Economic Growth and Democratisation in North East Asia (Part 2)

by James Graham

If the role of economic growth in the democratisation process is unclear its power to sustain and institutionalise a democratic regime is not. Democratisation undermines authoritarianism by presenting a clear alternative. Rapid economic growth demonstrated to the Japanese that democracy could deliver the social and economic outcomes that people desired. Once a level of per capita GDP of over $US6000 has been achieved no country has reverted back to authoritarianism. Part of this reason is that such a change would destabilise a country's economy and put at risk many of the improvements in living standards the county had achieved.

China at present contradicts much of the link between economic growth and democratisation. It now ranks in the middle of the United Nations Development Program's Human Development Index surrounded by many democracies. In 2002 China's GDP per capita was $US4,600 using purchasing power parity methods. This is close to the $US6000 level mentioned early that in case after case has lead to democracy. Yet what Chinese democratisation has occurred has not occurred in the economically prosperous coastal regions and cities. Instead a measure of democracy has come to China's smallest bureaucratic unit, the humble village. This democratisation was approved by China's Communist Party in an effort to improve the governance of the country's vast number of villages. The poor peasants have tended to leave their villages for the cities and thus have little interest in improving the governance of their own villages. Conversely many relatively rich villages are already well run giving good reasons like not having to pay any taxation to continue to support incumbents. Thus village democratisation has been uneven and concentrated in China's middle income villages. Only in these villages has the collective economy grown at the same time as democratisation has occurred. The two not only support each other but are a core part of village autonomy. Both China's limited democratisation and its general lack of democracy confuse the relationship between economic growth and democratisation.

As China shows, economic growth can entrench authoritarian elites in power. With the mass of a population receiving steady increases in their living standards most will not push for political freedom. Japan's periods of greatest economic growth also coincided with increases in authoritarianism and a weakening of democracy. People in general care most about their political rights when they are personally affected. Thus as the Chinese Communist Party has done now, a regime that stakes its legitimacy on economic growth will quickly find itself under attack if it fails to achieve it. In a democracy this usually means the government is voted out of office but for an authoritarian regime in the late 20th century a failure of this sort quickly lead to a velvet revolution. This peaceful transfer of power from an authoritarian regime to a democratic regime is possibly economic growth's most positive side effect. It is growth that creates wealthy business elites interconnected with the ruling authoritarian elite. Together both generally prefer to lose some of their political power than risk losing their personal fortunes. Bottom-up democratic revolutions can not only lead to the confiscation of private property but also unsettles foreign investors into withdrawing their investment funds, usually the primary source of economic growth from a country. Thus for a prosperous and interconnected business and political elite the risks of losing control are far greater than those of gradually democratising.

The relationship between economic growth and democratisation is ambiguous and varies from county to country. There is little doubt that in most countries it plays a significant role in preparing a nation for democracy. Each country however still requires a trigger to set it in motion. As the Chinese village democratisation shows this trigger can merely be a relative lack of economic development. The link between economic growth and democratisation in the region is thus inconclusive.

Economic Growth & Democratisation in N.E. Asia

Economic Growth & Democratisation in N.E. Asia (Part 1)
Economic Growth & Democratisation in N.E. Asia (Bibliography)