SAMOTALIS: Democracy, Good Governance, and Economic Development

Democracy, Good Governance, and Economic Development

The institutional deficit that characterizes so many developing and transitional countries-weak and arbitrary governance, weak protection of civil liberties and inadequate regulatory and legal framework to guarantee property rights; enforce contracts, and reduce the transaction costs-deprive these countries of needed productive investment and economic growth. Improving the quality of governance is essential for economic development. What types of policies and institutions have the most positive and measurable effects on improving governance? What kinds of institutional arrangements are associated with economic growth and poverty reduction? Research shows that democracy influences economic growth. Specifically, secure private property rights that give incentives to individuals to be productive, institutionalization of the rule of law, especially constraints against executives, and electoral mechanisms that give citizens the ability to evict the “rascals” are essential to promoting growth. Thus, an obvious corollary is that democratization and decentralization without simultaneous strengthening of property rights and the rule of law may not always lead to effective democratic governance.

Democratic Nation and State Building

Some two decades ago, Robert Jackson distinguished between de jure and de facto states.64 However, many de jure states are in effect quasi-states, as they exist simply because other nations recognize them as legal sovereign entities, despite the fact that they lack many of the attributes of a functioning government. Today, these quasi-states are often interchangeably called “weak,” “failed,” “failing,” “collapsing,” “fragile,” “rogue,” or “post-conflict states,” among other terms. Regardless of the label, these states pose formidable problems for democratic governance, economic development, and global stability, as they are unable to provide effective legitimate rule or to deliver essential public goods such as security, law and order, education, and other essential services.
The World Bank has identified about thirty low-income countries as being “under stress”-albeit, some have put the number of weak or fragile states at around fifty. In such settings of lawlessness, violence, and impunity, where the “state” lacks even the most basic attributes of sovereignty, the challenge is to literally transform the “state” into an effective and responsible sovereign. But, how can this be done? Countless cases of failed democratization show that democracy cannot flourish under conditions of anarchy. As Rotberg notes, among a “hierarchy of political goods,” nothing is “as critical as the supply of security, especially human security.” Similarly, Fukuyama argues for “stateness first”-pointing out that “at the core of state-building is the creation of a government that has monopoly of legitimate power and that is capable of enforcing rules throughout the state’s territory.”68 Therefore, establishing political order and security is absolutely essential. Once order is established, the key is not only to empower citizens and their independent organizations, but also to simultaneously strengthen the nascent institutions of governance and the rule of law, as well as the development of formal representative organizations such as political parties-which constitute an essential link between citizens and the formal policymaking bodies.69 In some settings, it may also mean the formal state structures’ building partnership with a diverse range of local nonstate intermediaries and rival sources of authority to provide core functions such as public security, law and order, and conflict management-albeit, such formulas should only serve as a transitional phase toward consolidation of the formal governing bodies.

It is also important to reiterate that democratic state building cannot be had on the cheap. Given weak and failing states’ inability to raise revenue on their own, state building will require external sources of funding and logistical assistance-sometimes for extended periods. This means that the international community, especially the rich nations, must be willing to stay the course. However, as Carothers and others have argued, this does not mean that grandiose and overly ambitious nation-building plans are the answer. Rather, the goals should be well-targeted and expectations kept realistic, and second, nation or state building is not a technical exercise. Rather, every society will build institutions that are unique to its own culture, history, traditions, and ethnic makeup. Therefore, adapting to local traditions is essential. Moreover, Fukuyama’s caution to democratic nation-builders, that there is a difference between “state” and “nation” building, is worth keeping in mind. If a state is the government, a nation is that and much more because it also includes shared memories, culture, values, language, and a common sense of identity. Clearly, nation building is much more ambitious and challenging than state building. As Fukuyama notes, it is relatively easy to create an army or a police force, but to convince people divided by region, religion, or ethnicity to live together in the same society and have common interests is much more difficult.Therefore, democratic state and nation building is a two-pronged process. At a minimum, it must include creating or strengthening core governmental institutions such as the security apparatus, judiciaries, economic agencies, and social-welfare systems, including education and health care.

As Fukuyama argues, the first phase should involve stabilizing the country by establishing law and order, rebuilding basic infrastructure, and jump-starting the economy. The second phase must begin after stability has been achieved. This should include creating self-sustaining political and economic institutions that will ultimately permit democratic governance and economic growth to take place. Perhaps the best argument for such measured state building is that the alternatives are worse. It not only acts as a bulwark against grandiose and ultimately futile and costly experiments, such as in Iraq, but also it means that leaving fragile states to their own devices could renew civil wars and interstate conflict, making the long-term costs far heavier.
By Shalendra D. Sharma Taiwan Journal of Democracy, 16/08/2014

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