3
Democracy, Freedom and Growth

The concept of 'political freedom' can be viewed in two ways, which are related but not identical. The first defines 'democracy' and 'political freedom' based upon the existence of free competitive (that is, more than one party) elections. This definition was used in Table 2.2 above. The second focuses on the amount of civil and economic rights that are available to the population: the existence of competitive elections is obviously one major civil right, but others include freedom of the press, freedom of movement, etc.

The two definitions are not identical. All dictatorships are not democratic according to the first criterion, that is they do not allow free competitive elections. On the other hand several dictatorships may grant a certain amount of civil and especially economic rights to their citizens.

One line of argument emphasizes the possibility of a negative relationship. With political freedom various pressure groups have a 'voice' in the political arena. Their conflicting demands for redistributive policies either imply legislative deadlocks or are resolved by increasing the size of the government. Furthermore, democratic governments (particularly coalition governments) may be slow at responding to shocks with appropriate policies. For example, Alesina and Drazen ( 1991) propose a model that explains delays in the adoption of efficient policies as a result of a 'veto game' among conflicting groups. Finally, incumbent politicians are expected to engage in suboptimal and short-sighted policies to be re-elected.8

Each of these arguments, however, can be questioned. First, even dictators need to please various constituencies to avoid being overthrown ( Ames, 1987). Redistributive struggles between various socio-economic groups can certainly occur in

____________________
8
On pressure groups and lobbying see Krueger ( 1974), Bhagwati ( 1982) and Mueller ( 1979). On fiscal deadlocks see Alesina ( 1988) and Alesina and Drazen ( 1991).

-22-

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