Excerpt: The Democracy Advantage

Acknowledgments

From the initial discussions that were the genesis of this book through the research, critical feedback, and physical production that have gone into its publication, we have benefited enormously from the intellect, expertise, encouragement, and hard work of numerous individuals whose help made this book possible and to whom we are deeply grateful.

Les Gelb and Larry Korb were early and unwavering enthusiasts for this project and the imperative of better understanding the complex interrelationships between democracy and development so as to guide policy during this exceptional era of political and economic transition.We also thank the Council on Foreign Relations for its comprehensive support to this project throughout its lifetime. It has served as a superb institutional home to this effort.We owe a debt of gratitude to Hank Greenberg, in particular, for his vision to spur the Council to devote more attention to the intersection between politics and economics.

The project benefited intellectually from some of the world's sharpest minds on the political and economic challenges to development. These contributions came in various forms. We would first like to acknowledge attendees to the White Oak workshop, which served as a kick-off to the project in its most unformulated stage: Nancy Birdsall, Larry Diamond, David Dollar, Stephen Heintz, Robert Herman, Terry Karl, Allan Meltzer, Joshua Muravchik, Joan Nelson, Minxin Pei, Theodore Piccone, Joseph Stiglitz, Nicolas van de Walle,Mark Weisbrot, Jennifer Windsor, and David Yang. We also profited from several subsequent study group sessions that aided in the evolution of our thinking. Additional participants to these meetings included: Jonathan Berman, Gail Buyske, Carolyn Campbell, John Cavanagh, Natasha Despotovich, Nadia Diuk, Eleanor Fox, Carol Graham, Wendy Luers, Barry Metzger, Sakiko Fukuda-Parr, Kilaparti Ramakrishna, Amity Shlaes, and Samuel Smoots. Feedback from participants in several additional seminars further deepened our understanding of common perceptions in the foreign policy community on the relationship between democracy and development. We appreciate their engagement and contributions.

A number of individuals gave generously of their time in one-on-one sessions. Their expertise and perspective generated an enormous amount of constructive feedback in particular subject areas.We are thus grateful to Daniel Adams, Thomas Carothers, Carl Eicher, David Hamburg, Gary Hufbauer, Bruce Klatsky, Monty Marshall, Johanna Mendelson-Forman, Barry Metzger, and Adam Przeworski.

Detailed comments on draft versions of the manuscript by James Lindsay and an anonymous reviewer also contributed valuably to the final product.

We are perhaps most indebted to the research assistance of Kristin Gosselin and Cheryl Igiri whose talents, creativity, enthusiasm, attention to detail, and tireless commitment have left their mark on every page of this book. Owing to the broadness of the subject matter as well as the quantitative and narrative analysis involved, this project presented a particularly robust series of research challenges. Nonetheless, these two young scholars were indefatigable in tracking down relevant information in whichever dimension of the undertaking they were working.

Essential research and administrative support was also graciously provided by Rene Bartholomew, Michelle Baute, Ian Bournland, Olivia Carballo, Mirna Galic, Bridget Grage, Julanar Green, Lilita Gusts, Oakley Johnson, Raena Khorram, Jonathan Kirschner, Michael McCarthy, Elizabeth Packard, Elli Parsa, Christine Quinn, Courtney Rusin, Garnett Russell, Christie Seefried, Marcia Sprules, Connie Stagnaro, and Tom Wasiak.

We are furthermore grateful to Trish Dorff and David Kellogg who shared extensively of their expertise and time to streamline the manuscript style-and ensure early drafts found their way into the hands of the right publisher. Their efforts led us to Routledge, who in the person of Rob Tempio has demonstrated all the intellectual vibrancy, enthusiasm, and openness that we could have hoped for in an editor.

Finally, we wish to thank the Hewlett Foundation, the Open Society Institute, and BP for their commitment to and interest in the unfolding questions of how democracy influences economic development. Their financial support to this project has been highly valued. The views and positions taken in the book, naturally, are solely those of the authors.

Foreword

Over the years many have claimed that some kind of dictatorship is needed to get economic development going in poor countries. Dictatorships are more capable of maintaining stability, holding wages down, and forcing high savings rates that lead to economic development. Economic growth under autocratic regimes eventually leads to democracy.We are invariably reminded of these perceived truths during economic or political crises in poor countries. And poor countries - with their grinding material privation, corruption, propensity for conflict, and instability - are no strangers to crisis.

The Democracy Advantage: How Democracies Promote Prosperity and Peace provides a cogent,well-documented refutation of the dictator-is-best nostrum.Moving past the anecdotes that have perpetuated the myth of authoritarian superiority, this book painstakingly examines the social and economic track record of all developing countries over the past 40 years. In the process, it exposes the fact that the development performance of the typical authoritarian government has been abysmal. By contrast, developing countries that adopt democratic institutions have posted consistently stronger economic results - providing more ample supplies of basic goods like health, education, and food production that shape the lives of the vast majority of people in poor countries.

Recognition of a democratic advantage should reshape the West's strategies to reduce poverty, enhance economic development, and stoke opportunity in the two-thirds of the world that remains mired in poverty. Yet forces within the current global system that might push individual countries in a democratic direction are missing. International banks and multinational corporations often feel more comfortable with a strong, if autocratic, regime. Development strategies typically ignore how aid recipients are governed. Such direct or implicit support for autocratic leadership reflects a more fundamental reality - many people living in industrialized democracies do not believe in democracy as a universal principle.

Economic progress in the modern world requires people to discuss ideas candidly and imaginatively. This is far more likely in open societies. Though at times slow to make decisions and quick to generate disagreement, democracies offer unmatched economic and political strength. They embrace participation, competition of ideas, and access to information - all of which leads to more responsible politics, checks on the hegemony of an ideology, and self-corrective mechanisms to mitigate disaster.Good governance and sustained strong economies feed on each other.

We must also take the right lessons from history and not be stampeded into sacrificing the fruits of democracy in the face of pressing security arguments.

Fascism and communism ensnared large segments of the global population in their ideological vise - populations who otherwise may well have chosen the path of freedom. Protagonists on both sides of the Cold War perpetuated authoritarian systems so as to advance their ambitions.

Today, the war on terrorism threatens to do the same, once again making the promotion of democracy subservient to demolishing this latest evil.Yet although democracies are not immune from terrorism, they are far less likely to be complicit of coddling terrorist networks or proliferating weapons of mass destruction. Many policy thinkers argue that we face a choice between security and democracy. The Democracy Advantage proves this to be a false choice. Only by enthusiastically supporting democracies and democratizing countries can the industrialized powers buttress a stable, secure, and prosperous world.We bypass democracy promotion at this juncture of history at our own peril.

This book offers bold, practical policy recommendations of what should be done to knock down the historical and bureaucratic barriers that constrain the West's support of democracy in poor countries. It makes a compelling case that an agenda to promote economic progress should start with a focus on poor countries that are taking the difficult steps to democratize.

The creation by the United States of the Millennium Challenge Account, which rewards countries that rule justly, is a hopeful development in this direction.

This is an important work addressing some of the most fundamental challenges of our time. Everyone who has an interest in the economic development of poor countries, democratization, or international security can learn from this shrewd analysis.

George Soros

Prologue

Debate over the relationship between democracy and development has long been controversial. Although Western nations have embraced liberal, pluralistic political traditions and enjoyed widespread prosperity, there have been persistent doubts in diplomatic and academic circles over whether democracy is right for other, less prosperous parts of the world.

For most of the post-World War II era, the prevailing view has been that economic development should precede democracy. The urbanization, expanded literacy, and broadened middle class that this economic growth could be expected to bring would pave the way for the political power sharing, compromise, and common identity required for a democracy to succeed.

By implication, this view holds that autocratic governments are better able to generate development at the early stages of a country's development. Poor countries have been seen as particularly ill suited for democracy. The absence of a literate, middle-class society made them susceptible to manipulation by elites. Self-governance in predominantly poor societies would also lead to demands for immediate redress from their many problems.

The state would be forced to take fiscally irresponsible and unsustainable policies. The ensuing macroeconomic instability would undercut prospects for growth. Everyone would be worse off. Holding elections in the already fractious ethnic settings that characterize many low-income societies was likely to be polarizing. Civil strife would be the inevitable outcome.

Compounding these concerns has been the belief that the cultural values in certain societies-be they Asian, African, Eastern European, the former Soviet republics, or Arab-were inherently incompatible with democracy.

Despite these views, since the late 1970s and particularly the end of the Cold War, a steady stream of poor countries has taken substantive steps toward democracy. Is this a good thing? Should the international community more vigorously support the emergence of democracy? Or should stability be the primary goal? What are the implications for economic development and international security?

Nearly 15 years after the collapse of communism, we felt it was time to take stock of what we now know about the relationship between democracy and development-and in the process attempt to provide answers to these questions. Thus, this book. Our collective experience in the foreign policy, development, journalistic, and academic worlds suggested to us that the recent democratizing trend was indeed positive for alleviating poverty and advancing economic development. Rather than there being a trade-off between democracy and development, we saw the two as compatible and complementary. In fact, given the propensity of many Third World authoritarian governments to monopolize political and economic power, thereby stymieing broad-based progress, in our view, only after some degree of popular political participation were established could most poor societies realize economic advancement.

We realize our position cuts across the grain of much conventional thinking on this subject. Popularized in 1959 by Seymour Martin Lipset, the revered former political sociologist at Harvard and Stanford, and frequently repeated since then in scholarly journals, textbooks, newspaper columns, and foreign policy lectures, the economic superiority of authoritarian governments over democracies at the early stages of development comes close to dogma within foreign policy circles. This view had particularly deep resonance during the Cold War when the prospects for any sudden shifts to democracy appeared remote and the West was supporting numerous autocrats in its life-and-death struggle against communism.

Rather than fading away since the demise of the Soviet Union, however, the conventional view has instead been revitalized by a new generation of writers and continues to be taught as doctrine to graduate students in international relations programs at leading universities.1 The belief in an "authoritarian advantage" remains widespread among many economists, national security experts, ambassadors to Third World countries, aid officials, heads of United Nations (UN) missions, and other individuals who shape the policies of the international community toward the developing world.

More is at stake in this debate than reducing poverty and spurring economic growth around the world, pressing as these goals are. Countries facing stagnant economic development are more vulnerable to political instability and violent upheavals. Once civil conflicts begin, they tend to persist and eventually to spill over into neighboring countries. Similarly, to the extent that autocracy and underdevelopment contribute to the viability of international terrorist organizations, realpolitik calculations to support certain authoritarian governments may, in fact, be undermining international security.

Our research shows that democracies have compelling advantages over their authoritarian counterparts in fostering social and economic development. We will present the evidence. But our purpose goes beyond an examination of the track record. Recognizing the economic and security virtues of democracy in poor countries fundamentally alters strategies for augmenting international development and security in the early twentyfirst century. Making such changes will be a considerable undertaking. With this book we aim to advance this process by laying out a series of farreaching recommendations for United States and international policymakers to consider as the global community grapples with some of the most pressing challenges of our time.