Academic journal article Asian Development Review

Democratic Government and Development: A Survey

Academic journal article Asian Development Review

Democratic Government and Development: A Survey

Article excerpt

I. Introduction

Amartya Sen won the Nobel Prize in Economics, in part, for assessing the importance of democracy as a universal value in the sense that a vast majority of individuals, independent of their geographic location and specific characteristics, and at almost all times, may have reason to see democracy as valuable. Its value does not rest on just one particular merit, but rather on a plurality of virtues. Sen (1999) emphasizes the intrinsic importance of political participation and freedom in human life, and the constructive role of democracy in the formation of values and the understanding of needs, rights, and duties.

Beyond these widely accepted virtues of democratic institutions, Sen also considers a more disputed dimension of democracy : the instrumental importance of political incentives in keeping governments responsible and accountable. Periodic, free, fair, broadly participatory; and genuinely' contested elections, together with a system of norms and institutions that support the right to vote and make it meaningful, give people the power to control and discipline the government. This ensures the implementation of policies favoring the population as a whole rather than specific (political or economic) segments of the population. In this sense, democratic institutions are both responsive to the demands of constituents and effective in using limited resources to address these demands.

The available empirical evidence, however, suggests only a weak correlation between the extension of democratic liberties and good policy making. Various societies that are considered democratic, according to standard measures, are seriously marred by institutional malpractices of different kinds (see, for example, Acemoglu, Robinson, and Santos-Villagran 2013).

Figure 1 plots the correlation between a commonly used index of democracy and a standard indicator of government quality.1 It shows that while most well-governed states also have well-established democratic institutions, many equally democratic states perform poorly on governance.2

This paper examines some of the reasons behind the variation in performances of modern democracies and presents recent developments in research on the functioning of democratic institutions. This paper will also probably open more questions than it will offer answers, which is partly its intention. Despite the growing interdisciplinary work on democratic governance, we still have a limited understanding of the subject.

This paper is organized as follows. Section II presents the debate on the relative merits of democratic institutions and discusses the critical socioeconomic dimensions along which modern democracies differ. Section III looks at one additional dimension: the role of history and of different paths to democracy to understand current and observable differences in governance. Section IV examines in some detail the case of East Asian economies and how democracy evolved in the region. Section V concludes by advancing policy suggestions to foster the functioning of democratic institutions in developing economies.

II. Democracy and Good Government

In the last 40 years, democracy has spread well beyond its historical boundaries in the Western hemisphere. Between 1973 and 2003, more than 60 economies all over the world adopted democratic institutions either after the collapse of larger states (e.g., the Soviet Union) or the end of dictatorships and authoritarian dominantparty systems (e.g., the Republic of Korea). By the beginning of the 21st century, the only major region of the world lacking democratic economies was North Africa and the Middle East, but recent events in this region are apparently putting an end to this Arab anomaly. This visible globalization of democracy has fomented a revival of the old debate on the relative merits of democratic and autocratic regimes dating back to Plato and Aristotle.

Acemoglu, Johnson, and Robinson (2001); Acemoglu et al. …

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