Global Policy Forum

Adam Przeworski *

At one time, dictatorships were believed to promote economic development, while development was believed to generate democracy. Combined, these views fostered a faulty prescription for international development and US foreign policy. Both of these beliefs have now been proven false, but they are being replaced by new blueprints for development policies whose foundations are equally lacking in fact. As the wave of independence movements swept Africa after 1957, concern about the future of the so-called "new nations" gripped the attention of US scholars and policymakers. With the Cold War at its zenith, the Soviet Union welcomed the birth of prospective members of the socialist commonwealth, while Western observers feared the spread of communism around the world.

The Soviet Union offered an attractive blueprint for these new countries. With forced savings that reached as much as 40 percent of gross domestic product (GDP), coercive extraction of food from peasants, and giant projects for exploiting mineral resources, communist countries grew at impressive rates. Their leaders confidently predicted that in the near future, the Soviet Union's per capita income would surpass Great Britain's. Eastern European countries, for example, industrialized rapidly after World War II, making Romania the successful economic "tiger" of the 1950s—at least if one were to believe the government's own statistics—with other Eastern European countries not far behind.

Communism appealed to the poor masses around the world by presenting itself as the shortcut to modernity. Communism's claim to legitimacy was its unique capability to mobilize resources in order to break the chains of poverty. Communists plastered walls and minds with images depicting the growth of homes, schools, steel mills, and armies. These Communists believed they would eradicate poverty, generate affluence, enable countries to assume their rightful place among the powers of the world, and, by the example of their success, convert others to their ways.

The economic successes of communist dictatorships sowed doubts even in the minds of committed democrats. Perhaps development did in fact require order and discipline, and maybe democrats were wrong to trust their methods to lift the poor masses from their plight. Many scholars concluded that the economic effectiveness of dictatorships was simply a fact of life that should be confronted courageously, admitting democracy was a luxury affordable only after the hard task of development had been accomplished. To cite just a few typical voices of the time, Walter Galenson claimed in 1959 that "the more democratic a government," the "greater the diversion of resources from investment to consumption." Karl de Schweinitz similarly argued that if the less-developed countries "are to grow economically, they must limit democratic participation in political affairs."

Joseph La Palombara thought, "If economic development is the all-embracing goal, the logic of experience dictates that not too much attention can be paid to the trappings of democracy." The conclusion was obvious. As Samuel Huntington and Joan Nelson put it, "Political participation must be held down, at least temporarily, to promote economic development." As 1975, impressed by the growth of communist countries, Huntington and Jorge Domí­nguez observed while all affluent countries had democratic regimes.

Taken together, these views implied that the road to democracy is circuitous. Dictatorships would generate development, and development would create democracy as a by-product. They justified supporting dictatorships and letting modernization do the rest. Later on, as optimism waned, it turned out that only dictatorships friendly to the United States, "authoritarian" ones, were capable of pursuing this path, while "totalitarian" dictatorships were incapable of change. Only when the dominoes finally fell—albeit in the unexpected direction of democracy—did serious questions emerge about this entire view. But doubts linger, and versions of this theory abide. For many, Chilean General Augusto Pinochet's dictatorship was the paradigm of successful economic reforms, while the economic success of authoritarian China stands in contrast to the failure of democratic Russia. Even though democratic ideals nourish political forces from Argentina to Mongolia, many are still attracted to the idea of a "strong" government insulated from pressures, guided by technical rationality, and capable of imposing order.

Modernization Theory

The views that dictatorships promote development and that development breeds democracy are both false. There is now a broad consensus that political regimes, dichotomized as dictatorships and democracies, do not differ on the average in their annual rates of growth of total income. Between 1951 and 1999, total GDP grew at the annual rate of 4.40 percent under dictatorships and at the rate of 3.69 percent under democracies. But one should not draw conclusions from these numbers since these political regimes existed under different economic and social conditions. In particular, democracies are much more common in developed countries, where incomes tend to grow more slowly, while dictatorships span the income range where growth tends to be faster. If we assume that dictatorships exist under the same conditions as democracies, we will conclude that the average rate of growth of total income would have been about 4.24 percent under dictatorships and 4.06 percent under democracies—a negligible difference. The same is true when examining less developed countries, those with annual per capita incomes lower than US$3,000 (in 1985 purchasing parity terms). Finally, we will arrive at the same conclusion if we look at what happens when a country changes political regimes.

Moreover, there is no reason to believe that democracies invest less than dictatorships, even in poor countries. Hence, the very claim that in poor countries democratic competition leads governments to opt for higher rates of consumption finds no support in empirical evidence. Investment rates are simply low in poor countries. Poverty is so tightly constraining that there is no room for political regimes to make a difference.

Very surprisingly, however, political regimes affect the population's growth rate, which is higher in dictatorships at every income level. This difference is not due to mortality rates. In fact, mortality rates are higher and life expectancies lower under authoritarian regimes. Neither is it due to the age structures of the population. The main difference is that fertility is higher under dictatorships. Very poor countries have fertility rates of about six births per woman regardless of their regime, while very wealthy countries converge to replacement fertility rates under both regimes. But within the entire intermediate range, from per capita income of US$1,000 to $12,000, fertility is higher under dictatorships. When regimes are matched for social and economic conditions, statistics reveal that an average woman has one-half of a child more under dictatorship than under democracy.

Why this is true remains unclear, but the consequence is that per capita, as distinct from total, income grows faster under democracies. The observed rate of annual growth of per capita income was 1.84 percent under dictatorships and 2.26 percent under democracies. Correcting for exogenous conditions, we still conclude that per capita incomes grew at the annual rate of 1.93 percent under dictatorships and at the rate of 2.11 percent under democracies. This is not a large difference, but nonetheless favors democracy.

Looking at the longer run, data generates the same conclusions. Poverty can trap societies in its grip. Of the 100 countries with per capita incomes of less than US$2,000 in 1950 or when they became independent, 56 remained equally poor or even poorer decades later. Yet the bonds of poverty are not inexorable. Some countries, notably Taiwan, South Korea, Japan, Singapore, Portugal, Malta, Ireland, Spain, Thailand, Greece, Malaysia, and Botswana, developed spectacularly, at least quintupling their per capita incomes. Of this list, Japan, Ireland, and Malta were parliamentary democracies during the entire period. Greece was a parliamentary democracy before and after a period of military rule. Botswana had more than one party with reasonably free elections in which the same party always won an overwhelming majority. Singapore and Malaysia had authoritarian regimes during the entire period. Portugal, Spain, South Korea, and Taiwan proceeded from various forms of dictatorship to different forms of democracy. Finally, Thailand has been so politically unstable that its history cannot be summarized. Looking at this list, it is clear that while such spectacular successes are rare, there is nothing to indicate that it takes one regime or the other to generate them. Indeed, contrary to conventional wisdom lauding the success of quasi-authoritarian East Asian states, the Asian "tigers" have been democratic as well as authoritarian, politically stable as well as highly unstable.

The list of economic disasters, by contrast, is much longer. A total of 19 countries that were independent before 1990 had lower incomes at the end than at the beginning of the period. Among them, Kiribati and Papua New Guinea were parliamentary democracies throughout. Five countries remained under different dictatorships during the entire period. Seven countries started as authoritarian and ended as democracies, but the transition typically occurred too late to impact observed growth patterns. Somalia began as a democracy and disintegrated under military rule. Finally, Suriname had a convoluted political history. Hence, patterns are again hard to find. But almost all these countries were ruled by dictatorship during most of their histories, having often experienced periods of civil strife and a lack of political institutions.

While these findings are not very satisfactory from an intellectual point of view—we still do not know which political institutions matter for economic development—they put to rest any notion of a trade-off between democracy and development. While some of the successful economic tigers have been dictatorships, dictatorships are no tigers. When one looks at the average performance of the two types of regimes, it is clear that, if anything, democracies generate a somewhat higher rate of growth of per capita income, lower mortality, and lower fertility.

Altogether, these findings add up to a bleak picture of dictatorships. While democracies are far from perfect, lives under dictatorships are grim and short. Because they rule by force, dictatorships are highly vulnerable to any visible signs of dissent. Economic growth under dictatorships is highly sensitive to any visible signs of political mobilization and to turnover of heads of government, while under democracy the same phenomena are an expected part of life and have no effect on growth rates. Since policies in dictatorships depend on the will or whim of a ruler, they exhibit much higher variance in economic performance: some generate miracles, some disasters, and many generate both. In the end, then, democracy does make a difference, not only for political liberty but also for material well-being.

Explaining the Correlation

There is no doubt that democratic regimes are more frequent in the more developed countries, while dictatorships predominate in poor ones; Lipset's original observation holds 40 years later. But the inference that development makes it more likely that a country will become democratic is fallacious. are two distinct reasons that a relation between per capita income and the frequency of democracies may be observed. One is that countries with higher incomes are more likely to become democratic; this is the hypothesis of the modernization theory. But the second possibility is that if democracy emerges—for whatever reason—in a wealthy country, it is more likely to survive than if it appears in a poor country. In fact, Lipset thought that it was the second mechanism that explained the observed patterns. His central hypothesis was, as he wrote in his famous 1959 essay "Some Social Requisites of Democracy," the "more well-to-do a nation, the greater the chance it will sustain democracy."

If modernization theory is correct, the probability that a country will become democratic should be higher in more developed countries, but this is a fallacy. Taiwan, for example, developed under an authoritarian regime, reached an annual per capita income of US$10,610 in 1996, and transitioned to democracy. But this is not yet evidence of the role of development. By 1996, the Taiwanese regime was 47 years old. If this regime had a 0.0226 chance of collapsing in any random year—the average probability for all dictatorships—it would have had only a 35 percent chance of surviving past 46 years even if it had remained as poor as it was in 1949. Most likely, the Taiwanese regime decided to hold elections because it needed to mobilize the support of democratic countries in its geopolitical conflict with China, a reason unrelated to development. In East Germany, the second wealthiest dictatorship fell in 1990, following the collapse of the Soviet Union. Spain, where the fourth wealthiest dictatorship collapsed in 1977, faced a crisis caused by the death of the founding dictator and the pressure to join Europe, for which democracy was a prerequisite. In Venezuela, the sixth wealthiest fell in 1958 because the United States turned against it. Dictatorships thus confront many hazards, independent of the development process, that can engender regime change.

These observations point to the underlying flaw in the modernization theory model that causally links development to democracy. Suppose that all dictatorships face the same chance of falling during a particular year for purely idiosyncratic reasons: death of the founding dictator, geopolitical crisis, foreign pressures, economic disaster, or a shift in policy by the United States or the Soviet Union, to take some examples. Some dictatorships succumb to these events, but since at any moment the probability of their occurrence is low, most escape them. Some of those that manage to survive grow economically. The observed result will be that dictatorships die in countries with high incomes. But they would have been unlikely to survive past old age just because of the accumulation of random hazards, independent of development. Thus, even if we observe a relation between incomes and the likelihood of transitions to democracy, the question remains whether dictatorships fall in wealthier countries because of their development or because the longer they persist, the more hazards they accumulate.

Even excluding the Persian Gulf states—where dictatorships survive at very high levels of income—while the probability of transitions to democracy increases as income grows until about US$5,000, dictatorships become more stable above this income level. Moreover, statistical analyses indicate that the observed relation between income and transitions to democracy is not due to income itself but to the fact that some of the factors that drive these transitions are related to income. First, countries with intermediate income levels are more likely to have experienced regime transitions in the past, and dictatorships last for shorter periods in countries that have previously experienced democracy. Secondly, dictatorships that emerge at intermediate income levels tend to be military dictatorships, which have shorter lives than civilian ones. Hence, the relation between income and transition to democracy is not monotonic, as modernization theory implies, and appears to be spurious.

Finally, if modernization theory is correct and if per capita income is a good indicator of modernization, it should be observed that stable democracies emerge around some distinct income threshold. Yet these thresholds vary enormously: India had a per capita income of about US$556 in 1947, the United States had an income of roughly US$1,100 in 1830—years when both countries established lasting democracies. Meanwhile East Germany, Taiwan, and Singapore remained under the grip of dictatorships even when their incomes surpassed US$10,000. Hence, lasting democracies can be established at highly disparate income levels.

In sum, even though some technical issues are entailed, there is no evidence that democracies are more likely to emerge when a country becomes modernized. Rather, the evidence is overwhelming that if democracy emerges in a country that is already modern, then it is much more likely to survive. No democracy ever fell in a country with a per capita income higher than that of Argentina in 1975—US$6055. This is a startling fact given that throughout history about 70 democracies have collapsed in poorer countries. In contrast, 35 democracies spent a total of 1,000 years under more affluent conditions, and not one collapsed. Affluent democracies survived wars, riots, scandals, and economic and governmental crises.

The probability that democracy survives increases monotonically with per capita income. Between 1951 and 1999, the probability that a democracy would fall during any particular year in countries with per capita income under US$1,000 was 0.089, implying that their expected life was about 11 years. With incomes in the range of US$1001 to US$3000, this probability was 0.037, for an expected duration of about 27 years. Between US$3001 and US$6055, the probability was 0.013, which translates into about 78 years of expected life. And above US$6055, democracies last forever.

Given these numbers, the observed relation between the incidence of democracy and per capita income is due almost entirely to the second mechanism of regime survival probabilities—not to the causal link between development and democracy. Dictatorships face multiple, heterogeneous risks. If one happens to fall in a country with a low per capita income, democracy is not likely to be long-lived. But if it falls in a more affluent country, democracy endures. Development does not generate democracy; rather democracies accumulate in the more developed countries.

Beware the Blueprints In retrospect, both the pessimism about the effects of democracy on development and the optimism about the consequences of development for transitions to democracy were unjustified. Yet at the time, both of these views seemed to be supported by the available historical experience. If the idea that communism portended the future now appears ludicrous, if we now believe that dictatorships offer no developmental advantage over democratic alternatives, it is only because we now know what did transpire.

This is, then, a cautionary tale. Gripped by anti-communist panic, many US scholars and policymakers developed a view of the world that was scientifically unfounded and politically pernicious. Ideology dominated science. Remarkably, no statistical study published before 1982 found that democracies developed faster, and no study published after that date reported that they developed slower. This bias in the scholarly community provided a convenient rationale for US policymakers to overthrow elected governments and to support anti-communist dictatorships.

What then should we believe today about the relation between political institutions and economic development? The goal of the research on political institutions is to identify those institutional arrangements that promote economic growth, internal peace, and general welfare. Thus far, we have not been very successful. One paradox of this area of research is that while subjective evaluations—whether of corruption, transparency, security of property rights, or simply the "quality of governance"—will predict economic performance, studies based on observable aspects of political institutions consistently raise doubts. Nevertheless, many international bodies and agencies of the US government are eager to impart advice to less developed countries, and some are even willing to condition their policies on what they consider "good governance." In my view, most of this advice is ill-founded and hastily offered, as likely to be helpful as to lead to disaster. This story cautions against pretending that we know more than we do. Blueprints—whether communist, anti-communist, authoritarian, or neo-liberal—have a wretched historical record.

About the Author: Adam Przeworski is Carroll and Milton Petric Professor in the Department of Politics at New York University.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.