Inequality, GDP composition by sector, and forms of government



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This paper considers forms of government originating from the conflicts among social classes. By introducing the concept of needs classes, this paper analyzes the relationships among inequality, GDP composition by sector, and forms of government. It explains that the forms of government are especially associated with the strength of safety-satisfied class, which is affected by inequality and the shares of different sectors of the economy. Therefore, it hypothesizes that forms of government are influenced by the inequality and the GDP composition by sector.

Data on the Gini coefficient of income, GDP composition by sector and Unified Democracy Scores in the 1980s and 2000s are regressed in this paper to verify the hypotheses. The regression results show that a country, which has a higher percentage of GDP from services and a lower value of Gini coefficient, possibly has a more democratic government. The percentage of GDP from agriculture though is not significant in every dataset, it negatively affects democratization.