Of democracy, development, dis-integrity, disinflation, demographic dividend  

A Mannan   | Published: February 15, 2019 22:12:17 | Updated: February 16, 2019 21:16:52

Here is an attempt to focus on the diversity and relationship of some of the core issues that often figure in public discourse. These are: democracy, development, dis-integrity, disinflation (hyper and hypo) and demographic dividend.

Agreements, counterarguments, debates, conflicts are seen amongst various interested groups -- politicians, economists, theoreticians, bureaucrats and the media. Authors who reflect their thoughts on the issues mentioned above examine them from various perspectives. Some prefer to use the expression 'Development without democracy', some dub it 'Development hypo', others use the headings 'People tend to forgive lack of democratic exercise if happy with development', or 'Economic stagnation makes people forget democracy', or when it comes to demography 'Demographic Dividend: no space for ageing population' so on and so forth.

Although successive governments in Bangladesh routinely harp on development or democracy, pragmatic and realistic assessments made transparently through filtering and calibrating are hard to find.

Few define or dare to define democracy in its befitting form and perspective. Alternatively, few speak unequivocally about rational distribution of development among the people.

   DEMOCRACY VIS-A-VIS DEVELOPMENT: Quote from The Economist, June 2015, "China's blistering economic performance in recent years has brought advocates of democracy out in hives. GDP growth in the one-party state, at an average of 10 per cent over the past decade, has easily outpaced that of its democratic emerging-market rivals. India saw annual growth of 6 per cent over the same period; Brazil, just 2 per cent. Some say that democracy is to blame for India's and Brazil's slower progress." Politicians in such places cannot lay the foundations for long-term growth, the argument goes, since voters want instant gratification. Are freedom and prosperity really at odds? 

In 1994 Torsten Persson of Stockholm University and Guido Tabellini, then of the University of Brescia, published a paper that argued that in democracies, vote-hungry politicians divert resources away from people who could use them more efficiently by lavishly spending on their constituents in the form of unemployment benefits and pensions. This and the political gridlock, another unfortunate aspect of democracy, both tend to slow growth. Another paper published in 1994, by Robert Barro of Harvard University, analysed data from some 100 countries before concluding that the "effect of democracy on growth is weakly negative."

Democracy's economic denigrators have not had it all their own way. In a paper published in 2008, Daron Acemoglu of the Massachusetts Institute of Technology argued that in non-democracies, well-connected firms use political power to shut out competition…When people have no political power, the risk of conflict rises. That may scare away investors. Autocracies also tend to skimp on schools and health care, which pushes down on the productive potential of the economy.

The average "free" country, according to a classification by Freedom House, an advocacy group, has a GDP per person of $17,000, four times that of the average "unfree" or "partly free" country. That could be seen as an indicator in itself, but it also presents a problem. Economists have long reasoned that poor countries should grow faster than rich ones, since they can boost growth dramatically with simple investments in schools and roads, whereas rich nations have exhausted such easy gains.

The authors look at data for 175 countries from 1960 to 2010 and assess their degree of democracy based on an index that measures things like free elections and checks on executive power. They then compare growth rates and political freedom, having made adjustments for the odd behaviour of GDP during transitions and for the relative poverty of un-free countries, among other distortions. They find that a "permanent" democratisation-where there is no slide back into autocracy-leads to an increase in GDP per person of about 20 per cent in the subsequent 25 years. When a given country is in such a democratic state, it grows faster than when it is not.

The authors reckon that higher investment in schooling and health care and lower social unrest are the reasons. There is also no clear evidence to suggest that poor countries benefit less from democratisation, as many had assumed.

The above shows that development and growth are more gainful in a democratic system vis-a-vis that in a non-democratic or autocratic system.

DEMOCRACY VS DIS-INTEGRITY: Here dis-integrity has been taken with its wider meaning of corruption of all forms. The Corruption Perspective Index (CPI) released by Transparency International Bangladesh (TIB) and a recast on it by an analyst says, "Cross analysis with global democracy data reveals a link between corruption and the health of democracy in 180 countries. Full democracies scored an average of 75 out of 100 on the CPI while flawed democracies got an average of 49. Hybrid regimes, which show elements of autocratic tendencies, scored 35. Autocratic regimes performed the worst, with an average score of just 30 on the CPI, according to the analysis. Bangladesh ranked 149th, scoring only 26 against the lowest global average of 43 in the index."

Today, corruption, which includes financial crime, not only poses a grave danger to the concept of good governance, it also threatens the very foundation of democracy, social justice and the rule of law, the TIB report observed. Bangladesh has been ranked 88th among 167 countries with an overall score of 5.57 out of 10 on the democracy index. It was ranked 92nd with a score of 5.43 in the previous year. Due to its poor score, Bangladesh was put in the category of hybrid regime along with 38 other countries, including Bhutan, Nepal and Pakistan in South Asia.

India and Sri Lanka were placed in the category of flawed democracy with an overall score of 7.23 and 6.19 respectively. Bangladesh's overall score on the rule of law index by the World Justice Project (WJP) last year is also appalling. Bangladesh has been ranked 102nd among 113 countries with an overall score of 0.41 out of 1.0. Denmark topped the list with an overall score of 0.89. Free media is also considered an effective tool to combat corruption.

DEMOCRACY IN CASE OF DISINFLATION (HYPO AND HYPER): The Economist, June 2015 writes, "In 2016 the then President of Brazil announced the building of Comperj-the Rio de Janeiro petrochemical complex, an undertaking of two oil refineries and a clutch of petrochemical plants. With forecasts of 220,000 new jobs in a town of 150,000 people, Itaboraí geared up for a boom. Today, it is almost a ghost town. Its straggling main street adjoins an unopened shopping mall and is punctuated by a score of blocks of flats and office towers, one with a heliport on the roof, all finished in the past few months and all plastered with "for sale" signs.

What did happen? Private firms that were supposed to join Petrobras, the state-controlled oil giant, in investing in the petrochemical plants took fright when a shale gas boom in the United States slashed costs for their competitors there.

Put another way, Latin America's problem is its failure to join what economists call "global value chains", which are in fact mainly regional. Modern industry needs elaborate supply chains with parts coming from several different countries, but they are often neighbouring ones. Some 72 per cent of the "foreign value-added" in exports from European counties is intraregional, in other words, it originates in other European nations; the equivalent for East Asia is 56 per cent and for South America only 30 per cent, according to the World Bank.

DEMOGRAPHY ABREAST WITH POPULATION DIVIDEND: In a write-up "Demographic dividend: no space for our ageing population", Dr. M.A. Kalam writes in a local daily, "Although ageing is an emerging issue in Bangladesh, adequate programmes and policies do not seem to have been formulated to cater to the specific health needs of the growing number of elderly persons."

The pattern of life, disease, dying and death has changed dramatically in Bangladesh over the last several decades. Over the last 43 years life expectancy at birth has improved by 22 years for males (71 years) and 24 years for females (73 years) according to the 2016 World Population Data Sheet (Population Reference Bureau, 2016). Life expectancies at birth of both sexes were 48 years in 1970.

Zero tolerance in population growth is useless and negative because of lack of a youthful population mix needed for a vibrant and dynamic growth of economy.

Democracy and development have apparently been divorced from each other, one at the North Pole and the other at the South. One refers to rule of law, welfare and natural freedom of the people and the other speaks of only development. Our democracy and development must take care in totality a harmonious blending and not an isolated, sporadic and haphazard modus operandi. Let democracy reign supreme. Moreover, we know democracy and development must work hand in hand. The game is like that of 'chicks first or eggs first', -- the answer is where there are no chicks, there are no eggs and where there are no eggs, there are no chicks either.

Abdul Mannan is Chartered Global Management Accountant (CGMA). 


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