Democracy as a middle ground: A unified theory of development and political regimes

•We study the decision of landed elites to democratize as an economy develops.•Randomly drawn autocrats differ in preferences and may choose anti-elite policies.•As it taxes land rents, democracy is very costly to elites when farming dominates.•Elites democratize society only after the economy has sufficiently industrialized.•An economy's date of democratization depends on its history of autocratic draws.

Although many of the worst performing countries over the post-World War II period were autocracies, many of the best were likewise autocratic. At the same time, no long-lived autocracy currently is rich whereas every long-lived democracy is. This paper proposes a theory to account for these observations that rests on the ideas that autocrats are heterogeneous and that elites experience lower land rents with industrialization. In a model calibrated to Britain's development, we show that elites democratize society only after the economy has accumulated enough wealth, and that the democratization date depends importantly on the history of rulers and distribution of land.