The paper provides theoretical explanations of the influence of political institutions and economic inequality on barriers to entry on markets, a level of redistribution, technological progress and economic growth. The model combines two approaches of modern economic lite­rature, endogenous growth models of creative destruction and the approach of the political economy of development, according to which political institutions determine a social choice of economic institutions, which influence long-term growth rates. On the first step of the game agents differing in their incomes, skills and political power, make a social decision about the level of redistribution and the level of barriers to entry on markets. On the second step agents make economic decisions on investment, production and consumption. Political regimes differ in the distribution of votes between the members of elite and other citizens. The model explains the empirical evidence, suggesting that the transition to democracy in short and middle term reduces inequality in incomes, but does not always lead to the formation of institutions, favoring the equality of opportunities. In the model the influence of political regimes on barriers to entry on markets depends on the initial level of inequality in incomes and skills, and also on the average level of skills. In a society with a high level of inequality in incomes and skills, the existence of a majority coalition, which support a high level of barriers to entry on markets is more probable. This coalition will include the richest agents and the least skilled agents. The results of the model explain different outcomes of democratization process in terms of its effect on barriers to entry on markets and economic growth. The paper also considers four examples of third-wave democratization, which illustrates the results of the model.