Democracy and Development

Allies or Adversaries?

R.C. Bhardwaj, K. Vijayakrishnan

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138624269
• eBook ISBN: 9780429865220
• Topic: Politics & International Relations
• Subtopic: Democracy
• Index: Politics & International Relations

Published in 1998. The question of whether democracy and development are allies or adversaries has long been debated and with the triumph of the democratic spirit worldwide the relationship between democracy and development has once again come to attract much attention globally. The collapse of the Soviet Union and the developments in Eastern Europe led to considerable rethinking in political circles on the efficacy of the economic policies pursued in those countries and the long-term viability of political systems prevalent there. Elsewhere, several newly industrialized countries are striving to consolidate their gains, though there are differing perceptions of whether their politics conform to the classical framework of democracy or not. In a remarkable turn-around, some other countries have initiated measures for economic reforms and structural adjustment, setting aside their earlier approaches towards economic management. In short, the last decades of this millennium have witnessed meaningful efforts worldwide on forging a new partnership between democracy and development. In February 1996, the Commonwealth Parliamentary Association jointly organized a conference entitled 'Parliamentary Democracy and Development': Allies or Adversaries?' with the Wilton Park, an international agency of the British Commonwealth and Foreign Office in Wilton House, West Sussex, United Kingdom. The week-long conference brought together parliamentarians, diplomats, administrators, political scientists, economists and specialists from all over the world. The participants shared their views and experiences on diverse aspects of the main theme. This publication presents an essentially parliamentary perspective on the correlation between democracy and development based on the discussions at the Wilton Park conference and in the light of current thinking on the subject matter.

1

The Contribution of Democracy to Economic Development

Introduction

The journey of democracy as a system of governance from the city states of Greece of the sixth and fifth century bc to the nation states of Eastern Europe at the end of the twentieth century has been a long and uneasy one. It has been proved to be a saga of the assertion of the will of the people, notwithstanding many trials and tribulations. Over the millennia, the nature and content of democracy underwent recurrent transformations in tune with changing times and varying climes. Yet the underlying core of democracy survived the cataclysmic changes all around. Over two thousand years later, one finds that the sovereign will of the people on which the edifice of parliamentary democracy rests has come to occupy centrestage of political systems across the globe.

The fact, however, remains that the world is still beset with myriad problems of various kinds. A few stark global statistics may help us to underscore the scale of the challenge which confronts us:

• Somewhere, still, every 2.4 seconds of every day, a small child dies from poverty.
• 1.3 billion people (a fifth of the world’s population) live in absolute poverty, a figure expected to rise to over 2 billion by the end of the decade.
• 1.75 billion people have no access to safe water and 3 billion are without basic sanitation.
• The number of refugees has risen from 2.5 million in 1970 to a desperate 18.5 million or more today, and there are between 24 and 30 million internally displaced people without even the theoretical protection of the United Nations High Commissioner for Refugees (UNHCR) because they have not crossed a frontier.¹

These figures speak for themselves, and make a mockery of the inflated claims of national development proffered by world leaders. It is true that several countries have been able to achieve rapid strides in socio-economic development, yet poverty still haunts most of the population, even as we are nearing the next millennium. It is in this context that the debate on the correlation between democracy and development gains added significance.

Democracy and Capitalism

At the outset, it may be helpful to define the concepts of democracy and development. There is very often a tendency to confuse democracy with capitalism, and in many cases capitalism is equated with economic development. Democracy is widely accepted to be a method of political organization for the purpose of arriving at decisions, and capitalism has been identified as a system for the economic organization of society. Further, while democracy requires periodic free and fair elections with political pluralism, capitalism does not. Development encompasses economic reform and adjustment; sustenance of macroeconomic stability; predictability of the policy environment; institutional structures conducive to sustainable growth with equity; and achievement and maintenance of competitiveness in a global setting.²

Is parliamentary democracy an ally of economic development or is it a hindrance?³ The best way to approach the subject is to look to historical experience,⁴ which shows that the emergence of capitalism and accelerated economic and industrial development preceded truly democratic institutions in Western Europe. John Healey observes that, from the sixteenth century onwards, societies emerged which were more dynamic in technological and economic terms than their predecessors. This was largely made possible by the emergence of a commercial class operating in markets where clear rules gave certainty for doing business and owning private property, and where people were relatively free from excessive and arbitrary intervention by the state. In view of this, many scholars argue that full democracy must wait for the development of an independent and robust capitalist class to challenge the power of political leadership and to ensure an environment or set of rules which permit accelerated economic activity. It is seen that the sustained democratic systems of the twentieth century, mainly in northern Europe and North America, have mostly been in countries which have had capitalist economic development and high standards of living. On the other hand, it is also seen that less economically developed countries (LEDCs) such as India and Jamaica have been genuinely democratic for nearly half a century.

Does this mean that the introduction of the full democratic process should or can be delayed until considerable economic development has taken place? Does it also mean that it is necessary for a society with more limited political and civil freedoms, with a single-party system and a powerful central state, first to achieve economic development? These questions bring to the fore examples of Singapore and the ‘miracle economies’ of East Asia which have achieved spectacular economic development with a less than full democratic system. There are many who cite the success of the newly industrialized countries (NICs) of South-East and East Asia to argue that some form of centralized authoritarian rule is required to provide the ‘firm hand’ in guaranteeing high rates of saving and investment, ensuring economic growth. Overall, the statistical evidence on the association between a country’s civil and political rights record and its economic growth is inconclusive. Intuitively, one can name as many single-party countries which have achieved a good economic performance as those which have not.

Economic Growth and Political Stability

The best correlations are probably between the economic performance of countries and the extent of their democratic stability. Frequent political changes have an adverse impact on the predictability of the business environment, which in turn has a cumulative unfavourable effect on economic performance. There is also evidence to suggest that countries with genuine electoral participation have been generally less unstable and politically violent though there may be exceptions, as in the case of Sri Lanka, a consolidated democratic culture, which has been trying to tackle protracted ethnic strife. Sri Lanka has often been cited as a vibrant democracy which has achieved considerable success in providing appreciable socio-economic progress for its people. However, the Sri Lankan developmental process has suffered in the wake of its ethnic crisis. If societies are fundamentally very polarized, not only is a democratic process more difficult to operate but so also is a sound economic policy.

Democracy and Competitive Market Environment

Is democracy consistent with a liberal, competitive market environment? A certain critical degree of free and competitive economic activity, especially competition with the rest of the world, has been a major factor in economic performance, as is evidenced in the East Asian countries. By and large, in Latin America and sub-Saharan Africa, economic performance has suffered because of excessive and arbitrary interventions by officials and politicians in prices and allocation decision in all areas of life – trade, foreign exchange, borrowing, production, investment, movement of goods, and so on. In addition, excessive arbitrary protection and subsidy has interfered with enterprise and initiative. In principle, democratic systems are consistent with market economies as both involve freedom of activity – one in the political arena and the other in the economic arena. Both also help in achieving decentralization and wider participation in the decision-making process. A genuinely liberal democracy allows the free formation and operation of civic interest groups which help in lobbying for specific interests. The state is then under pressure from these economic interests which can ossify the economic system by preventing the functioning of competitive, innovative action. Patronage politics and privileges for élite interests have been the bane of many authoritarian single-party regimes, as in the case of the Africa of the 1970s and the 1980s. In the recent past, there is no correlation between the type of political system and the degree of free market orientation of the policies pursued. In the period between the 1960s and the 1980s, there was a build-up of excessive market interference in Latin America, sub-Saharan Africa and South Asia without much regard to democratic rights.

The question then arises as to whether a democratic system or democratization is likely to aid a shift towards a more liberal competitive environment. Essentially, periodic elections permit democracy to replace the political leadership whose economic policies have not delivered the goods, opening up the way for alternative models or policies. Democracy also provides for the ventilation of grievances, and the leadership is bound to listen to the people’s voices. In addition, in a democratic set-up, independent interest groups have the chance to express their viewpoints favouring change or liberalization when the economy is cracking. Furthermore, there is every possibility of making change by compromise and negotiation, probably by incremental steps.

Electoralism and Economic Reforms

Electoral multi-party systems have successfully changed the economic agenda in certain aspects, as in the case of Sri Lanka in the 1960s and the 1970s and Jamaica over a longer period. In Botswana, the frequency and fairness of elections and the culture of the ‘appeal’ to the ordinary people have helped to sustain economic success. More important has been its basically democratic culture of consultation, compromise and slow, cautious change. In Senegal, however, the key to improvement in its performance was the need for economic reform. Elections took place and mandates for economic reforms were given, though the reforms faltered in the 1980s. President Abdou Diouf, himself a technocrat, who obtained a mandate for reform through elections, did not create a coalition of interests which favoured reforms, from Parliament, farmers and businessmen. From the late 1980s, the new electoralism in Africa has resulted in few changes of government or fresh coalitions committed to economic reforms. In some countries, such as Benin, electoral change in government has had perverse effects on economic reforms. In Kenya, Cameroon and Côte d’Ivoire, the somewhat ‘massaged’ elections have not resulted in any significant change in either government or policy. Economic reform, however, has been sustained in Ghana and Uganda where there have been no multi-party elections or change of government.

The Indian Experience

According to Healey, India, the world’s largest democracy, has long had modest economic growth, partly due to the existence of a substantial entrepreneurial capitalist class and considerable potential dynamism. The Indian economy has suffered from its dirigiste and protectionist policies and practices with overvalued exchange rates, controlled prices, excessive discretionary state licensing, control over movement of goo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Foreword
• Preface
• 1 The Contribution of Democracy to Economic Development
• 2 Creating an Enabling Economic Environment for Development
• 3 Human Rights, Good Governance and Development
• 4 Gender and Development
• 5 Freedom of the Press
• 6 Promoting an Efficient and Independent Public Administration
• 7 The Relationship between Government and the Military
• 8 The Singapore Model
• 9 Development and Democracy in the Island States of the Caribbean
• 10 Indirect Democracy in Uganda
• 11 The Role of Parliamentary Associations in Facilitating the Proper Functioning of Parliaments
• Appendices
• Bibliographies
• Index