Democracy May Be Critical For Good Governance but Not Economic Performance

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Friday, April 13, 2018 /10:10AM / FDC 

Democracy is a system of government whereby authority and power is vested in the hands of the majority. Simply put, it is the government of the people, for the people, and by the people. It ensures majority rule and protects minority rights. Democracy is based on two main principles: accountability and transparency.

Accountability ensures the government is answerable to its citizenry and will give account for every action. This obliges them to make right and fair decisions at all times. This facet of the regime is supported by the media, which provides unbiased public information, and assessments of performance. This is further supported by an active and powerful civic society, an effective legal system and free opposition.

Transparency ensures citizens have free access to any information held by the government that is useful for making political or business decisions.  Additional characteristics of a true democracy include: free and fair elections, a constitution or framework that limits government actions, and a rule of law that ensures fundamental human rights (freedom of expression, property ownership, media, assembly, association and religion).

Certainly, democracy is useful for securing good governance. However, as evidence shows from a global range of governance structures, this does not necessarily translate into economic development, nor is it a prerequisite for the same. The argument for democracy is rooted in the argument for capitalism; freedom of citizens combined with freedom of markets will lead to the optimal performance of the state and economy. This, how-ever, does not always prove true, nor is it necessarily a prerequisite for economic development.  Looking at three countries as examples, Mauritius, Nigeria and China, we can see that democracy is only one factor, and not always a necessary one, in influencing economic performance.

Mauritius is sub-Saharan Africa’s golden example when it comes to democracy and a strong candidate to prove the relationship between democracy and economic performance. The south-eastern country is the only full democracy7 in Africa, ranking 16th in the worldwide Democracy index, higher than Spain (19th), the US (21st), or Japan (23rd). The country runs a Westminster system of government, with a President and vice President (elected by the people), and a Prime Minister (appointed by the President). The President (like a Queen) holds ceremonial power, while the Prime Minister has the authority to make decisions.

The small country, with a population size of just over one million, boasts of one of the highest qualities of living in Africa. Life expectancy is 74.6 years; income per capita is $9,800/annum;8 and the country ranks 64th on the Human Development Index (HDI).9 In the media freedom sub-index,10 Mauritius comes in 9th, boasting of a fully free press, despite intermittent government interference. This is a case where democracy and economic performance have gone hand in hand.

China, however, stands in stark contrast with the democracy narrative. The Asian country runs a communist government, and a hierarchical electoral system. This essentially means that there is no legal way to impeach a government. Domestic media is entirely state owned, as are banks and land.11 The Asian giant, however, does not stand by some of the fundamental principles of Marxism, such as collective ownership and confiscatory taxes. Additionally, the performance of the leadership is assessed (by regional leaders) using economic indicators such as GDP growth, and revenue.

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This regime has achieved outstanding performance on the business and economic front. China is the second largest economy in the world with an annual GDP of $11.2trn and an income per capita of $8,123.12 The system does breed corruption, inequality and discontent, with the poorest 20%, owning less than 1% of the country’s wealth, but the country still maintains an average HDI ranking of 78th (out of 190 countries), with a life expectancy of 76 years, and adult literacy soaring at 95%.

Nigeria is awkwardly in the middle. It lacks the robust features of democracy that Mauritius enjoys, the economic success China enjoys, while forging democracy as a governance choice. Instead it has a hybrid system of government, with both democratic and authoritarian traits. A compromised press, pluralism, weak civil society and an ineffective legal system continue to weigh on Nigeria’s democracy. The country ranks 109th out of 167 countries on the Democracy Index and per-forms poorly on both human development and economic variables. Although it has the largest GDP on the continent, it has only the 18th highest income per capita at $2,457.14 The country ranks 152nd (out of 190 countries) on the HDI; and life expectancy is a mere 53 years.

The question remains: does the development performance of these three case studies have anything to do with their system of government? Not necessarily. A country such as China, which is one of the largest and fastest growing economies in the world, is proof of this conclusion. A democratic government is essential for enforcing civil rights and liberties, but it has no direct link to economic performance. What makes the difference is the determination, commitment and skill of the ruling government.

There is a need for civic education in Nigeria, to equip young citizens with the knowledge and skills needed to vote wisely, demand their rights, and adequately assess governments based on performance. This will boost good governance and move the country one step closer to development. Without it, Nigeria may move higher up the democracy value chain without actually reaping its potential rewards.

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