Pathways to Freedom: Political and Economic Lessons From Democratic Transitions

Over the past three years, the world has witnessed a number of democratic transitions take root across the Middle East and Asia. Millions of oppressed people in countries once ruled by autocrats are struggling to realize freedom and shared opportunity. Other countries around the world also now teeter on the edge of transition to more free and open societies.

These movements for political freedom and broader prosperity come at a time when democracy appears to be receding, as experts such as Larry Diamond in The Spirit of Democracy and Joshua Kurlantzick in Democracy in Retreat have noted. After the fall of the Berlin Wall, democracy surged, reaching a high-water mark in the first years of the twenty-first century with various “colored revolutions” in former Soviet Bloc countries. But then democratic gains in eastern Europe, Africa, and Latin America stalled or even deteriorated as fragile democratic institutions buckled under the enormous challenges of governance. The failed U.S. attempts to impose democracy in Iraq and Afghanistan and the economic rise of autocratic China further undermined confidence in the inevitability and even desirability of democratization. As Freedom House reports in itsFreedom in the World 2013, global levels of freedom have declined for the seventh straight year. Noted democracy scholars now talk about a “democratic recession.”

If successful, the nascent democratic openings in Tunisia, Egypt, Libya, and Myanmar, along with steps toward greater freedom in other countries such as Georgia, Ivory Coast, Sierra Leone, and Malawi, could help reverse the recent regressions in democracy. Yet the transition from authoritarianism to democracy is notoriously difficult. Many countries that once seemed budding with democratic promise now appear mired in political infighting and power grabs by ousted elites, or trapped in downward spirals of poverty and unemployment. History suggests that many transitioning countries will move only slowly toward substantive democracy—one characterized not only by majority rule through free and fair elections, but also by strong minority and civil rights protections. For quite some time, many will remain in the democratic purgatory of what experts Steven Levitsky and Lucan Way call “competitive authoritarianism” in their book of the same name—hybrid regimes with elements of both democracy and authoritarianism.

Despite a vast academic literature on democratization, the factors that allow some democratic transitions to succeed as others stall or backslide remain poorly understood by policymakers. Since the fall of the Berlin Wall, the relative importance of economic development and modernization, economic structure, inequality, governance and rule of law, civil society and media, structure of government, and education have been exhaustively debated. Rather than advancing a new one-sizefits- all theory of democratization, this book looks carefully at the statistical evidence, and backward at eight landmark country transitions over the past twenty-five years—some successful, others not so successful— to distill practical lessons for reformers in transitioning countries and policymakers in supportive outside states. By understanding the trade-offs, sequencing, and critical economic and policy decisions that transitioning countries have faced in the past, policymakers can make smarter choices to improve the chances of successful democratization in states undergoing transitions today.

The eight studies presented in this volume—Mexico, Brazil, Poland, South Africa, Indonesia, Thailand, Ukraine, and Nigeria—are not intended to be a representative sample, but instead encompass a range of experiences and outcomes with geographic diversity and high geopolitical relevance. The authors highlight the critical inflection points of each transition, rather than present an exhaustive record of each country’s trajectory. The tangible examples from the case studies, combined with insights from the statistical research, illuminate why some democratic transitions have succeeded while others have stumbled.

Each case study is organized around six themes that previous research indicates are clearly important to the process of democratization:

■ socioeconomic exclusion and inclusion
■ economic structure and policies
■ civil society and media
■ legal system and rule of law
■ government structure and division of power
■ education and demography

This structure allows the interested policymaker to easily compare an issue, such as rule of law, across each of the studies, and to understand the complex interplay of these themes. Through their focus on these issues, the studies illustrate a range of policy decisions and outcomes that can help guide other countries facing analogous challenges.

Factors that Matter in Transitions

Although policy options are inevitably constrained by context, as Stephan Haggard and Robert Kaufman explain in The Political Economy of Democratic Transitions, this book suggests seven major insights to assist those facing confusing and difficult trade-offs on the hard road to democracy and inclusive growth. Four of these concern initial circumstances; three involve critical policy choices once transitions begin to unfold. After laying out these insights, this chapter discusses their important implications for the pacing and sequencing of policy choices.

Initial Circumstances

Each country begins the process of democratic transition from a unique position based on its own political and economic development, but four initial circumstances play a critical role in shaping the trajectory of the transition.

Economic Growth and Crisis
Many experts once believed that economic growth inevitably led to democracy. But although most rich countries in the world today are relatively democratic, some—such as China and Saudi Arabia—have enjoyed growing economic prosperity without a commensurate increase in substantive political freedoms. In fact, history suggests that economic growth and prosperity do not necessarily lead to democracy, although a large middle class and higher overall wealth can help prevent backsliding to authoritarianism once democracy takes hold. On the other hand, short-term economic crises do trigger regime changes. Over the past three decades, many democratic transitions have been 4 Pathways to Freedom precipitated by serious economic shocks that inflicted unacceptable costs on citizens, rupturing the authoritarian bargain.

Indonesia’s remarkable and relatively sudden transition to democracy is a compelling example of economic crisis unleashing momentum for democratic freedom. With the onset of the Asian financial crisis in 1997, the frailties of Suharto’s economic policies, such as corruption, debt, and a hands-off approach to corporate governance and financial regulation, became clear. The resulting discontent swept the long-ruling Suharto regime from power.

Likewise, in Brazil, almost two decades before Indonesia’s transition, a structural economic crisis paved the way for the military government’s fall. Brazil suffered skyrocketing inflation, plummeting reserves, and crushing debt following the global oil shock of 1979. These woes eroded confidence in the military’s economic stewardship and raised questions about the authoritarian bargain of repression in return for economic growth. Protests erupted in the country’s manufacturing belt, and the military embarked on a liberalization process that eventually led to the restoration of civilian rule.

Mexico had a similar trajectory as the 1982 debt crisis set off political and economic change. The governing Institutional Revolutionary Party (PRI) struggled to maintain the unity of its authoritarian coalition as government revenues fell sharply. Just as in Brazil, the crisis caused many Mexicans to rethink their authoritarian bargain—a sentiment that intensified as growth lagged and poverty increased in the ensuing decade. A devaluation forced by excessive spending and insufficient reserves during the 1994 peso crisis sparked another recession. These crises cost the PRI significant support from interest groups and the public.

The three cases of Indonesia, Brazil, and Mexico demonstrate that economic shocks under autocracy can trigger democratic transitions over a broad time frame. In Indonesia, crisis led quickly to Suharto’s downfall. In Brazil, an economic shock starting in 1979 paved the way for the opposition’s victory in the presidential election six years later. In Mexico, subpar economic performance, punctuated by two crises, began almost two decades before the long-ruling PRI eventually lost the presidency in 2000. In all three, however, deteriorating economic conditions were an unmistakable trigger of change. This continues to be the case around the world, as is clear from the Arab uprisings of recent years, which were sparked in part by rising food prices and frustrated economic ambitions.


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