why authoritarianism (sometimes) works economically2

8/12/2019 Why Authoritarianism (Sometimes) Works Economically2

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Why authoritarianism (sometimes)

works economically: Dictatorship and

economic development in East Asia

Lecture for the Political Science

Symposium on China and Eastern Asia21/4-2008


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The Lee-thesis

Amartya Sen (1999:15): [A] great many people indifferent countries of the world are systematicallydenied political liberty and basic civil rights. It issometimes claimed that the denial of these rights helps

to stimulate economic growth and is good foreconomic development. Some have even championedharsher political systems with denial of basic civil andpolitical rights for their alleged advantage inpromoting economic development. This thesis (often

called the Lee thesis, attributed in some form to theformer prime minister of Singapore, Lee Kuan Yew) issometimes backed by some fairly rudimentaryempirical evidence


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The empirical record

Rodrik (2000): East Asian Tigers are exhbit#1 and Chile underPinochet is exhibit#2 for the Lee-thesis.

Then we have China

Does this prove the claim that democracy and human rights areluxury goods that should only be attained once a certain level of

development is reached? Is the Strong Autocrat the only one whocan guarantee development?

This argument is certainly popular among more or less autocraticthird world leaders, but it has also been popular in academia (eventhough decreasingly so)

In any case: Even if the Lee-thesis should hold, we have to engage inan evaluation of whether authoritarianism is desirable, on thebackground of other normative criteria as well. It is not always theeconomy, stupid!


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Some general results

1,00 2,00 3,00 4,00 5,00 6,00 7,00FHITOTAG

-5,00

-2,50

0,00

2,50

5,00

7,50

growth7000Algeria

Angola

ArgentinaAustraliaAustria

Bangladesh

BarbadosBelgium

BeninBolivia

Botswana

Brazil

BurundiCameroon

Cape Verde

Central African Repu

Chad

Chile

China

Colombia

Comoros

Congo (Kinshasa)

Costa Rica

Cote d'Ivorie

Dominican

RepublicEgypt

El Salvador

Equatorial Guinea

Ethiopia

FijiGambia, The

Germany

GhanaGuatemala Guinea

Guinea-Bissau

HaitiIndia

Irelan

d

Jordan

Korea, South

LesothoLuxembourg

Madagascar

Malaysia

Mauritania

Mauritius

Mozambiqu

e

New Zealand

NicaraguaNigerNigeria

PakistanPanama


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Econometric analysis

Przeworski and Limongi (1993) and Przeworski et al. (2000):No overall effect on economic growth from regime type.

Rodrik (2000): Democracy is positively related to high-quality growth

Barros inverse U-shape? Halperin et al (2005): The democracy-advantage and the

Asian outliers

Knutsen (2008): Democracy increases growth, decreasescorruption and protects property rights better on average

Growth and other economic indicators/factors: Thedemocracy-advantage is larger for other indicators than forgrowth in GDP


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But

The variance among dictatorships is far higher thanamong democracies, when it comes to for exampleeconomic growth performances: Some dictatorshipsperform extremely well and others perform

horrendously! A large bulk of the well-performing dictatorships can be

found in East Asia.

Two questions we need to answer: Why is it that somedictatorships canproduce very high

rates of economic growth?

What explains the divergence in results amongdictatorships?


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Theoretical arguments

I will only go through the theoretical arguments thatpoint in favor of dictatorships when it comes topromoting economic development. There are evenmore arguments pointing in favor of democracy, so be

aware of the theoretical bias here!

List of arguments on regime type and growth (Knutsen,2006) and list of arguments on regime type andproperty rights (Knutsen, 2007):

http://folk.uio.no/carlhk/ The arguments draw on different strands of literature

and connects insights from different disciplines
http://folk.uio.no/carlhk/http://folk.uio.no/carlhk/


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A list of arguments

The property rights argument (Marx, Mill and medianvoters)

The forced savings and investment argument

The crushing of the unions argument The chaos-avoidance argument (Huntington and

political and social stability)

The avoiding gridlock and pushing reform argument

The autonomy from interest group argument(centralization and the enlightened elite)

The cultural argument


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Prerequisites for the arguments

The motivation of elites?

The incentives of self-interested elites?

Institutional structures?

Information, learning and adaptation?

Common to these arguments are that they makestrong assumptions on the behavior of autocraticelites. What if these are not valid?

Power concentration (dictatorships) vs checksand balances and accountability (democracies)Democracy as maximin


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The divergence among dictatorships:

Institutional structures and types

Dictatorship is a broad and not very well

defined category (there are many dimensions

to regime type).

Hadenius and Teorell: 1) existence of hereditary

succession? 2) military force underpinning the

regime? 3) existence of popular elections?

Przeworski et al: Institutional checks and parties

Linz and Stepan: Totalitarian, Post-totalitarian,

Autocratic, Sultanistic (ideal types)


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The divergence among dictatorships: The

rational dictator and his context-dependent

strategies

Mancur Olson (1993&2003): Roving vs

Stationary Bandit

Robinson (2001): When is a state predatory?

The endogeneity of survival probability

Knutsen (2008): Power motivated dictators

and the role of the security context (internal

vs external threats). The case of Kuomintang.


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Other explanations on autocratic

divergence in economic outcomes

Aristotle and the virtues of rulers: Enlightened

rule vs tyranny

The international context (political support

and open markets)

Economic (or social or cultural) determinism

and superficial politics


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What is it about Asian dictatorships

Econometric results show that Asia is exceptional:On all other continents are democracy positivelyassociated with economic growth and

development. But not so in Asia (Knutsen, 2006).The data-problem and self-selection: Myanmarand North Korea.

Looking behind the macro-aggregates and ideal-

types: Idiosyncracies and the Asian model (FDI,size firms..)

The initial level of development..


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CountryGrowth 1970-

2000GDP per cap

1970(PPP)Average FHI

1972-2000Average polity

1970-2000Taiwan* 6,7 2790 4,1 -2,1

Singapore* 6,4 5279 4,7 -2,0Botswana 6,3 1193 2,3 7,6South Korea* 6,1 2716 3,7 -0,6China* 5,2 815 6,6 -7,2Thailand* 4,7 1822 3,6 2,8Cyprus 4,4 5275 1,9 9,6Ireland 4,4 7260 1,1 10,0Mauritius 4,3 4005 2,0 9,6Haiti 4,3 930 5,9 -5,3Indonesia* 4,2 1087 5,3 -6,0Malaysia* 4,2 2884 4,0 3,7Cape Verde 4,0 1387 4,1Seychelles 3,7 4091 4,7Romania 3,7 2056 5,3 -2,8


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Democracy and growth in Asia in the

90s

1,00 2,00 3,00 4,00 5,00 6,00 7,00

Average political rights score FHI in decade

0,00

2,00

4,00

6,00

8,00

pe

rcapGDP,nb:Somecountries

havedifferentstartand

endpointsforseries

BangladeshCambodia

China

India

Indonesia

Japan

Korea, South

Malaysia

Nepal

Pakistan

Papua New Guinea

Philippines

Singapore

Sri Lanka

Taiwan

Thailand

Vietnam

R Sq Linear = 0,281


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Growth accounting: de-mystification?

Alwyn Youngs results: Asian growth recordsare mainly due to economic fundamentals likea high savings rate, increases in human capital

and growth and reallocation of the laborforce.

Technical criticisms

Causality and inference criticisms Why did these countries save, educate and

reform in the first place??


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The debate on markets and state-

intervention Did countries like Taiwan, South Korea and Singapore follow

the text-book, neoclassical model? The answer is aqualified no..

World Bank and economists vs Chang, Wade and Amsden

Asian countries relied on selective and often ingenuousforms of state intervention in markets, but were sure tokeep in line with basic economic fundamentals (privateincentives, property rights).

State as entrepreneur and planner

Rodrik (2008): Many ways to institutionalize the deepereconomic fundamentals, and there is no single, best matrixof institutions and policies independent of contexts


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State feedback

property rights, rule law, incentives, macro climate

education, technology, ind.pol & cap alloc public goods

Firms, labor Outcome

technology, capital, aid open markets, demand

feedback International environment


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Asian experiences characterized by:

Export-led growth and open international markets. Comp

adv and sector composition.

US aid in the early period

Strong incentives to firms (markets and others; command

approaches).

Property rights protection and legal system.

Betting on a few horses: economies of scale and state-led

cartels. Focus on specific sectors (externalities and future

growth potential + military relevance)

Support contingent on performance. (autonomy of state

and bureaucracy)

State-led solving of coordination problems


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Asian experiences characterized by:

Infrastructure and education

Investment and technology policies, allocation of credit to firms

Sound macroeconomic policies (inflation, currency)

Land reform, redistr. and inequality (Koreans are the worlds true

ethical communists) Cheap labor (union policies and factory despotism) and work

hours:1980s, manufacturing: 53,4 and 48,4 h/w in S.K and Taiwan)

Capital accumulation (anti-consumption and pro-investment policies)

Technology adaptation (West and Japan)

Relative political stability

Well-functioning bureaucracies (For example economic planning

boards)


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The deeper question:

Why were wise policies selected in the first place? We can not stopafter labeling some regimes as developmental and some aspredatory.

The altruistic and enlightened autocrat?

Asian values?

Ideology; anticommunism (-China) and authoritarian capitalism The institutional explanation: Parties and checks and balances.

Autonomy and embeddednes (Evans). Lack of personalizedclientilism (question of degree). The bureaucracy.

The self-interested dictator:

Stability (Olson, Robinson)

Security threat and politics of power

Glory and pride

why authoritarianism (sometimes) works economically2

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