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					CHAPTER 2

               Democratic governance for human development




Good governance is perhaps the single most              concerned with whether institutions and rules
important factor in eradicating poverty and             are fair—and whether all people have a say in
promoting development.                                  how they operate:
   —UN Secretary-General Kofi Annan1                    • Participating in the rules and institutions that
                                                        shape one’s community is a basic human right
Around the world, more people are recogniz-             and part of human development.
ing that governance matters for development—            • More inclusive governance can be more ef-
that institutions, rules and political processes        fective. When local people are consulted about
play a big role in whether economies grow,              the location of a new health clinic, for example,
whether children go to school, whether human            there is a better chance it will be built in the right
development moves forward or back. So, pro-             place.
moting human development is not just a social,          • More participatory governance also can be
economic and technological challenge: it is also        more equitable. Much is known about the eco-
an institutional and political challenge.               nomic and social policies that help eradicate
    Accompanying this new consensus is a grow-          poverty and promote more inclusive growth. But
ing conviction that many persistent develop-            few countries pursue such policies vigorously,
ment problems reflect failures of governance.           often because the potential beneficiaries lack po-
Studies in a range of countries and regions hold        litical power and their interests are not fully
weak governance responsible for persistent              represented in policy decisions.
poverty and lagging development. The gover-                  Governance for human development is
nance crisis is evident in widespread corruption,       partly about having efficient institutions and
inefficient public services and a host of other fail-   rules that promote development by making
ures. These studies have also shown what poor           markets work and ensuring that public services
governance means for ordinary citizens—schools
without teachers, courts without justice, local bu-
                                                          BOX 2.1
reaucrats demanding bribes at every turn.2                                                   Good governance—for what?
    What does it mean to promote good gov-
                                                          From the human development perspective,         private and public spheres of life and deci-
ernance? There is no single answer. But much              good governance is democratic governance.       sion-making.
of the recent debate has focused on what makes            Democratic governance means that:               • People are free from discrimination
institutions and rules more effective, including          • People’s human rights and fundamental         based on race, ethnicity, class, gender or
transparency, participation, responsiveness, ac-          freedoms are respected, allowing them to live   any other attribute.
                                                          with dignity.                                   • The needs of future generations are re-
countability and the rule of law. All are impor-          • People have a say in decisions that affect    flected in current policies.
tant for human development—especially since               their lives.                                    • Economic and social policies are re-
ineffective institutions usually cause the most           • People can hold decision-makers ac-           sponsive to people’s needs and aspirations.
harm to poor and vulnerable people.                       countable.                                      • Economic and social policies aim at erad-
                                                          • Inclusive and fair rules, institutions and    icating poverty and expanding the choices
    But just as human development is about
                                                          practices govern social interactions.           that all people have in their lives.
much more than growth in national incomes,                • Women are equal partners with men in
governance for human development is about                 Source: Human Development Report Office.
much more than effective institutions and rules
(box 2.1). For three reasons, it must also be


DEMOCRATIC GOVERNANCE FOR HUMAN DEVELOPMENT                                                                                                              51
                            live up to their name. But it is also about pro-             POLITICAL       FREEDOM AND PARTICIPATION
                            tecting human rights, promoting wider partic-                ARE ESSENTIAL GOALS OF HUMAN
                            ipation in the institutions and rules that affect            DEVELOPMENT
                            people’s lives and achieving more equitable eco-
                            nomic and social outcomes. Thus governance for               Political freedom and the ability to participate
                            human development is concerned not just with                 in the life of one’s community are capabilities
                            efficient, equitable outcomes but also with fair             that are as important for human development
                            processes. Governance for human development                  as being able to read and write and being in good
                            must be democratic in substance and in form—                 health. People without political freedom—such
                            by the people and for the people (see the spe-               as being able to join associations and to form and
                            cial contribution by Nobel Prize–winner Aung                 express opinions—have far fewer choices in
Political freedom and       San Suu Kyi).                                                life. And being able to participate in the life of
                                                                                         one’s community—commanding the respect of
participation are part of
                            THE ROLE OF POLITICAL FREEDOM AND                            others and having a say in communal deci-
human development,          PARTICIPATION IN HUMAN DEVELOPMENT                           sions—is fundamental to human existence.
                                                                                              That political freedom and participation are
both as development
                            Political freedom and participation are part of              crucial to human development is not always well
goals in their own right    human development, both as development goals                 understood. Indeed, there is a widespread mis-
                            in their own right and as means for advancing                perception that human development is only about
and as means for
                            human development.                                           economic and social outcomes such as reducing
advancing human
development
                                                                  SPECIAL CONTRIBUTION
                                                            Human development and human dignity
                              Respect for human dignity implies commitment to cre-             Human development encompasses all aspects of
                              ating conditions under which individuals can develop       human existence. It is generally accepted that its
                              a sense of self-worth and security. True dignity comes     scope includes political and social rights as well as eco-
                              with an assurance of one’s ability to rise to the chal-    nomic ones—but the different rights are not always
                              lenges of the human situation. Such assurance is un-       given the same weight. For example, some people
                              likely to be fostered in people who have to live with      still claim that humanitarian aid and economic assis-
                              the threat of violence and injustice, with bad gover-      tance cannot wait for political and social progress. This
                              nance and instability or with poverty and disease.         insidious idea creates dissonance between comple-
                              Eradicating these threats must be the aim of those who     mentary requirements. If the people that aid targets
                              recognize the sanctity of human dignity and of those       are not empowered, it cannot achieve more than a very
                              who strive to promote human development. Devel-            limited, very short-term alleviation of problems rooted
                              opment as growth, advancement and the realization          in long-standing social and political ills. After all,
                              of potential depends on available resources—and no         human development is not intended to produce im-
                              resource is more potent than people empowered by           potent objects of charity.
                              confidence in their value as human beings.                       At this time when the world is preoccupied with
                                    The concept of human development is no longer        the menace of terrorism, it is worth considering that
                              new. But some analysts still consider its aspirations      people who feel deprived of control over their lives—
                              bold and daring—some might say overwhelming and            necessary for a dignified life—are liable to search for
                              foolhardy. The problems are innumerable, forever           fulfilment along the path of violence. Merely provid-
                              changing and forever the same—a complex, fluid             ing them with a certain material sufficiency is not
                              spectrum of social, economic and political issues that     enough to win them over to peace and unity. Their
                              is impossible to grasp entirely. That it defies delimi-    potential for human development has to be realized
                              tation is the core of the challenge posed by the task      and their human dignity respected so that they can gain
                              of human development. It demands constant effort and       the skills and confidence to build a world strong and
                              capacity for rethinking, flexibility and fast reactions.   prosperous in harmonious diversity.
                              The process of human development calls for human
                              resolve and ingenuity. Hopeless, helpless people
                              stripped of their dignity are hardly capable of such ac-
                              tivities. And so we return to the link between human                                     Aung San Suu Kyi
                              development and human dignity.                                        Winner of the Nobel Peace Prize, 1991




52                                                                                                   HUMAN DEVELOPMENT REPORT 2002
income poverty and improving health and edu-          the scope of human development: which capa-
cation. Though these are important for human de-      bilities are part of human development? Human
velopment, its aim is much broader—to promote         development is certainly broader than education
the freedom, well-being and dignity of people         and health. Many other capabilities are also im-
everywhere. Economic growth is a means to these       portant in expanding human choices. But pub-
broader ends. The success of the human devel-         lic policy is about setting priorities. And the
opment index (HDI)—itself only a partial mea-         human development approach requires decid-
sure of the economic and social dimensions of         ing which capabilities are most important for
human development—has contributed to this             public policy.5
misperception because it leaves out so many as-            There can be no single answer: societies
pects of human development (box 2.2).                 and people value capabilities differently de-
                                                      pending on their situation. Human Develop-
THEY   ARE ALSO IMPORTANT FOR MAKING                  ment Reports have applied two criteria in
HUMAN DEVELOPMENT HAPPEN                              identifying an important capability. First, it

As the first Human Development Report said
                                                        BOX 2.2
in 1990, “People are the real wealth of a nation.”3
                                                                     Human development—the concept is larger than the index
People are not only the beneficiaries of eco-
                                                        Ironically, the human development ap-            human development continues to be iden-
nomic and social progress, they are also its
                                                        proach to development has fallen victim to       tified with the HDI—while political free-
agents, both as individuals and by making com-          the success of its human development index       doms, participating in the life of one’s
mon causes with others. That is one reason              (HDI). The HDI has reinforced the nar-           community and physical security are often
strategies for promoting human development              row, oversimplified interpretation of the        overlooked. But such capabilities are as
                                                        human development concept as being only          universal and fundamental as being able to
have traditionally emphasized investing in ed-
                                                        about expanding education, health and de-        read or to enjoy good health. They are val-
ucation and health and promoting equitable              cent living standards. This has obscured the     ued by all people—and without them, other
economic growth. These are two pillars of de-           broader, more complex concept of human           choices are foreclosed. They are not in-
velopment because they mobilize individual              development as the expansion of capabili-        cluded in the HDI because they are diffi-
agency by strengthening productive capacities.          ties that widen people’s choices to lead lives   cult to measure appropriately, not because
                                                        that they value.                                 they are any less important to human
     But this Report highlights a third pillar of a           Despite careful efforts to explain that    development.
21st century human development strategy: pro-           the concept is broader than the measure,
moting participation through democratic gov-
                                                        Source: Fukuda-Parr 2002.
ernance. Participation promotes collective agency
as well as individual agency—important because
collective action through social and political
movements has often been a motor of progress
                                                       FIGURE 2.1
for issues central to human development: pro-          Mutually reinforcing capabilities
tecting the environment, promoting gender equal-
                                                                                             Enjoying political
ity, fostering human rights. In addition,                                                        freedom
participation and other human development                                                    and participation

gains can be mutually reinforcing. Political free-
dom empowers people to claim their economic                     Collective agency                                          Collective agency
and social rights, while education increases their              for greater equity                                         for greater equity
ability to demand economic and social policies                                                ENHANCED
                                                                                               HUMAN
that respond to their priorities (figure 2.1).4                                              DEVELOPMENT


BROADENING      THE SCOPE OF HUMAN                               Enjoying a decent                                   Being knowledgeable
                                                                 standard of living                                 and enjoying good health
DEVELOPMENT : WHY PARTICIPATION , AND
WHY NOW ?
                                                                                          Mutually reinforcing links
                                                                                          through Individual agency
Putting participation at the heart of human de-
velopment strategies raises a question about


DEMOCRATIC GOVERNANCE FOR HUMAN DEVELOPMENT                                                                                                            53
                         must be universally valued by people the world      DEMOCRACY AND HUMAN DEVELOPMENT
                         over. Second, it must be fundamental in the
                         sense that the lack of it would close off many      Democratic principles follow naturally and in-
                         options in life. Other than that, the basic con-    escapably from this vision of human develop-
                         cept of human development has remained              ment. The word democracy, from the Greek,
                         open-ended. Different capabilities may be con-      means “rule by the people”. It sums up well the
                         sidered important over time and in different        human development approach to governance
                         parts of the world.                                 because it expresses the idea that people come
                              In the decade since the first Human De-        first: governance must conform to the needs of
                         velopment Report, political freedom and par-        people, not vice versa. Whether there can be
                         ticipation have become much more prominent          such a thing as “will of the people” in a world
Alongside the economic   in public policy debates. The political shifts of   with disparate and competing interests, the
                         the 1990s built greater consensus on the value      basic democratic principle—of the equal con-
entrepreneurship that
                         of political freedom and human rights—con-          cern for all people in the formation of gover-
drives markets, social   sensus reflected in recent intergovernmental        nance structures—captures a key part of what
                         declarations such as the Millennium Declaration     human development should be about.
entrepreneurship now
                         of the UN General Assembly and the consen-               The democratic system of voting in elec-
drives policy debates    sus document of the March 2002 UN Confer-           tions adds another crucial element of gover-
                         ence on Financing for Development.                  nance from a human development standpoint,
on issues that matter
                              In an era of rapid globalization, markets      because elections are the paradigm of enforce-
for people               and political liberalization—not government         able accountability. When a government fails to
                         planning—are often the main drivers of eco-         live up to the needs and desires of the people,
                         nomic and social change. But a decade ago,          the people can throw it out of office. No form
                         with the legacy of the cold war still alive, the    of accountability is more direct. There is also no
                         world was divided on the importance of polit-       more egalitarian form of participation. The prin-
                         ical freedom and participation. And 1990 was        ciple of “one person, one vote” gives every in-
                         the tail end of the planning era of develop-        dividual an equal say in the choice of
                         ment, with the state as the primary actor. As a     government—in theory if not in practice. Other
                         result human development strategies empha-          forms of participation can also be important
                         sized the need to reallocate public investments     for ensuring the accountability of state and non-
                         in favour of human development priorities, es-      state actors when, for one reason or another, the
                         pecially the two pillars of expanding primary       ballot box fails to do the job. But there is always
                         health care and education and promoting pro-        the risk that particular groups and interests will
                         poor growth.                                        wield undue influence, as those with more re-
                              Changes in the world have shifted human        sources, or simply more determination, impose
                         development priorities and made political free-     their views.
                         dom, participation and collective action much            It would be a mistake to equate democracy
                         more important as public policy issues. Along-      with regular elections and to fall into the fallacy
                         side the economic entrepreneurship that drives      of “electoralism”.6 Some analysts consider the
                         markets, social entrepreneurship now drives         mere fact of elections a sufficient condition for
                         policy debates on issues that matter for people.    the existence of democracy, assuming that once
                         In addition, consensus is emerging on the im-       fair and free elections are regularly held, all
                         portance of collective action by people and civil   other democratic institutions and practice will
                         society groups in shaping the course of human       naturally follow.
                         development.                                             But democracy also requires functioning in-
                              Other capabilities might be considered im-     stitutions. It requires a legislature that represents
                         portant today—such as personal security or the      the people, not one controlled by the president,
                         capability to be free from physical danger or vi-   prime minister, bureaucrats or the military. It re-
                         olence. Chapter 4 highlights the importance of      quires an independent judiciary that enforces the
                         democratic governance of security forces.           rule of law with equal concern for all people. It


54                                                                                    HUMAN DEVELOPMENT REPORT 2002
requires well-functioning political parties and         is consistent with the respect and promotion of
electoral systems. It requires security forces that     all human rights—civil, cultural, economic, po-
are professional, politically neutral and serve the     litical and social.
needs of people. It requires an accessible media
that is free, independent and unbiased, not one         IS    THERE A TRADE - OFF BETWEEN
controlled by the state or by corporate interests.      DEMOCRACY AND DEVELOPMENT ?
And it requires a vibrant civil society, one that can
play a watchdog role on government and interest         In many countries questions linger about com-
groups—and provide alternative forms of politi-         patibilities and trade-offs between democracy
cal participation. These institutions, underpinned      and development. Military takeovers are most
by democratic values and respect for human rights,      often justified on the grounds that democratically
provide checks and balances against the risks of        elected governments are incompetent in man-
tyranny—and of populism, because in democra-
cies populist politicians can mobilize support by
using propaganda and appeals to racism and other             BOX 2.3
                                                                             Key principles of democracy—the Inter-Parliamentary
forms of intolerance.
                                                                                 Union’s Universal Declaration on Democracy
     In democratic societies people participate in
the public sphere in many ways—debating is-                  In 1995 the Inter-Parliamentary Union as-         sizing the need for properly structured, well-
                                                             sembled experts from various regions and          functioning institutions. These institutions
sues with friends and neighbours, writing to                 disciplines to develop an international stan-     must mediate tensions and preserve the
newspapers on the rights and wrongs of gov-                  dard on democracy. Building on this work,         equilibrium between society’s competing
ernment policies, marching in protests, be-                  the Universal Declaration on Democracy            claims.
coming members of political parties or trade                 was adopted in 1997.                                   A parliament representing all parts of
                                                                  The declaration starts with basic prin-      society is essential. It must be endowed with
unions—giving them a say in the decisions that               ciples. Democracy is a universally recog-         institutional powers and practical means to
affect their lives. Participation involves engag-            nized ideal, based on values common to            express the will of the people by legislating
ing in deliberative processes that can bring peo-            people everywhere regardless of cultural,         and overseeing government action. A key
ple’s concerns to the fore. Open space for free              political, social or economic differences. As     feature of the exercise of democracy is hold-
                                                             an ideal, democracy aims to protect and           ing free, fair, regular elections based on uni-
political debate and the diverse ways in which
                                                             promote the dignity and fundamental               versal, equal, secret suffrage.
people can express their views are the essence               rights of the individual, instil social justice        An active civil society is also essential.
of democratic life and are what make decision-               and foster economic and social develop-           The capacity and willingness of citizens to
making work in democracies. In representative                ment. Democracy is a political system that        influence the governance of their societies
systems of government, decision-making is del-               enables people to freely choose an effec-         should not be taken for granted, and is nec-
                                                             tive, honest, transparent and accountable         essary to develop conditions conducive to
egated to officials. But informed decisions re-              government.                                       the genuine exercise of participatory rights.
quire input from the people affected by them                      Democracy is based on two core prin-              Society must be committed to meeting
and cannot rely solely on “expert knowledge”.                ciples: participation and accountability.         the basic needs of the most disadvantaged
     Democracies take different shapes and                   Everyone has the right to participate in          groups to ensure their participation in the
                                                             the management of public affairs. Like-           workings of the democracy. Indeed, the in-
forms—because political systems vary, they may
                                                             wise, everyone has the right to access in-        stitutions and processes essential to any
be “differently democratic” on many fronts.7 For             formation on government activities, to            democracy must include the participation of
the world’s parliamentarians the essence of                  petition government and to seek redress           all members of society. They must defend di-
democracy lies in its basic principles (box 2.3).            through impartial administrative and ju-          versity, pluralism and the right to be different
It is the only political regime compatible with              dicial mechanisms.                                within a tolerant society.
                                                                  Genuine democracy presupposes a gen-              Democracy must also be recognized as
human development in its deepest sense, be-                  uine partnership between men and women            an international principle, applicable to in-
cause in democracy political power is authorized             in conducting the affairs of society. Democ-      ternational organizations and to states in
and controlled by the people over whom it is ex-             racy is also inseparable from human rights        their international relations.
ercised. The most benign dictatorship imagin-                and founded on the primacy of the law, for             Democracy is always a work in progress,
                                                             which judicial institutions and independent,      a state or condition constantly perfectible.
able would not be compatible with human                      impartial, effective oversight mechanisms         Sustaining democracy means nurturing and
development because human development has                    are the guarantors.                               reinforcing a democratic culture through
to be fully owned. It cannot be granted from                      The declaration sets out the prerequi-       all the means that education has at its
above. As Human Development Report 2000                      sites for democratic government, empha-           disposal.
explained, democracy is also the only political              Source: Johnsson, IPU 2002.

regime that respects open contests for power and


DEMOCRATIC GOVERNANCE FOR HUMAN DEVELOPMENT                                                                                                                       55
                                                       aging economic and social life. Authoritarian                         tage in building strong states that can make
                                                       regimes often argue that they have an advan-                          tough decisions in the interests of the people.
                                                                                                                             They also argue that democratic processes cre-
                                                                                                                             ate disorder and impede efficient management—
     BOX 2.4                                                                                                                 that countries must choose between democracy
                Democracy and economic growth—a review of the literature
                                                                                                                             and development, between extending political
     Why should a positive relationship be ex-                     from terrible to excellent, democracies tend
                                                                                                                             freedom and expanding incomes.
     pected between democracy and economic                         to cluster in the middle. The fastest-growing
     growth, and why might richer countries be                     countries have typically been dictatorships,                  These arguments are not supported by
     more likely to be democratic? Some re-                        but no democracy has ever performed as                    empirical evidence. Rather, there are good
     searchers argue that democracies are better                   badly as the worst dictatorships (Przeworski              reasons to believe that democracy and growth
     guarantors of property rights than non-                       and others 2000). The same is true for poverty            are compatible. With just two exceptions, all
     democracies (see, for example, Clague and                     reduction (Varshney 2002). Thus democracy
     others 1996) and that enforcing property                      appears to prevent the worst outcomes, even
                                                                                                                             of the world’s richest countries—those with per
     rights and contracts is essential for invest-                 if it does not guarantee the best ones.                   capita incomes above $20,000 (in 2000 pur-
     ment and growth. Democracies also appear                            Does economic development increase                  chasing power parity)—have the world’s most
     to be better at managing and consolidating                    the likelihood of a country being democra-                democratic regimes (figure 2.2). In addition,
     economic reforms, because democracies are                     tic? Modernization theory holds that the
                                                                                                                             42 of the 48 high human development coun-
     better at winning the support of groups that                  conversion to democracy is an inevitable
     lose out from reforms (Haggard 1997).                         result of economic development, making                    tries are democracies.8 These outcomes do not
          But there is little consensus on these                   richer countries more likely to transition to             mean that there is a causal relationship—that
     points—because there are also arguments                       democracy. But the evidence does not sup-                 democracy leads to economic growth or higher
     that democracy is bad for growth. Take the                    port this: middle-income countries have                   income. Indeed, the correlation between
     claim that dictators are less open to pressure                been more likely than poor or rich countries
     from self-interested pressure groups and so                   to move from dictatorships to democracies,                democracy and income weakens or disappears
     are better able, should they so choose, to                    according to Przeworski and others (2000).                when only low-income countries are consid-
     focus on the nation’s well-being.                             In Latin America, Landman (1999) finds                    ered (figure 2.3). In fact, the literature finds no
          Empirical studies of democracy and                       that the level of economic development has                causal relationship between democracy and
     growth are equally inconclusive. Borner,                      no significant effect on the rate of change to
                                                                                                                             economic performance, in either direction. A
     Brunetti and Weder (1995) found that 3                        democracy for any of seven measures of
     empirical studies identified a positive asso-                 democracy. The rate of economic growth                    systematic study by Adam Przeworski and
     ciation between democracy and growth, 3                       also has little impact: dictatorships can fall            others of 135 countries from 1950–90 dis-
     a negative association and 10 no conclusive                   during periods of expansion or contraction.               credits the notion of a trade-off between
     relationship. In another influential study                          Even so, high-income countries are more
                                                                                                                             democracy and development.9 Similarly, stud-
     Barro (1996) tested a non-linear relationship                 likely to be democratic once other factors
     and found that at low levels of democracy,                    are taken into account (Londregran and                    ies of sources of economic growth find no
     more democracy is better for growth—but                       Poole 1996; Barro 1997). The explanation is               strong evidence that democracy is an ex-
     at high levels, more democracy is harmful to                  that democratic regimes are much more likely              planatory factor (box 2.4).10
     growth.                                                       to survive in high-income countries, though
          Other research also finds conflicting ef-                they are not more likely to emerge. Between
     fects. According to Tavares and Waczairg                      1951 and 1990 none of the 31 democratic
                                                                                                                             DEMOCRACY      CONTRIBUTES TO STABILITY

     (2001), democracy increases human capital                     regimes with per capita incomes above $6,055              AND EQUITABLE ECONOMIC AND SOCIAL
     accumulation and lowers income inequality,                    (1985 purchasing power parity dollars) fell,              DEVELOPMENT
     increasing growth—but it also lowers phys-                    while 38 poor democracies collapsed (Prze-
     ical capital accumulation and raises govern-                  worski and others 2000). There is also evi-
                                                                                                                             Democracy expands political freedom, a desir-
     ment consumption, lowering growth. One                        dence that reversions to authoritarianism are
     striking finding: fertility rates are significantly           likely in economic downturns, but it is not               able outcome in itself. But democratic institu-
     lower in democracies at all income levels,                    clear, argue Londregan and Poole (1996),                  tions and processes can also contribute to
     and they go up and down as countries tran-                    whether bad economic performance causes                   development, especially human development.
     sition between dictatorships and democracies.                 democracies to fall or whether democracies                Competition for political power—through elec-
     This has strong implications for women’s                      about to fall exhibit bad performance.
     well-being. And as Przeworski and others                            Several studies have considered the re-             tions and other features of democracy—makes
     (2000) find, it also means that even if democ-                lationship between democracy and income                   politicians more likely to respond to people’s
     racy has no effect on aggregate GDP growth,                   inequality, but poor data make findings ten-              needs and aspirations. It can also help manage
     it may affect per capita GDP growth.                          uous. Data incomparability between coun-                  conflict and promote stability.
          Another robust finding is that while the                 tries and within countries over time
                                                                                                                                 In democracies people have a voice—un-
     economic performance of dictatorships varies                  precludes clear conclusions.
                                                                                                                             derpinned by freedom of speech and thought,
     Source: Clague and others 1996; Haggard 1997; Borner, Brunetti and Weder 1995; Barro 1996, 1997; Tavares and Waczairg
     2001; Przeworski and others 2000; Varshney 2002; Landman 1999; Londregan and Poole 1996.                                freedom of information, free and independent
                                                                                                                             media and open political debate—that allows


56                                                                                                                                    HUMAN DEVELOPMENT REPORT 2002
them to be heard in public policy-making. Pub-
                                                       FIGURE 2.2
lic pressure can influence the decisions and ac-       Democracy is no obstacle to high income
tions of public officials as well as private agents,   GDP per capita, 2000 (purchasing power parity U.S. dollars)
as with environmental pollution or abusive
labour practices. These democratic processes are                      Highest
clearly related to three aspects of development.
     First, democracies are better than authori-       30,000

tarian regimes at managing conflicts, because
the political space and the institutions that pro-
vide for open contests give opponents hope that                                                                                                                    UNITED
                                                                      Income                                                                                       KINGDOM
change is possible without destroying the system.      20,000

Some politicians argue that democracy leads to                                                                                             KOREA, REP.

political instability, undermining development.                                                    BAHRAIN

But empirical studies show that the reverse is true.
Socio-political unrest and handovers of power          10,000
                                                                                                    RUSSIAN FED.
occur more often in democracies than in dicta-                                                                        MALAYSIA                 BRAZIL              COSTA
                                                                                                                                                                   RICA
torships, but they do not disrupt development.                        Lowest               CHINA                            JORDAN
                                                                                   SYRIA                             MOROCCO
Between 1950 and 1990 democracies experi-                                                            HAITI                                        INDIA
                                                                      CONGO                                                      SENEGAL
enced twice as many riots and demonstrations                  0                            TOGO UGANDA MOZAMBIQUE             MALI
and three times as many labour strikes. But such
                                                               -2.0       -1.5             -1.0            -0.5          0              0.5               1.0        1.5            2.0
events—as well as changes in government—did                    Less democratic                                Democracy score                                    More democratic
not slow economic growth in democracies. Under
dictatorships they did. Dictatorships were also        Note: Democracy score is the voice and accountability indicator from World Bank 2001c.
                                                       Source: World Bank 2001c, 2002e.
more prone to violent political upheavals, ex-
periencing a war, on average, every 12 years,
compared with every 21 years in democracies.
And wars caused greater economic hardship in
                                                       FIGURE 2.3
dictatorships than in democracies.11 Democra-          Low income is no obstacle to democracy
cies can mitigate internal conflicts so that they do   GDP per capita, 2000 (purchasing power parity U.S. dollars)
not develop into political crises and economic          20,000
turmoil.
                                                                                                                                                   KOREA, REP.
     The same relationship holds in the opposite                                                                                                                           Higher
direction—that is, higher incomes help democ-
                                                                                              BAHRAIN
racies survive once they emerge, and the likeli-        15,000

hood of reverting to authoritarianism declines
as incomes increase (figure 2.4).12 Higher in-
comes also contribute to political stability.13                                                                                                                            Income
                                                        10,000
     Second, democracies are better at avoiding                                                                    MALAYSIA                                          COSTA
                                                                                                   RUSSIAN FED.                                                      RICA
catastrophes and at managing sudden downturns                                                                                                 BRAZIL
that threaten human survival. As Amartya Sen
has argued, democratic institutions and
                                                         5,000
processes provide strong incentives for gov-                                                                                JORDAN
                                                                         SYRIA         CHINA                          MOROCCO
ernments to prevent famines. Without opposi-
                                                                                                  UGANDA                                         INDIA
tion parties, uncensored public criticism and the                     CONGO                 TOGO                                     SENEGAL
                                                                                                                                                                           Lower
threat of being thrown out of office, rulers can              0                                    HAITI             MOZAMBIQUE MALI
act with impunity. Without a free press, the                  -2.0       -1.5              -1.0            -0.5          0              0.5               1.0        1.5            2.0
suffering from famine in isolated rural areas                  Less democratic                                Democracy score                                    More democratic
can be invisible to rulers and to the public.
“Famines kill millions of people in different          Note: Democracy score is the voice and accountability indicator from World Bank 2001c.
                                                       Source: World Bank 2001c, 2002e.
countries of the world, but they don’t kill the


DEMOCRATIC GOVERNANCE FOR HUMAN DEVELOPMENT                                                                                                                                           57
                                                                                                                             rulers. The kings and the presidents, the bu-
 FIGURE 2.4
 Probability of regime change—higher income means greater stability                                                          reaucrats and the bosses, the military leaders and
                                                                                                                             the commanders never are famine victims.”14
 Probability of regime change in a given year, 1955–99
      1
                                                                                                                                  Consider China, India and the Democratic
      10                  1                                                                                                  People’s Republic of Korea. In India famines
                          11
                                                                                                                             were common under colonial rule—for exam-
      Democratic to                                                                                                          ple, 2–3 million people died in the 1943 Ben-
      authoritarian
                                                                                                                             gal famine. But since independence and the
                                                                                                                             establishment of democratic rule, there has been
                                                                                       1
                                                                                       18
                                                                                                                             no recurrence of famine—despite severe crop
                                                                                                                             failures and massive losses of purchasing power
                                          1                                 1                                                for large segments of the population, as in 1968,
      1                                   25                                24
                                                         1                                        1                          1973, 1979 and 1987. Each time the government
      25                                                 28                                       28
       Authoritarian                           1    1                                                                        acted to avoid famine. For example, food pro-
       to democratic                           37   34                                                        1
                                                              1
                                                                 1                                            40             duction fell sharply during the 1973 drought in
                                                              44
      1                             1                            48                                                          Maharashtra, but famine was averted, partly
      50                            61                                 1
                                                                       80
                                                                                                                             because 5 million people were quickly put to
       1                                                                          1          1                          1
      100                                                                        147        159                        130   work in public works projects. In contrast, dur-
                                                                                                          o        o         ing 1958–61, famines in China killed nearly 30
                               0–1,000 1,001– 2,001– 3,001– 4,001– 5,001– 6,001– 7,001– 8,001+                               million people. And one of the worst famines in
                                       2,000 3,000 4,000 5,000 6,000 7,000 8,000
                                                                                                                             history continues in the Democratic People’s Re-
                                                                  Income
                                          GDP per capita, 1985 (purchasing power parity U.S. dollars)                        public of Korea, having already killed an esti-
 Source: Alvarez and others 2002.                                                                                            mated 1 in 10 citizens.
                                                                                                                                  Political incentives in democracies also seem
                                                                                                                             to help societies avoid other disasters, espe-
                                                                                                                             cially economic ruin and the collapse of devel-
 FIGURE 2.5
 Democracy and human development—the links                                                                                   opment. The worst economic crises in
                                                                                                                             democracies have been much less severe than the
                                            HUMAN DEVELOPMENT                                                                worst under dictatorships. True, some of the
            Expanding capabilities to enlarge the choices people have in their lives                                         highest economic growth has been achieved
                                                                                                                             under non-democratic rule, notably in the East
       To enjoy political
                                    To be knowledgeable,          To be able to survive                To enjoy a decent     Asian tigers between the 1960s and 1990s. But
      freedom and to be
                                      educated and free             and enjoy good                     standard of living
      able to participate
                                                                         health                                              authoritarian regimes have also taken countries
       in community life              to express oneself
                                                                                                                             to economic ruin—as in Mobutu Sese Seko’s
                                                                                                                             Congo, Papa and Bebe Doc’s Haiti and Idi
                                                                                                                             Amin’s Uganda. Only 1 of the 10 countries with
             Civil liberties  Open and informed   Public pressure                             Public pressure
                                                                                                                             less than 1% annual growth for at least 10 years
                   and          social dialogue        and
           political freedoms                   responsive actions
                                                                                                   and                       between 1950 and 1990 was a democracy.
                                                                                            responsive actions
                                                                                                                                  Third, democracies help spread the word
                                                                                                                             about critical health issues, such as the negative
                                                         Democracy                                                           implications for women of a large number of
                                         Democratic institutions and practice                                                births, the benefits of breast feeding and the
                                         characterized by
                                         • Contestation of power
                                                                                                                             dangers of unprotected sex in the context of
                                         • Participation of people                                                           HIV/AIDS. In these areas open dialogue and
                                         • Accountability of the powerful
                                                                                                                             public debate can disseminate information and
                                                                                                                             influence behaviour. Sharp declines in fertility
                       The strength of these links varies. They are strongest                                                in highly literate Indian states such as Kerala
                       for political freedom and participation; strong for
                       knowledge and information; and weaker for survival,                                                   were due not only to high literacy but also to
                       health and economic well-being.                                                                       its interaction with public debates on the ben-
                                                                                                                             efits of small families.15 Free, open public de-


58                                                                                                                                    HUMAN DEVELOPMENT REPORT 2002
bates are the cornerstone of what Amartya Sen         FIGURE 2.6
calls the “constructive role” that democracies        South Africa’s public health spending used to belie huge ethnic
can play in promoting development. And among          and regional disparities
                                                      Spending per capita (rand)                                                                                    Infant
countries with similar incomes, people live                                                                                                                         mortality
longer, fewer children die and women have                                                                                Regional disparities                       rate, 1990
                                                                                          Infant
                                                                                                                         1992/93                                    (per 1,000
                                                                                          mortality
fewer children in democratic regimes.16 This          Ethnic disparities                  rate, 1990
                                                                                                                                                                    live births)
hugely important result has strong implications       1987                                (per 1,000                     700
                                                                                                                                              Western Cape          24.4
                                                                                          live births)
for human development given the importance
                                                      600                                                                600
of lower fertility for women’s lives and choices                           White          8.7
                                                                                                                                              Gauteng               32.3
and for the health of future generations. Un-
                                                      500                                                                500
derstanding what lies behind this result and
identifying the policies that made a difference                                                                          400
                                                      400
are research priorities.                                                   Indian   11.0
                                                      300                  Coloured 36.3                                 300                  Free State            45.8
                                                                                                                                              KwaZulu-Natal         44.9
STILL,   THE LINKS BETWEEN DEMOCRACY                                                                                                          Northern Cape         42.9
                                                                                                                                              Eastern Cape          44.7
AND EQUITABLE DEVELOPMENT NEED TO BE                  200                                                                200                  Northwest             40.1
STRENGTHENED                                                                                                                                  Northern Province     52.9
                                                                                                                                              Mpumalanga            45.1
                                                      100                  African        55.0                           100

When more than growth is considered, demo-
cratic institutions and processes contribute to       0                                                                  0

development (figure 2.5). But the links are by
                                                      Source: Mehrotra and Delamonica 2002.
no means automatic. Social injustices are wide-
spread in democratic and authoritarian regimes
                                                      FIGURE 2.7
alike, whether deliberate or otherwise in the al-
                                                      Public health spending neglects poor people and favours the wealthy…
location of public services or in discrimination
                                                      Share of public spending on health services (percent)
against squatters, street children, migrants and
                                                                 Richest
other socially marginal groups. Discrimination        30                             30
                                                                                                   Richest
                                                                                                                    30                             30

against ethnic minorities, women, the elderly and     25                             25                             25
                                                                                                                               Richest
                                                                                                                                                   25
                                                                                                                                                               Richest
others continues even in long-established democ-      20                             20                             20                             20
racies, as the Commission for Racial Equality re-     15                             15                             15                             15
                                                                                                                                    Poorest                            Poorest
cently reported in the United Kingdom.17              10              Poorest        10                  Poorest    10                             10
Political incentives to respond to the needs of       5                               5                              5                              5
ordinary people may be offset by incentives to        0                               0                              0                              0
respond to the demands of the powerful or the                Ghana                         Indonesia                     Bulgaria                           Kenya
                                                               1994                              1987                        1995                            1992
wealthy.
     Much is known about how to promote eq-           …while education spending shows even greater disparity
                                                      Share of public spending on education (percent)
uitable development that benefits poor people:
                                                                 Richest
widening access to credit, reforming land own-        45                             45                            45                             45

ership, investing in basic social services for all,   40                             40
                                                                                                  Richest
                                                                                                                   40                             40
                                                                                                                               Richest
promoting the informal sector, following sound        35                             35                             35                            35           Richest

macroeconomic policies. But too often such poli-      30                             30                             30                            30
cies are not adopted because of systematic biases     25                             25                             25                            25
that protect the interests of elites. Around the      20                             20                             20                            20
world, public spending is often skewed in favour      15                             15                             15                            15
of rich people in such critical areas as basic        10               Poorest       10                             10              Poorest       10                  Poorest
                                                                                                         Poorest
health and education (figures 2.6 and 2.7).18         5                              5                              5                              5
Moreover, taxation and spending policies are          0                              0                              0                              0
not more progressive in the countries with the               Nepal                        Nicaragua                Tanzania, U. Rep. of                 Côte d’Ivoire
                                                               1996                             1993                         1993                            1995
highest income inequalities. According to one         Source: World Bank 2001e, pp. 80–81.

study covering more than 50 countries, countries


DEMOCRATIC GOVERNANCE FOR HUMAN DEVELOPMENT                                                                                                                                        59
                                                                                                                                      with higher income disparities have lower tax rev-
 FIGURE 2.8
 No automatic link between democracy and equity                                                                                       enues and government spending than countries
     Gini coefficient of income distribution                                                                                          with more evenly distributed incomes.19
       0                                                                                                                                  Such biases occur in both authoritarian
              Most                                                                                                                    and democratic regimes. Democracies range
     10
                                                                                                                                      from those with highly uneven income distri-
                                                                                                                                      butions to those that are more egalitarian. The
                                                                                                                                      same is true for less democratic regimes (figure
     20
                                                                                                                                      2.8). Similarly, there is a wide range of achieve-
                                                                                                                                      ments in key human development indicators
     30
            Equity                                                                                                                    such as the under-five mortality rate or the net
                                                                          JORDAN                        KOREA, REP.
                                                         MOROCCO                            INDIA                                     primary enrolment ratio. Mali has progressed
                                                     UGANDA                                                           UNITED
     40                                                  MOZAMBIQUE                                                   KINGDOM         further than Togo in stabilizing its democratic
                                   CHINA
                                                                              SENEGAL

                                                       RUSSIAN FED. MALAYSIA
                                                                                                                                      structures but has done no better in spreading
                                                                                                              COSTA RICA
     50
                                                                                   MALI
                                                                                                                                      primary schooling, raising literacy or reduc-
                                                                                                                                      ing infant mortality. Bahrain and Syria have
     60                                                                                                                               done as much to spread primary education as
                                                                                    BRAZIL
                                                                                                                                      more democratic Jordan—and more than Mo-
             Least
     70
                                                                                                                                      rocco (figure 2.9).
       -2.0             -1.5              -1.0        -0.5            0              0.5                1.0           1.5       2.0       Some democracies have huge, often grow-
             Less democratic                             Democracy score                                      More democratic         ing inequalities in income, wealth, social ad-
                                                                                                                                      vantage and power. Consider Brazil and the
     Note: Democracy score is the voice and accountability indicator from World Bank 2001c.                                           Russian Federation, with some of the world’s
     Source: World Bank 2001c, 2002e.
                                                                                                                                      widest income disparities. In many Latin Amer-
                                                                                                                                      ican countries disparities in income and edu-
                                                                                                                                      cation rose in the 1990s after democratic rule
 FIGURE 2.9
                                                                                                                                      was restored in the 1980s.20 Income inequali-
 No automatic link between democracy and human development                                                                            ties also jumped in the former Soviet Union,
                                                                                                                                      Central and Eastern Europe and the Baltics. By
     Human development index
 1.00
                                                                                                                                      contrast, Indonesia, the Republic of Korea and
                                                                                                                                      Malaysia achieved solid economic growth and
              Highest
 0.90                                                                                                                 UNITED          reduced income inequalities under non-de-
                                                                                          KOREA, REP.                 KINGDOM
                                                                                                                                      mocratic rule in the 1970s.21
                               BAHRAIN
                                                                                                                 COSTA RICA               So, while democracy can promote equi-
 0.80                                                               MALAYSIA
                                                     RUSSIAN FED.
                                                                                BRAZIL
                                                                                                                                      table development, the goals of democracy and
                                  CHINA
 0.70                   SYRIA                                               JORDAN                                                    equity should be considered largely indepen-
                                                                                                                                      dent—with both requiring dedicated effort
                  HDI                                MOROCCO
 0.60                                                                                                                                 and political will. Democracy may not auto-
                                                                                   INDIA
                                                                                                                                      matically secure equitable social and economic
                                         CONGO
 0.50                                      TOGO                                                                                       development, but poverty does not prevent
                                             HAITI      UGANDA
                                                                                                                                      democracy from taking root: Costa Rica, Jor-
                                                          SENEGAL
 0.40
                                                                               MALI
                                                                                                                                      dan, Mozambique and Senegal have expanded
                                                                    MOZAMBIQUE
                                                                                                                                      people’s freedoms and participation much
 0.30                                                                                                                                 more than their less democratic neighbours
              Lowest
                                                                                                                                      with similar incomes. The lesson is that democ-
 0.20                                                                                                                                 racy is not a luxury for developing countries.
           -2.0         -1.5              -1.0        -0.5            0              0.5                1.0           1.5       2.0
             Less democratic                             Democracy score                                      More democratic         On the contrary, democracy has intrinsic value
                                                                                                                                      for human development because it has strong
     Note: Democracy score is the voice and accountability indicator from World Bank 2001c.                                           links to political and civil freedoms and can con-
     Source: World Bank 2001c, indicator table 1.
                                                                                                                                      tribute to social and economic development.


60                                                                                                                                             HUMAN DEVELOPMENT REPORT 2002
But these links are not automatic, and strength-       owned industry and the transistor radio than it
ening them is the challenge of democratic gov-         does in an era of transnational corporations
ernance—making democratic institutions serve           and the Internet.
human development.                                           It follows that fulfilling the promise of de-
                                                       mocratic governance in a 21st century world can-
TODAY’S    GOVERNANCE CHALLENGE                        not depend simply on making state institutions
                                                       function better. It must also take into account
Democracy and human development have some-             the fact that global economic integration and po-
thing else in common. They are both more a             litical liberalization are reshaping the environ-
journey than a destination—a promise rather            ment in which state institutions operate—often
than a list. Societies can be more or less democ-      fundamentally changing what it means for peo-
ratic, just as people can have broader or more con-    ple to have a say in how they are governed.             People everywhere want
strained choices to lead lives they value. But there         To be sure, the nation-state is still a power-
                                                                                                               to determine their
is no defined end point. No society is ever com-       ful force shaping individual lives, and in most cases
pletely democratic or fully developed. What mat-       it is the most important one. But new actors are        destiny. The kind of
ters is moving forward, and not slipping back.         also becoming important, from the World Trade
                                                                                                               democracy they choose
     People everywhere want to determine their         Organization to national and international cor-
destiny. The kind of democracy they choose need        porations, to new groups in civil society and the       need not follow a
not follow a particular model—the North Amer-          media, both local and international. As the actors
                                                                                                               particular model
ican or the Western European, for example. The         change, so do the rules: from participatory local
model must be adapted to local circumstances and       budgeting to regional trade rules to international
history. But everywhere, democracy requires a          protection of human rights. And as people’s lives
long process of political development. It needs        become more interdependent, democratic prin-
basic institutions, formal and informal, of the        ciples of participation and equal concern for all
state and outside it. It will not thrive without the   must be reflected in the way that these new ac-
spread of democratic culture—of values and             tors structure their institutions and in the way that
principles that guide the behaviour of individu-       rules are formulated and implemented.
als and groups. Threats to democracy come not                Democratic governance in this fast-changing
only from political parties that are personalized      environment is about more than people having
and unable to represent people, but also from in-      the right to vote. It must be about strengthening
tolerance, extremism and a lack of respect for         democratic institutions so that they keep pace
human rights and human dignity.                        with the changing distribution of economic and
     The implication is that priorities for ad-        political power. And it must be about promot-
vancing democratic principles vary according to        ing democratic politics that make participation
the social context, just as priorities for human       and public accountability possible even when the
development vary over time and across com-             relevant power and processes lie outside the for-
munities. Promoting the equal concern for all          mal institutions of the state. What this two-part
people in the formation of governance structures       strategy implies for governance is the subject of
meant something different in an era of state-          the rest of this Report.




DEMOCRATIC GOVERNANCE FOR HUMAN DEVELOPMENT                                                                                            61

				
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