Friday, August 18, 2006

Here is something CCP likes to hear

There are two approaches of getting rich for developing nations:

Institution view: build democratic institutions which will secure property rights and promote rule of law, and investments and growth will follow.

Development view: Let a 'good' dictator promote human and physical capital investment, then democratic institutions will come along when people become more educated and richer.

This paper argues for the latter and backs it up with a lot of econometric analysis:

we conclude the empirical analysis by looking at the timing of human capital accumulation and institutional quality. We find evidence consistent with the example of South Korea, namely that economic growth and human capital accumulation cause institutional improvement, rather than the other way around.

The economic success of East Asia in the post war era, and of China most recently, has been a consequence of good-for-growth dictators, not of institutions constraining them. Indeed,the Chinese example illustrates this point forcefully: there was nothing pre-destined about Deng,one of the best dictators for growth, succeeding Mao, one of the worst.


I tend to be in the same camp of the authors, from that sense I am rooting for CCP even though I know how corrupted it is(but what's the next best alternative? I have to ask myself, and I don't see a good one on the horizon). What I am concerned is that even the 'good' dictators won't go away by themselves, and it's notoriously hard to gauge the tipping point: when will good dictatorship become a drag on economic development? Further more, democratic institutions are not just means for economic development, they are ends too, for that matter when will people decide to sacrifice some economic growth for more political freedom when they can afford it? These are harder questions than the one addressed here.

Here is the original post from Econblog.

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