Democracy first? Economic model begs to differ

Recent studies on economic growth report that preventing the abuse of state power through democratic institutions is critical to a nation’s development. However, there has been little prior research on how societies transition in response to the two conflicting goals of limiting the state’s stranglehold on governance while improving its administrative capacity through citizens’ political participation.

Osaka Metropolitan University Associate Professor Ryosuke Okazawa of the Graduate School of Economics led a team that focused on the quality of the bureaucracy, which has a significant impact on state capacity, and analyzed its historical evolution using an economic model.

Their model predicted that in nations where bureaucracies were historically underdeveloped, clientelism, in which politicians offer public office to their supporters in exchange for votes, would prevail rather than governments providing public services. It also turns out that under a corrupt government, the quality of the bureaucracy is likely to deteriorate further and society will likely fall into a vicious cycle.

The model also determined that democratization at a stage of an immaturely functioning government would hinder the development of the bureacratic institution because it would encourage vote-buying behavior by public office holders. To confirm the validity of this theoretical prediction, the team analyzed data from 108 nations from 1900 to 2000 and found a negative correlation between the experience of universal suffrage and the quality of current institutions in nations with low-quality bureaucracies in the past.

“The results of this study suggest that it may be important for societies to achieve nation-building before democracy,” explained Professor Okazawa. “Cases such as the public sector's inability to provide sufficient infrastructure and education necessary for economic development, thereby hampering the potential for economic growth, have been reported in many developing nations even today. Such an analysis of the relationship between national capacity and economic growth is a new area of research, and we hope that this study will serve as a catalyst for further discussion.”

The findings were published in the Journal of Development Economics.

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