Academic journal article
By Keefer, Philip
Asian Development Review , Vol. 28, No. 1
Broad consensus exists that the ability of political actors to make credible commitments is key to development. An important and little-explored determinant of the credibility of political commitments is the existence of organizations that facilitate citizen collective action to sanction political actors who renege. This paper focuses on one essential organization, the political party. Three measures of political parties are used to assess cross-country differences in the degree to which politicians facilitate the ability of citizens to act in their collective interest. Each of these measures is associated with superior development outcomes, above and beyond the effects of competitive elections. These results have implications for understanding the extraordinary economic success of some East Asian countries and notable lags among others. East Asian nondemocracies exhibit more institutionalized ruling parties than other nondemocracies, while East Asian democracies exhibit equally or less institutionalized parties. The evidence suggests that greater research and policy emphasis be placed on the organizational characteristics of countries that allow citizens to hold leaders accountable.
JEL classification: D72, H4, O10
One of the longest-running debates in political economy concerns whether democracy promotes development. Critics of this thesis are quick to point to counter-examples in East Asia. The very fast growing nondemocratic countries of the region - and the slowest-growing democracies - signal that democratic institutions are nonessential either to persuade political decision makers to pursue growth or to convince investors that governments will not expropriate them. What allows unelected politicians to make credible commitments to investors? Why are elections insufficient to persuade democratic politicians to pursue growth? This paper extends a growing body of research that addresses these questions by examining the ability of citizens to act collectively in defense of their joint interests. In countries where citizens have this ability, governments have greater incentives to pursue public policies in the public interest and face greater costs if they expropriate private investors. In particular, the paper offers preliminary evidence that political parties have a large effect on citizen collective action; that these effects can emerge in both nondemocracies and democracies; and underlines a seldom-remarked facet of East Asian exceptionalism: nondemocracies in East Asia are much more likely to exhibit institutionalized ruling parties, independent of their leaders, than nondemocracies elsewhere in the world. Democracies in East Asia, though, are not exceptional: they are no more likely - and perhaps less likely - to exhibit these arrangements than other democracies.
The first part of the paper reviews the literature on political economy and development through the lens of collective action. The organization of collective action has a modest profile in this literature. Research on more macro political economy issues generally abstracts all together from collective action problems and assumes that citizens are organized into cohesive blocs. At the other end of the spectrum, a large, micro development literature focuses on collective action issues in the context of the common resource management or community governance; it is less concerned with the conditions under which large groups of people can be mobilized to pursue their collective interests. Both more macro and more micro research, therefore, abstracts from the organizational arrangements that are essential to facilitate this collective action by large groups of citizens.
Among the possible institutions that might mitigate collective action problems, competitive elections have received by far the most attention. The next section therefore reviews evidence highlighting the democracy puzzle and, in particular, the uneven impact of elections on development. …