RATE OF ECONOMIC GROWTH

RATE OF ECONOMIC GROWTH

If democracies are expected to produce good governments, then is it not fair to expect that they would also produce development? Evidence shows that in practice many democracies did not fulfil this expectation.

If you consider all democracies and all dictatorships for the fifty years between 1950 and 2000, dictatorships have slightly higher rate of economic growth. The inability of democracy to achieve higher economic development worries us. But this alone cannot be reason to reject democracy. As you have already studied in economics, economic development depends on several factors: country’s population size, global situation, cooperation from other countries, economic priorities adopted by the country, etc. However, the difference in the rates of economic development between less developed countries with dictatorships and democracies is negligible. Overall, we cannot say that democracy is a guarantee of economic development. But we can expect democracy not to lag behind dictatorships in this respect.

When we find such significant difference in the rates of economic growth between countries under dictatorship and democracy, it is better to prefer democracy as it has several other positive outcomes.
 

Activity:

Should the gains of economic growth be evenly distributed? How can the poor get a voice for a better share in a nation?What can the poor countries do to receive a greater share in the world’s wealth?

The Rich Get Buff

Source: This topic is taken from NCERT TEXTBOOK

ECONOMIC OUTCOMES OF DEMOCRACY

ECONOMIC OUTCOMES OF DEMOCRACY

Arguments about democracy tend to be very passionate. This is how it should be, for democracy appeals to some of our deep values. These debates cannot be resolved in a simple manner. But some debates about democracy can and should be resolved by referring to some facts and figures. The debate about the economic outcomes of democracy is one such debate. Over the years many students of democracy have gathered careful evidence to see what the relationship of democracy with economic growth and economic inequalities is. The tables and the cartoon here present some of the evidences:

*  Table 1 shows that on an average dictatorial regimes have had a slightly better record of economic growth. But when we compare their record only in poor countries, there is virtually no difference.

Table 1: Rates of economic growth for different countries, 1950-2000.

*  Table 2 shows that within democracies there can be very high degree of inequalities. In democratic countries like South Africa and Brazil, the top 20 per cent people take away more than 60 per cent of the national income, leaving less than 3 per cent for the bottom 20 per cent population. Countries like Denmark and Hungary are much better in this respect.

Table 2: Inequality of income in selected countries.

*  You can see in the cartoon, there is often inequality of opportunities available to the poorer sections.

Poor Kids

Activity :

What would be your verdict on democracy if you had to base it purely on economic performance of democratic regimes in terms of growth and equal distribution?

Source: This topic is taken from NCERT TEXTBOOK