1. Small group discussion activity to conclude institutional design. 2. Understand potential dangers for democracy in economic reform process. 3. Learn.

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1. Small group discussion activity to conclude institutional design. 2. Understand potential dangers for democracy in economic reform process. 3. Learn and assess between sides of debate on “authoritarian advantage” in economic reform/ performance.

 Iraq, South Africa, Russia groups. 1. Would you have a presidential or parliamentary executive? Mechanisms for balancing powers? 2. What would the electoral system be for electing legislative and executive leaders? 3. What are your reasons for choosing these institutions?

Democratization & Economic Reform

Dangers for democratic regime  Economic deterioration may erode people’s attachment to democracy.  Extremist parties may gain power.  Growth of voter apathy.  Danger of coups.

Dangers for democratic regime  Leaders may seek to “ram through” reforms to break political logjams.  Strong presidency or multiparty parliament preferable?

Common issues of conflict and controversy 1. Role of the state in economic development. 2. Distributional consequences of reform (who gets what?). 3. Government accountability.

“Authoritarian advantage”?

Pro-Authoritarian Argument 1. Democratic governments may lack capacity for quick action. 2. Workers’ demands in democracy reduce profits and investment for growth. 3. Democratic citizen demands for social programs divert monies from investment.

Pro-Democracy Argument 1. Authoritarian advantage depends on enlightened dictator. Why would dictator invest in country instead of squandering resources on self?

Pro-Democracy Argument 2. Democratic leaders face punishment at polls for failure.

Pro-Democracy Argument 3. Lack of rule of law in authoritarian regimes  investors fear to commit. Danger of losing property rights at any time.

Pro-Democracy Argument 4. Political freedom generates better information for decisionmaking.

Pro-Democracy Argument 5. Democratic governments are risk-averse. (Przeworski & Limongi) Tend not to invest in grandiose schemes.

Pro-Democracy Argument 6. Democratic legitimacy can weather economic crisis. (Huntington) Not based on performance legitimacy.

The Historical Record 1. “Authoritarian advantage” based on limited time period and regions. (Maravall) 1960s-70s Latin America 1980s-90s East Asian “tigers”

The Historical Record 2. No difference between dictatorships & democracies in growth rates (Przeworski & Limongi)