Democracy And Economic Growth

Tidjane Thiam, writing in Newsweek's special edition (12/1999-2/2000) says democracy is vital to economic growth. As minister of Planning and Economic Development of Cote d'Ivoire, Thiam says, "Africa has paid too little attention to political modernization. Too many African governments pay only lip service to democracy, which is often limited to simply holding regular elections." Whatever are the benefits of American-style democracy, democracy is not a necessary condition for economic growth and; in fact, democracy might impede economic growth. Let's look at it.

There are several, once very impoverished, countries that experienced significant and rapid economic growth without democratic institutions. Some examples and their respective per capita GDPs are: Chile ($12,700), Hong Kong ($25,200) Taiwan ($12,000) Singapore ($28,000) and South Korea ($13,600). To the extent that political democracy exists in these countries today, it has only recently emerged.

What's true about these once backward countries is they all have relatively free markets, in a word they're economically free. Each of these countries, with the exception of South Korea, has either no or very low protectionism - tariff and quotas on imports. South Korea has what Gerald P. O'Driscoll, et. al., in their book 2000 Index of Economic Freedom, call moderate protectionism. Governments in these countries impose a relatively low burden on its citizens in the forms of taxation and economic regulation. These countries also share another characteristic vital to economic growth: secure property rights and rule of law.

Political democracy, and India is an excellent example, can jeopardize economic prosperity because people, forming interest groups and using their political freedom, can subvert and compromise the free market institutions vital to economic growth. Tidjane Thiam is quite concerned about economic growth in sub-Saharan Africa but the problem isn't democracy. With but a few exceptions, most of black African nations fall into the category of being either economically "unfree" or "repressed."

The same can be said about Africa north of the Sahara. The continent's countries falling into the category of "mostly free" are: South Africa, Namibia, Zambia, Botswana, Mauritius, Benin, Mali and Morocco. While citizens in these countries remain poor by western standards, they're far better off than their repressed neighbors.

Mr. Thiam might do well turning his attention to his own country. Cote d'Ivoire is typical of most African countries; it falls into the "mostly unfree" category. It has very high levels of protectionism and government economic regulation, plus corruption is rife. It also has a very low level of property rights protection and rule of law is highly compromised.

It should come as no surprise that when we're treated to television scenes of African famine, starvation and genocidal slaughter of hundreds of thousands of Africans, it tends to be in those African nations that fall into "mostly unfree" or "repressed" categories. This is not uniquely African. In eastern Europe, where we've witnessed starvation and/or genocide, it's occurred in "mostly unfree" or "repressed" nations such as Bosnia, Croatia, Albania and Romania.

Evidence shows that no amount of IMF, World Bank and other handout interventions can bring prosperity to repressive nations. Only Africans can solve Africa's problems. Unfortunately, Africans have been heeding the council of socialists around the world, including U.S. socialists. It's instructive that Mr. Thiam is minister of Planning and Development in Cote d'Ivoire. The idea that government planning and control are tickets to economic growth has been thoroughly discredited.

African nations might also benefit if American black academics, politicians and civil rights leaders stopped laying out the welcome mat and heaping praise on the leaders and officials of Africa's brutal and repressive regimes.

Walter E. Williams
c55-00
November 27, 2000
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