Sunday, October 22,  2017

Economy

The Impact of the Economic Crisis: Why Democracies Survive

BY Larry Diamond

Even if the world economy recovers quickly and vigorously from the current recession, more democracies will fail if they do not improve the quality of governance and rein in abuse of power. 

It is a cardinal principle of empirical democratic theory that hard economic times are supposed to mean hard times for democracy, particularly when it is new and fragile. As Seymour Martin Lipset argued in his 1960 classic, Political Man, when democratic regimes lack intrinsic legitimacy (what is often now called democratic “consolidation”), their survival depends precariously on effective performance — a concept that is measured primarily in economic terms. If no crisis supervenes, democracies with weak legitimacy may muddle along for some time, but when they lose their effectiveness, they collapse — as did shaky democratic governments in Austria, Germany, and Spain in the 1930s, following the onset of the Great Depression.1 In fact, the economic disarray of the late 1920s and 1930s swallowed up a number of other democracies in Europe and Latin America, even though the origin of the “first reverse wave” of global democratization can be traced further back to the March on Rome by Benito Mussolini’s Fascists in October 1922.2


During the second half of the twentieth century, there was a strong relationship between economic performance and the survival of regimes, particularly democracies. Analyzing data covering the years from 1950 to 1990, Adam Przeworski and his colleagues found that when democracies face a decline in income, they are three times more likely to disappear than when they experience economic growth. When they looked at longer-term trajectories, the impact of economic performance became even more striking: “The chance that a democracy will die is 1 in 135 when incomes grow during any three or more consecutive years, and 1 in 13 when incomes fall during any two consecutive years.”3 More than two-thirds of the democratic failures that Przeworski and his colleagues documented in their forty-year period of analysis were accompanied by a fall in income in one or both of the preceding years. Thus, “deaths of democracies follow a clear pattern: They are more likely when a country experiences an economic crisis, and in most cases they are accompanied by one.”4


Yet the current period in world history defies these patterns. By all accounts, the global financial crisis that began in September 2008 has triggered the worst economic downturn since the Great Depression. Yet it appears to have had little effect on the survival of democracy so far, for three reasons. First, the countries hardest hit economically by the financial crisis have mostly been the wealthy, industrialized democracies or the new European market economies. As Przeworski and his colleagues also showed, democracy has never broken down in a wealthy country, and after many decades of successful functioning, these democracies are now consolidated and deeply institutionalized. The post-communist democracies of Central and Eastern Europe that have recently been admitted into the European Union (and that would face enormous economic costs for abandoning democracy) also now appear to be consolidated. Second, in the newer and weaker democracies (including both the upper-middle-income ones in Eastern Europe and the less developed ones), the effect of economic turbulence has been the defeat of democratically elected governments but not the demise of democracy. And third, the breakdowns of democracy that have been occurring largely predate the onset of the global recession and are due to bad internal governance, not unfavorable global conditions. In fact, in a surprising number of instances, democratic breakdowns occurred while aggregate rates of economic growth were fairly robust.


The analysis that follows should not be read as implying that economic circumstances make no difference to the fate of fragile democracies. On the contrary, the data from recent decades suggests that such circumstances do matter — especially for younger and lower-income demo cracies.5 But where governance is bad — in particular, where corruption and abuse of power are rampant, and where inequality is extreme and intensifying — it may not matter much for democracy that the economy as a whole is expanding. To the extent that democracies depend for their survival on the support or at least acquiescence of the governed, bad governance undermines that support and inclines at-risk democracies toward calamity. Both survey data and objective trends suggest that in the short run, political factors may be more important than economic ones in determining the fate of new and fragile democracies. Thus, even if the world economy recovers quickly and vigorously from the current recession, more democracies will fail if they do not improve the quality of governance and rein in abuse of power.


The Global (Political) Recession of Democracy

One of the most remarkable features of the “third wave” of global democratic expansion thatWhat we are seeing is an apparent correlation between bad governance and democratic vulnerability. By contrast, many of these failed democracies of the past decade had positive economic growth rates in the year or two before their collapse began in 1974 has been its persistence. Unlike the relatively short “second wave” that began after World War II and began running into difficulties in the early 1960s, the third wave has not yet met with a decisive “reverse wave” of democratic breakdowns. Yet, as I have argued elsewhere, there are worrisome signs of a democratic rollback in the world.6 First, the number of democracies on the planet leveled off in the mid-1990s at about 120, and has not improved much since then; according to Freedom House, there were 119 electoral democracies at the beginning of 2009, and this number fell to 116 at the beginning of 2010.7 Since 1995, the percentage of states that could be called electoral democracies has oscillated within a narrow range, between about 60 and 63 percent of all the independent states in the world.


Second, the global incidence of democratic breakdowns has been increasing as this long third wave continues. If we count not only blatant democratic reversals — by either military or executive coup — but also incremental degradations of the democratic process that eventually drag a system below the threshold of electoral democracy, then by my count (which is very close to that of Freedom House) one of every five democracies that has existed during the third wave has been reversed. This is a significantly higher percentage than is generally appreciated. And more important, it is a significantly higher percentage than was the case just a few years ago, because the incidence of democratic reversals has been rising. In fact, three-fifths of the thirty democratic reversals that have occurred during the 35 years of the third wave have occurred in the last decade or so (beginning with the Pakistani coup in October 1999), and eight democracies broke down just in the recent three-year period spanning 2007 through 2009 (see Table 1 on page 20). I would not yet term this a “reverse wave,” but the number of transitions away from democracy is beginning to exceed the number toward democracy. And note that recent breakdowns have occurred in large and strategically important states such as the oil exporters Nigeria, Russia, and Venezuela as well as Bangladesh, Pakistan, the Philippines and Thailand.


The third worrisome indicator is that the level of freedom in the world, as measured by Freedom House, is now also in decline — and has been for several years in a row. For many years after 1995, levels of civil and political freedom (as measured annually by Freedom House) continued to expand, even as the number of electoral democracies leveled off. During every year except one between 1996 and 2005, the number of countries improving their freedom score (on either political rights or civil liberties or both) exceeded the number of countries declining in freedom — and usually by a large margin. The years from 2006 through 2008, however, marked the first three-year period since the end of the Cold War in which the number of countries declining in freedom exceeded the number gaining, and the pattern continued in 2009. Nearly four times as many countries declined in freedom as improved in 2007, and in 2008 and 2009 the ratio of declining countries to improving countries was roughly 2.5 to 1.

 

Note: Freedom scores are from the annual surveys of “Freedom in the World,” by Freedom House, for the year before the democratic breakdown. Scores range from 1 to 7, with 1 being most free and 7 being most repressive. Economic data are from the World Bank and the IMF World Economic Outlook Database, October 2010.

 

Of course, the second and third trends are related. Obviously, when democracy is lost, freedom levels decline. Moreover, nearly all the democracies that have broken down since 1999 have been illiberal, and a number of them had gradually been getting more so. On top of that, these democracies were poorly governed, and their performance in terms of rule of law, effectiveness of state administration, and fighting corruption compares unfavorably with the record compiled by other democracies.


What we are seeing, in other words, is an apparent correlation between bad governance and democratic vulnerability. By contrast, overall economic performance does not seem to have been a consistent culprit here, as many of these failed democracies of the past decade had positive economic growth rates in the year or two before their collapse.8 In fact, some of the democracies had quite good — even startlingly good — economic performance around the time that they failed, with annual growth rates topping 6 percent. Generally, those democracies that were extinguished as a result of mounting executive abuses of power were experiencing robust economic growth at the time. This was particularly true of the oil-exporting countries. Rising oil prices produced growth in the year before and the year of democratic demise of 10.3 and 21.2 percent in Nigeria, 6.4 and 10 percent in Russia, and 18.3 and 10.5 percent in Venezuela. A weaker version of the same pattern held in non-oil countries such as Kenya and the Philippines, while in Georgia and Niger growth was outstanding in the year before the reversal but slight in the year during which the democratic reversal occurred.


In the case of the oil countries, it is even plausible that the boom in this commodity created an additional incentive to strangle democracy. To be sure, it is hard to pinpoint a “time of death” for democracy when it dies by inches rather than perishing in a putsch, but the pattern is striking. Even in some countries that did have military coups, such as Bangladesh and Thailand, the economy was clearly growing, even in per capita terms. Only in a few countries — Nepal in 2002 and more recently Honduras, Mauritania, and Niger — did growth expire or swing negative in per capita terms in the year of reversal.9


What has consistently plagued the failed and failing democracies of the past decade has been bad governance. Around the time that most of these countries saw their democracies overthrown or strangled by executive abuse, they ranked in the bottom third on most of the World Bank’s six indicators of the quality of governance. Of the eighteen countries that have experienced a reversal of democracy since 1999, only two (Fiji and Thailand) were above the median on the rule of law, and only four on corruption. More typical was Kenya, which was in the 17th percentile on political stability, the 28th percentile in government effectiveness, the 21st in rule of law, and the 18th in control of corruption — in other words, stuck in the bottom quartile that contains the world’s most poorly governed states (most of which, by the way, are authoritarian regimes). 


To summarize, the troubled or outright failed democracies of the third wave share certain key characteristics. First, they tend (with exceptions such as Russia, Thailand, and Venezuela) to be poor or lower-middle income, with per capita incomes (in purchasing power parity dollars) under $5,000. Second, they rank low on the World Bank’s good-governance scale. Most of the current democracies that could be said to be severely at risk, if they are even still democracies (countries like Bolivia, Burundi, East Timor, Ecuador, Haiti, Liberia, Malawi, Nicaragua, and Sierra Leone), fall into the bottom third of the world’s states when it comes to controlling corruption. In addition, their governments are not very effective in terms of the quality and independence of the civil service, or of public services and policy formulation and implementation more generally.10 Third, they are politically unstable, with significant levels of politically motivated violence, or still-fresh histories of such violence that have not been laid to rest, or a more general sense that their governments are fragile and could be overthrown. Fourth, they are deeply split along class, ethnic, or other lines (with interparty hostility sometimes part of the mix, as in Bangladesh), which is one reason why they suffer civil wars and high levels of political violence. Fifth, executive power is seriously abused.


Executive abuse of power has been the key factor in the demise of democracy in such countries as Georgia, Honduras, Niger, Nigeria, the Philippines, Russia, and Venezuela, and it has played a role in Kenya and Pakistan as well. Ethan Kapstein and Nathan Converse find in their quantitative analysis that “effective constraints on executive power substantially increase the chances that democracy will survive” in post-transitional or otherwise fragile circumstances.11 Several of the current democracies that are most at risk have presidents who embrace grandiose political projects that they believe require them to concentrate and aggrandize power. For Bolivia’s Evo Morales and Ecuador’s Rafael Correa, the goal is to remake their respective countries along left-wing populist lines, redistributing wealth and power to historically dispossessed indigenous majorities (and to themselves and their supporters). For their fellow leftist Daniel Ortega in Nicaragua, the aim seems to be to restore the dominance of his Sandinista party and movement, as well as his own revolutionary authority and legacy — while digging into the same national trough of corruption at which previous presidents of the country have fed. For President Abdoulaye Wade of Senegal, it is to dominate the country’s institutions and pass power on to his son. Sri Lanka’s President Mahinda Rajapaksa having finally defeated the Tamil Tigers in a civil war, seems determined to promote an ethnic-chauvinist agenda in pursuit of Sinhalese dominance despite the risk that this will pose to reconciliation and a lasting peace.


Significantly, none of these narratives of democratic struggle and crisis is mainly about the stresses of imploding economic growth or spiraling unemployment. Certainly, economic and social injustice forms the backdrop for the crises of social and political polarization that have long been gathering in the Andean region of South America as well as parts of Central America (Guatemala, Honduras, Nicaragua). But some of these fragile democracies — Bangladesh, Burundi, Liberia, Malawi, Sierra Leone, and Sri Lanka — appear to be only lightly affected by the global recession. That is also true of a number of other African democracies that appear more liberal or look less vulnerable, including Benin, Ghana, Mali, and Zambia. Mostly, these are poor countries that are not well integrated into world markets. In a few other vulnerable low income countries, such as Ecuador, Guatemala, Haiti, Nicaragua, and Senegal, the rate of economic growth plunged below that of population growth, meaning that per capita income shrank. But in Nicaragua and Senegal, this could just as likely undermine as advance the hegemonic ambitions of presidents who have already made plain their undemocratic intentions. In Bolivia and Ecuador, such slippage in prosperity could reinforce the leftist, anti-globalist narratives of presidents already inclined toward authoritarian populism. In short, it is too early to dismiss the global economic downturn as a factor that could undermine the stability of poor and lower-middle-income democracies, but at most its effects seem likely to be secondary, reinforcing other negative trends.


The Global Recession’s Political Impact

Not all developing and emerging-market economies have been spared the harsh impact of theIt is too early to dismiss the global economic downturn as a factor that could undermine the stability of poor and lower-middle-income democracies, but at most its effects seem likely to be secondary.  Great Recession. Most countries have experienced some kind of downturn. In a great many of the more mature or middle-income, emerging-market countries, the IMF has reported negative economic growth rates for 2009, though in most cases the 2010 figures are expected to reveal a return to (modest) positive growth. In some cases, the impact at the end of 2008 was brutal enough to wipe out all year-to-date growth. The drop from 2007’s brisk growth was steep in far-flung places including Argentina, the Baltic states, Botswana, Brazil, Colombia, Poland, Romania, South Africa, South Korea, Taiwan, Ukraine, and Uruguay. Among developing and emerging-market democracies, it has generally been the poorer ones (Ghana, Indonesia, Mali, and Zambia, for instance) that have experienced the slightest effects.


What has been the political impact on democracy in the economically harder-hit countries? So far, surprisingly little: Governments have come and gone, but democracy has remained. Both effects — the instability of governments and the stability of democracy — have been quite striking. In those democracies that have been hit harder by the recession but are more strongly rooted as democracies, incumbents have often taken an electoral beating. In my count of the 32 democratic elections that have taken place in these countries (where power was up for grabs) between October 2008 and October 2010, the party of the incumbent president or prime minister has lost slightly more than half the time (17 elections).12 Overall, as we see in Table 2 on page 28, incumbent parties or presidents have gone down to defeat or suffered a setback in 19 of 34 elections.13 The impression of tough sledding for incumbents is intensified by the severe setbacks that ruling parties have encountered in midterm elections held by the presidential systems in Argentina, Mexico, and Venezuela (and if one widens the optic to include the wealthier democracies, the United States as well).


A good example of electoral punishment came in Bulgaria, where in the July 2009 parliamentary election incumbent premier Sergey Stanishev’s Socialist Party was able to garner only about 18 percent of the vote, down from 34 percent in 2005. Sofia mayor Boiko Borisov won nearly 40 percent and a near-majority of seats by promising to tackle corruption and the economic downturn. It is possible that the first pledge mattered more than the second: In 2008, “Bulgaria lost access to more than 500m euros [...] of EU funding for failing to deal with corruption and organized crime.”14 This underscores a continual theme of democratic elections across the troubled landscape of the global recession: Particular national factors, often political, matter as much as if not more than economic distress. Often, the economic distress is a serious aggravating factor, but not the sole cause of electoral alternation. The center-right also made gains in other post-communist elections in 2009, tossing out the former communists in presidential elections in Mongolia and in Macedonia, where the ruling Social Democratic Union went down to a crushing defeat with barely a third of the vote. In both countries, growth had plunged steeply into negative territory during the year of the election. In Moldova, the decline at the polls of the (still rather unreformed) Communist Party in mid-2009 was partly due to the parliamentary deadlock over the choice of a president, but this in turn was fallout from an intensely disputed and allegedly fraudulent election three months earlier, in which the Communists had somehow managed to expand their majority despite poor governance and a plunging economy.15 A free and fair election at that time might well have seen them booted out of power. 


In Panama, multimillionaire businessman Ricardo Martinelli, recaptured the presidency for the political right with a thumping victory over the ruling party, which finished nearly 10 points below its 2004 mark. The left-of-center ruling coalition had “struggled to rein in crime and high prices” amid a sharp economic downturn that had slashed economic growth from 9.2 percent in 2008 to an estimated 1.8 percent in 2009.16 Martinelli, leading a three-party coalition, won by 24 points — the biggest margin since the restoration of democracy in 1989.


In Chile, the right returned to power after two decades in the political wilderness following the 1990 exit of military dictator Augusto Pinochet. After losing to center-left coalition candidate Michelle Bachelet in January 2006, billionaire businessman Sebastian Piñera finally triumphed in a January 2010 runoff election against former president Eduardo Frei. Particularly striking was the improvement in Piñera’s first-round vote. In 2005, he had won only 30 percent, but four years later this went up to 44 percent. To be sure, the long-ruling center-left coalition had achieved impressive results. “Booming copper revenues and prudent fiscal policies,” along with innovative and targeted antipoverty programs, had “helped the government reduce poverty from 45 percent in 1990 to 13 percent today,” while lifting per capita income to the level of a middle-income country, at about $14,000.17 Although barred by law from running again, President Bachelet enjoyed a stratospheric 78 percent approval rating and had won widespread plaudits for her competent and effective economic management. But there was still considerable unease over the maldistribution of wealth, and the election was poorly timed for the ruling coalition, as 2009 had seen Chile’s GDP decline by 1.5 percent, after years of 4 to 6 percent growth. 


Electoral gains following the 2008 financial crisis were not solely the province of the right, however. In El Salvador’s March 2009 election, the ruling Arena party, after four terms and twenty years in power, finished 9 points down from its previous showing and lost the presidency to a moderate leftist. Although the economy contracted in 2009, it had recorded at least 3 percent annual growth in preceding years, as “each successive Arena administration worked hard to improve the delivery of public services.”18 But economic inequality remained severe while poverty was reduced at only a modest pace. Moreover, the left had been gaining at the local level for some time, and many observers expected it to win the presidency once it transcended its divisions and fielded a less radical candidate. Arena’s 2009 defeat was particularly noteworthy because it marked the first democratic and “peaceful turnover of power since the nation-state became independent in 1821,” and because it brought to power the FMLN (Farabundo Marti National Liberation Front), a party whose origins lay in “a coalition of guerrilla groups that fought a bitter insurrection in the hope of ushering in revolutionary change.”19 But the FMLN’s victory probably owes more to long-term and short-term political factors than to the immediate economic downturn. In Mexico, the ruling right-of-center National Action Party was also handed a setback in midterm legislative elections, falling from 40 percent of the seats in the lower house to less than 30 percent amid mounting problems of drug violence and an economy that shrank by 6.5 percent in 2009.


Elsewhere in 2009, left-of-center governments that had performed well or remained popular with voters were rewarded with strong votes of confidence. With India feeling the global recession only lightly, and the country coming off several years of exceptional economic growth under a very capable prime minister, Manmohan Singh, the Congress Party defied expectations and increased its share of seats in parliament by more than a third. In South Africa, where the electorate remains sharply divided along racial lines and the ruling African National Congress (ANC) still wears the mantle of liberation from apartheid, the incumbents held on to their nearly two-thirds majority in parliament. And with Indonesia enjoying greater stability and more even governance than it had known since the fall of Suharto, incumbent president Susilo Bambang Yudhoyono coasted to reelection with more than 60 percent in July 2009, a few months after his once-small party nearly tripled its share of the legislative vote. In Ghana, by contrast, the ruling party was not so fortunate. After eight years in power, and with the incumbent stepping down, the New Patriotic Party suffered an excruciatingly narrow defeat at the hands of the old ruling party of former authoritarian strongman Jerry Rawlings. The economy was not the reason for this setback: Ghana was still enjoying some of its most prosperous times since independence. Rather, voters seemed to be reacting against the familiar problem of rising corruption and arrogance in power.


As election results piled up in 2010, the pattern of retrospective voting — of voters in emerging-market democracies holding ruling parties and leaders accountable for their performance — continued. In several instances, voters punished incumbents for poor performance. With Ukraine reeling from a disastrous economic plunge and incessant squabbling between the two predominant factions born of the 2004 Orange Revolution, both of them paid the price. President Viktor Yuschenko’s reelection bid was swept aside with barely 5 percent, and his erstwhile ally Yulia Tymoshenko lost the runoff to pro-Russian former premier Viktor Yanukovich. In April 2010, Hungary’s ruling Socialists suffered a crushing defeat following a year (2009) in which the economy shrank by more than 6 percent amid long-simmering popular outrage over the September 2006 leak of an audiotape on which the Socialist prime minister could be heard avowing that his party had “lied in the morning, in the evening, and at night” about the state of the country’s finances in order to win the April 2006 parliamentary elections. Similarly, voters in the Philippines had been itching for years to punish incumbent president Gloria Macapagal-Arroyo for her abuses of power, including possible tampering with results from the previous presidential election. In this case, it did not matter that the country’s economy had come roaring back after a sharp dip in growth in 2009; Benigno Aquino III, son of the late and revered President Corazon Aquino, won easily in a verdict widely interpreted as a rejection of Arroyo (who was not on the ballot). In September 2010, after years of economic mismanagement and creeping authoritarianism, Venezuelan voters dealt a stinging setback to President Hugo Chavez in midterm National Assembly elections. Had Ch´avez not grossly rigged the electoral rules, his party would have lost control of the legislature. 


By contrast, Sri Lanka’s President Rajapaksa was decisively reelected in early 2010 after defeating the Tamil Tigers and maintaining decent economic growth. Later in the year, Colombian voters gave a similar reward for perceived success. Juan Manuel Santos, successor to the highly successful and popular but term-limited president Alvaro Uribe, won a landslide by pledging to build on Uribe’s achievements in stimulating economic growth and defeating narcotraficantes and leftwing insurgents. But no instance of reflected gratitude was more profound than in Brazil, where, after eight years of vigorous economic growth, significant reductions in poverty, and rising international prestige, voters convincingly elected President Luiz In´acio “Lula” da Silva’s designated successor, Dilma Rousseff, who had never before held elective office.


The Resilience of Democratic Accountability

What do we learn from this review of electoral politics in a time of global economic turmoil? If there is a common thread running through all these cases, it is the resilience of democratic politics. Voters punished incumbent leaders and parties who performed poorly, either because they were dragged down into the global economic undertow or because they had otherwise done a poor job of meeting voters’ expectations for good governance, or perhaps for both reasons. In most cases where economic downturns were severe, with the growth rate in the election year plummeting by at least 7 percentage points (as happened in Bulgaria, Mexico, Mongolia, Panama, and Ukraine), incumbents took a beating. The only ruling party that defied this trend was the rather unreconstructed Communist Party of Moldova, which probably rigged the vote — and even then it was punished badly just three months later. One could also cite the narrow reelection of Romania’s incumbent president in late 2009, but that came in a semi-presidential system where governing power had shifted to a different ruling coalition after parliamentary elections the previous year.


The summary data can be viewed in Table 2 on page 28. I sort elections going back to the fourth quarter of 2008 into two outcomes: whether the incumbent party retained power (or gained legislative ground) or lost power (or suffered a midterm defeat). In addition, I distinguish three groups: modest impact, with economic growth declining (or estimated to have declined) in the election year by fewer than 3 percentage points from the previous year; moderate impact (a decline of 3 to 7 points); and severe impact, with growth declining from the previous year by more than 7 points.20 In seven of the ten “severe-impact” cases, the incumbents lost (this becomes seven of nine if we eliminate Moldova’s questionable April 2009 balloting). Where economic growth declined sharply but not as drastically, incumbents lost five of eight times. Where economic performance was good or at least not as bad, incumbents won a majority of the time, and where they lost they were being punished for other performance failures. In general, democratic elections have performed as intended in times of economic distress, providing a safety valve that allows voters to punish incumbents while preserving the system as a whole.

 

 

Note: A country is counted twice if it had elections in separate calendar years. If elections were held simultaneously or in the same calendar year, it is counted once. Numbers in parentheses show the election date. Poland’s June 2010 presidential election was left out as it is hard to tell whether the incumbent was defeated. The speaker of the parliament ran against the brother of the late president and won. While the party of the late president was defeated, the ruling party (and candidate) of the ruling coalition won. It could thus be scored as an incumbent victory or defeat.


This may seem to suggest a somewhat sanguine view of the health of most existing democracies, but qualifications are in order. First, it is likely that a deeper, longer, and more pervasive global economic recession (not to mention a global depression) would exact a far more serious toll from the world’s vulnerable democracies. At a minimum, illiberal populist and even extremist political parties could be expected to draw many more voters, even in some of the postcommunist countries that have joined the European Union. In some of these countries, the principal obstacle in the way of democratic breakdown might then be the EU itself, with its political conditionality and its transfer payments to buffer economic dislocation and social pain. Elsewhere, in parts of Asia, Latin America, and Africa, the pace of democratic breakdowns would surely accelerate and possibly gather into a potent and undeniable reverse wave, driven not only by the spread of economic crisis but also by the much deeper symbolic loss of democratic prestige in an era — were it to come — in which the rich, established, capitalist democracies proved powerless to turn back the tide of economic misfortune.


Fortunately, there are growing signs that the United States is (slowly) emerging from its own encounter with recession, and the more seriously affected countries will probably follow it as global demand gradually increases. And many of the emerging-market democracies are now doing extremely well economically. But if the good news is that emerging democracies are weathering an economic storm that is not of their own making, the bad news is that they are too often staggering under the weight of governance problems that are largely rooted in their own deficient political institutions and norms. In the longer run, these democracies will need to improve the quality of their state institutions (both democratic and bureaucratic) — to boost accountability and bolster the rule of law — if they are to become secure against future challenges both economic and political.

___________________
NOTES

I am grateful for the excellent research assistance of Aayush Man Sakya and Nashat Moin.

1. Seymour Martin Lipset, Political Man: The Social Bases of Politics (Baltimore: Johns Hopkins University Press, 1981 [1960]), 68–70.

2. Samuel P. Huntington, The Third Wave: Democratization in the Late Twentieth Century (Norman: University of Oklahoma Press, 1991), 17–18.

3. Adam Przeworski, Michael E. Alvarez, Jose Antonio Cheibub, and Fernando Limongi, Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990 (New York: Cambridge Univesity Press, 2000), 109. 

4. Przeworski et al., Democracy and Development, 11. More recently, with a different data set (covering 1960 through 2004) and methodology, Ethan Kapstein and Nathan Converse have found a similar effect for young and therefore fragile democracies: Higher GDP growth, particularly averaging over five years, “is significantly associated with a reduced probability of democratic reversal.” The Fate of Young Democracies (New York: Cambridge University Press, 2008), 60.

5. That is the implication of the findings of both Przerworski et al. and Kapstein and Converse. As the latter show, for example, older and more economically developed democracies have greater ability to withstand the negative effects of poor economic performance.

6. For elaboration, see Larry Diamond, The Spirit of Democracy: The Struggle to Build Free Societies Throughout the World (New York: Times Books, 2008), ch. 3.

7. Arch Puddington, “The 2008 Freedom House Survey: A Third Year of Decline,” Journal of Democracy 20 (April 2009): 98, and “The Freedom House Survey for 2009: The Erosion Accelerates,” Journal of Democracy 21 (April 2010): 136.

8. Evidence of this, and other supporting documentation is available at www.journalofdemocracy.org/articles/gratis/DiamondGraphics-22-1.pdf.

9. And in these cases, it is hard to distinguish cause from effect. It is possible, in other words, that the sudden implosion of political stability might have contributed to the economic downturn (via the familiar route of loss of investor confidence).

10. The explanation for these measures of governance can be found in Daniel Kaufmann, Aart Kraay, and Massimo Mastruzzi, “Governance Matters VIII: Aggregate and Individual Governance Indicators, 1996–2008,” World Bank Policy Research WorkingPaper No. 4978, 29 June 2009, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1424591#.

11. Kapstein and Converse, Fate of Young Democracies, 68.

12. This counts both presidential and parliamentary election results in semipresidential systems such as Slovakia’s, but not concurrent or midterm legislative results in presidential systems such as those of Mexico or Venezuela.

13. This excludes a small number of elections in this period where it is difficult to interpret who the incumbent was or what fate they met, as in Poland or Bangladesh, which was returning to democracy after two years of military rule.

14. “Bulgaria Opposition Wins Election,” BBC News, 6 July 2009, http://news.bbc. co.uk/2/hi/8134851.stm.

15. Alina Mungiu-Pippidi and Igor Munteanu, “Moldova’s ‘Twitter Revolution,’” Journal of Democracy 20 (July 2009): 136–42.

16. “Panama Election: Supermarket Millionaire Ricardo Martinelli Wins Presidency,” Telegraph (London), 4 May 2009, available at www.telegraph.co.uk/news/worldnews/ centralamericaandthecaribbean/panama/5270318/Panama-election-supermarket-millionaire- Ricardo-Martinelli-wins-presidency.html.

17. “Billionaire Beats Rivals in Chile’s Presidential Election,” CBC News, 13 December 2009, available at www.cbc.ca/world/story/2009/12/13/chile-election.html?ref=rss.

18. Forrest D. Colburn, “The Turnover in El Salvador,” Journal of Democracy 20 (July 2009): 146.

19. Colburn, “Turnover in El Salvador,” 144, 143.

20. For elections in the first quarter of a year, I took the economic-growth rate from the preceding year. If I had also done that for Hungary regarding its April 2010 elections, the results in Table 2 would have been even more striking, as the ruling party would have lost in a climate of sharp economic decline.

 ___________________

Larry Diamond is a Senior Fellow at the Hoover Institution and the Freeman Spogli Institute for International Studies at Stanford University, and Director of Stanford’s Center on Democracy, Development, and the Rule of Law



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