DEMOCRACY AND
DEVELOPMENT
DR. RACHEL GISSELQUIST
RESEARCH FELLOW, UNU-WIDER
SO WHAT?
•
“Underlying the litany of Africa’s development problems is a crisis
of governance” (World Bank, 1989)
•
“Good governance is perhaps the single most important factor in
eradicating poverty and promoting development” (Kofi Annan, 1998)
•
Development policy:
•
•
•
Busan High Level Forum (2011): “promoting human rights,
democracy, and good governance are an integral part of our
development efforts”
Millennium Challenge Corporation: “ruling justly, investing in
people, economic freedom”
Finnish development policy: “rule of law, democracy , human
rights, and sustainable development”
OUTLINE AND AIMS
Introduce key concepts
Consider:
• Does economic development lead to democracy?
• Does regime type make a difference for key
development outcomes, such as growth,
redistribution, and social welfare?
• How else might institutions matter to development?
I. KEY CONCEPTS
INSTITUTIONS
“Institutions are the rules of the game in a society or, more
formally, are the humanly devised constraints that shape human
interaction” (Douglass North, Institutions, Institutional Change, and
Economic Performance (1990), p. 3).
Formal vs. informal institutions
Why do they matter?
•
Constraints on behavior
•
Incentives
•
Path dependence and the survival of inefficient institutions:
“the consequence of small events and chance circumstances can
determine solutions, that once they prevail lead to a particular
path” (North, p. 94)
REGIME
Government vs. Regime type vs. State
Regime: form or system of rule by which a state or community is
governed
• Characterized by procedural rules that are accepted
• Three key aspects define a regime
1.
2.
3.
Number & type of actors who gain access to principle
governmental positions
Method of access
Rules that are followed in making publicly-binding decisions
Democracies and autocracies are the two main regime types
DEMOCRACY
Minimal (or procedural or “Schumpeterian”) definition:
Crucial feature is elections.
• “the democratic method is that institutional arrangement for
arriving at political decisions in which individuals acquire the
power to decide by means of a competitive struggle for the
people’s vote”
-Joseph Schumpeter, Capitalism, Socialism, and
Democracy (1942)
Electoral Democracy
ELECTORAL DEMOCRACIES
SOURCE: FREEDOM HOUSE, 2016
REGIME SUB-TYPES, TAKE 2
Source: Howard and Roessler (2006)
Democracy vs. Authoritarianism
Electoral (minimal) democracy
DEMOCRACY (2015)
SOURCE: ECONOMIST INTELLIGENCE UNIT
GOVERNANCE &
STATE FRAGILITY
Governance: the exercise and organization of political power to
manage a country’s affairs.
Good governance: includes efficient and transparent public sectors,
stable and effective institutions, and support for citizen engagement
and participation in political processes.
State fragility: “States are fragile when state structures lack political
will and/or capacity to provide the basic functions needed for poverty
reduction, development and to safeguard the security and human
rights of their populations”
-Principles for Good International Engagement in Fragile
States & Situations, 2007
I.e., very poor quality governance is one of its defining characteristics
FRAGILE STATES & ECONOMIES
(SOURCE: OECD, 2015)
RELATIONSHIPS BETWEEN
“DEVELOPMENT” AND GOVERNMENT,
REGIME, AND STATE -- EXAMPLES
Poor growth
 Government voted out
Government is pro-poor
Economic crisis 
Regime change
Regime type (democracy)
Industrialization &
modernization 
 Inclusive growth
 Development
Development of state institutions
Developmental state
 Rapid growth
II. DEVELOPMENT  DEMOCRACY?
8
Iceland
7
Luxembourg
US
Japan
Denmark
FH Rating (2011)
6
5
4
Singapore
Kuwait
3
Qatar
2
UAE
1
Eritrea
0
0
2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 22000 24000 26000 28000 30000 32000 34000 36000 38000 40000 42000 44000 46000 48000 50000 52000 54000 56000
Per capita income (2010)
MODERNIZATION THEORY
(LIPSET, LERNER)
• "The more well-to-do a nation, the greater the chances it
will sustain democracy” (Lipset)
• As countries develop, they become more urbanized,
industrialized, literate, have greater access to media and
higher incomes
• Mechanisms for enhancing democracy:
• Provides resources for ordinary people to launch and
sustain collective action for common demands, mounting
effective pressure on state authorities to respond
• Industrialization led to working class struggles for social
inclusion, resulting in universal suffrage
3 CRITIQUES
1. Many cases don’t fit:
• In terms of outcomes:
Some poor countries are democracies, some rich
countries are not.
• In terms of mechanisms:
E.g., working classes often sided with fascist or Communist
parties that aborted civic freedoms.
2. Development may lead to conflict, not democracy:
Huntington’s inverted U hypothesis about income and political stability:
Rapid social progress results in frustrated aspirations and demands for
social inclusion that are not commensurate with existing political
institutions
Samuel Huntington, Political Order and Changing Societies (1968).
3. Development may “sustain” a regime but not cause
democratic transition.
Adam Przeworski and Fernando Limongi, “Modernization:
Theories and Facts,” World Politics (1997):
• “[M]odernization need not generate democracy but
democracies survive in countries that are modern.”
• “Above $6,055, democracies could expect to last forever”
RESURGENCE OF SUPPORT
FOR MODERNIZATION
Some mechanisms proposed:
• Development reduces inequality (Acemoglu & Robinson)
Median voter becomes wealthier and distributive demands placed
on elites are less extreme; suppressing the masses becomes
more costly than conceding to democracy
• Development provides more options for elites (Boix)
Mobile capital allows them to move it out of reach of taxation;
Immobile capital (e.g. oil resources, plantations) are more easily
taxed
• Human empowerment approach (Inglehart & Welzel)
Development increases peoples’ capabilities and willingness to
struggle for democratic freedoms
• III. DEMOCRACY & GOOD
GOVERNANCE  DEVELOPMENT ?
A “DEVELOPMENT DIVIDEND”?
(KAUFMANN, KRAAY, AND ZOIDO-LOBATON 2000)
SOME MECHANISMS
Democracies provide checks on government power &
elections may force governments to be more responsive to
citizen demands.
Authoritarian governments may more likely
 Extract rents, instead of providing public goods and
investing in human capital
 Focus on the short term and extracting rents to the
maximum extent possible while in power
 Spend on a repressive apparatus rather than productive
investments
 Foster political instability and conflict
…OR, DOES DEMOCRACY
HINDER DEVELOPMENT?
A strong state with developmental objectives (developmental
state) may be necessary to institute the extensive planning and
regulation needed to promote growth in late industrializing
countries
E.g., “East Asian Miracle” countries (Hong Kong,
Singapore, South Korea, Taiwan)
In democracies, interest group demands may increase pressure
for redistribution and undermine overall economic efficiency
(Mancur Olson)
Authoritarianism may help to isolate technocrats from
such popular pressures (“Embedded autonomy”)
DEMOCRACIES & SOCIAL WELFARE
Elections may generally make governments more responsive to
citizens, BUT empirical record is not so clear.
VARIATIONS ACROSS
DEMOCRACIES
Electoral systems
E.g., proportional representation systems might provide more
redistribution than majoritarian ones
Parties and party systems
E.g., social democratic parties may engage in more welfare
spending due to historical alliance with labor.
Federalism
E.g., lines of accountability for service delivery, tax systems, and
welfare might be murkier
Sub-national variation within democracies…
Other factors?
IV. HOW ELSE MIGHT INSTITUTIONS
MATTER?
STATE CAPACITY IS KEY TO
DEVELOPMENT
Dimensions of state capacity (Hanson & Sigmon 2013)
- Extractive: to raise revenue
- Coercive: to protect border, maintain order, enforce policy
- Administrative: to develop policy, to deliver public goods
“The most important political distinction among countries
concerns not their form of government but their degree of
government” (Huntington, 1968)
WHAT DO CAPABLE STATE
INSTITUTIONS LOOK LIKE?
Developed countries suggest some models.
But, copying institutions from developed countries won’t
necessarily work.
• Context matters. The problems of “isomorphic mimicry”
and “capability traps” (Pritchett & Andrews 2013)
So how then do we build state capability for development?
• Pritchett, Woolcock, and Andrews’ solution: “Problem
driven iterative adaptation” (PDIA)
OTHER INSTITUTIONS…
• Basic rule of law
• Secure property rights
• Legal and regulatory framework that supports
entrepreneurship and investment
• Conducive culture? Weber’s “Protestant ethic and the
spirit of capitalism”
CONCLUDING MESSAGES
Contrary to policy rhetoric, it is not clear that “good
governance” promotes development and poverty alleviation.
(Of course, democracy and good governance may be worth
promoting as “goods” in themselves.)
The research literature has highlighted the opposite
relationship: Development appears to be associated with a
higher likelihood of democracy, although exactly why is much
debated.
Democracies appear to be more likely to support inclusive
growth (redistribution, social welfare) – but not always.
State capacity may be more important than democracy/regime
type.