Download Democracy and Democratization

The consequences of democracy
For economic growth, human
development, & peace
Thanksgiving!
Class structure
I.
Recap:
•
II.
Consequences of democracy for…
1.
2.
3.
III.
Does economic development promote democracy?
Przeworski et al. Ch 2
Economic growth? - Przeworski et al. Ch 3 & 4
Human development - Siegle et al.
Peace - Mesquita et al.
Discussion: Policy implications?
I: Recap Przeworski et al
1.
Are democracies more likely to emerge as countries
develop economically? (The ‘endogenous’ or
‘modernization’ thesis)
•
2.
Industrialization, urbanization, education, communication,
mobilization…democratization
Having emerged for other reasons, are they more
likely to survive as democracies in developed
nations? (The exogenous thesis)
•
•
Emerge due to war, death, economic crisis, foreign pressures,
succession crisis, etc
Level of income cannot predict when dictatorships fall
Model
Regime
change
Democracy
Affluent
Democracy
Dictatorship
Democracy
Poor
Dictatorship
Dictatorship
Regime
change
Table 2.1 p.82
Conclusions Ch2.
“To summarize, the level of economic
development, as measured by per capita
income, is by far the best predictor of political
regimes. Yet there are countries in which
dictatorships persist when all other observable
conditions indicate that they should not; there
are others in which democracies flourish despite
the odds.” p.88.
II: Consequences of democracy for
growth, development, and peace
Impact of democracy on human
development
Sources:
– Przeworski et al 2000. Democracy & Development
– Joseph T. Siegle, Michael Weinstein and Morton
Halperin. 2004. ‘Why democracies excel’ Foreign
Affairs 83(5):57-72.
– Morton H. Halperin, Joseph T. Siegle, and Michael
W. Weinstein. 2005. The Democracy Advantage
Routledge
Key Questions
Is there a trade-off between economic and
political development?
Do developing countries have to choose either
higher per capita income/less democracy (the
‘China/Singapore model’) or democratization and
poorer economies (the ‘India’ route)?
Complex normative and empirical issues
Discussion
What is the impact of democracy on economic
growth?
Reasons why democracy may harm growth?
Reasons why democracy may benefit growth?
Change in democracy and economic
development
Democracy & development
Fear that democracy hindered economic development
–
–
–
–
–
Galenson (1959), Huntington (1968), O’Donnell (1973)
Rise of unions > pressures on wages/ consumption/ inflation
Shift from investment to consumption
Democratic regimes more vulnerable to public pressures
Stronger governments can take difficult decisions in long-term national
interest (the ‘authoritarian advantage’)
Counter arguments
–
–
–
–
–
North (1990), Barro (1990), Olson (1991), Sen (1994)
Democracies better allocate resources to productive uses
Some government intervention in economy is optimal for growth
Dictatorships are less efficient than markets
Sen: “no democracy ever experienced a famine” – press & opposition
Przeworski et al.
Does democracy undermine investment?
Growth rates of productive inputs
– Investment share in GDP
– Probit model controlling for income, Britcol, religion
Unit of measurement: type of regime per year
1950-1990 (dictatorship v. democracy)
Przeworski et al.
Conclusions: “There is no trade-off between democracy and
development, not even in poor countries.” p178.
In poor countries (with incomes below $3,000), the two regimes
are almost identical in their:
–
–
–
–
–
Investment shares
Growth of capital stock
Growth of labor force
Output per worker
Product wages
Democracy need not be sacrificed to economic development
Yet important distinction between rich and poor nations
Przeworksi et al.
Poor nations invest little, get little value from total factor
productivity and pay low wages
– Most poor nations remain poor
– Regimes make no difference for growth
– Democracy is fragile in poor nations so most have dictatorships
More affluent nations ($2500-3000+)
– Total growth rates similar for dictatorships and democracies
– Yet reasons for growth differ…
• Wealthy dictatorship grow by using a lot of labor and paying low wages
(repressing unions) – labor-intensive productivity, higher birth rates/fertility
but shorter longevity (esp. for women)
• Wealthy democracies grow by using labor more effectively: slower
population and labor growth rates but higher wages, benefit more from
technical progress
Przeworski et al. conclusions
The kind of regime does not affect the rate of
investment, the growth of capital stock (p153), or
the growth of total income (p156)
“There is no trade-off between democracy and
development, not even in poor countries.” P.178
“Much ado about nothing.”
Strengths and limits of this account?
Potential criticisms of Przeworski
1.
2.
3.
4.
Definition/classification of regime types?
Focus on economic, but not human, development
Limited period of analysis: post-1990 developments?
Under-specified model –
–
–
Limited institutional controls?
Limited cultural controls?
5. Outliers to the model – eg Singapore, Saudi Arabia?
Halperin, Siegle and Weinstein
Classification of nations
Compare all nation states 1960 to 2001
Low-income nations (per capita less than $2000)
Contrast low-income autocracies and
democracies
Classification by Polity IV
Ref: Halperin, Siegle and Weinstein
Halperin, Siegle and Weinstein
Concepts
Democracy: “Governance systems in which
national leaders are selected through free and
fair elections, there are institutions that foster a
shared distribution of power, and citizens have
extensive opportunities to participate in political
life.”
Polity IV democracy index
Use Polity IV index
Rates 161 states every year since 1800
0-10 scale
• Constraints on the chief executive (1-4)
»
(Independence of the chief executive)
• The competitiveness of executive recruitment (1-2)
»
(Extent to which chief executive is chosen through competitive elections)
• The openness of executive recruitment (1)
»
(Opportunities for non-elites to attain executive office)
• The competitiveness of popular participation (1-3)
»
(Extent to which non-elites are able to access institutional structures for political expression)
Democracies: score 8 to 10
Intermediary states: 3 to 7
Autocracies: score 0 to 2
Halperin, Siegle and Weinstein
Economic Growth
Among all countries, democracies have realized
consistently higher levels of economic growth from
1960-2001 (2.3% vs. 1.6%).
Among low-income countries, no difference in per
capita growth in GDP between democracies and
autocracies (1.5% to 1.3%) (confirms Przeworski)
– When East Asia is removed, the authoritarian growth rate of
growth drops while the democratic rate remains steady
– Low income democracies have less volatile growth
– Note: prob. of missing/unreliable data for autocracies
Halperin, Siegle and Weinstein
Economic indicators
3.26
3.5
3
3.16
2.66
2.5
2
Autocracy
Mixed
Democracy
1.5
1
1
0.74
0.5
0
-0.5
PerCap GDP Growth
1975-2002
-0.15
GNP Annual Growth 1975-95
Note: Poor nations only (GDP/cap under $2000)
Polity DEMOC: 35 Autocracies, 25 Mixed, 16 Democracies
Halperin, Siegle and Weinstein
East Asian exceptionalism?
What of S. Korea, Taiwan, Singapore, Vietnam,
Indonesia and China? Rapid growth under
autocracies. Exceptions. Why?
•
•
•
•
•
•
Pursuit of market economics
Access to capital markets
Constraints on leaders
Relative social equality
Openness to Western markets
Security interests
Also failures (Burma, Cambodia, N. Korea)
Halperin, Siegle and Weinstein
Social Indicators
140
114 116
120
100
107
90
75 74
80
67
60
60
54 55
43
40
29
20
0
Aids/100000
InfantMortality
ChildMortality
Note: Poor nations only (GDP/cap under $2000)
Polity DEMOC 35 Autocracies, 25 Mixed, 16 Democracies
LifeExp
Autocracy
Mixed
Democracy
Halperin, Siegle and Weinstein
Social Indicators
90
80.3
80
70
60
70.4
67.6
69
62.9
55.553.6
54 52
Autocracy
Mixed
Democracy
50
38.4
34.5
40
30
20.5
20
10
0
Educ enroll 2002
Illiteracy
Water
Note: Poor nations only (GDP/cap under $2000)
Polity DEMOC 35 Autocracies, 25 Mixed, 16 Democracies
Gender (GDI)
Halperin, Siegle and Weinstein
Social indicators
On average, low income democracies consistently have
superior levels of welfare across various measures of
human development
•
•
•
•
•
Life expectancy
Secondary school enrollment
Agricultural production
Childhood mortality
HDI
Growing divergence in recent decades
Due to greater effectiveness NOT higher welfare
spending (eg education)
Halperin, Siegle and Weinstein
Government expenditure
30
25
24.5
22.9
20.2
20
Autocracy
Mixed
Democracy
15
9.7
10
4.2 3.5 4.1
5
2.7 2
1.6
10.5
3.2
0
Central Govnt
Educ
Military
Spending & aid as % GDP.
Poor nations only (GDP/cap under $2000)
Polity DEMOC 35 Autocracies, 25 Mixed, 16 Democracies
Aid rec'd
Halperin, Siegle and Weinstein
A ‘democratic peace’?
Autocracies more stable?
Autocracy, poverty and conflict are related.
Democracies are less likely to engage in conflict with
other democracies than any other regime type
– Less external conflict (?)
– Fewer civil wars
Democracies are less likely to be state failures - one of
the three most important factors (The State Failure
Project)
Democratic peace
Democracies rarely fight each other
Why?
– Constraint of risk-averse mass public?
– Constraint of multiple interest groups?
– Transparency of decision-making process leads
towards greater trust and predictability
– An Imperial (US hegemonic) peace?
Ref: Bueno de Mesquita et al. 2003. The Logic of Political
Survival MIT Press
Halperin, Siegle and Weinstein
Policy implications?
Multilateral agencies should prioritize democracies by…
1. Use democratic selectivity when allocating aid
•
Eg MCA
2. Revise charters WB, IMF & regional banks to favor
democratic regimes
3. Use democracy-impact statements
4. Separate security aid from development aid
5. Develop cohesive Development Policy coordination Council
(Sec State, Treasury, MCA, USAID)
III: Discussion exercise
Ford Foundation Discussion Exercise
Policy Analysis Role Playing Exercise: Ford Foundation Program Management
Divide into pairs to discuss the following. You have 15 minutes to develop your joint recommendations and the reasons for
your conclusions.
You are employed as Senior Program Managers for the Ford Foundation. The Foundation has decided to invest $50m over
a ten year period in the Rights and Social Justice Program aimed to encourage Governance and civic society in the
developing world.
“In governance we foster effective, transparent, accountable and responsible governmental institutions guided by the rule of
law and dedicated to reducing inequality.”
The Foundation has asked you to advise them about suitable criteria for this Program when evaluating how to prioritize
applications for different projects in Africa, Asia and Latin America. The Foundation wants to know which of the following two
options they should follow.
(i) To prioritize investments in projects which will directly encourage economic growth and social equality in
developing countries, (including improving education , encouraging literacy, and reducing extreme poverty), on the
grounds that human development will gradually create the necessary social and cultural foundation for democratic
consolidation.
OR
(ii) To prioritize investments in projects in developing countries which will directly encourage the reform of political
institutions, including funding independent advisors to promote free and fair elections, effective party competition, the
organization of voluntary and professional associations in civil society, and a free press.
Focus your discussion on any two poorer developing countries (defined as those with a per capita GDP (PPP) of less
than $4,000). What are your recommendations, and why? Use information from your experience, from Przeworski, and
from the data to support your conclusions.
Democracy and Development, 2004
Poor democracies
Rich autocracies
Next class:Huntington’s Clash
Wed: Does Huntington predict a clash of
‘civilizational cultures’?
Reading: Huntington Ch.1-3