Some questions of democracy, economic growth, development and income inequality.

Democracy or oligarchy which one is much efficacious to the economic development?

The question is so complex. Nazi Germany recovered at a faster pace than the whole of Europe has ever witnessed (except the Soviet during over the same time frame). But before disqualifying democracy as a prerequisite a closer look at Germany’s industrial developments during the period before the Nazi is a perfect stance. Germany was amongst the first world industrialisers to spring up during the second industrial wave which makes one conclude Hitler simply harnessed that potency to ascent his Nazi empire further. So, is that true that what comes before Hitler was a democratic Germany? No! But at least the country was in a position to score a better index, and a moderate government seems to be viable. Because it is not too harsh on the people but powerful enough to develop and sustain.
Every prerequisite (the human capital, monetary/pecuniary capital, and the natural capital) of economic growth, if perfectly utilised and mobilised then growth is necessary.

Development or democracy. What presides the other?

Industrialisation, in most of the industrialised countries, followed a course that has made some to conclude economic growth facilitates the coming of democracy but democracy can never be a prerequisite for it.
Gerring advanced that the call for democracy in poor countries where many are forced to live on one dollar a day (¼ of the world’s population) sounds less sensible than ‘food first’. Hence the economic advancement becomes responsible for the transformation a nation into a democracy. In most countries, as this statement implies, nothing will change instantly if earnings per capita are low, slack and still. Malawi, however, despite having a stagnant and struggling economy her democratic index has advanced positively and swiftly. Kersal and Both confirmed Gerring’s view: Multiparty electoral democracy will likely produce a negative impact on growth. When competing parties interchangeably influence the economy there is a possibility of some complete reversals on the projects once made by the other political group.

Did the downfall of the Soviet Empire in 1991 create a gap for democracy in Africa?

Socialism has been criticised by some scholars taking the position of the West and capitalism. As much as the system facilitated for the political independence of Africa, it is said to have brought brutal oligarchies. Thus the downfall of the leading patron left many states with no option but to adopt multiparty politics.
Post-socialist Africa has attested the transition into multiparty-electoral politics that is far from being the transition into democracy. Takaaki Masaki and van de Walle termed post-socialist African regimes ‘autonomous electoral autocracies’: These are not inclined to democracy, but they are corrupt and clientelist. Agreed, corruption is an always development’s worst enemy.However, when a dictatorial regime is less corrupt, development is likely to happen at a faster pace. This is likely to happen when the core possessing power is eager to fight corruption from the top. President Nyerere in Tanzania had been heroically fighting corruption in the same way.

What is democracy?

An American definition of democracy is simply a rule by the people. Any leader and his form of rule is therefore for the people and by the people. In fact, the leaders are far from being rulers but they are leaders and only leaders.

Now, there are two types of democracy, liberal democracy and illiberal democracy. A prominent African economist Dambisa Moyo claims 60% of the countries in this world are democratic but only 40%, if not less than that, are liberal and democratic. Freedom is an essential feature of democracy (…and that is a Western perspective). This means out of the total 20% of the countries are democratic but not liberal, and it is likely to see state capitalism fully operating in these economies. Let’s assume the other 40% (not democratic and illiberal)are military states with restrictive economies like Lao in Southeast Asia. However, everything should come under the radar; ‘democracy itself is concisely difficult to describe.’ A moderately democratic country should score at least 6 on the ratings of democracy index and countries scoring below 5 are non-democratic. See Wikipedia (the index chart).

The controversy in Africa: Some questions answered.

In Africa, Botswana rose from ashes as a transitional-democratic country, and she refrained from being a military state. If her neighbours had followed the same path they could have managed to develop at such a pace (that isn’t, however, a perfect opinion). Repressive economies, lacking transparency killed the trail of African development. Of course, Botswana is not so much a developed country but it stands well in a perfect position when its economy is measured as per African standard. Private capitalism and semi-liberalism are the pillars of the nation’s success. When considering factors for her higher income per capita, however, the size of her population (2 million) should not be left out, and liberal democracy should be another.
In contrast, Masaki and van de Walle pointed out that tough economic decisions were made in Ethiopia because the government had already removed the threat of facing the voters and that brought about growth and assured the availability of the much needed foreign currency. The policy formulators can choose, for example, to make the Ethiopian’s airline business great unopposed in Ethiopia at the expense of the agricultural sector because they simply dictate. Whilst in Botswana there is a special body that even a president is obliged to adhere to. A policy cannot be exercised before the body has allowed it to happen. Power is centralised and so are the economic gains.
Tracing the history of Tanzania’s economic crisis the ‘dictatorial factor’ should be left out. Agriculture has been the fountain of the economy, instead of strengthening it the authority suffocated it in favour of the manufacturing sector. Some of the revenues generated from agriculture were not returned back for further developments but diverted into the manufacturing sector. Of course, some other reasons as the worldwide oil shocks can find a place to fit in but it could have been better if the government had stood by agriculture for a while but that was not the case because there was none (like in the context of Botswana) to question the riskiness, or for the moderation, of the policies implemented.

What about income equality in more centralised economies.

Agreed, the economy in most instances advances with no democracy, that growth can lead to democracy at a later date. This question, however, remained unanswered; if democracy fails to exists at this later stage as in Russia what will happen? In the author’s opinion, income inequality will become and will remain a problem. Russia has the highest number of billionaires whilst some people are living in poverty, making the nation the most unequal amongst all other major countries. Some (poverty-stricken) have been reported as relying on food aid. The schism between the poor and the rich is deepening incessantly, but equality is to be traded for political and economic disruption—imposition of democracy and the transfer of economic/political power. Most post-socialist African countries share the same story with their former club patron.
As the economy grows in some ethnically divided countries, income gains and income opportunities may remain under the confinement of one ethnic group. In some instances, the lack of democracy and this ethnic consciousness may inhibit the economy to take off. Uganda is a perfect example. The country faced many tumults, consequently, various ethnic groups were severely crushed. Since the 1970s the country failed to utilise its resources to gear up its economy after trapping itself in conflicts. Two things became an outcome economic inequality and a very slow growth.
The other essence of a restrained economy; the muscular side gains more and the feminine remains a loser. Liberal democratic economy presents an equality of opportunities economically so that income differences across gender remain lower.
Suppression of the labour force, labour movements and trade unions equates to poor quality of living. Labour wages remain lower and stagnant. However, China is showing a rapid rise of labour wages despite a longtime stalemate in democracy levels (which can place her in the same bracket with Zimbabwe). Economic development, unlike economic growth, is observed through watching the effect of the figures (growth) and the quality of living. The lack of democracy negatively affects the effect of economic growth, that is economic development.
To completely rule-off the effectiveness oligarchy over the quality of living is an injustice. Despite a fairly low per capita income below $7000, Cuba has one of the best social service provision, health facilities and education facilities, this yields to a high life expectancy when compared to the rest of South America.

Is democracy economically a victor over non-democracy?

Quite contrary to some of these views, John Gerring have argued that democracy can only affect the economy positively when existing as a stock democracy. Stock democracy is a long existing democracy, and in this case, America’s qualifies to be a one. Rather than democracy measured only in degrees or judged through indexes, it is only when measured by years of existence in one country that it positively defines the growth and development of the economy. The Spanish dictator Franco died in 1975 that led to a quite reduced pace of the economic growth as Spain quickly transitioned into democracy. What became a clear stand-up idea for a once termed as a sequitur is that a decade after Franco’s death Spain’s economy picked up a faster pace.
The case of Cuba is an engrossing one in that just like South Korea stood as US kid Cuba inclined herself to the other competing power [the Soviet Union]. David Ray determined the end result: Cuba remained a periphery of the Soviet, supplying raw material like sugar whilst South Korea (once a periphery to the US) developed herself into being a core. South Korean manufacturing industry picked up at a faster pace, and today some leading brands like Samsung are well much advanced for a country that was once a periphery. It can not be said South Korea was democratic but the form of governance was moderated one (paragraph 1). Military and dictatorial states like North Korea allots much of the national budget into the military and the armaments manufacturing industry. But if somehow someday the same nation changes its focus from armaments industry the same industries will transform the North Korea into being another Asian tiger cub. This ‘transition’ does not imply that North Korea has to accept democracy for it to happen but to change the writing font: fewer restrictions on the economy and a room for private investments.

Sources and Annotations.

‘Why Africa is poor’, (in) Daron Acemoph and James A Robinson Eds., Economic History Society of Southern Africa,Rutledge pp. 21-50.|ISSN 2078-0389|

Katy Barnato, Russia is the most unequal major country in the world: Study (accessed 20/10/2017)

Takaaki Masaki and Nicolas van de Walle, The impact of democracy on economic growth in sub-Saharan Africa, 1982-2012, (United Nations University World Institute for Development Economics Research 2014), Wider Working paper 2014/057.

John Gerring, Democracy and Economic growth: A Historical Perspective, (accessed 20/10/2017)


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