DEMOCRACY, DEVELOPMENT & INSTITUTIONS DR. OMAR SHAHABUDIN MCDOOM LONDON SCHOOL OF ECONOMICS & UNU-WIDER

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1 DEMOCRACY, DEVELOPMENT & INSTITUTIONS DR. OMAR SHAHABUDIN MCDOOM LONDON SCHOOL OF ECONOMICS & UNU-WIDER

2 WHY AM I HERE? What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government

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4 CORE QUESTIONS Does economic development enable or constrain democracy? Does democracy enable or constrain economic development? What is the role of institutions?

5 WHAT IS DEMOCRACY? Minimalist: Electoral democracy 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 Schumpter, Capitalism, Socialism, and Democracy (1942) Substantive: Liberal Democracy Characterized by elections, civil liberties and political freedoms, multipartyism, rule of law, separation of powers.

6 REGIME TYPES Source: Howard and Roessler (2006), p. Democracy vs. Authoritarianism Electoral (minimal) democracy

7 VARIETIES OF DEMOCRACY

8 MEASUREMENT: POLITY IV

9 FREEDOM HOUSE

10 EIU DEMOCRACY INDEX

11 WHAT IS DEMOCRATIZATION? Transition from authoritarianism (the first free and fair elections) Democratic consolidation: The two turnovers test. Democracy becomes the only game in town. The deepening democracy: electoral democracy liberal democracy

12 WHAT IS DEVELOPMENT? Narrow vs wide conceptions Economic versus human development Development pathways Market-led e.g. capitalism State-led e.g. communism, developmental states Externally facilitated e.g.aid donor-driven

13 WHAT IS AN INSTITUTION? 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).

14 II. DEVELOPMENT DEMOCRACY?

15 FH Rating (2011) Denmark Iceland US Japan Luxembourg Kuwait Singapore 2 Qatar 1 Eritrea UAE Per capita income (2010)

16 THE MODERNIZATION HYPOTHESIS "The more well-to-do a nation, the greater the chances it will sustain democracy Seymour Martin Lipset, some social requisites of democracy, 1959 (see also Political Man, 1960) Modernization as a historical, sequenced, gradualist process of accumulated social change for the better: industrialization -> urbanization -> education -> civil society inc. media -> political participation

17 CAUSAL LOGICS Education: Education presumably broadens men's outlooks, enables them to understand the need for norms of tolerance, restrains them from adhering to extremist and monistic doctrines, and increases their capacity to make rational electoral choices. Higher income: - Class struggles over distribution of wealth less extreme in more affluent countries - The wealth level will also affect the extent to which given countries can develop "universalistic" norms among its civil servants and politicians (selection based on competence; performance without favoritism). Mass society: the presence of intermediary organizations and institutions which can act as sources of countervailing power, and recruiters of participants in the political process

18 CRITIQUES - I DEPENDENCY THEORY - Modernization is not always benign - Not all countries will experience same stages of growth - Capitalist development in core countries fosters underdevelopment in periphery countries (Singer & Prebisch thesis 1949)

19 CRITIQUES - II DEVELOPMENT MAY CAUSE CONFLICT Inverted U relationship between income and political stability: rapid income increases result in frustrated aspirations for political particiption and Samuel Huntington, Political Order and Changing Societies (1968).

20 CRITIQUES - III MISTAKEN INTERPRETATION OF DATA [M]odernization need not generate democracy but democracies survive in countries that are modern.adam Przeworski and Fernando Limongi, 1997 Above $6,055, democracies could expect to last forever

21 CAPITALISM & DEMOCRACY - COMPATIBILITY - Historical view that capitalism weakened traditional powerbrokers and empowered popular actors - Contemporary view on success of liberal democracy: rule of law; property rights (Fukuyama) - INCOMPATIBILITY - Merging of economic and political power - Produces inequality (Pikkety) - DEMOCRACY TAMED CAPITALISM - Workers rights (trade unions) - Welfare state - CAPITALISM TAMED DEMOCRACY - Constrained extreme redistributive demands

22 SOCIAL STRUCTURE Class coalitions mediate effect of development & determine ultimate regime type Barrington Moore, The Social Origins of Dictatorship & Democracy, 1966 Weak middle class + strong aristocracy = Fascism Weak middle class + weak aristocracy + dominating peasantry = Communism Strong middle class + weak aristocracy = Liberal democracy

23 ALTERNATIVE EXPLANATIONS OF DEMOCRATIZATION? Transition theories Waves Culture International factors: linkages and leverage

24 II. DEMOCRACY DEVELOPMENT?

25 DEMOCRACY ENABLES DEVELOPMENT Democratic governments may more likely: Provide checks on abuse of power Be more responsive to citizen demands. Authoritarian governments may more likely: Extract rents, instead of providing public goods and investing in human capital Spend on a repressive apparatus rather than productive investments

26 DEMOCRACY CONSTRAINS DEVELOPMENT 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 ) 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)

27 IV. WHAT ROLE DO INSTITUTIONS PLAY?

28 The most important political distinction among countries concerns not their form of government but their degree of government (Huntington, 1968). Underlying the litany of Africa s development problems is a crisis of governance (World Bank, 1989)

29 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

30 A DEVELOPMENT DIVIDEND? (KAUFMANN, KRAAY, AND ZOIDO-LOBATON 2000)

31 EFFECTIVENESS VS LEGITIMACY? - Are EFFECTIVE institutions enough? - Focus on state and institutional capacity - Should institutions also be LEGITIMATE? - Focus on societal acceptance of state and its institutions

32 QUESTIONS?