Social Effects of Democracy Political Economy of the Global South Prof. Tyson Roberts

What is Democracy? “that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote” (Schumpeter 1947) “a political system which supplies regular constitutional opportunities for changing the governing officials” (Lipset 1959) “a system in which parties lose elections (Przeworski and Limongi 1991)

What are some social requisites for a stable democracy? (per Lipset) Education Economic development Income level Industrialization Urbanization Access to telecommunications Access to media

What are arguments democracy might help or hinder economic performance What are arguments democracy might help or hinder economic performance? (per PACL) Help: Accountability => good governance Transparency => efficient allocation of resources Hinder: Unleash demands for consumption => less investment Enable organization (e.g., unions) => less investment

What are some economic effects of democracy? (per PACL) Poor countries: few effects Wealthy countries: Less labor participation Less labor exploitation Higher productivity

How does regime type affect the probability and manner of democratic transition? (per Geddes) Military dictatorships prefer negotiated democratization to revolution or war Personalist leaders have most to lose from democratization, less willing to democratize than military or party-based dictatorships Monarchies that share power with the family are more durable than monarchies with concentrated power

Why did dictatorships fall during the 1990s? Withdrawal of support from USSR & West Example of overthrows in E. Europe Aid conditional on democratization Miscalculation – sycophants tell dictators they can win multiparty election, then they lose Kaunda in Zambia Obasanjo in Nigeria Suharto in East Timor (independence vote)

What aspect of democracy did aid donors emphasize post-Cold War? Multiparty elections

How might democracy affect proneness to political violence? Reduce political violence Accountability => good governance (less need for violence) Legitimacy => opposition should peacefully accept government policies Increase political violence ?

Differences in preferences Why does ethnic diversity hinder investment in public goods? (per Easterly, Collier CH2) Differences in preferences where to put roads, language taught in schools, where to put hospitals, etc. Less willingness to spend on public services perceived to aid other groups Greater willingness to hurt economic growth by taxing other ethnic groups for redistribution Example: Indians in East Africa

Does ethnic diversity always lead to low growth and conflict Does ethnic diversity always lead to low growth and conflict? (Collier, CH2) No Diversity may increase productivity in the private sector More points of view, different skills, etc. Diversity is less damaging at higher income levels Ethnic identities can be suppressed in favor of national identities

How does democracy affect political violence empirically? No effect when looking at all countries Middle and high income countries => democracy reduces risk of political violence Low income countries => democracy increases risk of political violence Why?

Example: Iraq

Under Saddam’s authoritarian rule, 1979-2003 Kurds and Shiites repressed Occasional state-sponsored violence (e.g., 5,000 civilians killed by mustard gas in 1988) Overall, fairly stable

Democracy introduced in 2003 Kurdistan has own army Massive Shiite vs. Sunni violence ISIS takes over Western part of country

Why democracy does not reduce political violence in low-income countries Voters uninformed, don’t understand choices in election Weak state capacity + economic dependence on commodities Poor economic performance may be due to external shocks (e.g., commodity prices), not government performance Voters more likely to vote based on ethnic identity Temptation for politicians to intervene in economy to reward loyal supporters

What are options available to politicians in low-income countries? Become a good government – DIFFICULT! Lie to electors – EASY BUT CREATES CYNICISM Scapegoat a minority – EFFECTIVE! BUT UNDERMINES PEACE & PROSPERITY Bribery– WORKS SHORT TERM BUT UNDERMINES CAPACITY Intimidation – WORKS SHORT TERM BUT CAN CREATE BACKLASH Restrict the field to exclude strong candidates – WORKS SHORT TERM BUT CAN CREATE BACKLASH Miscount the votes – WORKS! BUT OBSERVERS DON’T LIKE

What are country examples of these tactics? Results?

What to do? Promoting multiparty elections in poor countries can result in violence For STABLE democracy, aid donors should promote the social requisites Education Economic development Good governance (rule of law, low corruption, etc.) Independent media, etc.

Final Exam 10 multiple choice questions 3 essays, choose 2 Big ideas, 1 per week 3 essays, choose 2 Extra credit questions based on presentations Send me your slides

Sample Essay Questions How do international economic relations affect economic development and democracy? Address aid, debt, FDI, and trade Give specific examples Draw on class readings to explain economic and political outcomes in Bolvia and Zaire, as portrayed in the films. Use at least one major reading from before the midterm and one after the midterm

Sample Essay Questions How does natural resource endowments and colonial history affect economic prosperity and democracy in the Global South? Why did many Global South governments use state-led development policies during the post-WW2 period and abandon those policies later? What were the economic and political results? How does the World Bank define “institutional quality”? What are some determinants and effects of good vs. poor institutional quality?