Domestic Consequences of Democracy: Growth and Welfare?
Is democracy really worth the trouble? Does it pave the way for improvements in spheres of life other than those narrowly connected with political freedoms? For the populations of the countries currently undergoing transitions toward more democratic rule, this issue is painfully crucial. This chapter looks at consequences of democracy with regard to economic development, which we will define as growth and welfare. The relationship between democracy and human rights is also addressed. Whereas democracy was treated as a dependent variable in Chapter 2, where we were looking for conditions favorable to the rise of democracy, democracy is treated as an independent variable in this chapter, where we are looking at its effects on economic development. In this chapter, we will consider the question of whether democracy, once it is attained, will be able to fulfill expectations of improved performance in terms of economic growth and welfare. The scholars who have addressed this issue are not all optimists; some even see a trade-off between political democracy on the one hand and economic development on the other. The main standpoints in the theoretical debate are outlined, and a survey of the empirical studies addressing the question is provided.1 It will reject the notion of a general trade-off between democracy and economic development, but I will also demonstrate why economic development and welfare improvement will not necessarily be forthcoming from the new democracies.
Many scholars see an incompatibility between democracy and economic growth for both economic and political reasons. The economic reasons relate to the fact that growth requires an economic surplus available for in