This paper highlights the important role democratically organized non-governmental organizations (NGOs) operating at the local level play in fostering economic development. This view runs counter to modernization theory’s claim that a significant level of economic development must be achieved before democratic organization is possible. It uses Ethiopia as a case study of the cultural infrastructure of civil society and uses case examples of local NGOs to show the importance of local-level democracy for economic development. We argue that local civil society organizations (CSOs) tend to threaten political leaders, the example of Ethiopia showing initial government acceptance and then growing resistance to CSOs, the most recent example of being the passing of an anti-NGO law. We argue that such government repression threatens opportunities for economic development that are generated by local-level NGOs.