The Development Dilemma
For Amartya Sen, winner of the 1998 Nobel Prize for economics, it was clear: "The most important thing that has happened in the 20th century is democracy." Yet today, for many developing countries in Africa, Eastern Europe, Latin America, and Asia, the value of democracy is not quite this self-evident. While Western nations preach "democratization" as the key to economic progress, the developing nations themselves must determine the best form of governance and the best economic policy that will drive their countries forward.
In opposition to its knee-jerk appeal, some have argued that "democracy"-the presence of freely elected institutions and the ability to participate in them--is unnecessary and is, in fact, an obstacle to the progress of developing countries. There are theoretical arguments, empirical evidence, and events from recent history that may appear to support this thesis; yet, upon closer examination, the bulk of the argument proves untenable. Indeed, democracy is a factor that promotes economic growth. Though it cannot guarantee increases in a nation's GDP or per capita income, the practice of democracy is critical for long-term sustainable growth.
Resistance to democracy arises from the belief that a strong central government is more conducive to development than democratic institutions. In particular, the influence of populism on policy formation is seen as the major drawback of democratic government. Since a democracy is dependent on the will of the people, some argue that such governments are less likely to make necessary but politically unpopular economic decisions; on the other hand, an authoritarian government could theoretically take necessary economic measures with an eye toward the long-term good without fear of reprisal at the ballot box.
For instance, several historians have attributed Russia's economic disarray after the breakup of the Soviet Union to Russian President Boris Yeltsin's untimely introduction of democracy. In 1992, implementation of Russian Finance Minister Yegor Gaidar's "shock therapy"--abolishing price controls on all goods--was delayed because it was highly unpopular. This delay was a move that economists have widely criticized, and it undermined later economic reform.
Conversely, officials may formulate popular but economically unviable policies, catering to the short-term desires of the masses rather than following a long-term economic blueprint. India, Asia's largest democracy, has often excused its economic failures as the "price of democracy"--frequent elections and proportional representation meant weak coalition governments that followed public opinion slavishly and isolated India from the world economy.
However, political decisions are neither made in a vacuum nor based completely on public opinion. Although democracy may make government sensitive to the people's desires, this may be seen as insurance against the opposite: an oppressive government insensitive to the people's needs. An open political system helps root out pervasive corruption, which hurts development and discredits public authority. With democracy, a government has to account for its policies before an ever-demanding public, thus ensuring greater transparency and reining in corruption. Even as some argue that corruption is not intrinsic to undemocratic government and that an autocrat might be willing to forgo bounty in the near term to enhance long-term growth prospects and future revenues, evidence to the contrary abounds. Zaire's Mobutu Sese Seko, the Philippines' Ferdinand Marcos, and Kenya's Daniel arap Moi are just a few prominent examples of the corrupt dictators produced by a lack of transparency within the system. Without accountabili ty to the people, there is no way of ensuring that undemocratic governments deliver the goods.
Yet critics of democracy say that in the area of economic-policy implementation, undemocratic governments may be superior because, unlike democracies, they are not beset by constantly changing governments, bureaucracies, and interest groups. …