Does Economic Growth Foster Democracy?

China has just released its very first White Paper on democracy last week. Bottom line is we are not going to see China adopts Western style democratic system anytime soon.

According to the theory propounded by political scientist Seymour Martin Lipset, with average annual GDP growth rate over 9 % since 1980, one would expect economic prosperty should help bring about some sort of democractic reform in China by now. Professor Lipset, now the Hazel Professor of Public Policy at George Mason University, in his classic 1959 article "Some Social Requisites of Democracy: EconomicDevelopment and Political Legitimacy" in American Political Science Review argued that economic growth fosters democracy.

His idea, in simple terms, is that income growth will eventually create a middle class that will demand for a open democratic form of government. Apparently with more than two decades of breakneck growth, China's example seems to contradict Lipset's theory. And the question is why?

In a recent article in Foreign Affairs entitled "Development and Democracy", two political science professors from New York University Bruce Bueno de Mesquita and George Down provide an answer to the question.

Their argument in a nutshell is this: To stay in power, modern autocrats have to do two things. On the one hand, they have to promote economic growth in order to make people happy. On the other hand, economic growth will make it easier for people to organize thus posing a threat to the autocrats. The autocrats then face a dilemma. They need to promote economic growth for survival but do not like the threat posed by the lowered costs of organizing for opposition that comes as a byproduct of that growth.

The way to resolve that dilemma, the professors argue, is for the autocrats to be picky on what kind of public goods they offer. The autocrats should continue to provide the kind of public goods that are conducive to economic growth but with minimal political consequences. Examples are roads and bridges. The autocrats should avoid supplying the kind of public goods that will enable the people to organize at low costs. Examples are higher education and press freedom. The two professor call the latter kind of public good "coordination goods." Through careful manipulation of the composition of the supply of public goods, the authors argue, modern autocrats can ensure the longevity of their rule.

What about Hong Kong? It has high income per capita (about US $ 24,000) yet democratic political system is apparently missing there. And insufficient supply of coordination goods should not be a reason as we enjoy a relatively high degree of press freedom, human rights are decently protected and most Hong Kong do receive a decent amount of education. What prevents Hong Kong from having a democratic political system then? I have no clue. Comments are open though.