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Democracy is widely regarded as the apex among the various forms of government. It is seen as a harbinger of justice and liberty to the people, as it gives them an opportunity to determine the course of their lives without excessive interference from the state. Many newly independent states aspire to establish a democratic form of government based on liberal ideals, although transitions to democracy may itself be complex because of socio-political reasons. However, not all nations that adopt a democratic form of government succeed economically and many are rife with corruption, inefficacy, complacency and poverty. On the other hand, semi-authoritarian nations have succeeded economically in the absence of a democratic decision-making process. It is evident that there is a situation where non-democracies like China and the United Arab Emirates (U.A.E) provide a higher standard of living and a higher per-capita income to their citizens than democracies like India. In an increasingly materialistic world, citizens may choose economic safety over political liberty, thereby questioning the importance of democracy and its ideals. This article seeks to evaluate whether democracy impedes economic growth by analyzing various examples of democratic and non-democratic nations.

The economic success of a nation depends on a multitude of factors. Political stability, competence and outlook of the leaders, geographical location, relationship with neighbours and the availability of resources are some of the important factors. Some nations like Singapore have succeeded economically despite being small and resourceless, while others like India and the Philippines have failed to fully utilize their economic potential. A caution must be given that not all present democracies are economically inefficient, as the largest economies in Europe and the United States have a strong and dominant economy complemented by stable democratic systems. However, most of these established democracies became prosperous before they provided all their people full democratic rights – a case that will be elaborated in subsequent paragraphs.

Another example, South Korea achieved its economic success before it became a democracy in the 1980s and its record as a stable democracy has been strong since then. The growth of nations such as South Korea is astonishing considering the fact that it was war-ravaged and appallingly poor less than 80 years ago. In essence, South Korea achieved its economic success through iron-fisted policy making by an authoritarian elite, especially during the Park Chung-hee regime. Democracies, in comparison, have a disadvantage in terms of agile decision making and political firmness that non-democracies with able leaders do not have. Democracies can only legitimately implement a policy through legislative and executive procedures. If such policies are further questioned by the judiciary, it will exacerbate the time taken in actually implementing the policy. The policy-making in a democracy versus non-democracies is reviewed in the next paragraph.

The decision-making process in a democracy is long and complex. It is deliberately designed in such a manner so as to prevent the concentration of power within the hands of the few, who are in most cases not accountable to the people. In a democracy, however, there is always an intricate balance of power and mutual checks and balances. For example, the United States Constitution embodies a strong system of checks and balances where the President (executive), the Congress (legislative) and the Supreme Court (judiciary) have separate roles and responsibilities, but they are constantly kept in check by the two other branches of government. In a parliamentary democracy like India, the Prime Minister and his cabinet are responsible to the Houses of Parliament. The President may be removed by impeachment and the Supreme Court evaluates the actions of the legislature and the executive through issuing judgments. It is no surprise, therefore, that projects planned by the executive government of a nation in a democratic nation are marred by lawsuits; this is bound to slow-down the evaluation and implementation of the project.

In an authoritarian state like China, for example, the single-party government is unfettered to make any policies and implement them without question. Due to the absence of any protected civil rights, citizens do not have any recourse for their grievances to be addressed. The case of Singapore is interesting in this regard. Although a fully-functioning democracy, Singapore has been ruled by the People’s Action Party since its independence in 1965. Due to an electoral certainty, this party and its government do not have to evaluate the opposition to their policies because they are backed by a solid public mandate. Therefore, the planning, evaluation and implementation of projects are straightforward. Thus, the democratic process is inefficient and bureaucratic, which slows down the process of implementation because of a deliberative process that exists between the government and the citizens. In the case of India, the parliamentary process of approving laws and the bureaucratic implementation of projects itself takes a significant amount of time. For example, the implementation of the 2010 Commonwealth Games case where structures collapsed and rampant corruption was later unearthed is a case-in-point.

A question may arise as to how then countries such as the U.S. managed to achieve economic success despite being a democracy. Also, the economic development and prosperity of the United States had been previously unheard of in world history. This can be attributed partly to the constant conflict and warfare that had engulfed the world prior to the Second World War and before the emergence of the prosperous West. However, the prosperity of the United States and most of the developed countries in Europe preceded the establishment of democracy in those nations. At the beginning of the 20th century, the United States was a force to be reckoned with, considering the decline of the United Kingdom as the superpower. The wealth in the United States was built upon the base of slavery and this wealth was concentrated in the hands of the few. The United States during the 19th century would not be considered to be a democratic country in the opinion of scholars today because voting was effectively the privilege of white men.  It was not until 1965 that all Americans gained full access to the right to vote. So, it would be preposterous to consider that the United States became prosperous only after 1965.

Similarly, in the United Kingdom, the decline of the British Empire brought in many socio-economic changes in the U.K.; people from erstwhile colonies immigrated to Britain and helped rebuild a post-war U.K that was ravaged by war. However, the U.K. did not become wealthy after the Second World War, as it was already a prosperous nation due to its colonial history and before it accepted ethnic minorities (people from the Caribbean, Africa and the Indian sub-continent) as British citizens. Therefore, the development of a nation is much smoother in a relatively authoritarian state than a democracy, provided that such an authoritarian leadership is not driving the nation to become a failed state where poverty, insurgency and instability are widespread.

Through the examples of countries becoming democracies after achieving economic success, such as South Korea and traditional democracies such as the U.S. and the U.K., a case can be made that a democracy slows-down policy making thereby hampering economic growth. Recent observations have been made regarding the falling competencies of democratic nations such as the U.S. and the U.K. in comparison to the authoritarian nations like China and the U.A.E. Moreover, Chinese influence in Africa has overtaken the American influence in key areas such as development aid. Newly independent nations in the future may find a better ideal in China than in the United States because of the economic decline of the latter and the bolstering of the power of the former.

Although this is a cause for concern for liberals and democrats around the world, it is high time that they evaluate the changes that need to be incorporated in democracies to keep them competent. The relative poverty of democracies and their lack of economic competence in comparison to well-managed authoritarian states portray the disadvantages related to economic development in democracies, and consequently their potential unattractiveness. Therefore, an authoritarian state or a semi-authoritarian state with competent leadership and vision seem to be better at ensuring economic prosperity than in democracies, and especially in democracies that are rife with corruption and mismanagement. The more empirical evidence is required in this regard to fully establish whether democracies are indeed failing behind authoritarian states in terms of economic development. However, the trend can certainly be determined as seen through the examples in this article.



Rahn R. (2017, May 8). Korea's economic miracle. The Washington Times. Retrieved from    https://www.washingtontimes.com/news/2017/may/8/south-korea-has-undergone-an-economic-miracle/

Vuletin G. & others. (2016, September 16). Democracy does not cause growth. The Brookings Institution. Retrieved from https://www.brookings.edu/blog/up-front/2016/09/06/democracy-does-not-cause-growth/

Image credit: Economic Development




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Written By Nishanth Chakkere Ramesh

Undergraduate student of Business Administration and International Relations, with a keen interest in understanding the cause of things.

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