Democratic Outcomes Flashcards
Olson
- Property rights and constraints on government are necessary for economic growth.
- Only formal institutions of democracy are capable of providing necessary conditions for stable, long-term economic growth, because limited time horizons prevent dictatorships from committing
- Conditions underpinning democracy (e.g. rule of law, independent judiciary, etc.) also provide protection for individual rights that enables development
Acemoglu et al
Democracy causes growth. Democratic transitions increase GDP per capita by about 20% in the long run. Exploit waves of democratisation to identify the causal effect
Another study - used settler mortality rates used as exogenous determinant of contemporary political institutions that provide for protection against risk of expropriation. Find evidence of strong causal effect of institutions on income per capita
Acemoglu and Robinson
Redistribution - authoritarian governments favour interests of elites vs democracies favour broad range of interests
North
Property rights are protected under a democracy, government cannot arbitrarily seize private property, encourages investment and growth
Przeworski and Limongi
- Examined 18 different studies, concluding that 8 dictatorships grew faster, 8 democracies grew faster, 5 had no effect - hence inconclusive
- Rule of law, protecting intellectual property, patents, with stability of legal outcomes, protecting against expropriation, independent judiciary important. BUT is this the ‘liberal’ part of a liberal democracy and market liberalism, rather than the democracy itself?
- Democracies are less redistributive than we thought - 1) problem with system, or 2) median voter does not want redistribution? Eg. imperfect democracy with high amount of elite control, or other cleavages like cultural issues they care more about
Meltzer and Richard
More redistribution
As suffrage expands, the position of the median voter (whose preferences determine government policy) shifts down in the income distribution. Universal suffrage - median voter earns median income, less than mean income under inequality. Hence more economic redistribution
Boix
- Impact of econ development on public sector size conditional on political regime and level of electoral participation
- Democracy - politicians respond to voters’ demands so public sector grows parallel to structural changes and modernisation from economic development
Brown and Hunter
Latin America
1. In poor countries during economic crisis, democracies increase the allocation of resources to social programs relative to authoritarian regimes
2. Autocracies more constrained by economic forces, democracies more constrained by popular demand
3. 17 Latin American countries
Przeworski et al
No conclusive evidence either supporting democracy or dictatorship: total output grows at same rates
1. Higher inequality may be good (so democracies bad for development) - higher relative income can lead to higher rates of savings and investment and spur growth. Majority rule can also lead to policies less favourable to growth than policies that provide opportunities to just a limited part of the population
2. Arguments that democracies and dictatorships may be separately good for growth are not mutually exclusive (and could explain why there are not aggregate effects across the board) - eg. democracy hinders growth by reducing investment, and fosters growth by promoting allocative efficiency: the rate at which productive factors grow may be higher under dictatorship, but the use of resources more efficient under democracy
Lee thesis
- LKY - democratic rights and freedoms may give rise to demands for redistribution that can hamper economic growth by undermining economic efficiency, and authoritarianism may isolate technocrats from such popular pressures
- Strong state with developmental objectives (developmental state) necessary for extensive planning and regulation needed to promote growth in late industrialising countries, e.g. East Asian Miracle economies (Singapore, South Korea, Taiwan). Autocracies can mobilise state resources to shift people into more efficient sectors during industrial growth
- Can still redistribute from an instrumental perspective, to reduce inequality and achieve other outcomes
Barro
More political rights do not have an effect on growth. Rule of law is not strongly linked to democracy eg. Singapore has strong rule of law
Gerring et al
The net effect of democracy on growth performance cross-nationally over the last five decades is negative or null
Tabellini
Not democracy per se that creates higher growth; but because the key challenge for most developing countries is to create the basic legal and institutional infrastructures that protect property rights, enforce private contracts and allow individuals to freely take advantage of market opportunities
Besley and Kudamatsu (intro)
Democratic institutions encourage public goods provision because of representation, accountability and selection
Sen
- democracies allow the poor to penalise governments that allow famines to occur, so political leaders, acting strategically, will try and avert famines.
- democracies are better than nondemocracies at transmitting information from poor and remote areas to the central government due to freedom of press. Even if democratic and nondemocratic leaders are equally devoted to stopping famine, democracies are more likely to know when action is needed
- For economic growth to be achieved, social reforms eg. improvements in education and public health must precede economic reform