Economic Development and Authoritarian Rule. Johnson describes the economic miracle that took place in three East Asian nations, Taiwan,

Transcription

1 1 Economic Development and Authoritarian Rule Throughout his paper, Political Institutions and Economic Performance, Chalmers Johnson describes the economic miracle that took place in three East Asian nations, Taiwan, Japan and South Korea. From this article, one might infer that authoritarianism is necessary in order to promote economic growth and development. However, it is fallacious to generalize the case of these three countries to the rest of the world, and this paper will argue that for many developing nations, authoritarianism is not conducive to economic development. This paper will begin by describing the advantages which democratic countries possess that allow them to be better able to develop economically than their authoritarian counterparts. It will then discuss the unique circumstances that allowed East Asian autocracies to pursue their successful policies, and how this cannot be replicated by other dictatorships throughout the world. The paper will end with a discussion of how despite the challenges to economic development such as political instability and higher labor costs that democratic countries might face, dictatorships do little to overcome these obstacles. In the context of this paper, the term democracy shall be used to refer to a system of government which is characterized by popular participation, genuine competition for executive office, and institutional checks on power (Siegle 59). Conversely, the terms authoritarian and dictatorship shall be used to refer to a political system in which there is concentration of power in a leader or an elite not constitutionally responsible to the people (Webster 2009). In their paper, Why Democracies Excel, authors Siegle, Weinstein and Halperin take the firm position that democracies are more conducive to economic growth than autocracies, and claim that democracies present an enormously powerful set of institutions that propel development (184). Research has shown that from 1960 to the present, if East Asia is excluded from the calculation, the median per capita growth rates of poor democracies have been 50

2 2 percent higher than those of autocracies [and] since 1960 only 16 autocratic countries have had per capita incomes above $2000 (Siegle et. al 59). In addition, democracies consistently outperform authoritarian countries on measures of well-being such as life expectancy, literacy rates, etc. Finally, democracies are less likely to experience economic disasters than autocracies. According to Siegle et. al, since 1960, poor autocracies have experienced severe economic contractions (falls of 10 percent or more in annual GDP) twice as often as poor democracies (60). In spurring economic growth, one of the main advantages that democracies possess over dictatorships is that in such a system, governments are obliged to attempt to ameliorate the economic and overall wellbeing of average citizens; otherwise, as Siegle et. al describe, they find themselves out of office (63). Conversely, in an authoritarian regime the ruling elite generally has little incentive to try to aid the segment of the population outside the inner circle of party officials. Political scientist Robert Wade also supports this claim and describes that many authoritarian governments do not give high priority to economic development, being preoccupied with the task of excluding most of the population from power (375). Democracies also contain a robust system of checks and balances that prevents any one group from monopolizing power. This system of checks and balances has proven extremely efficacious at reducing the number of economic catastrophes in developing countries, and according to Siegle et.al, although democracy is a more cumbersome process, it reduces the scope for rash, narrowly conceived, or radical policies that can have disastrous economic consequences (64). As well, according to modernization theorists, democracies are more likely to achieve better economic performance because their populations are better educated. For example, in his paper, The Passing of Traditional Society, Daniel Lerner claims that the primitive social

3 3 function of literacy, as of all skills, is to reduce waste of human effort. Its higher function is to train the skilled labor force with which cities develop the industrial complex that produces commodities for cash customers, including newspapers and radios and movies for media consumers (61). Statistically, democracies on average have more educated populations than authoritarian nations, and a child born in a democratic country is 40% more likely to receive a secondary school education than a child born in a dictatorial regime. (Siegle et. al 60). Possibly the single most important advantage that democracies enjoy over authoritarian regimes in promoting economic development is improved state effectiveness. Although state effectiveness is a broad concept, we can define it as the state s capacity to perform its core functions for the majority of its people (Shaoguang 2007). State effectiveness consists of a plurality of factors, including the strength of the legal system and the effectiveness of regulation (Levitsky Sept. 17). According to Levitsky, the state and particularly the rule of law are the essential foundations of any economy [and] without underlying state institutions, you do not have a free-market economy, you have a jungle (Levitsky Sept. 17). Democracies generally enjoy greater state effectiveness for two main reasons which Siegel describes in his paper greater openness and accountability. Together, these two factors help to reduce corruption, which is one of the greatest impediments to an effective state. Rampant corruption leads to what political scientist Kiren Chaudry refers to as administrative weakness since it undermines the ability of state organs to perform basic functions such as enforcing laws, regulating industries and collecting taxes. As he argues, the result is that hobbled by corrupt bureaucrats markets are prevented from performing their effortless miracles in efficient allocation (251). It is clear that the culture of openness and accountability present in democratic countries reduces the level of corruption, especially as a result of the free press which is able to communicate cases of corruption to the population. For example, in Kenya

4 4 between 2002 and 2003, one year after a democratic government was elected, the average number of bribes paid by Kenyans per year declined from 29 to only 9. (Siegle et.al 65). Thus, democracy is more effective than dictatorship at reducing the level of corruption and as Siegle concludes, this provides the foundation for the application of legal norms in the conduct of government and business, and a rule-based regulation of the economy (66). Critics of democracy as a necessary component of economic growth might often make reference to the East Asian model during the second half of the 20 th century, and describe how authoritarian regimes such as these are more effective at promoting development. Throughout their paper, authors Wade and Johnson describe the economic boom that South Korea and Taiwan (which at the time possessed authoritarian elements) enjoyed after the Second World War. Statistically, from 1950 to 1980, the per capita incomes of South Korea and Taiwan respectively rose from $146 and $224 to $1553 and $2720 (Johnson 136). Economic growth for countries in this region was on average three times faster than for the United States, and these countries fared significantly better than other developing nations such as Argentina and Brazil. Nevertheless, although an authoritarian political system was critical to the state-led development that occurred in East Asia, it is not possible to generalize this model to the rest of the world. While on a superficial level it may seem logical to conclude that states throughout the world can replicate the strategy of countries like Taiwan and South Korea, a more detailed analysis demonstrates that East Asian dictatorships enjoyed several unique circumstances which are not present in many developing nations throughout the modern world. The first main circumstance unique to East Asian dictatorships which benefited them was the context of the Cold War. In this period, two significant conflicts took place: the Korean War and the Vietnam War. In its fight against communism, the United States actively participated in both of these conflicts and perceived countries such as Taiwan and South Korea to be important

5 5 allies. This led America to provide colossal sums of aid to these nations, and Taiwan for example received over six billion dollars. As well, the United States opened its market to East Asian exports, and overall played an active role in trying to help their economies succeed in order to prove that capitalist economies perform better than communist ones. Finally, the 1950s and 1960s were a period of general global economic expansion, and this was a propitious time for countries with export strategies. (Levitsky Sept. 24). Today authoritarian rulers may not encounter such favorable circumstances and may not be able to successfully implement similar economic policies. For example, a dictatorship in Bolivia or Mali would certainly not receive the generous support that the authoritarian regimes in East Asia obtained from the United States, and this is especially true in light of the emphasis on human rights that began under the Carter administration. While in the past the United States may have supported and provided aid to dictatorial regimes which were perceived as anti-communist, today human rights abuses are not only grounds for the withholding of aid, but could also result in significant economic sanctions as can be seen in the case of South Africa. As Levitsky describes, especially in the 1990s, the Western powers of the United States and Europe promoted democracy either through direct military intervention (such as the US involvement in Panama) or through conditionality of aid. According to Levitsky, These days if you lead a coup or steal an election you risk losing access to critical markets or aid (Levitsky Oct. 1) as is the case with present-day Honduras, where the US has cut benefits to the country in light of the recent undemocratic coup. The second circumstance which allowed East Asian authoritarian regimes to implement their economic policies was the fact that these countries were what Wade and Johnson described as developmental states. One of the key components of developmental states is that they must be autonomous, meaning that an effective bureaucracy can pursue its goals independently of

6 6 powerful groups in society (Levitsky Sept. 17) such as landowners, unions, etc. In order to achieve autonomy, developmental states must be extremely cohesive since leading bureaucrats must all share a similar ideology and set of goals. One of the key factors which encouraged cohesion among the East Asian states was military threats. In the case of Taiwan, there was a significant threat from China, and what united the leading bureaucrats was an anti-communist ideology. South Korea was also under a similar threat from its communist neighbor to the north. In the absence of military threats, it is extremely difficult for states to achieve cohesiveness, and thus autonomy. Unlike the case in East Asian countries where the ruling bureaucracy made decisions independently from major interest groups, throughout most authoritarian regimes, interest groups command significant leverage over policy. According to Siegle, authoritarian governments often result in an economic monopoly [where] only businesses and individuals closely tied to the ruling party are able to acquire the licenses, permits, credit, and other resources needed to succeed. Such preferential treatment diminishes competition and innovation and therefore reduces economic efficiency (64). Today many authoritarian regimes cannot replicate the success of East Asia since their countries do not possess the elements of a developmental state. For example, it is unlikely that a dictatorship in a country such as Bolivia could develop a successful economic policy because the leading bureaucracy would lack autonomy. In the absence of a significant military threat as was the case of Taiwan, the top bureaucrats in a country like Bolivia would lack the cohesion and unified ideology that was present in East Asian nations. Supporters of the theory that economic development requires an authoritarian government might also refer to the case of Chile under the Pinochet dictatorship. They might refer to that fact that during the 1980s, while other Latin American nations were facing economic collapse, the Chilean economy grew at approximately 5% per year. (Levitsky Sept. 17) Although

7 7 the Chilean dictatorship did indeed yield these robust economic results, during this time period Chile experienced two significant economic contractions. In the mid-1970s, the GDP of Chile declined by 12 percent and in the mid-1980s it declined a further 17 percent. (Siegle et. al 61). In addition, while Chile might have benefited in a macroeconomic perspective from the policies of Pinochet, it is debatable the extent to which they benefited average citizens, since economic inequality dramatically increased. Even if one were to consider Chile a success story along with the cases of the East Asian countries, the empirical basis on which to assert that authoritarianism leads to economic development is scant. On a global scale, for every successful authoritarian regime there was a litany of nations in which dictatorships failed to provide any sort of economic improvements whatsoever; these cases include countries such as Argentina, Paraguay, Congo, Haiti, Afghanistan, Iran, Romania, etc. According to Levitsky, The vast majority of the world s dictatorships have not performed well [and] Taiwan, Singapore, and Pinochet s Chile were exceptions (Levitsky Sept. 17). The notion that authoritarian regimes correct the problems that democracies face in development is also largely unfounded. One common argument is that democratic countries lack the stability of dictatorships due to the fact that government policies might change from administration to administration. However, this argument does not take into consideration the idea that democracies enhance political stability by establishing clear mechanisms for succession (Siegle et. al 65). Oftentimes, authoritarian regimes do not have clearly-defined mechanisms through which power is transferred, and frequently the result is an intense and possibly violent power struggle that could potentially destabilize the nation. Democracies run a significantly lower risk of plunging into civil war and armed conflict over an event such as the

8 8 death of a leader, and even though policies may change slightly from administration to administration, development momentum is thus sustained (65). As well, many might argue that authoritarian regimes keep labor costs lower than democratic governments by suppressing unions and labor movements. However, this argument fails to take into consideration the increased international emphasis on human rights, especially after the Carter administration. While in the past authoritarian countries may have been able to get away with suppressing labor movements and benefitting from the lower labor costs, today such countries are likely to face numerous economic consequences by the Western powers, and as described earlier, are likely to lose access to critical markets or aid (Levitsky.Oct. 1). With very few exceptions, it is unlikely that Western nations would openly trade with or provide support to a dictatorial regime, and for example, the United States and Europe imposed sanctions on the nation of Myanmar for its human rights violations and powerful suppression of labor movements. Several other examples include sanctions and the withholding of aid to countries such as Belarus, Côte D Ivoire, Cuba, Iran, etc. Although critics might cite the case of China and how the US has not imposed any trade restrictions against it, China is in many ways exceptional since the American and Chinese economies are so heavily interdependent. However, most regimes that violate human rights and labor movements would face significantly more serious economic consequences and countries such as Bolivia and Mali could expect significant penalties from Western nations. In conclusion, democracies are significantly more effective at promoting democracy than authoritarian nations. In addition to the significant empirical proof which is provided in the article by Siegle et. al, democracies enjoy certain advantages which are conducive to improved economic efficiency. Democratic governments have to respond to the preferences of citizens, and usually employ a robust system of checks and balances. Populations in democratic countries are

9 9 also more likely than their authoritarian counterparts to be better educated, and democracies benefit from lower rates of corruption which in turn lead to enhanced state effectiveness. While developing democracies may face certain obstacles such as the fact that elections could potentially cause government policies to frequently change, authoritarian regimes with their weak succession mechanisms are in fact even more unstable in nature and the death of a leader may make the nation highly vulnerable to violence. As well, although many might attribute the success of the East Asian model to authoritarianism, as has been discussed in this paper, this model cannot be generalized to the rest of the developing world since East Asian countries benefited from unique circumstances. Overall, democracies are preferable not only on humanitarian, but also on economic grounds and provide a more viable path toward economic growth than their authoritarian counterparts.

10 10 Works Cited Alexander Gerschenkron, Economic Backwardness in Historical Perspective (Harvard University Press, 1962) Chalmers Johnson, Political Institutions and Economic Performance: The Government-Business Relationship in Japan, South Korea, and Taiwan. In Deyo, ed, The Political Economy of the New Asian Industrialism Daniel Lerner, The Passing of Traditional Society: Modernizing the Middle East (Free Press, 1958). Steven Levitsky. From State to Market-led Development in the 1980s and 1990s. Government 20. Harvard University. Cambridge, 17 September Steven Levitsky. Theories of Democratization. Government 20. Harvard University. Cambridge, 24 September Steven Levitsky. The Third Wave of Democratization. Government 20. Harvard University. Cambridge, 1 October, Wang Shaoguang. Democracy and State Effectiveness October 4, < Joseph T. Siegle, Michael M. Weinstein, and Morton H. Halperin, Why Democracies Excel. Foreign Affairs 57 (2004): Robert Wade, Governing the Market, (Princeton University Press, 1990)