This paper analyzes the concept of culture by identifying the mechanisms that underlie the relationship between democracy, culture and development. After a succinct description of the treatment of this relationship within modernization theory, it introduces a neo-institutional concept of culture based on social learning processes from which shared mental models emerge. This is followed by an illustration of the role of culture in the solution of cooperation, coordination and social choice problems, and an outline of a methodological approach called analytic ethnography and an intervention scheme based on the design of situations. The paper concludes posing the possibility of amplifying the present theoretical approach towards a cultural political economy of human development.