modernization theory predicted. Yet the rapid increase in
U.S.-China trade since the mid-1980s has done little for
Chinese democracy, and the even closer integration that is
likely to follow during the next decade will do equally little.
The attitudes of many about the future of Iraqi society and
democracy in the aftermath of the U.S.-led invasion were
similarly optimistic because of modernization theory.
Despite its disastrous economic performance under
Saddam Hussein’s regime, Iraq was not as poor in 2002
as many sub-Saharan African nations, and it had a
comparatively well-educated population, so it was believed
to be ripe ground for the development of democracy and
civil liberties, and perhaps even what we would describe as
pluralism. These hopes were quickly dashed as chaos and
civil war descended upon Iraqi society.
Modernization theory is both incorrect and unhelpful for
thinking about how to confront the major problems of
extractive institutions in failing nations. The strongest piece
of evidence in favor of modernization theory is that rich
nations are the ones that have democratic regimes,
respect civil and human rights, and enjoy functioning
markets and generally inclusive economic institutions. Yet
interpreting this association as supporting modernization
theory ignores the major effect of inclusive economic and
political institutions on economic growth. As we have
argued throughout this book, it is the societies with
inclusive institutions that have grown over the past three
hundred years and have become relatively rich today. That
this accounts for what we see around us is shown clearly if
we look at the facts slightly differently: while nations that
have built inclusive economic and political institutions over
the last several centuries have achieved sustained
economic growth, authoritarian regimes that have grown
more rapidly over the past sixty or one hundred years,
contrary to what Lipset’s modernization theory would claim,
have not become more democratic. And this is in fact not
surprising. Growth under extractive institutions is possible
precisely because it doesn’t necessarily or automatically
imply the demise of these very institutions. In fact, it is often
generated because those in control of the extractive
institutions view economic growth as not a threat but a
support to their regime, as the Chinese Communist Party