In this paper I discuss the factors and processes affecting the prospe
cts for the institutionalization of democracy throughout the world. I
survey cultural and economic variables, religious traditions, various
electoral systems, the importance of a participatory civil society, an
d the methods through which political parties should be structured to
maintain stability. I conclude that, because new democracies have low
levels of legitimacy, there is a need for considerable caution about t
he long-term prospects for their stability. In many countries during t
he 1980s and early 1990s, political democratization occurred at the sa
me time as a profound economic crises. Such conditions have already ca
used the breakdown of democratization in a number of countries. To att
ain legitimacy, what new democracies need above all is efficacy, parti
cularly in the economic arena, but also in the polity. If they can tak
e the high road to economic development, they can keep their political
houses in order The opposite is true as well: Governments that defy t
he elementary laws of supply and demand will fail to develop and will
not institutionalize genuinely democratic systems.