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Review of Development Economics, 6(2), 183–203, 2002 The Political Economy of the Kuznets Curve Daron Acemoglu and James A. Robinson* Abstract The paper provides a political economy theory of the Kuznets curve. When development leads to increas- ing inequality, this can induce political instability and force democratization on political elites. Democrati- zation leads to institutional changes which encourage redistribution and reduce inequality. Nevertheless, development does not necessarily induce a Kuznets curve, and it is shown that development may be asso- ciated with two types of nondemocratic paths: an “autocratic disaster,” with high inequality and low output, and an “East Asian Miracle,” with low inequality and high output.These arise either because inequality does not increase with development, or because the degree of political mobilization is low. 1. Introduction One of the major stylized facts about long-run processes of economic development is the Kuznets curve—the inverse-U shaped pattern of inequality. In a seminal paper, Kuznets (1955) argued that as countries developed, income inequality first increased, peaked, and then decreased, and documented this using both cross-country and time- series data. The empirical validity of this “Kuznets curve” has been intensively inves- tigated, but the evidence is mixed (see, e.g., Williamson, 1985; Lindert, 1986; Feinstein, 1988; Anand and Kanbur, 1993; Fields, 1995; Fields and Jakubson, 1993; Deininger and Squire, 1998; Schultz, 1998; Morrisson, 1999). Historical investigations of Western European countries tend to support Kuznets’ conjecture. For example, in England, the Gini coefficient for income inequality rose from 0.400 in 1823 to 0.627 in 1871, but fell to 0.443 in 1901 (Williamson, 1985). As we discuss in more detail in section 2, the evi- dence from France, Sweden, and Germany also follows this pattern. On the other