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Rodrik on The Myth of Authoritarian Growth

I really agree with Dani’s great article on this (HT Chris Blattman).

When we look at systematic historical evidence… we find that authoritarianism buys little in terms of economic growth. For every authoritarian country that has managed to grow rapidly, there are several that have floundered. For every Lee Kuan Yew of Singapore, there are many like Mobutu Sese Seko of the Congo.

Democracies … provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.

Authoritarian regimes, by contrast, ultimately produce economies that are as fragile as their political systems….

At first sight, China seems to be an exception. … Even though it has democratized some of its local decision-making, the Chinese Communist Party maintains a tight grip on national politics and the human-rights picture is marred by frequent abuses.

But China also remains a comparatively poor country. Its future economic progress depends in no small part on whether it manages to open its political system to competition, in much the same way that it has opened up its economy. Without this transformation, the lack of institutionalized mechanisms for voicing and organizing dissent will eventually produce conflicts that will overwhelm the capacity of the regime to suppress. Political stability and economic growth will both suffer.

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  1. John Gibbs wrote:

    With all due respect, it is ridiculous to refer to authoritinarianism as a single style of government. Most dictators are simply interested in self-aggrandisement. However, the historical evidence clearly shows a high economic success rate for “authoritarian” governments with pro-growth policies. This is because a big effort is required to kick-start the economic growth machine, and democratic countries which listen to dissenting voices tend not to develop sufficient momentum in a single direction. After the economic growth machine has got going, a transition to democratic government becomes desirable for continued growth.

    Posted August 17, 2010 at 5:49 pm | Permalink
  2. Dan Kyba wrote:

    Good article. It comes down to numbers and concentration/dispersion of power. Authoritarian regimes are at greater risk to capture by limited interests than democratic regimes, thereby compromising their ability to provide encompassing public goods (yes, I am basically an Olsonian at heart).
    Is democracy a prerequisite for economic growth and development – not really. Is democracy necessary to hold on to the gains of economic growth and development – absolutely.

    Posted August 17, 2010 at 9:42 pm | Permalink
  3. Jiesheng wrote:

    How do you explain East Asia’s growth surpassing that of Western Industrialised countries in the 1960s, 70s and even now? The fact is “democratic” (as no country in the world can be purely labelled democratic) countries need not start of with democratic means to create and maintain economic successes.

    Posted August 18, 2010 at 4:57 am | Permalink
  4. I like the article, although the references to the empirical research is a bit misleading. The fact is the evidence is decidedly mixed on whether democracy improves growth performance.

    I appreciate that Rodrik put specific predictions at the end, even if they are mostly for show. I’d like to know how long he believes it will take for Brazil to pass Turkey and India to pass China. Will it take 50 years, or 25? Or can we be bold enough to say some time between 2020 and 2030? Putting claims about development to the test is what this site is all about, isn’t it?

    Posted August 18, 2010 at 5:39 pm | Permalink
  5. Hak Lim wrote:

    The argument becomes moot when you look at the social costs of these authoritarian regimes.

    Posted August 19, 2010 at 2:15 pm | Permalink
  6. Hak Lim wrote:

    The argument becomes moot when you think of the social costs of these authoritarian regimes.

    Posted August 19, 2010 at 2:39 pm | Permalink

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