Looking at the broader trend of democracy around the world, those concerns are not entirely unwarranted. Democracy has been faltering in the past decade and a half, reflected in the Economist Intelligence Unit’s Democracy Index and Freedom House’s latest report. Hong Kong’s independence is under increased threat due to the new national security law, as is the region’s status as a leading financial center and trade hub. India, the world’s largest democracy, was recently downgraded to “partly free.”
Democracy Offers A Better Framework For Growth Than Autocratic Regimes
Recently, China’s rise as an economic powerhouse has contributed to a belief that a more authoritarian system is best for economic growth. China’s apparent success in managing the pandemic has only strengthened the sentiment. A number of countries are finding value in a more directed model that avoids the messiness of government by the people.
However, much evidence contradicts this notion. Studies show that democracy does cause growth. Countries that switch to democratic rule achieve about 20% higher gross domestic product per capita in the long run, as democracy promotes investments and education. Social conflict falls while economic development rises. Additional accountability reduces corruption and inefficiency.
In sum, research finds that democracy offers a better framework for economic development than do autocratic or authoritarian regimes. That said, democracies certainly have room for improvement in responding to crises, when the need for decisive action is at odds with a deliberative system.
Winston Churchill once observed that “Democracy is the worst form of government, except for all the others.” Hopefully, the pandemic won’t cause populations to think otherwise.
Carl R. Tannenbaum is executive vice president and chief economist at Northern Trust. Ryan James Boyle is vice president and senior economist at Northern Trust. Vaibhav Tandon is second vice president and an economist Northern Trust.