Russian economist Vladimir Popov spoke in one of my classes today on democracy and development in transitional economies. His research focuses on countries which were previously command economies with authoritarian governments, but which have liberalized in terms of legal and/or political institutions. His conclusions were surprising: the countries with less democratization of their political structures showed consistently better econonomic growth, as long as they had liberal legal institutions. That is, the best performers were countries that protected individuals' civil and property rights, but localized political power in a strong central authority.
The conventional wisdom, which most Americans would seem to buy into without question, is that democracy is a sure engine for economic growth. But this just hasn't been the case with transitional countries - the impressive economic success stories of Singapore, South Korea, and to a lesser extent China have been achieved by authoritarian political structures atop rapidly liberalizing legal and civil institutions.
Mr Popov is not arguing that democracy is a bad thing - obviously there are reasons besides economic growth for implementing political reforms! - but it's important to weigh the costs of democracy along with the benefits. Democratic reforms in Russia, for instance, have led to a crippling deterioration of the rule of law, leaving the economy without the vital institutions it needs to grow.
Right now all eyes are on Iraq, and the hope is that a successful democracy will emerge - one that will demonstrate the potential democracy has for the entire Arab world. The neocons have argued that Iraq is a perfect case for democracy, and there's some reason to believe that in this case they're right. After all, Iraq has a highly educated populace, relatively equal rights for women, and even a secular state - all important institutions for economic development.
What's a little muddier is how this strategy will work in countries lacking such a strong institutional framework. It may be disingenuous to claim that democratic reforms will instantly transform the economies of the Arab world. Working to build strong civil and property rights, along with institutions that defend them, might be a more prudent first step.
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