Development versus democracy: A silly debate

Alarmingly, there has recently been a rise in calls from both within and outside Africa saying that for individual countries on the continent to pursue democracy will undermine their economic growth, development and industrialization.

Such calls are coming from both industrial and emerging markets, as well as African analysts. They wrongly argue that spending time, energy and resources on building viable democracies in Africa is a waste.

Off course, the argument that building democracies in Africa is at best a luxury, and at worst undermining development, had been even strongly advanced in most African countries immediately following the end of independence. This was the refrain from Africa’s immediate post-independence leadership generation.

Some African tyrants and their hangers-on have insisted that economic growth is more important than democratic rights. But more well-meaning Africans also argued that democracy undermines development.

The African argument for development before democracy has waned following the economic decline of many African economies, whatever the regimes in power, when those leaders and regimes who argued against democracy delivered neither economic development nor democracy.

More recently, there has again been strong calls for Africans to concentrate less on building democracies, and just focus on development. China’s economic rise without democracy appears to have emboldened this view, as many argue that the Asian have for two decades now achieved spectacular growth rates without democracy. Of course, Chinese advisors to African countries, not surprisingly, emphasize this view in their engagements with the continent.

Some even take the call a step further, arguing that all African countries need is “benevolent” dictators, such as the late Ethiopian leader Meles Zenawi or Rwandan leader Paul Kagame, who could focus determinedly on growing their economies. They argue that Ethiopia and Rwanda are among the countries growing economically at a rapid pace, without any democracy.

The Turkish political economist, Dani Rodrik, in his groundbreaking research across developing countries, shows to the contrary; democracy is not only compatible with growth and poverty reduction, but may be crucial to both.

The countries in Africa which attempted to build genuine democracy, such as Cape Verde, Mauritius and Botswana from the time when they became independent until the early 1990s are far more stable, richer and peaceful than any other African country where governments argued that democracy is not for Africa.

Amartya Sen, the great Indian economics Nobel laureate has long argued that the issue is not about either development or democracy, but that real development was not only about economic growth in numbers, but about “expanding the real freedoms that people enjoy”.

Sen argues that “development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as social deprivation, neglect of public facilities as well as intolerance or overactivity of repressive states”.

Regions and provinces within developing countries which introduced democracy at the regional or provincial level are often more successful than their peers within the same countries. Kerala, the southern state of India, is an example, where the introduction of genuine democracy dramatically lifted economic growth rates, compared to peers in the nation.

Even city governments which introduce democracy at the local level are often more successful than their peers within the same countries. When the local government in Porto Alegre, the capital city of the Rio Grande do Sol state in Brazil, in 1990 introduced more inclusive democratic practices, involved citizens in budgeting and planning and became more accountable, the city performed better than any of its peers in the same country.

Over the past two decades emerging markets which lacked genuine democracy are often those worst hit by global and regional financial crises. Sen wrote how the “protective power” of the lack of democracy was deeply felt by the East and Southeast Asian ‘tiger’ economies during the 1996/97 Asian financial crisis.

The lack of democracy – multiparty elections, open media, strong flourishing civil societies - in many of these countries meant that they missed the ‘protective security’ that democracies bring. The importance of democratic governance was overlooked by the East Asian ‘tigers’ when growth rates were high. The lack of democratic freedoms meant that open public discussion, public scrutiny and civil society and opposition party scrutiny of public affairs were absent. As such avenues for government and business to act in a timely manner to prevent the financial crisis were absent.

The absence of democratic checks-and-balances in the East Asian ‘tiger’ economies during the 1996/1997 Asian financial crisis meant that leaders, governments and companies could not be effectively held accountable for unscrupulous business activities.

In early 2014, the US Federal Reserve, the country’s central bank, started to reduce its monetary stimulus, which was put in place to overcome the impact of the 2007/2008 global financial crisis on the US economy. The US decision triggered a mini-financial crisis among emerging markets across the world, with currencies nose-diving, capital outflows and interest rate hikes.

China’s economic troubles this year in rebalancing its economy have also hit the economies of many fast-growing emerging markets – depreciating their currencies, causing capital outflows and company shares and sending tremors through their stock markets.

The emerging markets with the poorest democratic governance fared the worst. Poor democratic and economic governance generates investor perceptions of future instability. In fact, many fast-growing emerging economies are “systemically vulnerable” because they fall short on democratic and economic governance.

Genuine democracy offers greater inclusiveness and accountability in reaching developmental, growth and industrialization goals; and makes states more effective, stable and robust against internal and external crises.

China, so often pointed to as an example where development takes place without democracy, is itself ‘systemically vulnerable’. Because it lacks democracy, it always faces the prospect of capital flight, especially given its high public debt.

In the absence of democracy, China needs the dizzyingly high economic growth rates, and needs to distribute the dividends from growth as widely as possible to compensate for the lack of individual freedom; if not, the country will face internal uprisings.

* William Gumede is Chairman of the Democracy Works Foundation. His latest book is ‘South Africa in BRICS - Salvation or Ruination?’ Tafelberg (http://www.amazon.com/Tafelberg-Short-Africa-Salvation-ruination-ebook/…). A version of this article first appeared in The African Independent, Johannesburg.

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