Democracy is key to economic success

Stacking up progress: One of the inherent strengths of democratic systems, apart from bringing economic benefits, is their flexibility and pragmatism. (Finbarr O’Reilly/Reuters)

Stacking up progress: One of the inherent strengths of democratic systems, apart from bringing economic benefits, is their flexibility and pragmatism. (Finbarr O’Reilly/Reuters)

DEVELOPMENT

The first reason for supporting democracy in Africa is that the continent’s democracies have typically posted economic growth rates that are one-third faster than its autocracies. They are, therefore, better equipped to create the numbers of jobs required as their populations expand.

This matches what has been seen globally and over a longer time frame. For example, as the work by the Africa Center’s Joseph Siegle and his colleagues illustrates, since the end of the Cold War, only nine out of 85 autocracies worldwide have realised sustained economic growth. Moreover, 48 of these autocracies had at least one episode of disastrous economic experience (defined as an annual contraction in per capita gross domestic product of at least 10%) during this period.

There is a link between democratic and economic performance in this regard. Of the top 47 countries in the United Nation’s human development index — that is, those classified as having “very high human development” — 41 are deemed as “free”; two (Singapore and Seychelles) as “partly free’; and just four (Brunei, Hong Kong, the United Arab Emirates and Qatar) as “not free”.

Analysis by Nicolas van de Walle and Takaaki Masaki substantiates further the link between democracy and growth. In scrutinising 43 (out of 49) countries in sub-Saharan Africa for the period 1982 to 2012, the authors found “strong evidence that democracy is positively associated with economic growth”, and that this “democratic advantage” is more pronounced for those African countries that have been democratic for longer periods of time.

A calculation on the basis of the Freedom House classifications shows that GDP growth in those countries classified as “free” is substantially higher than growth in the “partly” and “not free” categories.

As can be seen, the performance of the “not free” group is considerably worse if the oil-producing states (Sudan, Equatorial Guinea, Angola, Gabon and the Democratic Republic of Congo) are omitted. Although, in the short term, commodity endowments can push up growth rates, over the medium to long term, the quality of governance becomes more important because commodity prices are cyclical and good governance is necessary to garner investment.

Not only do democratic regimes improve accountability but also the great asset of democracy is that it enables a test of philosophies in the marketplace of the political consumer. One of the inherent strengths of democratic systems is their flexibility and pragmatism. They enable consensus — that aid is no longer a panacea, that regional integration needs to be promoted, that investing in education and skills is essential — to be implemented and institutions to work.

Democracy makes politics and policies more competitive, something particularly lacking under autocratic regimes and, to be successful, businesses and economies need a competitive edge. Thus, a “benevolent dictatorship” comes with a cost to potential economic growth.

This argument is reinforced by the poor performance of military regimes. Since the end of the Cold War, the number of military regimes and the frequency of coups have significantly declined. Even though there has been revisionist literature on the impact of “good coups” in Africa, the record of economic management and political violence of the coup era speaks for itself, as African militaries have been worse at managing countries than their civilian counterparts.

Autocracies are typically three times more likely to have sharp economic declines leading to regular periods of crisis. This volatility is partly, though not entirely, owed to autocracies’ greater reliance on revenues from natural resources. Moreover, analysis shows that autocracies are more likely to recede in periods of economic stagnation (when there is per capita growth of less than 1%).

Indeed, this matches a wider pattern — globally, the degree of fluctuation of growth in autocratic regimes is substantially higher. The coefficient of variation (standard deviation over mean) for the autocratic growth rate since 2000 is 4.28; for mixed regimes it is 2.11; and for democracies it is 1.48. In other words, democratic growth has been about three times less volatile than that of autocracies.

In practical terms, this means that autocracies vary far more widely from year to year and among one another in their growth than do democracies. Consistency matters in growth and development; such volatility undermines the compounding impact of steady growth.

As noted above, a key component in democratic reform is the role played by the private sector. Where this is weak, it limits economic opportunity and the potential for job creation needed to turn around a stagnating economy. These periods challenge autocracies’ claims of “performance legitimacy” — or, essentially, legitimacy through delivery despite an absence of human rights — and can lead to more abrupt transitions.

The second reason for supporting democracy is that, historically, democracies have proved to be much more effective at resolving tensions and conflict within societies peacefully. Therefore, paradoxically, it is entirely in the self-interest of the leaders of authoritarian regimes to move towards democracy because authoritarian regimes often end violently, with serious consequences for the incumbent. Peace and stability, or the lack of it, have economic as well as social consequences.

Before 1990, sub-Saharan Africa had experienced 19 democratic elections, 14 undemocratic or contested elections and 77 incidences of undemocratic regime change. Seventeen heads of state died violent deaths in office or shortly after having been deposed in a coup.

The post-1990 reality of the continent is starkly different. Since then, there have been significantly more elections. By 2016, there had been 118 democratic elections, 77 undemocratic or contested elections and 34 undemocratic regime changes. Eleven leaders suffered violent deaths in office.

When the data is further disaggregated into the most recent Freedom House categories of “free”, “partly free” and “not free” countries, it’s possible to see how different trajectories of regime change affect the levels of freedom within a country.

This should not be surprising. “Democracies,” notes Kofi Annan, “have far lower levels of internal violence than non-democracies. In an era when more than 90% of wars take place within, not between, states, the import of this finding for conflict prevention should be obvious.”

Democracy produces orderly changes of leadership. It enables people to be patient for their turn, rather than revert to a coup. In this regard, the 1991 Organisation of African Unity Conference on Security, Development and Co-operation in Africa identified lack of inclusive democracy as the primary cause of insecurity on the continent.

A viable democratic dispensation offers the possibility of alternative government, and avoids government complacency.

Finally, and probably the foremost good reason for having a democratic system of government in Africa is that it’s the style of government that the citizens favour. The Afrobarometer index of demand for democracy climbed 15 points in 16 countries surveyed between 2002 and 2012, from 36% to 51%. Seven out of 10 Africans in 34 countries surveyed preferred democracy to “other kinds of government” by 2013.

The demand for democracy is strongest in West Africa. Africans also see elections as the best sign of a democratic regime. There are good examples, too, where democracy has worked in spite of a difficult inheritance.

This is an edited excerpt from Making Africa Work: A Handbook for Economic Success by Greg Mills, Olusegun Obasanjo, Jeffrey Herbst and Dickie Davis, published by Tafelberg

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