Democracy and Economic Development
Lot of experts in the world have been producing works on the relationship between democracy and economic development and I think it will be very interesting to discuss about their theories. One of the most important riddle is how each of them affect another.
More than two thousand years ago, in his On Democracy and Tyranny, Aristotle argued that the best form of government should be dominated by middle class people because they had nothing to covet from upper class and nothing to be coveted by lower class. Government dominated by lower class would feature power abuses and mob rules while that dominated by upper class would be an oligarchic one. Government ruled by middle class, thus was the least likely to end up in seditions and greediness.
Similar argument was made by neoconservative Seymour Martin Lipset who was famous for his “The more well-to-do a nation, the greater the chances that it will sustain democracy”. He predicted that economic development would have a very strong effect on democratization. Former Prime Minister of Singapore, Lee Kuan Yew, added that people are ready to sacrifice their political freedom and prioritize their economic needs in time of misery.
We have evidenced how Park Chung Hee and Chun Doo Hwan, two former notorious dictators of South Korea, developed their country from poor agrarian one into big industrialized country and brought out millions of South Koreans from poverty. Rising number of educated middle class who benefited much from economic development led to big demonstrations against Chun’s highly oppresive regime and South Korea had its first free elections in 1988. In China, after introducing great economic reform which bettered some Chinese, Deng Xiaoping had to face growing resistance from hundreds of thousands of people who desired democracy and they ended up in unforgettable bloodbath in Tiananmen Square in 1989.
Looking at these two examples, I think I can conclude two important things. One, authoritarian government can also promote economic development. The challenge is to make sure that this authoritarian regime does not try to enrich themselves and does the best for the people. They refuse to step down simply because they believe their countries’ fate is in their hands and giving control to other will make things worse off. This is what, according to my humble opinion, differs Vladimir Putin’s regime in Russia with Robert Mugabe’s regime in Zimbabwe and Tan Shwe’s regime in Myanmar.
It should be noted that I also believe that democractic government can also promote economic development. For example, “democratic things” like multi-party system makes it possible for the appearance of previously unknown capable leaders and open debates may find best solutions for certain economic problem.
In their essay, Why Africa has Grown Slowly, Paul Collier and Jan Gunning mentioned that 32 African countries are poorer now than they were in 1980. They put aside African countries’ fate as ex-colony with dry lands and things like that which often used as an excuse for their being underdeveloped. Collier and Gunning argued that implementation of democracy would eventually benefit them.
I have very good example on this. Botswana was one of five poorest countries in the world when they became in 1966 with only US$ 90 GDP per capita. The discovery of diamond there changed it’s fate. It is now the biggest producer of germ-diamond in the world with 30% world share. Botswana’s GDP per capita now is US$ 14.300 which is around four times that of Indonesia. It was rated as Africa’s stablest state by World Bank and it’s corruption perception index is even better than some European Union’s countries. Discovery of diamond did not tear country apart like discovery of oil in Biafra, Nigeria. Botswana has traditional public meeting called Kgotla. It is headed by village chief and local villagers may come and talk about anything that affect their life. The government adapted Kgotla system into its parliament and council and that is the beginning of how they ended up putting diamond under state control with clear accountability. Revenue from diamond itself is used to build schools, hospitals and other infrastructures. Incumbent Festus Mogae himself is widely known as the fiercest critic of dictator Robert Mugabe and refuses to attend any Southern African Development Community’s meetings which are attended by Mugabe.
Two, as people better off, they become increasingly want a voice over policy influencing them. Middle class in Russia and China, for this moment, are not “significant” to do this, but incumbent governments in these two countries are doing really good in improving economic life. If two conclusions above are true, is there a prospect of democracy in Russia and China in the future? Perhaps.
Image was taken from here.
Tags: Botswana, China, Chun Doo Hwan, Democracy, Economic Development, Festus Mogae, Kgotla, Lee Kuan Yew, Myanmar, Park Chung Hee, Robert Mugabe, Russia, Singapore, South Korea, Tan Shwe, Vladimir Putin
November 12th, 2008 at 4:24 pm
Wow. Very interesting article. It obviously a topic you know all about. I feel I’m pretty reckless by commenting. Yet your post is too good and tempting to let it pass.
Unfortunately prosperity and democracy are not two sides of one coin. It is just a historical coincidence that capitalism ( from early on in the sixteenth century, when there was still no democracy to be noticed) out of which an enormous growth of wealth resulted and enlightenment (in the late eighteenth century, and not at all interested in economic development) out of which democracy was born, both started in the same hemisphere.
So, yes indeed, in authoritarian political systems economical development can take place. Probably to launch such a development such a system is even a big advantage. What happens in China nowadays, did more or less happen in the thirties in Nazi Germany. Dictators like Pinochet in Chile of the seventies and eighties, don’t have to hesitate, compromise, accommodate, seek consensus, care about the free public media, stick to the law and protect the interests of all citizens, in order to give capitalism a chance. But a democratic government has to do just all these things.
The problem with authoritarian regimes and dictators is however how to get rid of them once they got control. Because they are not only bad for civil rights, but their economic accomplishments usually also tend to deteriorate over time. Lack of freedom generally will lead to stagnation or lack of innovation. The hierarchical tendency of these systems may cause limited upward social mobility, which is a waste of talent which in its turn can seriously hamper the ongoing growing economy. Concentration of power which is part of a dictatorship, usually also means a accumulation of wealth, at the cost of other strata of society. This and other phenomenon of inequality usually result in vices like graft and corruption which will hurt a sound economy.
So, I guess the start of economic growth may indeed benefit from an authoritarian regime. But a sustainable growth will do better if the political system is democratic.
Or is it?
colsons last blog post..Happy Anniversary.
November 14th, 2008 at 3:58 am
I agreed more or less with Colson and i embrace you for your first hypothesis. You seem to be disentangled from the American politics that tries to drive people’s mind as if democracy is the only best thing. I am not sure how was it exactly in Iraq although i have watched some documentary films before. But the thing is..mm..i’ll share you a lame story, but it’s a story;
Before i went to the middle east, i was worried about traveling there alone, backpack, woman, etc. One of the country i fear the most was Syria. The US govt website said that Syria is the terrorist friendly country. But when i was there, it was totally different. People were extremely nice and everywhere i went was extremely safe. I can walk at 2 o’clock at night and felt secured. Officers in uniform with guns were everywhere but they really tried to give you secured feeling, no harassment, jawil2 or even just negor2 iseng like the satpam/abri in indo sometimes do. Yet the president sovereign the country is actually the son of the later president. He won about 90 percent of the voice at the election. Pictures of them were everywhere in the country. 90 percent? son of the later? Difficult to believe that he is not an authoritarian like you mentioned. But the people of Syria live very happy under his rule. They realize that their president is an authoritarian yet they said that they want it so.
A bit different from Lebanon, whereas more democratic government let interference from other countries. The influences does not give good ampact. Some parties got support from foreign power, war.
so yes, i agree with u, for this reason
Ms last blog post..I Bribed an Officer
November 14th, 2008 at 6:02 pm
@Colson:
Thanks Colson, I took it as compliment.
Pinochet might be another good example as well, I forgot to mention his name. I completely agree with you, dictators don’t have to care about external pressures, such as those from private individual groups which may try to lobby the government to create certain policies which will eventually benefit them. Thus, in the beginning, as long as the challenges I mentioned in the article can be overcome, dictatorship might be good. In addition, democracy allows opposition which sometimes makes it very difficult to make decision. Look at Japan, ruling and opposition factions were fighting in the parliament and they found it very hard to reach agreement.
As times passed by, democratic regimes proved to be better in optimize efficiency of economic activities. Dictatorship’s system in which power’s held by few people on the top. It’ll be extremely difficult for them to control all complicated economic process without decentralizing decision making. This was why central planning system failed in communist countries.
@M:
Talking about your story, yeah, there’s actually no problem if people are happy. Isn’t that what people pursue in their life?
Yes, I never think democracy is the best system. I imagine myself as little bit authoritarian leader of one state but perform very well in improving people’s life.
The thing is sometimes it’s difficult to see whether people under authoritarian rule are really happy or not. They might want to have voice over decisions which affect their life. Yemen doesn’t have considerable middle class populations, does it? I’m not really familiar with this country though, not much media coverage on it.
November 16th, 2008 at 1:34 am
Sherwin,
apapun sistem pemerintahannya,
pasti ada positif negatifnya.
Yang penting, jangan menganggap sistem lain itu buruk dan memaksa sistem yang kita yakini.
Kenapa saya komen kayak gini?
Saya membandingkan antara China dan Uni Eropa. Meskipun Cina sudah menjadi negara besar kini, tetapi Cina tetap memegang asas kedaulatan negara lain. Uni Eropa terlalu sombong dengan asas demokrasinya dan penegakan HAM-nya. Hitung berapa banyak sanksi yang diberikan Uni Eropa kepada negara lain hanya karena menjalankan pemerintahan otoriter. Contohnya Myanmar.
Jadi, apapun sistem yang dijalankan oleh negara lain, mari tetap kita hormati dan fokus pada pembangunan nasional dan perdamaian global.
Verdinands last blog post..Galileo Galilei
November 16th, 2008 at 12:39 pm
Win..
loe nulis opoe gitu gw kaga ngerti…
ahahahah
Anton Soeharyos last blog post..Obama and McCain as cultural icon -About Last Night- SouthPark
November 16th, 2008 at 2:43 pm
@Verdinand Siahaan:
I do agree with you Lae. There’s always bright and dark side of one system, one can’t just force other to follow its system.
But, I conclude that it’s not the system which matters the most, but it’s who holds the power.
@Anton:
Pura2 kau ah.
Heh?! Mungkin efek jalan2 mencari daun merah kemaren sore bikin lo jadi bloon.
November 18th, 2008 at 10:31 am
this article is nice but too smart to me
what did you write, Sher? one of a chapter in a thesis? or should I think that you are in Prof. Tobing mode on?
OK for the pros and the contradictions of each countries’ governtmental system. I can’t find which country has got better system than others, which one do you think? The U.S or what? Yeah I know there is no country has the best of all, but I’m sure there is a system which has more advantage aspects. Wealthy country has embraced certain system…it is democracy, authoritarian, or else?
Paniang kapalo, mending makan indomi aja
November 20th, 2008 at 4:48 pm
@yonna;
But yes, I’m gon’na write about it.
No, I haven’t started writing it yet.
As I’ve just said before, what matters is who holds the power, not what kind of system one state has.
November 21st, 2008 at 2:51 pm
@ sherwintoning 3: I’m not so sure Japan is a good example of opposition thwarding decisive decision making by the government parliamentary majority. In my view the “liberal party” has been in power for far too long which has resulted in very severe wear and tear of their original political vitality. Which is the usuals problem with dictatorships: in the first few years they may be beneficial under certain circumstances, but then it’s about time for a fresh team.
Even if the dictator’s intentions are good and altruistic. Fidel Castro started out in ‘59 as the man of hope and inspiration and see where Cuba is now. Juan Peron became Argentina’s ruler in ‘46 and brought prosperity to the common man. But as he stayed on till ‘55 he was exiled because the economy was in ruins. I think Moammad Abu Minyar al Qadhafi started out in ‘75 with high hopes and ideals and even brought about more equality and prosperity in his country, but since about ‘80 nothing much improved. On the contrary he almost led the country to ruins by his peculiar foreign policies.
Well, I’m biased, but I do think the political system does matter. The quality of people at the top matters of course, I give you that. But the system must provide safeguards against deterioration. There is a need for periodical refreshment of command, a competition of ideas and ideologies. Well, it may to be the perfect comparison, but the credit crunch may teach us what lack of control of the controllers may lead to.
colsons last blog post..Newsflash: Europeana has been launched today!
November 21st, 2008 at 6:13 pm
@Colson:
Talking about the case of Liberal Democratic Party (LDP) in Japan, political scientists described it as dominant-power politics syndrome, one of two common syndromes exist in countries in the gray zone between democracy and authoritarian. (Another is feckless Pluralism) This syndrome was more visible in Japan prior to 1990, but as we’ve seen LDP started to lose grip afterward. They did continuously won the elections but face growing contest from oppositions. As more oppositions entered upper house in Japan, decision making process became very difficult task and tended to end up in deadlock, which was actually one of the reason why previous Prime Minister, Yasuo Fukuda, decided to call for his own early resignation.
I think the problem with Fidel Castro’s case was that he implemented communism in his country. I’ve been doing research on the true nature of communism and why it failed. The system itself contains seeds of its own destruction.
If you’re interested on this, you might want to read “The Political Economy of Communism” by Janos Kornai, Hungarian Professor in Harvard University. You may find the abstract here http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780198287766/toc.html?q=socialist|system
As you see from this paragraph above, I admit that I was too early in judging that the system didn’t matter. What actually I wanted to say was what was written in my reply to Verdinand. I missed “the most” part from my reply to Yonna.
Thank you for enlightening examples or Qaddafi and Peron which I’m not quite familiar with. 
November 25th, 2008 at 11:34 am
What an article you’ve written!
I tried to analyze the paradox between democracy and globalization once and I found an interesting approach relevant to this problem. In his book, Jan Aart Scholte describes democracy as one of the main normative concern of social relations together with human security and social justice. Scholte observes the relations between the three normative concerns as following:
[T]hese three conditions can often (though not always) substantially reinforce each other. For example, people who enjoy security arguably have greater possibilities to participate in a working democracy, and democratic governance is likely to promote greater equity. Conversely, shortcomings in respect of human security or social justice have frequently paralleled deficits in democracy.
The interpretation of these three normative concepts is often simplified as a chain reaction phenomenon. Although for some cases, it doesn’t work that way. For example, Lipset’s premise would be greatly challenged by the fact that to some extent Singapore still remain undemocratic despite of its successful economic development.
I might agree with Colson on dictatorship. History showed us that many man of hopes were trapped in the same vicious cycle of dictatorship. Soekarno and Soeharto fall in the same category on this Soeharto, he’d done a very good handle of “benevolent authoritarian” and managed to keep it for thirty-years. Saddam Hussein was no different. Did you know that he was praised by the UNICEF and they gave him an award for providing a free-education for Iraqi peoples? That was before he mismanaged his power. For a short period, dictators can provide a stability that is very much needed for an economic development.
Then the question would be, how come these altruistic dictators failed to keep their legacies in good manner? I think an old saying of politic might be relevant, that “power tends to corrupt”. With no limitation of power, the nature of man will eventually lead them to misuse the power. And the one and only system that provide safeguards to prevent this kind of flaws is democracy. It is the only system that can ‘heal itself’.
Andikas last blog post..Palin: “Place in Hell reserved for women who don’t support other women”
November 26th, 2008 at 9:00 am
hmmm….so the best system is the one who has the most steady and solid safeguards to prevent deterioration, whatever the system is, it should have safeguards in its system, is that so? hmmm
and I wonder where the safeguards come up from? nonetheless, the rise and fall of global economic policies affects domestic economy stability. by the theory, maybe it’s no so difficult to compare each systems but by the practice…even one single system such as democracy will be applied differently in each countries.
i still lost it…my mind is still wandering around hehe.
November 27th, 2008 at 2:33 am
The safeguard is the people. No matter what kind of democracy that a country use, as long as there are the mechanism of separation of power and free-and-fair election, then those two things can serve as the “minimum requirement” of political infrastructure to run the safeguard.
Andikas last blog post..As we set the floor on fire…
November 28th, 2008 at 8:58 am
i wrote this long comment and clicked back by accident.
now im in the fetal position, crying.
Irenes last blog post..Blah
November 28th, 2008 at 10:48 am
nice piece.
I agree with Colson and you. Economic development can occur within an authoritarian system.
The important question is: how sustainable will the development be?
Drawing from my own observation (which is more skimming over subjects rather than close examination) is that in the long run, democracies are more able to cater to the demands and needs of the governed and more reliable in terms of creating an environment which may support healthy economic growth.
However, ecenomic development should not be held as the sole indicator of a country’s well-being. With well-being I mean civil rights, equality, and all that jazz.
Take China. In 2007 the people’s republic had an outstanding 11-point-something in GDP growth. Last time I heard, China has the highest average gdp rate (+/- 9%…and i might be making this up). But what does this 11% gdp growth say about an authoritarian government? I think its too rash to conclude that an authoritarian government may directly benefit the economy. From my perspective, and I think you may have alluded to this in your article, that while China may be authoritarian, its economic policies are not (to some extent). In other words, an authoritarian government may choose to exercise some liberal moves when it comes to the economy.Remember chairman Mao and his not-so-great Leap Forward. It wasn’t until Deng Xiaoping injected some market reform into the system that real development started to take form.
Now, what does 11% say about the well-being of China?
Well…Looking at China’s embarrassing Human Development Index (covers literacy, education, gdp/capita,
and life expectancy)–where they’re ranked 81, just above Grenada–not so good. Being ranked 126th out of 157 countries in Heritage’s Index of Economic Freedom, isn’t much help either. This index recognizes that China averages well in trade and government expenditure, indicating that they have long moved away from an absolute socialist economy model to a more market-oriented economy. However, the index also points out that many sectors of the nation’s economy is still highly regulated by the government, which is why they scored low. Low transparency or corruption also becomes a big factor. China’s resume at Amnesty International’s archives is also far from sterling. Amnesty includes them among 20 countries that are the worst offenders of human rights, just below Pakistan–that is really bad.
Of course, this does not mean democracies are free from injustice. Look at Indonesia, also mentioned by Amnesty and ranked higher than China. The repression of freedom and the crippling corruption there is evidence of a more subtle authoritarian way of governing within the democracy.
i had to rewrite this…
hiks…
cheers,
Irene
Irenes last blog post..Blah
November 30th, 2008 at 5:20 pm
@Andika:
I do completely agree with you, I’ve mentioned before that as for a dictator, the biggest challenge for him is to act not based on his own personal interest and democracy can prevent this kind of thing. I like your idea about democracy as a system which has self-healing feature. 
So basically we agree that for short period of time dictatorship can be advantageous to countries concerned?
How’d you explain the case of Singapore? Indeed, it was a strange case from my point of view.
@Yonna:
Andika has answered your questions perfectly. I’d add “free press” and “guarantee of human rights” as minimum requirement for democracy to work as safeguard though.
@Irene:
On paper, China did have great GDP growth and blablabla, but you’re right, life in China’s still far away from good for most people. We should take into considerations the fact that China’s country with vast populations and territory which plays a role as an obstacle to development. Deng Xiaoping said some people must get rich first and other would follow, people in Eastern part of China were, to some extent, already bettered off. When the size of middle class is big enough, there’s prospect of democracy, guarantee of human rights, etc. Thank you for rewriting your comment. Salam kenal. 
Wow, it’s really surprising to see biochemistry majoring student can write such an enlightening comment, I feel so humble now.
December 1st, 2008 at 5:06 am
gw ngambil econ/politik minor lol. that should explain some of it.
you’re right China’s huge (and growing) population is an obstacle.
Irenes last blog post..MUI investigates!!!!
December 2nd, 2008 at 9:24 am
@Irene:
Hahaha, pantesan.