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Background Few studies have addressed how political and economic contexts shape the effects of health services and environment, such that a politically and economically unstable society, despite having sufficient health professionals and facilities, finds it difficult to transfer health resources into actual population health performance. We examined whether political and economic characteristics moderate the effects of health services on infant mortality rates (IMR) in less-developed countries. Methods This study used a longitudinal ecological study design and focused on 46 less-developed countries during the 30-year period from 1980 to 2009. Data were derived from World Development Indicators, the United Nations Commodity Trade Statistics Database and the Polity IV project. Lagged dependent variable panel regression models were used to increase the causal inferences. Random intercept models were used to accommodate the possible problem of a serial correlation of errors because of the repeated measurements. Results After controlling for baseline IMR and other socioeconomic variables, our study showed that democracy had a direct effect on IMR, and a moderating effect on the relationship between health services and IMR. The effects of health services on IMR were stronger for countries with a lower level of democracy than for countries with a higher level of democracy in the 10-year models. Compared with other trade-rated characteristics, democracy is a more robust predictor of long-term IMR in less-developed countries. Conclusions Our study provides additional evidence that democracy has direct effects on IMR and further showed that democracy can modify the effects of health services on IMR. [ABSTRACT FROM AUTHOR]