The democratic transition model (DTM) revisited: World Bank debt, democracy and welfare effort in neo-liberal context, 1968-1989

Debt dependency is a linkage to international capital agents who are also cultural carriers of liberal democracy. The diffusion of core's pro-welfarist/social security tendency to the semiperiphery results in a rather large progressive liberal component in their welfare effort. When changes in relations of production result in difficulties with economic development during the post-OPEC era, the World Bank and the IMF were compelled to implement austerity policies on debtor nations. Electoral democracy may be less associated with increased welfare effort in the context of a shift towards liberalism in the global economy after the OPEC oil shocks. One corollary is that debt dependency, conjoining elements of this geopolitical shift and the structural propensities of economies, interacts with domestic political institutions to affect welfare effort varyingly. Pooled cross-national time series analyses of data from Venezuela, Portugal, Spain and Brazil have shown that high debt dependency interacted with post-OPEC era democratization significantly reduced welfare effort (Ng, 1993). Pre-OPEC era democratization interacted with high debt-dependent, and post-Opec era democratization interacted with low debt-dependency, revealing counteracting effects. Pre-OPEC democratization and low debt dependence augmented welfare effort.;In this work, I revisit this democratic transition model (DTM) by testing it with pooled cross-national time series data of twelve middle-income developing nations from 1968 to 1989. The findings converge to first show that positive "integrative" effects of debt on welfare effort are reduced by post-OPEC era democratization. In addition, the more the World Bank and IMF extend loans to middle-income developing nations, the more likely economic growth and Socialist parties augment welfare effort in these nations. Bureaucratic legacies and unemployment rate augments welfare effort in the pre-OPEC and post-OPEC eras of democratization respectively. The strength of the democratic transition model (DTM) lies not only in its ability to explain the debt-democracy interaction typologically, but also in its ability to explain the variation in support for industrialism, demographic, interest-group, state-bureaucratic and social-democratic theories.