Transcript Nnadozie Chapter 11 Democracy and Development

Democracy and
Development
Nnadozie, Chapter 11
1.Defining Democracy

Process Democracy-involves the election of leaders in
free and fair periodic elections of leaders by citizens.

Principled Democracy: Individual rights protected with
majority rule, independent judiciary, protection of
individual and minority rights with political competition,
and rule of law..

Joseph Schumpeter, “Democracy is an institutional
arrangement of arriving at political decisions in which
individuals acquire the power to decide by means of
competitive struggle for the people’s vote.”
1.Measuring Democracy?

The most widely used index of democracy is the
Freedom House Index (FHI) that ranges from 1
to 7, where FHI=1 (completely Free), and FHI=7
(completely authoritarian)
FHI Ranges:
Free= 1-2.5 ,
Partly Free= 3-5.5
Not Free= 5.5-7.00
2.The Relationship Between Development
and Democracy: Theories of Democracy

The Impact of Development on Democracy-4 approaches

1. Modernization Theory: prosperity leads to emergence of
prerequisites to democracy

2. Neo-modernization: Regimes with income below $2000 are
likely to collapse under economic downturn.

3. Civil Society Theory: Societal pre-conditions or requirements for
democracy. CS includes: labor unions, student groups, chamber of
commerce, teachers union, women’s group, church groups, etc.
.

4 Structural Explanation; Based on business cycles. Bourgeoisie
(class of business people) independent of the state tend to be
democratic.
3.The Legacy of Democracy in
Africa

Two movements toward “democracy” involves:
the de-colonization period of the 1960s, and the wave of
democratization that began in 1989-following the
collapse of Soviet Union and end of the Cold war

The colonial origin of non-democratic Africa
A colonial African state had three features: Europeans
holding large industries, Asian in the middle engaged in
wholesale and retail trading, and Africans engaged in
farming, market trading, and rudimentary services.


At Independence there was no business class or
bourgeoisie in most African states.
4.Democratization and Emergence
of Representative Democracies

There was some experimentation with governance which
involved military coups in the 1970s.

Before 1989, only three countries were free based on
FHI with 1-2.5, (Botswana, Senegal, Mauritius)
17 partially free, and 25 countries not free.

After 1989, there was a wave of democratization that led
to 8 countries to be free (Benin, Botswana, Cape
Verde, Mali, Mauritius, Namibia, South Africa, 22 are
partially free, and 18 are not free- according FHI
measure
5.What is the future of Democracy in Africa?

Democracy is difficult to sustain and
consolidate in Africa for various reasons

At least two preconditions may be needed
1. Accepting political opposition as legitimate.
2. Having access to wealth and income outside the
government. Natural resource wealth such as Oil
and Land is state government controlled and
owned. There must be a some private sector
independent of the government.
6.Democracy and Development

The impact of Democracy and Development is
mixed. This is a “Chicken and egg problem”.

Empirical results for in 1980s and later show that
multiparty democratic states have better
economic policies than autocratic ones.

Among those countries with more freedom the
more established one’s with democratic
institutions over 10 years are better (see table
11.1, 11.2)
7.The Recent Economic Performance of
Democracies in Africa

Established democracies have outperformed
new democracies.

The effect of democracy in Africa has been the
those that manage to become democracies
outperform authoritarian an states

New democracies seem to do at least as well, if
not better, than autocratic states
8.Concluding Remarks

Whether development leads to Democracy or vice versa
is difficult to answer?

But, even if democracy does not lead to economic
growth, freedom to choose, and freedom to have
basic political and civil rights, and other rights are
desirable in themselves. So, democracy and freedom
is a basic human goal on its own merit.

In the long-run democracies can achieve development
than autocratic states.
Political Instability-Chapter 12

I. Introduction

II. Institutions and Economic Development
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III. Theoretical Issues
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IV. Empirical Results
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V. Summary and Policy Implications
I. Introduction

Economists have Neglected Institution’s (rules)
and politics in the process of development
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Endogenous Theory recognizes economic policy
is an important determinant of long-run
economic growth

Political Instability (PI) affects economic
development,
 Investment is endogenously determined by PI
Introduction: Political Instability

Economic Development is multi-dimensional
concept aimed at improving the living standards
and range of choices available the majority of
citizens of a country. It includes freedom to
choose and freedom from servitude or
misrule.

Political stability is necessary but not a sufficient
condition for economic development
II.Institutions and Economic
Development

Institutions are social rules, conventions and
other elements of the structural framework of the
social and economic interaction

Institutions can be formal like laws, constitutions,
property rights, and contracts

Institutions can also be informal such as “social
capital”
II. Institutions and Development cont.
 Political
institutions are central to process
of economic development..
 A stable
political system with a strong and
efficient judiciary that provides secure
property rights, and enforces the rule of
law and predictable is key for economic
progress..
Institutions and Development
 The
political system must be predictable
and stable that respects the rights of the
majority participation in a periodic free
elections.
 Unstable
social system is one that
changes in unpredictable way.
Concepts of Political Instability

Political stability occurs when there is a constitutional
mechanism that ensures the peaceful transfer of power
of government.

Three types of PI: elite, communal and mass. Elite PI
involves coups d’etat, violence removal of government.
Changes by community groups (ethnic, religious, etc),
and Mass PI is an attack on the national political system
to over through government .

Regime threatening PI: coups, revolutions
Non-Regime threatening PI: strikes, riots, crises to get
concessions from government.

C. Studies of PI and Economic
Development


PI has a negative and significant impact on
physical quality of life in Africa (Mbaku)
After accounting for export and investment
instability, PI has negative effect on economic
growth in African economies ( Alexander and
Hansen
 PI weakens government to make it difficult to
make necessary reforms (Edwards and
Tapeline)
Conceptual/Theoretical Issues

Political Instability and Economic Growth

PI affects interaction between individuals and
organizations negatively. It increases uncertainty
and therefore decreases savings and Private
investment.
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PI is likely to lead to corruption, proliferation of
rules, and regulations, confusion, misallocation
of public resources and bureaucratic inefficiency
Policy Implications

PI affects economic growth directly and indirectly via
reduced investment…

Example, structural adjustment programs of the IMF and
the World Bank may create short-term hardship that may
cause PI and ultimately on negative economic impact on
economic growth in the short-run

On the other failure to carry out the necessary reforms
may create economic stagnation and worsen or prolong
PI.
Conclusion and Policy Implications contd.

All governments (democratic or autocratic)
should promote economic growth and
development as a way of securing PI

Economic stagnation leads to PI which further
leads to further stagnation and decline.

The growth effect of elite driven PI is likely to be
narrow and short lived compared to the effects
of a broad measure of PI
Chapter 13: Inequality and Conflict
Article by Professor Wayne Nafziger of KSU

I. Introduction:

II. The Impact of Stagnation and income decline
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III. Failure of Adjustments to Chronic Deficits
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IV. Failure of Agricultural and Rural Development
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V. Income Inequality- Cases of Nigeria and South Africa
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V. Military Centrality and Conflict Tradition
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VI. Conflict & Competition For Mineral Resources
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VII. Conclusion and Policy Implications
The Political Economy of Inequality and Conflict
in Africa
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20% of African live in countries that suffer from
state and rebel violence driven conflicts.
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The World Bank estimates civil war in Africa
lowers GDP per capita by 2.2% annually

Political Economy approach takes into
account of economics and politics or politicians
who make decisions as well as interest groups
and people who are affected.
I. INTRODUCTION cont.

Nafziger and his co-author have analyzed the
relationship between humanitarian emergencies
and their sources based on annual data from
1980-1995 for Africa and other LDCs.

These analysis shows stagnation and decline in
GNP, high military expenditure ratio to GNP, a
culture of violent conflict, and slow growth in
food production are the primary sources of
humanitarian emergencies.
II. STAGNATION & DECLINE INCOMES

Policies of Governing elites are the root causes of deadly
political violence, including genocide and structural
violence-examples- Sudan, Rwanda, Sierra Leone, etc.

The increase in interstate and intrastate conflict and
violence and humanitarian emergencies in the last two
decades of the 20th century are linked to negative
economic growth in the 1970s,1980s and stagnation in
the 1990s.

Africa GDP Per capita was lower in the late 1990s or
today, than at the end of 1960s.
II. STAGNATION & DECLINE INCOMES
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In African states such as Nigeria, Sierra Leone, Zaire,
and Liberia, etc..economic decline led to Ethnic conflicts
and a rise in rebellion in response to predatory rule.
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Predatory rule involves regimes that govern through
coercion, personality politics, that tend to degrade the
institutional foundation of the state..They lack democratic
institutions.
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In some predatory states, the ruling elite and their clients
use their positions and access to plunder the national
economy through graft, corruption, and extortion, and
unethical private business practices.
II.Stagnation and Decline income

Political Economist Claude Ake of Nigereia writes”
Instead of being a force for public good, the state in
Africa tend to be privatized by dominant elite faction..

The state engages in ‘rent-seeking’: a behavior to
obtain private benefit from public action and resources
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Stagnation and Negative growth interacted with State
predation in leading to downwards spiral in states such
as Angola, Ethiopia, Sudan, Somalia, Liberia, and Zaire
II. Economic Stagnation and decline:
External Factors

Worsening international conditions such as long
term decline in commodity terms of trade, rising trade
protection, exclusion from global capital flows and flows
of foreign investment, and capital flight has contributed
to Africa’s poor economic performance.

The terms of trade for Africa fell by 52% from 1970-92,
38% from 1980-92, and export purchasing power fell
by 4% and 29% in 1970-92 and 1980-92, respectively,
III. Failure of Adjustment To Chronic
External Deficits

International economic institutions compel local
elites to promote structural adjustments
programs (SAPS) threatening the positions and
contributing increased opportunistic rent seeking
and overt repression.

The resulting SAP cuts in spending reduce funds
to distribute to clients and requires greater
military and police support to remain in power.
IV. The Failure of Agricultural and
Rural Development
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About 70% of Africans make their make their
living from agriculture and related activities …

Agriculture contributes to the rest of the
economy in providing food, foreign exchange,
labor supply, capital transfer and markets ,

Declining productivity in agriculture is a primary
driving force for the general economic decline,
poverty and food insecurity in many Africa.
IV. Agriculture and Rural
Development
 From
1962-89, food output per capita grew
at the annual rate of 0.5% in developing
countries, 0.3% in developing countries,
and 0.4% overall, but declined by 0.8%
in Africa .
 In
other words food production per capita
increased in all regions of the world except
in Africa as shown in figure 13.1
IV.Agriculture & Rural Stagnation and decline

India and Africa both produced 50 million tons of
food grains in 1960, in 1988 India produced 150
million tons (after green revolution technological
improvements) and Africa produced about 50
million or about 1/3 of India in 1988.

India yield per hectare increased by 2.4% per
year, while Africa grew at the rate of 0.1%
V. Income Inequality
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Policies that lead to high income inequality in Africa are:
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Historical legacies of discrimination such as colonialism,
apartheid and policy failures.
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Government policies of in land and natural resource use,
including lack of land reform.
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Differential access to resources and wealth based on
regional and ethnic bias.

Growing regional inequality and limited regional
integration
V. Income Inequality-Example- Nigeria
 In
Nigeria, rising Inequality during oil boom
contributed to conflict that led to civil war
or the Biafran War in 1967-70,
 Nigeria’s
oil fueled growth after the war
rose to 8% per year (1970-79), and the
revenues were stolen by various corrupt
military regimes.
V.Income Inequality: Example-South Africa

About 3750 people were killed in internal repression and resistance
against Apartheid toward its demise in 1993.
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South Africa’s Gini Coefficient is 0.65 with the top 10% of the
population receiving 30% of national income

Life expectancy was 52 for blacks, 62 for Asians and mixed races
(“colored people”) and 74 for whites , compared to 54 for Africa as a
whole.
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Adult Literacy was 67% for non whites, & 85% for whites

Apartheid ended in 1994 with leadership of Mandela & ANC and a
pressure by the global anti-apartheid movement. Still the economic
inequality persists.
VI. Military Centrality and Conflict

Military was used to create wars and conflicts
under autocratic rulers. Massive wealth and
money was diverted to military, that is often used
to violently remove elected governments..

A culture of violent political culture in states like
Rwanda, Burundi, and Congo has resulted in
massive displacement of population and
humanitarian emergencies. States such as
Somalia have collapsed due to conflict by warlords following dictatorial rule.
VII. Competition & Conflict Over Minerals and
other Natural Resources

The struggle to control mineral and other natural
resources is an important source of conflict in Africa.
Examples include Angola, Sierra Leone, Liberia, Congo.

Here, autocratic rulers and warlords use exclusive
contracts with foreign firms for diamonds, and other
minerals to extract revenues and collect taxes.

Examples: Charles Taylor of Liberia in late 1990s,
Mobutu Seko of Zaire/Congo 1965-97. Mobuto fell to
rebel forces of Laurent Kabila until Kabila was
assassinated and replaced by his son Joseph in 2001
VIII. Conclusion and Policy Implications

Humanitarian emergencies are associated with high inequality,
conflict, and military centrality (high military exp./GNP), abundance
of mineral resources, and inversely related to GDP per capital
growth and food output, and external adjustments.

The major changes Africa needs to make are institutional changes
including democratization, legal system reform, effective financial
institutions, greater investments on quality education and
establishment of functioning democratic institutions. These take
time.

There is a substantial scope for international and national
governments and NGO actors to coordinate long term sustainable
policies to reduce Africa’s vulnerability to conflict and policy driven
humanitarian emergencies…
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Test #3 ( On material covered after test #2)