why is democracy slow in economic developmebt then in non-demoratic
country ? Give any 5 reason
Answers
Explanation:
Democratization of a country from a non-democratic regime is usually preceded by a fall in GDP, and a volatile but expected growth in the long run, While on the other hand authoritarian regimes experience significant growth at the beginning and decline in the long run.[4] The cause of such behavior is that non-democratic regimes, mainly authoritarian ones, are more effective at implementing decisive policies and choices as well as solving ethnic and sub-national conflicts, but are unsustainable in the long run as there is more incentive to extract money from society which in turn leads to less prosperity.[5] Democratic regimes revolve around institutions and policies which lay the foundations, through which principles of liberty and equality are designed and followed, thus directly or indirectly affecting firms or individuals who benefit from the directives and increase their growth, which in turn has a positive impact on economy.[6]
The positive changes of democracy to economic growth such as delegation of authority and regulations of social conflicts heavily outweigh the negative and restrictive effects, especially when compared to autocracy. One of the main reasons for this is that society, i.e. voters are able to support difficult trade offs and changes when there is no perceived alternative. This is primarily true in countries with a higher level of education. So it ties the development level of a country as one of the decisive factors to undergo positive democratic changes and reforms. Thus, countries that embark in democratization at higher levels of education are more likely than not to continue their development under democracy.[7]
As mentioned before, all of these factors do not guarantee success. As for each such case, there is a failure. There is never a single formula for democracy. The processes in associations with peace, social stability and rapid socioeconomic development are not yet fully understood, which may be the reason for a widespread opinion and many hypothesis.[8]
A 2006 meta-analysis found that democracy has no direct effect on economic growth. However, it has strong and significant indirect effects which contribute to growth. Democracy is associated with higher human capital accumulation, lower inflation, lower political instability, and higher economic freedom. Democracy is closely tied with economic sources of growth, like education levels and lifespan through improvement of educative institutions as well as healthcare. "As democracy expands in developing countries, newly empowered workers are likely to demand better living conditions, health care, access to clean water, and so on—all conditions that contribute to increased life expectancy and, in turn, to increased productivity".[9] There is also some evidence that it is associated with larger governments and more restrictions on international trade.[10]
If leaving out East Asia, then during the last forty-five years poor democracies have grown their economies 50% more rapidly than nondemocracies. Poor democracies such as the Baltic countries, Botswana, Costa Rica, Ghana, and Senegal have grown more rapidly than nondemocracies such as Angola, Syria, Uzbekistan, and Zimbabwe.[11]
Of the eighty worst financial catastrophes during the last four decades, only five were in democracies. Similarly, poor democracies are half likely as nondemocracies to experience a 10 percent decline in GDP per capita over the course of a single year.[11]
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Answer:
A democratic society is often regarded as a prerequisite for economic growth and development. Yet, most empirical studies are not capable of identifying a positive link between GDP growth and democracy indexes.
In addition, it is a stylized empirical fact that:
(i) most developing countries are dictatorships
(i) most developing countries are dictatorships(ii) many poor dictatorships have experienced high growth performances and emerged from poverty such as South Korea, China and Egypt.
Against this background, it is of interest to analyse in which ways the growth performance between autocratic and democratic economies may differ, in particular among low-income countries. To answer this question, we compare the endogenous growth paths of two economies that differ only in their political regimes in the context of an overlapping generations model.
The key features of the model are:
(i) a positive bequest motive in the form of investments in education or productive public
capital (infrastructure).
(ii) a higher marginal (inter-temporal) utility of consumption today versus consumption tomorrow in low-income countries
for example:-subsistence level of consumption.
(iii) a dictator that cares about her income or the income of her dynasty tomorrow. In this framework, we demonstrate that poor but large and stable dictatorships exhibit a higher equilibrium growth rate than comparable (equally poor) democracies.
Moreover, there exists a particular threshold value in income such that the growth-reducing impact of dictatorial consumption (corruption) outweighs the higher (initial) public investments. Above this, the growth rate under democracy dominates the one in dictatorship.