Roads to Prosperity
The Myth of Authoritarian Growth
Dani Rodrik
|
|
|
|
CAMBRIDGE – On a recent Saturday morning, several hundred pro-democracy activists congregated in a Moscow square to protest government restrictions on freedom of assembly. They held up signs reading “31,” in reference to Article 31 of the Russian constitution, which guarantees freedom of assembly. They were promptly surrounded by policemen, who tried to break up the demonstration. A leading critic of the Kremlin and several others were hastily dragged into a police car and driven away.
Events like this are an almost daily occurrence in Russia, where Prime Minister Vladimir Putin rules the country with a strong hand, and persecution of the government’s opponents, human-rights violations, and judicial abuses have become routine. At a time when democracy and human rights have become global norms, such transgressions do little to enhance Russia’s global reputation. Authoritarian leaders like Putin understand this, but apparently they see it as price worth paying in order to exercise unbridled power at home.
What leaders like Putin understand less well is that their politics also compromise their countries’ economic future and global economic standing.
The relationship between a nation’s politics and its economic prospects is one of the most fundamental – and most studied – subjects in all of social science. Which is better for economic growth – a strong guiding hand that is free from the pressure of political competition, or a plurality of competing interests that fosters openness to new ideas and new political players?
East Asian examples (South Korea, Taiwan, China) seem to suggest the former. But how, then, can one explain the fact that almost all wealthy countries – except those that owe their riches to natural resources alone – are democratic? Should political openness precede, rather than follow, economic growth?
When we look at systematic historical evidence, instead of individual cases, we find that authoritarianism buys little in terms of economic growth. For every authoritarian country that has managed to grow rapidly, there are several that have floundered. For every Lee Kuan Yew of Singapore, there are many like Mobutu Sese Seko of the Congo.
Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects. They provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.
Authoritarian regimes, by contrast, ultimately produce economies that are as fragile as their political systems. Their economic potency, when it exists, rests on the strength of individual leaders, or on favorable but temporary circumstances. They cannot aspire to continued economic innovation or to global economic leadership.
At first sight, China seems to be an exception. Since the late 1970’s, following the end of Mao’s disastrous experiments, China has done extremely well, experiencing unparalleled rates of economic growth. Even though it has democratized some of its local decision-making, the Chinese Communist Party maintains a tight grip on national politics and the human-rights picture is marred by frequent abuses.
But China also remains a comparatively poor country. Its future economic progress depends in no small part on whether it manages to open its political system to competition, in much the same way that it has opened up its economy. Without this transformation, the lack of institutionalized mechanisms for voicing and organizing dissent will eventually produce conflicts that will overwhelm the capacity of the regime to suppress. Political stability and economic growth will both suffer.
Still, Russia and China are both large and powerful economies. Their example can sway leaders elsewhere to think that they can aspire to economic ascendancy while tightening the screws on domestic political opposition.
Consider Turkey, a rising economic power in the Middle East that seemed destined until recently to become the region’s sole Muslim democracy. During his first term in office, Prime Minister Recep Tayyip Erdogan relaxed some restrictions on Kurdish minorities and passed reforms that aligned the country’s legal regime with European norms.
But more recently Erdogan and his allies have launched a thinly disguised campaign to intimidate their opponents and cement government control over the media and public institutions. They have incarcerated hundreds of military officers, academics, and journalists on fabricated charges of fomenting terror and plotting coups. So widespread is wiretapping and harassment of Erdogan’s critics that some believe the country has turned into a “republic of fear.”
This turn towards authoritarianism bodes ill for the Turkish economy, despite its strong fundamentals. It will have corrosive effects on the quality of policymaking, as well as undermine Turkey’s claim to global economic standing.
For the true up-and-coming economic superpowers, we should turn instead to countries like Brazil, India, and South Africa, which have already accomplished their democratic transitions and are unlikely to regress. None of these countries is without problems, of course. Brazil has yet to recover fully its economic dynamism and find a path to rapid growth. India’s democracy can be maddening in its resistance to economic change. And South Africa suffers from a shockingly high level of unemployment.
Yet these challenges are nothing compared to the momentous tasks of institutional transformation that await authoritarian countries. Don’t be surprised if Brazil leaves Turkey in the dust, South Africa eventually surpasses Russia, and India outdoes China.
Dani Rodrik, Professor of Political Economy at Harvard University’s John F. Kennedy School of Government, is the first recipient of the Social Science Research Council’s Albert O. Hirschman Prize. His latest book is One Economics, Many Recipes: Globalization, Institutions, and Economic Growth.
Copyright: Project Syndicate, 2010.
www.project-syndicate.org
You might also like to read more from Dani Rodrik or return to our home page.
|
|
AustinScaggs 03:26 10 Aug 10
Ivan: And you think China or Russia are better illustrations of democracy?
hat0891 05:20 10 Aug 10
The core argument of the author about the superiority of democracies vs. the authoritarian regimes is hardly contestable. But the author apparently has poor knowledge of Turkey, which I happen to observe regularly. This country is undergoing a dramatic transformation, which may or may not lead it to becoming a stronger democracy and economy. Its success largely depends on the success of the reforms initiated by the government, - most notably, the ongoing attempts to adopt a new "civilian" constitution and the "Kurdish opening", - as well as the pace of the EU accession process.
Leo 10:19 11 Aug 10
My reading of the author is he is contrasting regimes that are personalised vis-a-vis regimes that function based on a system(however controversial). He predicts that the former is not sustainable in the long run. Democracy doesn't necessarily mean that people will think! but who said illusions ain't fascinating?
Ivan 03:47 11 Aug 10
@AustinScaggs: China and Russia are not democracies. Irregardless of how China prefers to present itself to the world, it is a communist government reliant on a socialist experiment for economic growth. (It is obvious they realized some time ago that communism does not work for long-term sustainability.) Russia is not a democracy, but a socialist government. Much to the chagrin of the U.S., Putin managed to put Russia in a respectable economic footing. Russia still has many problems, some ingrained not necessarily in econmic strategy but more a problem of culture and perspective, but what Russia managed to do under Putin's reign was nothing short of remarkable.
In summary, I believe not one form of government is perfect--the are all prone to error, particularly with 'leaders' with misguided ideals and/or perceptions of the world. So long as world governments are managed by the flawed personal reactions of its leaders--mixing religion and government is a prime example of what NOT to do--governments will falter and fail time and again. Unfortunately, this is a pattern that may be in place until human civilization ceases to exist (past record being an undeniable indicator).
It would be shortsighted to not offer a solution in my dialogue. (But, then again, who is actually listening?)
Initially, maintaining TRUE separation of governance and religion would be a necessity--many people cannot perceive how much religion affects government and policy, be it directly or indirectly. (The argument that without religion and how it manifests itself in a positive manner in times of decisions by the justices of the Supreme Court is a reckless at best.) That would require that the government body operate using logic and not emotion, facts as opposed to scare tactics, and scientific calculations of probability and observation of patterns as opposed to personal delusions.
I don't propose a utopia. Nevertheless, from observation, my proposal requires a level of discipline humans may never achieve, irregardless of the passage of time.
Ivan 03:55 11 Aug 10
CORRECTION: '(The argument that without religion and how it manifests itself in a positive manner in times of decisions by the justices of the Supreme Court is a reckless at best.)', should have read:
(The argument that religion and how it manifests itself in a positive manner during times of decision, without which there is little chance for measurable progress in a society--for example, by justices of the Supreme Court in the U.S.--is a reckless assumption at best.)
MK 09:28 15 Aug 10
hat0891: the author is Turkish... and I have to say I share his views on how Tukey becomes less of a democracy.
hritcu 01:40 17 Aug 10
I find the article very weakly motivated. The concrete arguments given in the agrument would have basically supported any conclusion, like the absence of a strong correlation between political system and economical performance, or even the opposite of what the author claims. Also the article doesn't talk at all about the huge influence the financial sector has on U.S. politics, culminating with the recent unprecedentent interventions of the U.S. government in the financial markets, which many see as a total failure of both US-style democracy and US-style capitalism. Does Rodrik's book give stronger arguments to support his claims?
Richard44 04:18 18 Aug 10
The issue of what qualifies as a democracy seems like a long discussion for another day, but probably we can say that the US is more democratic than certain other places.
Second, there is an issue that I find myself considering when dealing with people who post comments, and it is the issue of perfection: In theis case the question/issue is, even if the US is not perfect, is it still good enough? Norway may be more democratic, but must the expression of democracy be perfect in order to qualify? How perfect does the US have to be? Does perfection exist in any event?
Really, what struck me in reading the analysis was that perhaps one could turn it around and propose that for certain size countries (so as to exclude Singapore, for example) the measure of government "democracy" is how well they are doing economically, and how well they deal with disasters, and stress, etc. I mean, who really cares about some abstract term of Democracy? Isn't it performance (benefit to the citizens in general from the economic production) that counts? I suppose we would want to exclude or somehow deal with places like Kuwait which are simply sucking assets out of the ground. So before trading liberty for wealth, it might be worth considering if the trade is ever successful.
DaiViet 12:04 21 Aug 10
In my view, political systems are a necessary condition for economic prosperity, but they are not sufficient. I would suggest that any setup that actively encourage the free exchange of ideas among its citizens will become a hotbed of economic activity and growth.
cheeheongquah 07:15 22 Aug 10
But what about Germany which has been quite authoritarian in the economy in relation to US?
And, US has been increasingly authoritative as well!
Chee-Heong Quah
yakman 12:27 07 Sep 10
In this subject Mr. rodrik is not objective anymore. His father in law a retired general is allaged to military coup in turkey.
now his is trying to convince us democratically selected goverment is more dictator than a military coup leader and It is turkey where military coup has been done 5 times since the 1960. And they hanged one elected primeminister and two minister and the other peoples.
Mr. you can not be objective in this case.
partha 04:33 08 Sep 10
That’s right, democracy and economic growth are complementary each other. In fact the authoritarian growth just warrants the unbridled speed with an inherent brewing up entropy of underlying discontent and deprivation with a divided and discriminating distribution of wealth (mostly crony capitalism just feeding the upper layers of the society the best and hardly trickles to the bottom of the society for ill reformed institutions). So in any case India in its most vibrant democracy (with all woes and worries) certainly triumphs over China in the long run where the speed of growth is neither sustainable nor equitable.
In fact innovation , creativity the life blood of any economy for long term race can easily relate to democracy where the pressure valve of discontent always help in routinely cleansing the bugs from the socio political system. But totalitarian govt is less compatible to this cleansing process or debugging process.And when they crack down on the society , its basically just creates a big fire wall to restrict its liberty as well as smooth functioning of the people both.
jayakarthik 11:20 12 Sep 10
democracy has it own perils slow decision making a byproduct of seeking consensus among the stake holder ie people but it is far superior way of governance than any form of authoritarianism.singapore is an exception but i dont think any other country has come close to that one may be the size was not similar.china is an economic powerhouse no doubt but it is so opaque that we dont know what is happening there.whether people are prospering or not whether they have a stake in the economic growth.we dont know whether growth takes into account the environmental concerns,freedom of expression etc.to quote a recent example in indian state of orissa which is rich in bauxite main ingredient to make aluminium vedanta resources which is listed in london stock exchange was denied permission to mine becoz of environmental concerns and tribal resistance so these are the virtues of democracy where people have say in their future.i doubt whether these are taken into account when china or any country which has no democracy embarks on a path of economic growth.what world needs is inclusive growth not a growth where very few people prosper and majority are left out this can happen only in a vibrant democracy.i still vividly remember lee kuan yew criticising indian democracy for its slow decision making process yep india makes slow decision but if it makes decision it results in empowering its people economically.let us hope that democracy takes deep roots world wide.
veli86 10:23 10 Oct 10
In my opinion, the answer of the question "Which is better for economic growth – a strong guiding hand or plurality?" depends on the developmental stage of the country. If the country is far from the advanced contries in terms of productive capacity, the target is obvious "adoption of the existing best technologies". Adoption doesn't need new ideas. It requires determinism, focus and discipline. And these needs can be easily met in an authoritian regime. In fact, a poor functioning democratic regime may undermine the effectiveness of technology adoption through rent-seeking etc. However, as the countries converge to the advanced countries, then the gains from tech. adoption would diminish. In this point, creative thinking and new ideas are needed. An authoritian regime is not able to provide appropriate environment for free thinking and new ideas that would hinder further improvement in economic prosperity.
Ivan 10:09 10 Aug 10
Perhaps your article should have been titled: The Myth Of Growth In Dictatorships vs Plutocracies.
It is convenient and idealistic to think of the U.S. as a democracy, but nothing could be further from the truth. The U.S. may be many things, but in terms of government, it is NOT a democracy. A plutocracy? An aristocracy? A meritocracy? A tyranny in-the-making?
Many are quick to point out that freedoms such as the right to vote and the right to practice a particular religion is proof of a democratic government. Perhaps they refer to the 'freedom' to vote within the systematically limited and protected system of the Electoral College? Or the 'freedom' to practice a religion so long as it does not offend someone in the Executive Branch or other arms of the government? Or perhaps they refer to the right to mount a public protest, so long as the Patriot Act doesn't deem it a threat to public safety? Perhaps those who prefer to refer to the U.S. as a democracy have such short memories that they have forgotten that the bailouts for the insurance industry, banks, Fannie Mae and Freddie Mac, and the auto industry was done WITHOUT a vote from the citizenry, most of whom opposed such measures, burdening future generations for an undeterminable period of time. (The argument that issues which could not be understood by the general public is a poor excuse at best, a blunt example of how the U.S. is not a democracy at its best [as were the passage of the Patriot Act, and other previous examples].)
'Democracy' in the U.S. is an illusion sustained to appease the unaware masses, and thus control them better via the illusion of choice. Whether one wishes to believe the U.S. is a democracy--as one would believe in any particular religion--is relative to whether they prefer an illusion for the sake of personal comfort or 'maintaining the peace', as opposed to reality. Sadly, propagating the illusion that the U.S. is a democracy severely cripples or obliterates the possibility of true change to come forth from future generations. More disturbing is that many people prefer it that way--a system, no matter how flawed, often defends itself to the end.