World Politics: Economic Development and Democracy

World Politics: Class IV - Economic Development and Democracy

Class Outline

This class recaps definitions of democracy, critically examines the relationship between development and democratization through Modernization Theory (1.0 and 2.0) and Survival Theory, and discusses the policy implications of these theories.

Recap: Definitions of Democracy

• Substantive Definition

  • Imbues democracy with substantive ideals, such as the common good.

  • Requires assumptions about the existence and attainability of a common good.

  • Challenged by Schumpeter’s elitist critique regarding the irrationality of individuals, suggesting that individuals may not always act in pursuit of a common, rational good.

• Procedural Definition

  • Focuses solely on the procedures and institutional conditions necessary for democracy.

  • Makes no assumptions about the substantive content of democratic decisions.

  • Passes no judgment on the rationality of individuals or collectives.

  • Requires specifying institutional conditions and individual rights (e.g., free and fair elections, freedom of speech).

  • Dahl’s typology identifies two crucial dimensions for classifying political regimes:

    • Contestation: The extent to which citizens can openly oppose the government through electoral and other means.

    • Inclusiveness: The extent to which all adult citizens have the right to participate in the political process (e.g., vote, run for office).

  • Dahl's polyarchy is a political system that scores high on both contestation and inclusiveness, corresponding to what is commonly understood as a liberal democracy.

Critiques of Pure Procedural Democracy:

• Accountability critique: To be compatible with the rule of law, democracy must require additional institutional safeguards, such as separation of powers, an independent judiciary, audit institutions, and other forms of checks and balances necessary for executive power to be controlled.

• Consensualist critique: A robust democracy should expand the number of voices that are heard through institutions like federalism, proportional electoral rules, and qualified majorities that move from majority rule to rule by consensus.

• Participatory critique: Procedural democracy does not allow forms of non-electoral participation, such as referenda, primaries, and other forms of internal democracy within parties, unions and even firms.

Development and Democratization: The Correlation

• Empirical data from sources like Przeworski and colleagues ($2000, 80$) and varieties of Democracy (V-Dem) consistently show a positive correlation: countries with higher GDP per capita tend to have a higher proportion of democracies.

• Illustration: Figures $6.2$ and a V-Dem graph demonstrate that as GDP per capita (in $1985$ PPP US Dollars or grouped GDP categories) increases, the proportion of democracies also tends to increase.

Modernization Theory 1.0 (Lipset 1959)

• Core Argument: Economic development leads to social and cultural changes that make democracy more likely.

• Causal Chain:

  • Economic Development (industrialization, urbanization, wealth accumulation)

  • Leads to Social Mobilization (education, communication, rise of middle class)

  • Fosters Demand for Political Participation and Democratic Institutions.

• Key Mechanisms:

  • Education: A more educated populace is better informed, more articulate, and more likely to demand democratic rights.

  • Communication: Increased access to media facilitates the spread of democratic ideas and provides a means for collective action.

  • Middle Class: An expanding middle class acts as a stabilizing force, demanding civil liberties and political freedoms, and mediating between the poor and the rich.

  • Reduced Inequality: Development often leads to a more equitable distribution of wealth, reducing social tensions and making democratic compromise easier.

• Critique: Often criticized for being too deterministic and not accounting for specific historical contexts or agency. It suggests a unilinear path to democracy, which isn't always observed.

Modernization Theory 2.0 (Przeworski et al. 2000)

• Core Argument: While development doesn't necessarily cause countries to become democratic, it significantly increases the likelihood that existing democracies will survive.

• Key Findings:

  • Transition Probability: The probability of a transition to democracy does not strongly correlate with economic development.

  • Survival Probability: Once a country becomes democratic, higher levels of economic development (GDP per capita) make that democracy significantly more durable.

  • Wealthy Democracies are Durable: No rich democracy has ever fallen into authoritarianism.

• Mechanism: Economic prosperity makes societies more stable by:

  • Reducing social unrest and making democratic compromises more feasible.

  • Increasing the "costs of repression" for authoritarian leaders (if they were to take over) and the "benefits of tolerance" for democratic actors.

  • Providing resources for social welfare programs that can alleviate grievances.

Survival Theory (Przeworski 2000)

• Core Argument: Contends that democracy is more likely to survive in economically developed countries, but economic development doesn't cause democratization directly.

• Distinction from Modernization Theory 1.0: Survival Theory separates the emergence of democracy from its survival.

  • Democracies can emerge at any level of development, often through specific political struggles or exogenous shocks.

  • However, once established, economic prosperity provides the stability necessary for their longevity.

• Implication: If a poor country manages to democratize, its democracy is far more fragile and susceptible to collapse than a democracy in a wealthy country.

Policy Implications

• Foreign Aid and Development: Should foreign aid be specifically targeted at promoting economic development to foster democracy?

  • Based on Modernization Theory 1.0, yes, as development is seen as a precursor to democracy.

  • Based on Modernization Theory 2.0/Survival Theory, aid might help stabilize existing democracies or create conditions where emerging democracies are more likely to last, but it may not directly trigger democratic transitions. Therefore, the focus might shift from causing democratization to sustaining it.

• Democracy Promotion: Direct promotion of democratic institutions or values through foreign policy interventions (e.g., electoral assistance, human rights advocacy) is a separate approach.

  • It aims to directly influence political structures, often independently of economic development levels.

  • Effectiveness is debated, with some arguing it can backfire or be seen as interference.

Endogeneity and Reverse Causality: Does Democracy Cause Development?

• The strong correlation between wealth and democracy raises the question of causality: do democracies perform better economically than authoritarian regimes?

• Arguments for Democracy driving Development:

  • Property Rights and Rule of Law: Democracies are often associated with stronger property rights and a more consistent rule of law, which encourages investment and economic growth.

  • Accountability: Democratic leaders are theoretically more accountable to the populace, which can reduce corruption and lead to more effective economic policies.

  • Stability and Predictability: While transitions can be unstable, established democracies tend to offer more predictable policy environments compared to volatile authoritarian regimes.

• Counterarguments/Complexities:

  • Authoritarian Development: Some authoritarian regimes (e.g., China, Singapore) have achieved remarkable economic development, challenging the idea that democracy is a prerequisite.

  • Short-Term Costs: Democratization processes can sometimes be disruptive to economic stability in the short term, especially in countries with weak institutions.

  • No Clear Consensus: Empirical studies on democracy's direct causal effect on economic growth are mixed and do not show a universally positive and strong causal link.

Alternative Pathways and Challenges to Democratization

• Beyond economic development, other factors critically influence democratization:

  • External Leverage: International pressure, conditionality on aid, or regional influences can push regimes toward democracy.

  • Historical Junctures and Pacts: Critical historical moments, elite pacts, or negotiated transitions can lead to democratic breakthroughs, sometimes regardless of economic development.

  • Role of Civil Society and Mass Mobilization: Strong civil society organizations and popular movements can be crucial in demanding and securing democratic reforms.

  • Contingency and Agency: The specific choices made by political actors, leaders, and opposition groups play a significant, often unpredictable, role.

• The Resource Curse (or Paradox of Plenty):

  • Countries rich in natural resources (e.g., oil, minerals) often exhibit less democracy and slower economic development, particularly a lack of diversification.

  • Mechanisms:

    • Rentier Effect: Governments derive revenue directly from resource extraction rather than taxation of citizens, reducing accountability and incentives to respond to public demands for democracy.

    • Repression Effect: Resource wealth provides financial means for governments to build strong security forces to suppress dissent and maintain authoritarian rule.

    • Modernization Effect (weakened): The absence of industrialization and diversified economies means fewer social and cultural changes (like a strong middle class) that typically foster democratic demands.

• Legacies of Colonialism and Institutional Design: Historical institutional settings and decisions regarding electoral systems, federalism, etc., can significantly shape the prospects for democracy even with economic development.