1. Small group discussion activity to conclude institutional design.

2. Understand potential dangers for democracy in economic reform process.

3. Learn and assess between sides of debate on “authoritarian advantage” in economic reform/ performance.

Iraq, South Africa, Russia groups. 1. Would you have a presidential or

parliamentary executive? Mechanisms for balancing powers?

2. What would the electoral system be for electing legislative and executive leaders?

3. What are your reasons for choosing these institutions?

Democratization & Economic Reform

Dangers for democratic regime Economic deterioration may erode

people’s attachment to democracy. Extremist parties may gain power. Growth of voter apathy. Danger of coups.

Dangers for democratic regime Leaders may seek to “ram through”

reforms to break political logjams. Strong presidency or multiparty

parliament preferable?

Common issues of conflict and controversy

1. Role of the state in economic development.

2. Distributional consequences of reform (who gets what?).

3. Government accountability.

“Authoritarian advantage”?

Pro-Authoritarian Argument1. Democratic governments may

lack capacity for quick action.2. Workers’ demands in democracy

reduce profits and investment for growth.

3. Democratic citizen demands for social programs divert monies from investment.

Pro-Democracy Argument1. Authoritarian advantage

depends on enlightened dictator. Why would dictator invest in

country instead of squandering resources on self?

Pro-Democracy Argument2. Democratic leaders face

punishment at polls for failure.

Pro-Democracy Argument3. Lack of rule of law in

authoritarian regimes investors fear to commit.

Danger of losing property rights at any time.

Pro-Democracy Argument4. Political freedom generates

better information for decisionmaking.

Pro-Democracy Argument5. Democratic governments are

risk-averse. (Przeworski & Limongi)

Tend not to invest in grandiose schemes.

Pro-Democracy Argument6. Democratic legitimacy can

weather economic crisis. (Huntington)

Not based on performance legitimacy.

The Historical Record1. “Authoritarian advantage” based

on limited time period and regions. (Maravall)

1960s-70s Latin America 1980s-90s East Asian “tigers”

The Historical Record2. No difference between

dictatorships & democracies in growth rates 1950-1990. (Przeworski & Limongi)