Why authoritarianism (sometimes)
works economically: Dictatorship and
economic development in East Asia
Lecture for the Political Science
Symposium on China and Eastern Asia
21/4-2008
The Lee-thesis
• Amartya Sen (1999:15): “[A] great many people in
different countries of the world are systematically
denied political liberty and basic civil rights. It is
sometimes claimed that the denial of these rights helps
to stimulate economic growth and is “good” for
economic development. Some have even championed
harsher political systems – with denial of basic civil and
political rights – for their alleged advantage in
promoting economic development. This thesis (often
called “the Lee thesis”, attributed in some form to the
former prime minister of Singapore, Lee Kuan Yew) is
sometimes backed by some fairly rudimentary
empirical evidence”
The empirical record
• Rodrik (2000): East Asian Tigers are exhbit#1 and Chile under
Pinochet is exhibit#2 for the Lee-thesis.
• Then we have China…
• Does this prove the claim that democracy and human rights are
“luxury goods” that should only be attained once a certain level of
development is reached? Is the “Strong Autocrat” the only one who
can guarantee development?
• This argument is certainly popular among more or less autocratic
third world leaders, but it has also been popular in academia (even
though decreasingly so)
• In any case: Even if the Lee-thesis should hold, we have to engage in
an evaluation of whether authoritarianism is desirable, on the
background of other normative criteria as well. It is not always the
economy, stupid!
Some general results
7,50
Botswana
Korea, South
China
5,00
Mauritius
Haiti
Irelan
Malaysia
Cape
Verde
Barbados
d
Dominican
Luxembourg
India
Republic
Austria
Egypt
Chile
growth7000Belgium
Pakistan Guinea-Bissau
Brazil Lesotho
2,50
Germany
Fiji
Equatorial Guinea
Panama
Colombia
Australia
Jordan
Algeria
Costa Rica
Bangladesh
New Zealand
Cameroon
Guatemala
Gambia, The
Ghana
Guinea
Argentina
Benin Chad Ethiopia
0,00
El Salvador Bolivia
Mauritania Burundi
Cote d'Ivorie
Nigeria
Comoros Madagascar
Niger
Mozambiqu
e
Nicaragua
-2,50
Angola
Central African Repu
Congo (Kinshasa)
-5,00
1,00
2,00
3,00
4,00
FHITOTAG
5,00
6,00
7,00
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 “highquality growth”
• Barro’s inverse U-shape?
• Halperin et al (2005): The democracy-advantage and the
Asian “outliers”
• Knutsen (2008): Democracy increases growth, decreases
corruption and protects property rights better on average…
• Growth and other economic indicators/factors: The
democracy-advantage is larger for other indicators than for
growth in GDP
But…
• The variance among dictatorships is far higher than
among democracies, when it comes to for example
economic growth performances: Some dictatorships
perform 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 some dictatorships can produce very high
rates of economic growth?
– What explains the divergence in results among
dictatorships?
Theoretical arguments
• I will only go through the theoretical arguments that
point in favor of dictatorships when it comes to
promoting economic development. There are even
more 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 and
property rights (Knutsen, 2007):
http://folk.uio.no/carlhk/
• The arguments draw on different strands of literature
and connects insights from different disciplines
A list of arguments
• The property rights argument (Marx, Mill and median
voters)
• 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
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 make
strong assumptions on the behavior of autocratic
elites. What if these are not valid?
• Power concentration (dictatorships) vs checks
and balances and accountability (democracies)
Democracy as “maximin”
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)
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.
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
What is it about Asian dictatorships
• Econometric results show that Asia is exceptional:
On all other continents are democracy positively
associated with economic growth and
development. But not so in Asia (Knutsen, 2006).
The data-problem and self-selection: Myanmar
and North Korea.
• Looking behind the macro-aggregates and idealtypes: Idiosyncracies and the Asian model (FDI,
size firms..)
• The initial level of development..
Country
Growth 1970-
GDP per cap
Average FHI
Average polity
2000
1970(PPP)
1972-2000
1970-2000
Taiwan*
6,7
2790
4,1
-2,1
Singapore*
6,4
5279
4,7
-2,0
Botswana
6,3
1193
2,3
7,6
South Korea*
6,1
2716
3,7
-0,6
China*
5,2
815
6,6
-7,2
Thailand*
4,7
1822
3,6
2,8
Cyprus
4,4
5275
1,9
9,6
Ireland
4,4
7260
1,1
10,0
Mauritius
4,3
4005
2,0
9,6
Haiti
4,3
930
5,9
-5,3
Indonesia*
4,2
1087
5,3
-6,0
Malaysia*
4,2
2884
4,0
3,7
Cape Verde
4,0
1387
4,1
Seychelles
3,7
4091
4,7
Romania
3,7
2056
5,3
-2,8
per cap GDP, nb: Some countries have different start and
endpoints for series
Democracy and growth in Asia in the
90’s
8,00
China
6,00
Singapore
Taiwan
Vietnam
Korea, South
Malaysia
Thailand
4,00
India
Bangladesh
Cambodia
Indonesia
Sri Lanka
Nepal
2,00
Japan
Pakistan
Philippines
R Sq Linear = 0,281
Papua New Guinea
0,00
1,00
2,00
3,00
4,00
5,00
6,00
Average political rights score FHI in decade
7,00
Growth accounting: de-mystification?
• Alwyn Young’s results: Asian growth records
are mainly due to economic fundamentals like
a high savings rate, increases in human capital
and growth and reallocation of the labor
force.
• Technical criticisms
• Causality and inference criticisms
• Why did these countries save, educate and
reform in the first place??
The debate on markets and stateintervention
• Did countries like Taiwan, South Korea and Singapore follow
the text-book, neoclassical model? The answer is a
qualified no..
• World Bank and economists vs Chang, Wade and Amsden
• Asian countries relied on selective and often ingenuous
forms of state intervention in markets, but were sure to
keep in line with basic economic fundamentals (private
incentives, property rights).
• State as entrepreneur and planner
• Rodrik (2008): Many ways to institutionalize the deeper
economic fundamentals, and there is no single, best matrix
of institutions and policies independent of contexts
State
feedback
property rights, rule law, incentives, macro climate
education, technology, ind.pol & cap alloc
Firms, labor
technology, capital, aid
feedback
public goods
Outcome
open markets, demand
International environment
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
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 world’s true
ethical communists…”)
Cheap labor (union policies and “factory despotism”) and work
hours:1980’s, 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)
The deeper question:
• Why were wise policies selected in the first place? We can not stop
after labeling some regimes as “developmental” and some as
“predatory”.
• 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 personalized
clientilism (question of degree). The bureaucracy.
• The self-interested dictator:
– Stability (Olson, Robinson)
– Security threat and politics of power
– Glory and pride