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Recent studies of democratization, most importantly Przeworski, Alvarez, Cheibub, Limongi, 2000 (PACL), question the modernization hypothesis that richer countries are more likely to be democratic. PACL claim instead that transitions to democracy are unpredictable, but once there, countries can remain democratic with higher levels of GDP per capita. We retest this hypothesis using an expanded data set and a three-way, rather than two-way, categorization of regimes: autocracies, partial democracies, and full democracies. We find that the modernization theory does hold up well, contrary to PACL’s findings: greater levels of prosperity do predict when countries are likely to leave autocracy and stay fully democratic. Partial democracies, on the other hand, emerge as the most volatile and least predictable category of regimes. We also find considerable support for Acemoglu and Robinson’s (2002) theories on inequality and transitions. Our analysis highlights the need to better understand the workings of partial, or unconsolidated, democracies, as these are also the countries most likely to enter external wars or fall prey to internal failure.