Skip to content

Does Democracy Help Or Hurt Economic Growth

February 9, 2010

There are some interesting posts up at CIPE’s Development Blog on the consequences of democratic governance. Here’s one discussion comparing India and China. From another, more general discussion on the merits:

Democracies do a superior job of averting disasters, such as famines (Sen). They don’t always have higher growth rates but they have less volatile growth (Rodrik). Controlling volatility matters because an economy can be destroyed faster than it can be built, as the sad example of Zimbabwe most recently shows us.

Democracies do better at controlling corruption. They are certainly not immune, and corruption scandals become very visible in the presence of free media and other mechanisms of accountability. Authoritarian governments are arguably more dependent on corruption to retain power, but do a better job of sweeping it under the rug.

Finally, democracies are better for political stability, as they provide an orderly mechanism for the transfer of power. Building on this point, one can think of democracy as fundamentally a system for handling conflicts. Conflicts, though rarely pleasant, are best handled through honest, open methods in the context of individual rights, rule of law, and good governance – all hallmarks of functioning democracies.

My criticisms of democracy ought not to be taken as wholesale condemnation. Sen’s finding is an important one. (Do note, however, that volatility is not the same thing as collapse. And as I recall, it wasn’t volatility that laid Zimbabwe low. To the contrary, it was a blend of ethnic-hatred, crony-markets and democracy.)

But the main thing is to keep the main thing the main thing: in a world of competitive governance, there will exist many different kinds of states, some or many of which will be well-functioning democracies. There are and will be different degrees of democratic governance, varying from Swiss-style cantons to California-style plebiscites. Some will have constitutional rule-sets that foster growth better than others. And if we allow large scale entry and exit, we should see a massively customized order emerge that represents the particular needs of people in very particular circumstances.

All of which is to say, the question isn’t democracy yes, democracy no–but rather: does competitive governance help or hurt economic growth. That’s the study I’d like to see. Oh wait, we’ve already seen what hurts it.


  1. September 19, 2014 12:05 am

    Most are made with canvas or polyurethane that is both durable
    and ultra thick. In order to get a rich and spotless tan while keeping your skin smooth and glowing, it is necessary
    to use the best quality tanning products. My personal preference having used both mediums is
    the lotion, or the sunless tanner spray, sprayed on and then rubbed in.

  2. September 18, 2014 9:43 pm

    Zahle was burned in 1777 and 1791, and it ԝas burned and
    plundered inn 1860. His precise, forceful fills propel the banjd forward
    wit undeniable pߋwer. Ϝollowing the collapse of the Ottomn Empire after World War I, tthe League of
    Νations mandated the five provinces thst make up present-day Lebqnon to France.

  3. September 17, 2014 1:45 am

    Visit one of the movers shop to know the service charge.
    Their assistance will make your resettlement unproblematic and calm.
    The emergency vehicle dash lights also come with extended spare part and service warranty.
    In the years to come we will launch some more spate of services which will help
    us to establish a strong foothold in the global
    market. This will largely depend on the type of goods you
    wish to store inside it. Properly planning for the move
    will help you to refrain from last minute disarray and dismay.
    com makes sharing and access control easy ‘ files or folders or even file
    drawers. They offer a rock bottom quotes on the estimate, only to baste
    on charge after charge by their spent time everything and done.
    ‘ Your files remain private on your PC which reduces security risks as long as you follow certain best practices.
    Have you been seriously thinking on the benefits of – There are many benefits which you would come across when you hire the services of LA
    Movers for transferring your household goods to Los Angeles.

  4. September 3, 2014 7:13 am

    The first week, you get acquainted with your new routine, and the end of the diet seems
    so far away. But before you buy HCG drops
    you should know how they work. Until now,
    the only 100% approved items for moisturizing on the HCG diet have been pure
    baby oil and mineral oil because unlike other oils, they have no nutritional value and are will not be
    absorbed by the skin.

  5. September 1, 2014 10:47 am

    She has a charm that is slightly reminiscent of the childhood favourite
    Rosie and Jim’s Ragdoll, with a modernized interior to suit
    the 21st century traveller. Leave your windows open a few hours a
    day and then you get to clean the black soot off of the floors.
    A camera and photo album are another way for a family to record their boating trips.

  6. August 20, 2014 1:32 am

    Facelift surgery will help you defy age and enjoy an attractive and more youthful facial appearance.
    If you are residing in Miami and want to enhance your appearance then you
    will need to visit an experienced cosmetic surgeon in Miami.
    This massage also encompasses the beauty facial techniques
    making this a wonderfully relaxing massage to receive.

  7. August 17, 2014 5:46 am

    It is therefore necessary to hire a reputed moving service provider who has high
    quality vehicles and equipments for packing, loading and unloading your items.
    You have to closely examine the area where you’re going
    to move to. Whether you’re a large business looking to move
    your office block to a new location or just a small home owner
    that is having interstate moving in mind, there are plenty of options to
    move to Melbourne safely that are worth your

  8. June 13, 2014 7:23 am

    These significant changes give an opening to a market of specialists
    when it comes to tax preparation, auditing and bookkeeping.
    He or she should be a person who would be in a position to
    utilize resources for the benefit of the organization. Various accounting firms allow
    students to serve as interns.

  9. Mike Gibson permalink*
    February 10, 2010 7:44 pm

    Well, there you go! Interesting stuff on first pass. I’ll have to read that more thoroughly. Thanks for the comment.

  10. February 10, 2010 7:26 pm

    Well, Sen’s largely unsubstantiated and unproven famine thesis has been refuted pretty convincingly in a prize-winning article by Olivier Rubin (published in the European Journal of Development Research last November):

    May want to check it out if you haven’t read it yet.



  1. If By Democracy, You Mean… « Let A Thousand Nations Bloom

Comments are closed.

%d bloggers like this: