Democracy & development

Some economists suggest a threshold that must be crossed before conditions necessary for the success of democracy can be met. They place the threshold at about $6,000 per capita income.

By Shahid Javed Burki
Tuesday, 26 Oct, 2010

IS democracy good for economic development or does it hinder it? The debate goes on. India has certainly been helped by it in recent decades. Pakistan has done poorly since its return to what the Washington-based lobby group, the Freedom House, labels a “limited form” of democracy.
Those who have studied the miracle economies of East Asia and their extraordinary economic performance over the last three decades defend the model pursued by that region according to which economic development naturally precedes democracy.

Most East Asians turned towards democracy after achieving economic progress. Some economists suggest that there is a threshold that needs to be crossed before all the conditions considered necessary for the success of democracy can be met. They place the thresh old at about $6,000 per capita income.

Lee Kuan Yew, the founding father of modern Singapore, once asserted that democracy leads to “disorderly conduct” that disrupts material progress. The is land state has been slow to loosen the control of the one predominant political party on the tightly run political system. The country is now one of the richest in the world.

China’s economic success in the last quarter of a century, which is as remarkable as that of the East Asian miracle economies, has created the case for a tight grip on political power in order to create a dynamic economy. China’s ability to pull out of the recession of 2008-09 while the established democracies of the West are still struggling is considered further evidence of the need to follow a sequential approach: of allowing the economy to take off before attempting to bring in democracy. The Chinese approach is being followed by other countries in East Asia, particularly Vietnam. China may, therefore, be one reason why the drive towards establishing democratic systems has slackened in the world.

America’s experience in Iraq and Afghanistan, where it launched military operations in part to bring in liberal democracy, has not helped advance that particular cause in the developing world. Repeated elections in Iraq have not created a representative system of governance in which all segments of a very diverse population have full confidence.

While Iraq has made some advance, Afghanistan remains way behind. The Americans have concluded that the best way of departing from that country is to negotiate with the Taliban, a group that has no interest in the western style of governance.

In the 2010 report, Freedom House found that declines in liberty occurred in 40 countries (in Africa, Latin America, the Middle East and the ex-Soviet Union) while gains were recorded in 16. Liberty and human rights had retreated globally for the fourth consecutive year. The organisation said that this marked the longest period of decline in freedom since it began publishing its reports nearly 40 years ago.

Freedom House classifies countries as ‘free’, ‘partly free’ or ‘not free’ by using a range of indicators that reflect its belief that political liberty and human rights are interlinked. As well as the fairness of their electoral systems, countries are assessed on issues like the integrity of their judges and the independence of their trade unions.

According to The Economist, that in January 2010 wrote a long article on democracy’s decline using Freedom House findings, there was “a huge turn for the worse since the bubbly mood of 20 years ago, when the collapse of Soviet communism, plus the fall of apartheid, convinced people that liberal democracy had prevailed for good. To thinkers like Francis Fukuyama, this was the time when it became evident that political freedom, underpinned by economic freedom, marked the ultimate state in human society’s development: ‘the end of history’, at least in a moral sense.” Both Russia and South Africa became ‘free’ for some time by the reckoning of Freedom House. In 2009, Russia went back to the ‘not free’ category.

To quote from The Economist again, “for freedom watchers in the West, the worrying thing is that the cause of liberal democracy is not merely suffering political reverses, it is also in intellectual retreat. Semi-free countries, uncertain which direction to take, seem less convinced that the liberal path is the way to the future. And in the West, opinion-makers are quicker to acknowledge democracy’s drawbacks — and the apparent fact that contested elections do more harm than good when other conditions for a well-functioning system are absent.” According to Freedom House, the number of electoral democracies went down by three, to 116 in 2009. This left the total at its lowest level since 1995, although it is still comfortably above the figure of 69 in 1990. Then, even though Gen Zia was no longer holding Pakistan in his tight grip, having been killed in an air crash in August 1988, Freedom House still classified the country as ‘not free’.

Pakistan provides a good illustration in support of the following position: that elections alone don’t qualify a political system as a democracy. A more nuanced argument against the promotion of electoral democracy has been made by several analysts, most notably Fareed Zakaria and Paul Collier. They have argued that democracy cannot take hold in the absence of several pre-conditions that ultimately assure its success.

It is evident from Pakistan’s case that the legal and judicial systems are still playing catch-up with the election-based political structure. There is an ongoing con frontation between the government’s executive and legislative branches on the one side and the judicial system on the other side. The latter is still attempting to instil respect for itself among the ranks of those who dominate the other two branches. The former is not prepared to have its freedom constrained by the niceties of established law.

How should the debate be settled? Extending the universe to be studied beyond East Asia helps to conclude in favour of democracy. A study by Morton Halperin, Joseph Siegle and Michael Weinstein using World Bank data between 1960 and 2001, found that the average annual economic growth rate was 2.3 per cent for democracies and 1.6 per cent for autocracies. Those looking for more evidence point out that a climate of freedom is most needed in knowledge-based economies, the state towards which most successful countries are moving.

It is no accident that that every economy at the top of the Global Innovation Index is a democracy with the exception of Singapore and Hong Kong. China comes in 27th. Given all this evidence Pakistan should not be tempted to return to the controlled systems it has tried in earlier times.