revolution’.”[65] “For instance The French Revolution, together with the English revolutions of the 17th century, marks the culmination of a long economic and social evolution which brought the bourgeoisie to power.”[66]

It has to be mentioned that development doesn’t throughout trigger a democratic transition. A rapid industrialization might rather lead to socialist-extremism than to a participative political system.[67]

Daniel Lerner described the sequence of development in his opus “Passing Traditional Society”. Development’s inherent urbanization contributes to a more literate society which is exposed to a steadily growing media.[68] All three factors paralleling modernization are conducive to a psychological structure-change and favor a liberalization of the society and a further modernization of the polity.[69] “Men are not born modern, but are made so by their life experience.”[70] One of those experiences is the exit of the rural areas for the city. Urbanization means the cutting of family ties and the integration into a new, more complex and stressful environment.[71]

Literacy first of all arouses interest and allows a more subtle understanding of ongoing processes. It also enables deeper social interactions and sound political participation.[72]

The media provides information of daily (political and social) events but also gives insights into remote places, which can become a new reference-point and hence a possible cause of dissatisfaction with the status quo.[73]

The occupation in factories, more precisely, the time spent in the industrial enterprises, increases the modern capabilities of man, who experiences that cooperation is advantageous and people become aware of their influence on politics and oppose the status quo. Some scholars even went as far as, that poor countries were inherently incapable of being a democracy, because in a stagnant economy the distribution of wealth would be seen as a zero-sum game, whereas economic growth entails the incentive for cooperation to sustain the growth.[74] The competition for the scare wealth is likely to impede political development.

But also the new employment patterns in the industrial firms demand an adaption by the individual. The labor process favors active cooperation among the employees and the economic system becomes more and more complex and demands a more flexible, decentralized command structure than previously.[75]

To encapsulate, economic development only indirectly affected the political system via urbanization, education and mass media and their entailing impacts on the mentality of each individual. The “syndrome of individual modernity” or the “psychic mobility” indicates the newly enhanced capabilities of the people. New political attitudes, like respect and tolerance for minorities and the desire of “freedom from absolute submission to received authority” are inherently to the abandonment of the oligarchic structures of the countryside and the obtaining of education and access to mass media in the urban region.[76] Empirical evidence shows that the likelihood of a democratic transition rises from 1% at an urbanization and industrialization-level inferior of 0.25 to 10%, when the level lies above 0.75.[77]

The last branch of Modernization Theory derives from the early work of Almond and Verba.[78] Accordingly to them and following inspired scientists, economic development is not an end in itself but seen as a mean to change political attitudes, conducive to a participative system. The assumption is based on the famous “Hierarchy of Needs”, conceptualized by Maslow in 1954.[79]

People who are located on the “physiological level”, can’t sacrifice any resources for the struggle for a better political system, though they might realize the highest gains from such a transition.[80] In addition these people don’t have the financial endowment to relinquish today’s consumption to the benefit of an educational investment for the future.[81] Education is the main driver of the change of political attitudes and therefore lifts the likelihood of a bottom-up transition.[82] Education not only creates the ability to engage sophistically in the political life it also creates “attentive citizens” who have an increased political-interest and are conducive to support democracy.[83] This is picked up by the civic-culture concept of Almond and Verba which contains various attributes, modern individuals are equipped with, such as institutional confidence of the individual in the institutions of the country, interpersonal trust, support for democracy, non-conformity, associational activity and self-expression values.[84]

“People who have become “materially, intellectually, and socially more independent want also political independence.”[85]

However “one of the most radical innovations for which education is responsible, is the inclusion of personal ambition.”[86] “As growing socioeconomic resources broaden the range of activities that people can choose; self-expression values broaden the range of activities to which they aspire.”[87] But what happens if this “revolution of rising expectation” isn’t complied with social mobility? Unemployed school leavers are “political dynamite – the stuff of which revolutions are made.”[88]

In their World Value Survey, Ingelhart and Welzel stress the fact, that it might not be the first generation, which engages in the erection of the status quo, but rather their scions, who are born in a new world and therefore posses new, post-materialist values, in contrary to their materialist-constrained ancestors. The intergenerational change in which survival is being replaced by self-expression and traditional by secular-rational values, leads to the postulation of universal suffrage.[89] Accordingly to their survey, 74% of the people, who are rated as “post-materialist”, are willing to participate in political boycotts, while the approval among those described as “materialists” is only 12%. The scholars emphasize that economic development has to be distinguished from the socioeconomic one.[90]

At this transitional point in time the regime side faces an unbridgeable trade-off. On the one hand they need an increased number of educated civil servants to sustain their central government; on the other hand, these people may also be the first who contest their power-monopoly. The divergence of the peoples’ values and the ones represented by the regime, leads to a further delegitimization of the system.[91]

In 2008 only one of the first 25 countries listed in the upper part of the UN Development Programme’s Human Development Index was not a democracy, namely Singapore. Among the first 40, one could find four non-democracies and among the first 50, there were seven.[92] This correlation is, accordingly to an overwhelming amount of empirical research, not a coincidence but proves the theory established under the auspices of the Modernization Theory.

Multiple studies tried to prove or rebut empirically the nexus. Both sides produced a litany of studies so that in the end the theoretical discussion still prevails over the data-based one. Most famous support derives from the findings of Curtight, Barro, Boix & Stokes, Burkhart & Bech, Helliwell, Epstein and Vanhanen, who states that Lipset is “broadly correct in his assertion of a strong causal relationship between economic development and democracy and his explanation of why development promotes democracy.”[93] Others find a strong relation between democracy and education, while others reject it.[94]

The most virulent critics, to name just a few, might be Przeworski & Limongi, Neubauer and Acemoglu et al. [95]

4.1.2 Structural View

The Theory of Changing Structural Patterns or Institutional Theory differs from the Modernization Theory in the aspect that its belief in the miraculous effects of economic development is much more moderate.[96] While Modernization Theory presumes that economic development triggers an inevitable, unilinear path towards democracy, regardless of any difference in the particular society, institutionalists examined that society’s overall progress requires a structural change of formal and informal institutions, which are only partly affected by economic growth.[97] An active, intentional effort on the part of the political forces is demanded to do its bit.[98]

This doctrine integrates conditionality within the nexus of development and democracy, namely the appropriate adaption of the prevalent institutions.[99] “Institutions are rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction.” [100]

These institutions can change in an incrementally fashion with the help of “political or economic entrepreneurs” or by wars, conquest, national disasters or social and political revolutions in a discontinuous way.

It has to be emphasized that Institutionalism doesn’t reject the optimistic, generalizing Modernization Theory in all its aspects but rather tries to adjust it to particular circumstances, found in different places.

In his book “Political Order in Changing Societies” Huntington proposes a process which supposes, that after a certain threshold of economic development is attained, a political decay will take place. At an annual income of $5,001-6000 a democratic transition is very likely, but after this development-level has been exceeded, the transition-likelihood plummets. Huntington calls this the “bell shaped pattern of instability” for dictatorships. [101] The instability of the polity occurs due to the fact that the political institutions aren’t further in accordance with the enhanced economic and social ones.[102] This opportunity is seized by the dominant groups of the society for building up new formal institutions, consistent with their own visions.

However the focal point of research lies on the different social groups which are trying to set up new institutions. The knowledge about the agendas of different groups and which groups prevail at a certain point in time, can lead to valid forecasts, whether this transitional phase will culminate into the creation of a democratic system or not. One of the most famous quotations, referring to this issue, derives from Moore (1966): “No bourgeoisie, no democracy.” Accordingly to his studies, societies will face once in history the decision, how to respond to modernity.[103] The outcome depends on the group-composition of the society in this crucial instant of time.

The cohort of social groupings, which is judged as the most supportive for democracy, is the emerged educated middle class, despite some particularities, as experienced in Brazil, Argentine or South Africa in the past.[104] A threat from the left-working class could push middle-class into the clutches of authoritarian rulers.[105]

The role of the working class remains a highly debated one.[106] Other scholars attribute the decisive role to the ruling elites. Cheng set up a model in which a long-term development causes a political decay and this again leads to an economic recession. In this time the country’s business elite is likely to demand an economic and political liberalization in order to restore economic growth.[107] The aristocratic, land-based elites wouldn’t be in affirmative and a regime division becomes likely. In addition the economic downturn might lead to plummeting taxes and a decrease in resources, available to repress turmoil.[108]

In spite of those rational-actor models, culture can’t be explained appropriately in a scientific way and therefore certain differences will resist.[109]

As Dahl examined, the organizational resources of a society parallel development.[110] Owing to de Tocqueville, Modernization Theory talks a lot about the civil society, which is conducive to democracy. Institutionalism acknowledges their important status but takes a more critical approach. Trust networks not only have to be in favor of democracy but also have to get part of it, if democracy should be efficient, without favoring any actors.[111]

Some scholars localize the conditionality earlier in the model, namely the redistribution of the benefits, which derives from the economic development. Thereby the subject of most concern is the degree of inequality. Kuznets’s curve predicts an increasing inequality in the short and medium run of economic development, which is reversed in the long-run.[112] The rising inequality can be a motivation to contest the political system.[113] In spite of this coherence, Acemoglu and Robinson examined that it is rather the following income equality which curbs the threats to the elites, posed by a redistribution-conducting democracy and thus opens the path towards democracy.[114]

It can be encapsulated that institutionalists take up Modernization Theory’s main idea, the eruptive effects of economic growth on all layers of society. Nevertheless it amends the doctrine with a critical look on a country’s institutions.[115] As North states: “History matters. It matters not just because we can learn from the past, but because the present and the future are connected to the past by the continuity of a society’s institutions.“[116] As Acemoglu and Robinson showed in their book “Why Nations Fail”, extractive institutions might be able to resist any change of society.[117]

4.2 Exit and Voice

The next step in the “unilinear, conditional” process of development and democracy is the application of the “Exit, Voice, and Loyalty” framework, which, as mentioned earlier, could serve as a switch whether the people in their newly socially modernized country will demand political concessions or rather aspire for a life in a foreign country, which already offers the desired attributes.

Over the recent decades a litany of research treated the framework by which factors exit and voice are caused respectively, the interaction between both and the best amalgam of both for improving the organization’s performance.

Hereafter the theoretical viability of the model in respect to the Modernization Theory will be examined and the both mechanisms scrutinized in respect to the regarded process.

For Hirschman the EVL “recovering-mechanisms” were possible reactions to a subjectively perceived decline of the provision of services or goods.[118] Heeding that the focus here is on the state-level, the quotation is adapted to “(public) services or (public) goods”, whereby the latter contains democracy.

The subjectively perceived decline can be triggered from two directions, namely the supply- side, where the performance of certain institutions is deteriorating, or from the demand side, where people reassess the quality of the goods lower than previously; although objectively nothing has changed.[119] The last situation can occur when the people gain access to new information and compare the state of their own lives with the one of other groups.[120] Consequently social development and access to new information-sources can be the reason why people feel relatively subordinated and voice their newly explored grievances or exit to the reference. Therefore EVL is not a “response to the decline” but rather an expression of “the belief that an (…) organization could do better.”[121] This stands in accordance with the Modernization Theory where the “modernity syndrome” assigns people new attitudes, as for instance the belief in change. [122]

Why certain actors decide in favor of exit or voice, is a highly debated one since the publishing of Hirschman’s book. Accordingly to the Harvard scholar, exit belongs to the economic realm, voice to the political.[123] This already implicates the decision tree, starting with the assessment of the efficiency of voice and when impossible, exit will be conducted.[124]

Although initially Hirschman conceived loyalty as a third equal mechanism, the scientific consensus nowadays assesses loyalty as vested into the exit-voice nexus.[125] Pfaff attributed loyalty to the sociological realm of sentiments and identity.[126] An increasing self-identification with an organization, leads to soaring loyalties.[127] Hence the individual’s threshold which indicates when they will respond to a deteriorating quality of a good, is much higher. They consequently stay passive for a longer time and act like genuinely satisfied persons. Further Loyalty determines decisions and the shapes of Exit and Voice.[128]

4.2.1 Exit

In 2013 over 231 million people lived outside the country where they have been originally born in.[129] Although the absolute number of migrants has increased steadily, the ratio to the global population remained at 3% since 1960. In 2009, 80% of the migrants originated from developing countries and moved with a 56% probability to an OECD-member state.[130] (see Illustration 12)

It is a widespread misbelief that migrants or refugees are negatively selected among the population from their developing country. If one is taking into consideration the fees incurring for the passage, which ranges from $5,000 to up to $15,000, depending on the distance which has to be covered, one can easily refute this folk wisdom.[131] Empirical observations redraw this picture. The degree of migration varies with the level of development; scholars describe this relationship as a “migration-hump”.[132] Possible explanations for this phenomenon derive from Docquier and Rapoport who assume, that the high income provides the people with the means to fulfill a long-conceived plan, to improve their living-conditions.[133] De Haas, based on Zelinsky’s five stages of development-demography transition, concludes that development affects the number of migrants indirectly, because of development’s inherent population pressure.[134] Samuel and George indicate that international migrants are often those who recently moved internally from rural to urban centers in their home country, which stands in accordance with Lerner’s thesis, outlined above.[135]


[1] Cf. Hirschman 1970

[2] Krugman 1993 (p.16)

[3] Todaro and Smith 2012 (p.131)

[4] Dalton and Ong 2002 (p.2), based on Fukuyama 2006

[5] Cf. Hobbes 2013 (p.125f.); Olson 1993 (p.568) who describes the advantage of the replacement of „roving bandits“ by „stationary bandits with a monopoly of power“ for the peasants, who are charged with regular taxes and don’t suffer of arbitrary dispossessions and therefore have a higher incentive to increase their production.

[6] Cf. Rousseau 1991

[7] Tilly 2007 (p.XI-Preface)

[8] Cf. Linz and Stepan 1996 (p.3)

[9] Cf. Lijphart 1999 (p.6f.)

[10] Cf. Whitehead 2002 (p.7)

[11] Cf. Tilly 2007 (p.7-11)

[12] Cf. Dahl 2006; Munck 2011 (p.2); Tilly 2007 (p.10): weighs the pro and cons of the definitions and conclude that the procedural one might not be the best but the most efficient among these definitions

[13] Cf. Beetham 1994 (Preface)

[14] Cf. Norris 2010 (p.5)

[15] Cf. Denk 2013 (p.3458)

[16] Cf. Freedom House 2014 (p.6)

[17] Cf. Huntington 1993

[18] Cf. Allen and Thomas 2000 (p.1)

[19] Originally from Horaz (Epistle, 20 B.C.), Kant 2009 (p.1) described it as the maxim of Enlightenment

[20] Cf. Sachs 2010 (p.8)

[21] Cf. Huber et al. 1993 (p.72)

[22] Przeworski and Limongi 1997 (p.156)

[23] Chen 2007 (p.14) in addition says that it also influences US foreign policies toward developing countries

[24] Cf. Todaro and Smith 2012 (p.115ff.)

[25] Cf. Chen 2007 (p.11)

[26] Cf. Chen 2007(p.3)

[27] Cf. Todaro and Smith 2012 (p.126)

[28] Being more precise, the government should not withdraw entirely but retreat from selective-interventions and concentrate on its core-tasks as the provision of physical infrastructure, education, health service and functioning financial markets (see Williamson 2000)

[29] Cf. Baum and Lake 2003; Friedman and Friedman 2002 (p.8) say that there is a „inmate connection between economic and politics, that only certain combinations of political and economic arrangements are possible,[…]“, for instance capitalism and democracy due to their mutual demand for personal freedom

[30] Cf. Varshney 2000 shows that indirect growth measurements are more sustainable and effective than an instant poverty alleviation with the help of short-term redistribution-policies; Dick 1974 presents an empirical evidence

[31] Cf. Swanson 2007 (p.233)

[32] Cf. Esteva 2010 (p.9)

[33] World Commission on Environment and Development (the Brundtland Commission) 1987 (p.6)

[34] Cf. Sen 1999

[35] Cf. Hirschman 1970; Hirschman 1978; Brubaker 1990: pointed out that Hirschman had not intended to apply the EVL on states, only on firms, schools, political parties and voluntary associations; with his 1978 essay Hirschman made up leeway

[36] Cf. Hirschman 1970 (p.15)

[37] Cf. Hoffmann 2008 (p.6): points out that in the German edition “Abwanderung und Widerspruch” (Tübingen: J.C.B. Mohr 1974) of Hirschman’s book, the loyalty-issue is already excluded in the title, because it is vested into the Exit-Voice dichotomy; Barry 1974 (p.95) dubbed loyalty as an „ad hoc equation filler“

[38] Hirschman 1970 (p.43)

[39] Cf. Hirschman 1993

[40] Barry 1974 (p.82)

[41] Diebold 2011 (p.254)

[42] Cf. Granger 1969

[43] Granger 2003 (p.366)

[44] Cf. Docquier et al. 2010 (p.10)

[45] Cf. Huntington 1968

[46] Cf. Shah 2011

[47] Przeworski and Limongi 1997 (p.156)

[48] Cf. Rostow 1961

[49] Cf. Neubauer 1967 (p.1002)

[50] Lipset 1959 (p.58)

[51] Cf. Chen 2007

[52] Cf. Lipset 1959 (Preface); (p.24); (p.28)

[53] Rostow 1961

[54] Cf. Russett 1965 (cited in Diamond 1992, p.454)

[55] de Schweinitz 1959 (p.387); Olson 1963 (p.541); Brown 1964

[56] Cf. Rostow 1961 (p.4ff.); Tilly 2007

[57] Cf. Rostow 1961 (p.71)

[58] Rostow 1961 (p.71); Huber et al. 1993 (p.83)

[59] Cf. Tocqueville 1956 (p.95ff.); Lipset 1959 (p.74)

[60] Cf. Huber et al. 1993; Pollack 1990(p.293)

[61] Olson 1963 (p.532f.)

[62] Cf. Strand et al. 2012; Kuznets 1955

[63] Cf. Boix and Stokes 2003 (p.520)

[64] Cf. Goldstone and Kocornik-Mina (p.50); Lipset 1959 (p.74)

[65] Strand et al. 2012 (p.11); Tocqueville 1956 (p.169-79)

[66] McAdam et al. (p.94); Huber et al. 1993 point out that the political systems of the 18th weren’t full-fledged democracies and that the bourgeoisie which needed cheap labor was pushing only for a limited version of a participatory system, whereas the subordinate classes acted as the pivotal factor

[67] Cf. Przeworski and Limongi 1997; Lipset 1959 (p.69) emphasizes that the pace of industrialization matters and cites Engels that a completed economic transition curbs the likelihood of a revolution, therefore the stage of mass-consumption has to be reached before a revolution has occurred in the 4th stage

[68] Cf. Lerner 1958 (p.84-85) stresses that “homeless illiterate in cities”, ergo a lagging of literacy behind urbanization, can be a threat to the society due to their vulnerability of indoctrination and abuse for extremist agendas

[69] Cf. Rosenthal 1970 (p.172); Berger 2000 (p.33); Lerner 1958 (p.386)

[70] Inkeles and Smith 1974 (p.5)

[71] Cf. Huntington 1993 (p.69) point out that the exposure to new working and living conditions creates stress and strains; the easiness of mobilization is increased by the fabric employment. Elites can respond by curbing the economic development, which would lead to a likely turmoil in the short-run or foster the economic performance, which would lead to a turmoil in the long-run

[72] Cf. Huber et al. 1993; Lipset 1959 (p.57)

[73] Cf. Shah 2011; Tajfel 1975 (p.113) shows that the own situation is compared to the one’s of others and if the own one is inferior, the individual will be dissatisfied

[74] Cf. de Schweinitz 1959 (p.538f.)

[75] Cf. Przeworski and Limongi 1997 (p. 156)

[76] Inkeles and Smith 1974 (p.109); Diamond 2008

[77] Cf. Boix and Stokes 2003 (p.544)

[78] Cf. Almond and Verba 1963

[79] Cf. Diamond 1992 (p.486); Maslow 1987

[80] Cf. Rostow 1961(p.20) calls it the “ability to take risk”; Ingelhart 1990: “Scarcity hypothesis”

[81] Huber et al. 1993 (p.77)

[82] Cf. Stephens et al. 1992; Goldstone and Kocornik-Mina;

[83] Cf. Shafiq 2010 found empirical evidence that education triggers support for democracy, regardless of religion and culture; Dahl 1989 (in Pérez-Armendériz und Crow 2009, p.12) says that democracy requires a minimum core of “attentive citizens”; Linz and Stepan 1996 (p.79): “[…] the political economy of prosperity contributed to new perceptions about alternative futures and to lessening resistance to democratic alternatives.”

[84] Cf. Almond and Verba 1963

[85] Ingelhart and Welzel 2005 (p.152)

[86] Abernethy and Coombe 1965 (p.291)

[87] Ingelhart and Welzel 2005(p.152)

[88] Papaioannou et al. 2008 (p.541); Abernethy and Coombe 1965 (p.292)

[89] Cf. Ingelhart and Welzel 2005 (p.65) Survival is predominant in industry, while self-expression in service-economies; Traditional values are found in agrarian areas, while secular-rational ones in the industrial, urban centers; Rostow 1961 (p.11) calls the intergenerational value-change „ the Buddenbrock dynamics“

[90] Thereby they forestall criticism, deriving from the fact of rentier-states (see Ross 1999)

[91] Cf. Lipset 1959 (p.77)

[92] Cf. Diamond 2008 (p.4)

[93] Cf. Cutright 1963; Barro 1999 finds a positive causall effect of the middle class share of income, GDP/capita, primary schooling rate on the electoral rights; Boix and Stokes 2003 spotted a positive relation especially before WWII, at an annual income/capita at $3,500 a country has a chance of 20% to transform its polity, the probability increases by 2% every $1,000 income/capita; Burkhart and Lewis-Beck 1994 conducted a Granger-test and found that development Granger-causes democracy; Helliwell 1992 (p.7) tracks down a 2 % amelioration in democracy when GDP/capita increases by 10% and a 1.85 amelioration when a 1% increase of working class population that attended a secondary school is observable; Epstein et al. 2006 showed that with a trichotomous differentiation of regime-types (dictatorship, partial democracy, democracy) one can refute Przeworski and Limongi 1997’s findings; Vanhanen 1997 (p.13) found a 0.71 correlation between political freedom and the HDI and a 0.51R2 with GNP

[94] Cf. Kapur and McHale 2005a (p.109); Acemoglu et al. 2005 (p.44)

[95] Cf. Przeworski and Limongi 1997 say that development rather sustains democracy than triggers its establishment, at a $ 4,000 income/capita survival is certain ; Neubauer 1967; Acemoglu et al. 2008 point out the flaw of former studies which weren’t controlling for factors, effecting simultaneously both variables, they find a positive R but no causal effect of the level of income on the likelihood of democratization

[96] Cf. North 1990 (p.3); Tilly 2004 points out the multiple democratization paths, which have been observed in the history, which depend on the democratic organizations in the country, the patterns of social relations, the international scenery, the current era, region and the previous history.

[97] Cf. Ingelhart and Welzel 2005 emphasize that the particular culture plays no role in the build-up process of institutions

[98] Cf. Todaro and Smith 2012; Huntington 1991 (p.33): “Economic development makes democracy possible, political leadership makes it real.”

[99] Cf. Huntington 1968 (p.35) dismisses Modernization Theory as Webbism- the tendency to ascribe qualities to a political system which are their ultimate goals not their actual process/function

[100] North 1990 (p.3); (p.100): “Recall(s) that the intermediate instruments of institutional change are political or economic entrepreneurs who attempt to maximize at those margins that appears to offer the most profitable (short-run) alternatives“; (p.79) institutions mainly change due to profit- maximizing behavior and new knowledge, which is used to make them more efficient while the transformation costs have to be taken into account

[101] Huntington 1968 (p.43)

[102] Cf. Glazer and Konrad 2003; Goldstone 1991 emphasizes that a population pressure, paralleling development is likely to culminate in a revolution

[103] Moore, JR. 1966 conceives three possible political modern systems, namely fascism, communism or democracy

[104] Cf. Diamond 1992

[105] Cf. Luebbert 1991

[106] Cf. Lipset 1959 (p.87) mentions that the working class only demands economic, not political improvements

[107] Cf. Acemoglu and Robinson 2006 (p.69) point out that development separates elites into agrarian based hardliners and industrial soft-liners and thus split the regime

[108] Cf. Haggard and Kaufman 1995 (p.252)

[109] Cf. Putnam et al. 1993

[110] Cf. Dahl 1989 (p.219)

[111] Cf. Tilly 2007 (p.93)

[112] Cf. Kuznets 1955: the positive correlation between economic development and an increasing income gap is explained by the scarcity of capital and the abundance of labor in the early stages of industrialization. This disparity between the productive factors will be reversed when a certain development level is reached and worker can demand higher wages.

[113] Cf. Diamond et al. 1989 (p.432) show that a steady and broadly distributed growth tends to be more important for democracy than socioeconomic development

[114] Cf. Acemoglu and Robinson 2006 (p.49) find a positive relation between the labor-share of the national income and democracy and adduce South Africa as an example (p.10f.)

[115] Olson 1965a (p.536) stresses that though development and social change in the SU occurred, no political convergence followed suit

[116] North 1990 (p.VII)

[117] Cf. Acemoglu and Robinson 2012 (p.444)

[118] Ritter 1989 refers to EVL as “Gesundungsmechanismen”; Hirschman 1970

[119] Cf. Barry 1974 (p.90): with the emerging of new references, people will rejudge the quality of their own situation though in absolute terms it hasn’t changed

[120] Cf. Tajfel 1975 (p.113)

[121] Barry 1974 (p.90)

[122] Inkeles and Smith 1974 (p.294)

[123] Cf. Hirschman 1970 (p.15)

[124] Cf. Clark et al. 2007 (p.5)

[125] Cf. Barry 1974 (p.98)

[126] Cf. Pfaff 2006

[127] Cf. Moasa 2013 (p.86)

[128] Cf. Dekker and Bolt (p.4).

[129] Cf. United Nations Department of Economic and Social Affairs, Population Division Septmeber 2013

[130] Cf. Burgess 2011 (p.44)

[131] Cf. Startts (p.12) mentions that people need capital or at least opportunity to draw loans ; Körner 2001 (p.34) emphasizes that unemployment is as financial barrier to emigration;

[132] Martin 1996; Massey et al. 1998 (p.277): “[…] international migrants do not come from poor, isolated places that are disconnected from world markets, but from regions and nations that are undergoing, rapid change and development as a result of their incorporation into global trade, information and production networks. In the short-run, int. migration does not stem from a lack of economic development, but from development itself.”;

Giersch 1994 (p.25) show the life-cycle of the migration-degree in relation to economic development

[133] Cf. Docquier and Rapoport 2011(p.5):Highest rates in middle income countries where people have incentive and means; Hanson 2009 (p.4373): Income ceiling: increased migration until $3400 GDP/capita at 2000 PPP-adjusted prices, afterwards it declines

[134] Cf. Zelinsky 1971; Haas 2008 (p.16)

[135] Cf. Samuel and George 2002 (p.37)“Those who have moved once are likely to move again.”; Olesen 2002 (p.277) shows that with an elevation of the agricultural productivity, the newly unemployed will leave towards the urban centers and some of them will migrate internationally

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Exit, Voice, and Loyalty. The Role of Migration in the Process of Development and Democratization
University of Leipzig  (Wirtschaftswissenschaftliche Fakultät)
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Entwicklung, Demokratie, Demokratisierung, Migration, Flüchtlinge, Diaspora, Modernization Theory, Modernisierungstheorie, Dependency School, Weltsystem Theory, Samuel P. Huntington, Lipset, Krugman, empirische Studie
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Dominik Hueller (Author), 2014, Exit, Voice, and Loyalty. The Role of Migration in the Process of Development and Democratization, Munich, GRIN Verlag, https://www.grin.com/document/285526


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