Tuesday, May 29, 2012

Democracy and Development

. Tuesday, May 29, 2012

Xavier Marquez has a very interesting series of posts on the relationship between democracy and economic growth since the end of WWII:

The basics of this relationship in the post-WWII era seem pretty well understood: basically, the richer the country, the more “democratic” it appears to be (in the sense I’ve discussed here and here, where democracy is conceived as a system of normatively regulated competition for control of states including the usual paraphernalia of elections, freedoms of speech and assembly, etc.), though the reasons for why this is the case remain disputed, and there are obvious and significant exceptions to this pattern. Conversely, the academic literature suggests that democratic regimes have a slight and indirect long-term development advantage, though the evidence for this claim is much more controversial, and there is no consensus on how this particular advantage operates, if it exists at all
There are links to literature describing all of these assertions in the original post. Marquez then runs down some simple data (and presents it very well) and notes:
The median income of democratic regimes has been higher than the median income of both hybrid and fully authoritarian regimes since at least the 1950s, and the gap has in general widened, not narrowed, even as the number of democratic countries has increased. (From this graph we cannot tell, however, whether the gap has widened because democratic countries have grown faster, or because non-democratic countries that grew fast turned into democracies; from the graphs below, we may infer that it was a mixture of both). The gap was highest during “peak authoritarianism” in the late 1970s and early 1980s, when most poor and newly independent countries were either hybrid regimes or dictatorships, but it stopped growing after the end of the cold war, when a number of relatively poor countries became democratic. ...
What about growth? Is any particular regime type consistently associated with economic growth? ...
The answer is "not really" or at least "not very much". Dictatorships and hybrid regimes have more variability -- some grow very quickly, at least for awhile, but also go bust more frequently -- but averaging across regime types shows very little difference in central tendency:
To the extent that we can ignore these confidence intervals and focus only on the trend performance, democracies have not always done better than these other regimes. In the early post-war era it seems that dictatorships did better (though most did about as well as democracies), but then decolonization came along and the growth performance of dictatorships basically cratered. Indeed, the 80s, when the so-called “third wave” of democratization began, was also (not coincidentally perhaps?) the time when the “growth gap” between democracies and hybrid and dictatorial regimes was at its widest. Ominously, the last decade has seen a reversal of this pattern, which explains much of the (not very well thought out) commentary about the rise of the “Chinese model.”
He has a very cool motion chart at his blog (that I can't find the embed code for) that maps out the null effect, so click through to watch it.


LFC said...

It's worth noting that growth, although related to development, is not synonymous with it. See e.g. here.

Democracy and Development

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