The Democracy Advantage

For decades, policies pursued by the United States and other industrialized nations toward the developing world have been based on a dirty little secret among policy experts: democracy and development don t mix. The Democracy Advantage: How Democracies Promote Prosperity and Peace (a Council on Foreign Relations book–published by Routledge), coauthored by Open Society Institute Director of U.S. Advocacy Morton Halperin (with Joseph T. Siegle and Michael M. Weinstein) makes a compelling case that they do.

On January 20, 2005, OSI New York hosted a panel discussion on The Democracy Advantage, moderated by Gara LaMarche, OSI's Director of U.S. Programs.

Halperin began by stating that the book's inspiration came from an anomaly in American foreign policy: development policies of the United States and international financial institutions often seem at odds with the professed mission of promoting democracy around the world. When dispensing aid funds, U.S. agencies fail to take into account whether a country is democratic or not. In fact, in order to receive aid some countries are pressured to make changes that hurt the development of democratic governments.

This stance has been justified by the assumption that only rich countries can be successful democracies, Halperin said; poor countries supposedly need a benevolent dictator to produce sufficient economic growth that can then support democracy. The authors therefore decided to look at the question whether democracy indeed represents an advantage or a disadvantage for poor countries.

The book s real contribution is its data, Weinstein remarked. It demonstrates that democracy is neither necessary nor sufficient for growth, but that it increases the probability of growth. Low-income democracies (those with an average yearly per capita income of $2000) consistently outgrow autocracies, he said. The reasons for this are threefold:

  • Low-income democracies suffer far fewer disasters than do autocracies. You don t have the Great Leap Forward, Weinstein noted. Autocracies are twice as likely to experience economic collapse as democracies.
  • Democracies are far more resilient. Of those countries that suffer three-year economic setbacks (such as recessions), only about five percent of democracies regress politically as a result.
  • Autocracies are plagued by far more frequent conflict than are low-income democracies.

Even if readers take issue with the book s conclusion that low-income democracies outperform low-income autocracies, Weinstein said, they cannot come away from the book s data and at the very least concede that autocracies do not do better than democracies.

Weinstein went on to list the book's three main policy conclusions:

  • Economic aid should go to democracies; under conditions of limited amounts of funds, this distinction means money better spent.
  • Due to security concerns, the United States has historically provided aid to countries that do our bidding. The authors recommend that these payments no longer be called and treated like aid, but rather that we should call it what it is: security dollars.
  • U.S. aid agencies, as well as the World Bank and IMF, should be required to provide a democracy impact statement much like an environmental impact report before they intervene in low-income countries. This would give civic organizations and advocacy groups the information necessary to prepare for the consequences of the aid.

At this time there is actually a democracy disadvantage, Halperin pointed out. Democratic countries are in fact less likely to receive assistance. One additional reason, therefore, to change aid policy would be to provide countries an incentive to become democratic.

While agreeing with the authors' claims, Max Boot asserted that the Bush administration foreign policy is oriented toward promotion of democracy. The question is how to operationalize the book s findings, he said. This becomes much more difficult with regard to countries such as Saudi Arabia or Egypt with which the United States is in a very delicate political position.

Wisner commented that he had come away from the book convinced that democracy is essential to sustained growth. However, citing the need for some nuance in our thinking, he pointed to the case of Egypt. Many pillars of growth such as a sustained tradition of market entrepeneurship or a more tolerant view of liberalism have tended to be absent in that country.

Wisner's greatest concern, he said, is the U.S. role in the promotion of democracy. Making a plea for a note of humility, he asked that policymakers consider the extent to which the United States can realistically set as a goal the imposition of democracy. The danger is that the overassertion of democracy would actually undermine U.S. policy by creating a sense of American imperialism," Wisner cautioned.

Date: January 20, 2005
Time: 7:008:30 p.m.

OSI-New York

Max Boot, Morton Halperin, Michael M. Weinstein, and Frank G. Wisner