The purpose of this study is to examine the correlation between economic development and authoritarian governments. The objectives of this study are to find out whether authoritarian governments an impediment to economic growth and how the authoritarian governments are performing economically compared to the developed democratic nations. The study was conducted using a quantitative approach.
In the first part of the study questionnaires were given to 40 students from International Islamic University Malaysia to find out their view on economic velveteen and authoritarian government. In the second part, a comparison is done between the economic indicators of developed democratic nations and a group of selected authoritarian governments. The data suggests that an authoritarian government also can bring economic development to a nation. Introduction: Economic Development of a country and their political stability are always interconnected.
If the society thinks that they are being worsened off by the current political system, it can lead to a political instability in the society. On the other hand, f the economy is politically unstable, it will reduce the incoming investment from abroad at the same time slowing down the development of a nation. That’s why it is always the goal of political economy to understand how institutional arrangements shape policy outcomes and human well-being.
There has been some debate among the scholars about the degree to which institutional arrangements affect the economic development of a nation. Some researchers suggest a high economic growth among autocratic institutions is a proof that a “benevolent autocrat” can overcome the political obstacles necessary to create economic growth (Easterly, 2011). As a result, some suggest a benevolent autocrat is a necessity and an important factor for economic development during the primary stages of economic growth. Roosts (1971, p. 57) states”… He buildup of an initial minimum quantum of social overhead capital (including the role of education), the bringing about of expansion in agriculture, and the generation of a supply of imports adequate for modernization have required important interventions and leadership by national governments. ” However, Mulligan, Gill, and Martin (2004) find little evidence that political institutions enhance economic efficiency. The fact that the most of the developed industrialized nations are democratic was long taken as iron-clad evidence that only democracy can bring economic development.
But the recent history, however, NAS complicated matters. The blistering economic growth of authoritarian governments like China without a political liberalizing now suggests that the link between economic development and the liberal democracy is actually quite weak. The growing number of the affluent authoritarian state shows that they can reap the benefit of economic development without easing their political control. A key objective that motivates this paper is that an autocratic government is not always a disaster in economic terms.
There is undeniable evidence throughout history that proves there has been economic development in autocratic governments. For example, Singapore was one of the fastest-growing countries in the last decade and the country has been classified as a ‘Growth Miracle’ (Fireworks et al. 2000) and as an ‘Asian Tiger Economy (Young 1995). The regime, led by Prime Minister Lee Guan Yew, defended his form of government stating that it is very much needed to boost the economic velveteen in the developing countries (Seen, 1999).
The fast growing economy of China also challenges the notion that democracy is always essential to the economic development of a country. However, this paper is not intended as a defense of autocracy, but as means of gaining further insights into the issue why autocracy can sometimes be successful. We will focus on one underlying dimension, which is to find out the position in economic development of authoritarian governments compared to the developed democratic countries.
This paper will focus on autocrats that exist today and will try to empirically find out whether their institutional arrangements are better than those of democratic developed countries. We will not only look in to regimes which are robustly high performers, but will also take into account those underdeveloped authoritarian countries to find out what is the real reason for their low economic performance. With the help of hypothesis testing, we will try to find out the correlation between the economic growth and autocratic government.
Also, an average of economic development indicators such as standard of living, literacy rate, fife expectancy condition on per capita Gross Domestic Product (GAP), gross primary school enrollment rate and Human Development Index from all the industrialized democratic countries will be taken to compare with the findings of the autocratic regimes. Therefore, the research questions of this paper are as follows: 1) Are authoritarian governments an impediment to economic growth? 2) How the authoritarian governments are performing economically compared to the developed democratic nations?
Literature Review Over the past decades, a lot of literatures have been written on this topic. Some argue democracy is a powerful link between economic developments and democracy (Fireworks & Liming, 1997; Fireworks & Liming, 1993; Lewis, 2008). On the other hand, there are those who do not believe democracy enhances economic development. For them, authoritarian governments more effectively stimulated the economic development of a nation (Kurt, 1979; March, 1988; Sorrow and Knells, 1990). But what is an authoritarian government? Dry. Paul M.
Johnson defines autocracy or an authoritarian government as “a system of government in which supreme political power to direct all the activities of the state is concentrated in the ands of one person, whose decisions are subject to neither external legal restraints nor regularities mechanisms of popular control (except perhaps for the implicit threat to coup d’etat or mass insurrection)” (ND) These authoritarian governments sometimes use economic development as a tool to create both economic stability and political stability in an economy.
Mesquite and Downs states that economic development can increase the prospect of survival of a regime by expanding their government resources and their ability to deal with various problems such as economic recessions or natural disasters. However, in the long run, economic development can threaten the political survival of the government by raising the likelihood that effective political competitors may emerge (2005, p. 79). But the question is can an authoritarian government increase their economic development without a reform? Economic development, according to Harvard Professor Michael E.
Porter is the “long-term process of building a number of interdependent microeconomic capabilities and incentives to support more advanced forms of competition. ” These capabilities and incentives, which were originally identified in Porter’s The Competitive Advantage of Nations, 1990, include the nature and extent of the inputs required by firms to produce goods or services; the rules, incentives and norms governing the type and intensity of local rivalry; the quality of demand for local services; and the extent and quality of local suppliers and related industries.
Studies show that it is not democracy or autocracy that boosts the economic development, but it is the high level of economic freedom and stable economic policies (Adkins, Momma and Asides, 2002; Guaranty, Lawson and Holcomb, 2005; Klein and Lulu, 2003). Both the democratic and autocratic regimes can create an environment with a high level of economic freedom and stable economic policies.
That’s why if a country is experiencing frequent regime changes, especially as the result of military coups, it can create significant uncertainty for parties engaged or interested in forming economic exchanges, which is supported empirically by Fen (1997) and Lasing et al. (1996). As a result, these uncertainties will lower the investments and will result in lower standard of living and lower productions. Therefore, we cannot take that only a democratic nation can achieve economic Roth.
Diamond (2008, 96), for example, states the ‘evidence is murky for the hypothesis that democracy enhances economic development, while Testable (2002, 70) considers it a surprising fact that there is no evidence of democracy increasing development. In Curt’s estimation, authoritarian government can more effectively stimulate growth and investment by suppressing labor unions, wages, and consumer demand?very unpopular measures (1979, p. 334; see also March, 1988; Sorrow and Knells, 1990).
Methodology: In the last chapters I have tried to review the literature of the related problem. This part of the assignment will be focused on the methodology. The study adopted simple two methods to test the research hypothesis and both of them are quantitative approaches. In the first part, a questionnaire titled ‘Authoritarian Government and Economic Development’ was distributed to collect the information to test the hypothesis. It was manually distributed to randomly selected 50 students studying in International Islamic University Malaysia.
Questionnaires were used to find the views of students on authoritarian government, democratic government and economic development. The questionnaire was split into 2 parts excluding the part regarding the demography of the respondents. Part 1 addressed the general understanding of an authoritarian government and economic development. Part 2 was focused on finding the view of the students about authoritarian government and economic development. The questionnaire was based on close-ended questions to limit the information given by the respondents to attain the objectives of the study.
In the second part, a comparison will be done between developed democratic nations and authoritarian governments based on GAP growth, unemployment level and life expectancy ratio. The average of economic indicators of developed five countries will be used from 2007 to 2011 for comparison with the economic indicators of some of the selected authoritarian governments. The authoritarian governments used for this study are China, North Korea, Bahrain, Vietnam, Cuba, Saudi Arabia and Kuwait.
Analysis of the questionnaire: The data extracted from the questionnaires were organized into tables using simple percentage to see the overall opinion of the students regarding the issue. A total number of 50 students completed the questionnaire and out of them 23 were male ND 27 were females. Most of the students were of the age group 20-25 which was 65% of the total number of students. The second largest age group, consisting of 30% of the respondents was from 18 to 20 years and the remaining 5% were more than 25 years old as shown in the figure 1 .
Out of the total number of students, 75% of the students were from auxiliary of Law and Auxiliary of Economics, while the remaining 25% were from other faculties. Basic understanding of the students on authoritarian government and economic development: From all the students who filled the questionnaire, 85% of the students Lully understood the meaning of an authoritarian government while 12% are not certain about authoritarian government. This data is represented in the figure 2. Though most of them understood the meaning of authoritarian government, only a few are aware that there are authoritarian governments with high economic development.
Only 39% of the respondents are aware that there are authoritarian governments with high economic growth while 55% of the respondents did not know that there are authoritarian governments with high economic development. Also, 82% of the respondents understood the meaning of economic development while 8% are to certain about the concept of economic development. Perception of students on government structure and economic development: The study found out that 88% believe that democracies are outperforming autocracies if it comes to development beyond economic growth as shown in the figure 3.
However, still 71% of the students believe that a “benevolent autocrat” can overcome the political obstacles necessary to create economic growth, but 33% disagree with the statement. Also, 82% believes that institutional arrangements affect the economic development of a nation but most of them which is 92 % of the respondents believe hat it is the high level of economic freedom and stable economic policies, that bring economic development, institutional arrangements. Which economic institution can bring economic development? Most of the students participated, believes that democratic governments are better when it comes to economic development and this is not a concern as democratic institutions are very famous among the students. As shown in the figure 4, only 27% of the students thinks that an authoritarian can bring economic development while the rest of 4% thinks that both the systems can bring economic development to a nation.
Analysis using Economic indicators: In this section, economic indicators of five developed countries namely United States of America, United Kingdom, Germany, France and Japan are taken to compare with the findings of authoritarian governments. The authoritarian governments selected for this study is China, Bahrain, Saudi Arabia, North Korea, Cuba and Kuwait. Average of economic indicators of five developed countries will be calculated to compare with the results and the data is collected only for 5 years starting from 2007. Data was collected from World Bank data bank.
The economic indicators selected for this part f analysis are life expectancy at birth (years), GAP growth rate (annual %) and total unemployment level (percentage of total labor force). Average of economic indicators of developed democratic nations is shown in the data table from 2007 to 2011. The average life expectancy of the democratic nations is between 80 to 81 years. This is high figure compare to all the authoritarian governments considered for the study is Cuba and this could be because of the high developed Healthcare system of Cuba.
Even for North Korea, the life expectancy is around 68-69 years which is high marred to nation which is always political conflict with the rest of the world. The life expectancy of Vietnam, Saudi Arabia and china is around 74-75 years while the life expectancy of Bahrain is between 75-77 years. The Gross Domestic Product (GAP) growth of the average democratic countries fluctuates between 3% to negative (-5%) percent. This could be mainly because of the Supreme Mortgage crisis in 2008 and the European crisis at the end of 2010.
However, during that period the GAP growth of all the authoritarian government remain positive as shown in the data table 2. The sights growth rate is in China in 2008 when it was 14. 2%. The unemployment levels of the democratic nations are relatively high. Around average of 6%-7% of the total labor force in the democratic countries remains unemployed. Although, for most of the authoritarian government, the data of unemployment cannot be found, the unemployment level in democratic nations is high compared to the authoritarian governments. In China, the unemployment level is below 5% and in Cuba the level is below 3%.