🔎 What Was Investigated

A historical puzzle: how core principles of modern democracy influenced the evolution of government budgets. Building on Dahl’s (1971) concept of polyarchy, the study links stages of electoral contestation and suffrage inclusion to distinct patterns of state spending.

📚 How Democratization Is Argued to Work

• Before contestation and broad suffrage, land-owning elites dominated policymaking and prioritized spending on repressive capacity to secure regimes.
• Contestation without wide participation incorporated urban elites into politics, shifting spending toward economic development that benefited those groups.
• Extending suffrage to the masses increased social-welfare spending, but only when political competition was present (i.e., suffrage mattered conditional on contestation).

🗂️ New Historical Budget Data Across Countries and Centuries

• Compiled patterns of government finance for over thirty countries worldwide
• Time span: early 19th century to the mid-20th century
• Budget categories analyzed include military/repressive spending, economic development expenditures, and social-welfare outlays

📈 How the Hypotheses Were Tested

• Employed two-way fixed effects panel models to estimate the impact of contestation and suffrage on budget composition
• Conducted multiple sensitivity analyses to test robustness of results

✅ Key Findings

• Strong empirical support for the theoretical expectations derived from polyarchy: shifts in who could contest and who could vote systematically reallocated state spending.
• Early elite-dominated regimes prioritized repression; contested but restricted regimes shifted resources toward development; mass suffrage combined with competition expanded welfare spending.
• The effect of extending suffrage on welfare was conditional on the presence of genuine political competition.

💡 Why It Matters

These results integrate democratic theory with historical public-finance evidence to provide a more complete account of how democratization reshaped state priorities. The findings clarify when and why expansion of political rights led governments to invest in repression, growth, or welfare.