The case for democracy – a new study on India, South Africa and Brazil (shame it’s not much good – missed opportunity)

May 23, 2014

     By Duncan Green     

The ODI is a 10 minute train ride from my home, so I’m easily tempted out of my lair for the occasional lunchtime meeting. Last week it was the launch South African elections 1994of ‘Democracy Works: The Democratic Alternative from the South’, a paper on the three ‘rapidly developing democracies’ of Brazil, India and South Africa, co-authored by the Legatum Institute and South Africa’s Centre for Development and Enterprise (not ODI, who merely hosted the launch). I was underwhelmed.

Which is a shame, because the topic is great – China’s rise and the West’s economic implosion are undermining arguments for democratic and open systems around the world. The report quotes Jacob Zuma: “the economic crisis facing countries in the West has put a question mark on the paradigm and approaches which a few years ago were celebrated as dogma to be worshipped.”

The authors respond with a vigorous defence of democracy, broadly defined (not just elections):

‘The story of these three countries shows that inclusive growth is possible in a democracy; that democracy is not an obstacle to growth; and that democracy can in some cases be an enormous advantage to states pursuing high-growth strategies. Democracies can accomplish things that cannot be done in authoritarian states. Both elected leaders and their citizens can use the many rights, freedoms, processes, and institutions that comprise democracy to improve institutions when they falter or fail: fight the scourge of corruption; argue for rule of law, an independent judiciary, better legislation, and regulations; give legitimacy, and create support for policies which may at first seem difficult to accept.’

The panellists at the ODI avoided the temptation of saying democracy is a universal panacea: ‘it is empirically false that democracies grow faster than autocracies’, and settled for saying that democracy is not incompatible with growth, and as the previous para argues, even has some advantages.

By basing itself on actually existing democracies in the South, the report avoids what ODI boss Kevin Watkins called Bill Easterly’s ‘disastrous’ mistake of ‘establishing an evolutionary scale with the US at the top’ (I agree with Kev in my forthcoming review of Easterly’s new book, the Tyranny of Experts for an IMF magazine, and will post it here once it’s out).

The report also highlights the importance of ‘constitutional moments’ when new constitutions, agreed after periods of struggle and conflict, open up politics to new ideas and players, as in Brazil or South Africa.

So why was I underwhelmed?

Firstly the report’s unashamedly liberal capitalist stance produced some serious blind spots. Although the panellists denied it, lots of the talk of liberalization, bringing in the private sector on infrastructure and services, cutting fiscal deficits etc sounded pretty Washington Consensus (at least in its later variants). PPPs anyone?

So there is lots of vague language on ‘fairness’ and ‘inclusive growth’, but no serious discussion of inequality or redistribution, including the obviously critical question of why inequality is falling in Brazil, but not in South Africa and India. Instead, the focus is on efficiency and ‘unleashing the private sector’, for example by not overtaxing it – it could have been written by the IMF.

Second, if you’re going to study new democracies in the South, an interesting question is whether they differ from the old ones in the North, and if so how? But when I asked the panellists, they replied that there was really nothing to add to de Toqueville – democracy is democracy, anywhere and at all times. But surely it’s worth exploring possible differences, for example in the shifting balance between collective and individual rights; the role of participatory budget processes (Brazil); judicial activism in India; combined insider-outsider activism in South Africa (protesters dancing and singing outside the courthouse to keep the judges honest) or the relative efficacy of the nation state and more dynamic sub-national bodies such as cities or states in federal systems? Didn’t see much sign of any of that.

inequality brazilInstead what is presented is a curiously emaciated conception of democracy as a set of rules and top-down institutions, busily fighting corruption and fiscal indiscipline before periodically subjecting themselves to elections. And at times the conclusions get pretty banal: ‘democratic elections provide a mechanism for removing leaders’. Who new?

The report explicitly focuses on the economy and growth record, but ignores the important discussions in South Africa and elsewhere on whether you can have a ‘democratic developmental state‘, or whether growth take-offs necessarily involve a period of autocracy, as in the East Asian variant. And for my money, Dani Rodrik had more to say on all this in his paper on institutions and the quality of growth published back in 1999, which concluded, based on a sample of 90 countries from 1970-89:

  • Democracies yield long-run growth rates that are more predictable.
  • Democracies produce greater short-term stability.
  • Democracies handle adverse shocks much better.
  • Democracies deliver better distributional outcomes.


Rodrik argued that this is the case because democracy has more feedback loops – government reformers face lots of opposition (so there are fewer big booms), but also much better information when things start to go wrong (so fewer busts). In autocracies no-one wants to tell the General (we know what happens to messengers…..). See chapter 5 of Rodrik’s great book ‘One Economics, Many Recipes’ for more.

Back to the report – some papers stimulate because they make you argue with them in your head and think about what’s missing – this is one of those, and in that spirit, I would recommend it. And of course, if I’ve been unfair, I’m sure the authors will put me right – that’s the joy of blogs.

May 23, 2014
Duncan Green