The Nuanced Connection Between Democracy and Development

Author: Wyatt Raynal, The Australian National University

Democracy and economic development are favourably interconnected, but in ways more nuanced than generally accepted. Contrary to popular conceptions of mutually-linked causality between the two, [1] analysis of relevant case studies suggests neither democracy nor development guarantees its counterpart. Instead, development appears most supportably portrayed as a stabiliser of democratic regimes,[2] only serving as a contributor to democratisation when additional conditions are met.[3] In counterpoint, analysis suggests that democratisation can strongly influence the economic development of a state in the long-term, even if it is not capable of the explosive short-term growth possible under dictatorship.[4] The complexity of this proposed relationship represents a revision of Lipset’s seminal report on the cooperative function of the regime and economics,[5] countering some of the generalisations foundational to the vast literature on the subject.

In analysing their intersection, measures for democracy and development must be established. Democracy is here understood in its liberal sense, requiring universal adult suffrage, majority rule, widespread political engagement and political freedom.[1] Democratisation can be measured by a positive increase in a state’s Polity2 score, derived from indicators including free political communication and contested elections.[2] Economic development, meanwhile, is considered as the qualitative development of living standards in a state. While this is most satisfactorily expressed by Human Development Index (HDI) rankings, which consider living standards,[3] GDP per capita is substituted as a quantitative proof in combination with other factors where relevant.

Hwever, when analysing the generalisation that development leads to democracy, it becomes evident that no such two-dimensional relationship exists. The traditional argument, with such proponents as Friedman and Dahl, is that development drives education, and education increases popular desire for the public goods and freedoms democracy can provide.[1] Standing against this assertion is the case study of Xi Jinping’s China. Maintaining a GDP growth rate of 6.9% through 2017,[2] something which has funded a secondary education system ranked 6th in the world for mathematics and 10th for science,[3] China has shown no sign of democratising. This demonstrates two paradoxically negative effects which development may have upon democratisation: providing dictators with a financial means of incentivising regime stakeholders against defection,[4] and encouraging the ruling party to use education as a propagandistic tool, such as has occurred in Chinese schooling.[5] This is supported by a 2012 statistical analysis of 153 states, in which it was found that authoritarian states deriving a large part of their income from internal resources (such as China) were likely to become more dictatorial following development.[6] This complicates the relationship between development and democracy, suggesting greater nuance in their interaction.

Development’s effect upon democratisation is conditional. One factor historically conducive to democratisation when combined with development is leadership change.[1] Exemplar of this is the rule of Franco in Spain from 1939-1975,[2] a period in which the state developed into the globe’s eleventh largest economy.[3] While income increased annually, laying the groundwork for democratic process, democratisation occurred only following the death of the dictator.[4] This is mirrored in an analysis of twenty other dictatorships under which GDP rose above US$6,000[5] during the twentieth century, with three quarters of states examined liberalising following the exit of the dictator.[6] This suggests states that are developmentally prepared for liberalisation may fail to democratise without leadership change. A further factor statistically linked to the democratisation of developed states is the source of state income: resource-based economies are historically less likely to liberalise following development than other forms of dictatorship, likely because of increased government control over assets.[7] In this sense, development’s role as a cause of democratisation is subordinate to circumstance.

Irrespective of its causal role, development favours democratic stability. In his 1959 report, Seymour Lipset compares the economic development of European ‘stable’ democracies- defined as uninterruptedly democratic states since the Great War which had not hosted an anti-democratic political movement in the last 25 years- with those which were ‘unstable’.[1] The major observation, that the unstable democracies averaged half the GDP of the stable, was corroborated by parallel comparison of Latin American states, which demonstrated the same deficit.[2] While it could be argued that lack of development was a consequence and not a cause of democratic instability, the latter hypothesis is lent credence on two counts. First, economically vulnerable populations have higher demands of government and less to lose in rebelling, increasing their likelihood of doing so.[3] Second, developed states better provide the education necessary to actively understand and engage in democracy, increasing the likelihood a competent leader is elected.[4] Development, therefore, supportably favours democratic stability.

Conversely, democracy’s stability is central to its causal link to economic development. In the short term, Sirowy and Inkels note democracy’s slow decision-making is “largely unable to… facilitate rapid growth”[1] compared with dictatorships such as Lee Kuan Yew’s Singapore, which peaked in 1970 at a growth rate of 13.89%.[2] Despite this, the top sixteen states on the Human Development Index are democratic, for three main reasons. First, democracy’s stability allows for growth accumulation over greater periods than dictatorships, which average much shorter lengths of sustained development.[3] Next, democracies are statistically less likely to engage in wars with high casualties or risk.[4] States that are more peaceful (according to the Global Peace Index) have averaged three times the GDP growth in the last six decades of less peaceful states,[5] suggesting this is a factor linking democracy to development. Finally, democratic leaders have greater incentive than dictators to provide public goods necessary for development, traditionally doing so more effectively.[6] This is illustrated by contrasting North and South Korea. The former, a dictatorship, spends primarily on military,[7] the latter, a democracy, on development; [8] the former’s 2015 GDP totals $40 billion, the latter’s, $1.92 trillion.[9] In these ways, democracy is tied directly to economic development.

In examining the intersection of democracy and development the complexity of their self-affirming cycle comes to light. Eluding facile definition, the connections which bind these staples of the global economy cannot be understood by isolating the debate to two factors alone. Democracy and development, like everything in politics, are not as simple as they seem.