The relation between democracy and development

Democracy as a condition of economic development

Before the Arab Spring revolutions broke out, bringing about deep transformations in the Arab countries of North Africa, the complex dynamic at work in these societies had helped autocratic forms of government establish a stable foothold and foreclose the possibility of any movement towards democracy. With that understanding in the background, we can go back to the question of how authoritarian forms of government work not only against democracy but also against economic development.

As Gema Martín Muñoz (2010, 27) points out, the relation between economic development and democracy has often been analysed as one in which the latter follows from the former: economic development fosters democracy, which cannot take hold without economic development as a necessary background condition. But an analysis of Arab societies suggests that “this so-called ‘virtuous circle’ will not produce the hoped-for results” (ibid.), and that what holds is actually the inverse of this relation, meaning that there can be no economic development except against the backdrop of democratic institutions, which therefore act as a necessary condition of economic development.

To see this, we can turn once more to Martín Muñoz, whose analysis is worth quoting in full:

Authoritarianism has engendered clientelist behaviour, systems of patronage and networks of corruption. For this reason, economic liberalisation processes tend to be imperfect and incomplete. Liberalisation in the strict sense of the word, which would mean the independence of economic actors from politicians, the rule of competition, transparency, and the suppression of monopolistic practices, is obstructed because traditional elites seek to protect themselves from transparency and from the emergence of new autonomous elites that could challenge them politically.

Consequently, there has been resistance to introducing the necessary juridical changes [...]. So efforts are made to maintain the economic role of the state, while increasing the private sector, which leads to a worrying bifurcation of economic policies, because the private sector forms a parasitical relationship with the public sector, or privatisation is limited to selective, less productive, economic sectors [...]. This way, the state preserves its power and autonomy while selectively offloading economic decisionmaking to a protected market. As a result, although some macroeconomic indicators may have improved, the benefits have not been distributed among the general population.

On the other hand, the interplay between population growth, political authoritarianism and the unequal distribution of wealth is producing a vicious circle of political alienation and economic marginality that progressively fuels support for resistance movements, including violent ones. Because of this potentially unstable situation, the region attracts very little foreign investment (only 5 percent of European investment in emerging countries goes to southern Mediterranean countries as a whole, and only 1.5 percent of world investment enters emerging countries). This reflects the mistrust felt by potential foreign investors about a region they regard as blighted by political instability and poor governance, not to mention poverty and illiteracy, and where political methods of managing tensions have tended to be superseded by military methods. (Martín Muñoz 2010, 27-28; footnotes omitted)

 
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