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