Disentangling the Complex Relationship between Democracy and Development: Part II - Economic Research Forum (ERF)

Disentangling the Complex Relationship between Democracy and Development: Part II

This blog post is written by Ahmed Goher (Economic Research Forum)

In an attempt to understand the causal relationship between democracy and development, Adam Przeworski, Carroll and Milton Professor of Politics and (by courtesy) Economics at New York University, took over from Ibrahim Elbadawi and presented ‘ Democracy, Elections, and Development’ in the first session of ERF’s 21st Annual ConferenceHB__8561 that kicked off March 20 in Gammarth, Tunisia.

Przeworski began by expressing his optimism towards the future of the region, emphasizing that he was not dissuaded by the terrorist incident that took place only two days prior to the conference, claiming the lives of over 20 individuals at Tunis’ Bardo Museum.

Przeworski then proceeded to ambitiously summarize two enormous bodies of economic and political literature to make sense of the complex relationship between development and democracy. According to Przeworski, the complexity of the matter means that for the large part very few things are certain, largely since econometrics fails to reject the many brilliant, albeit sometimes divergent, postulated theories. The one thing Przeworski claims we can be certain of is that democracies do not grow slower than non-democracies; determining whether democracies grow faster, however, “is next to impossible to tell.” For one thing, notions of democracy are diverse, different variables (e.g., GDP or levels of growth) are often taken into account, and the way in which the data itself is organized also differs largely among economists. The result: divergent results that only make this topic more complex and hard to understand.

Moreover, Przeworski outlines three ways of thinking about democracy and three operlizations of such thought, which poses further problems for econometrics. While some will focus on competitive elections as a measure of democracy, others focus on constraints on the chief executive and others on so-called measures of “freedom,” of which Przeworski is highly skeptical of.

In the end, Przeworski concludes that while not a single study since 1980 shows that non-democracies grow faster than democracies, we cannot assert that democracies grow faster than non-democracies. “There is no final word on the matter,” he says.

When it comes to the relationship between development and democracy, the matter is also very similar. However, one thing Przeworski believes is quite certain is that once established in wealthy, high-income societies, democracies are certain to survive regardless of any wars, riots and financial crises they might experience.

Still, on the matter of whether economic development generates democracy, results are largely divergent and inconclusive, giving rise to “endless controversy.”

On the issue of elections, Przeworski believes that they have a survival effect on regimes, as elections make all kinds of regimes last longer than they otherwise would have. “Even new dictators hold elections to show people that they have some independent source of support,” Przeworski explains.

Moreover, alternation in the office of chief executive plays a crucial role in consolidating democracy, since once one alternation of power occurs, subsequent alternations more likely and regime breakdown becomes highly unlikely, Przeworski argues. Such alternation is nevertheless exceedingly difficult. In fact, as of 2009, 68 countries in the world, including China and Russia, never experienced alternation in the office of the chief executive. This is partially due to the unclear fate autocracies face if they lose elections.

Przeworski also notes that per econometric regressions, growth does not matter for breakdowns, but unemployment may matter. For instance, Polish citizens were willing to suffer lower wages and inflation during transition but not willing to suffer unemployment.

In the end, Przeworski echoes Elbadawi’s findings that democracies offer more economic stability than autocratic regimes. While they may grow at a slower rate, they do not face the sort of acute “ups and downs” that are usually seen in autocracies.