23
" Between state building and economic growth Having a state is a basic precondition for intensive economic growth. The economist Paul Collier has demonstrated the converse of this proposition, namely, that state breakdown, civil war, and interstate conflict have very negative consequences for growth.20 A great deal of Africa’s poverty in the late twentieth century was related to the fact that states there were very weak and subject to constant breakdown and instability. Beyond the establishment of a state that can provide for basic order, greater administrative capacity is also strongly correlated with economic growth. This is particularly true at low absolute levels of per capita GDP (less than $1,000); while it remains important at higher levels of income, the impact may not be proportionate. There is also a large literature linking good governance to economic growth, though the definition of “good governance” is not well established and, depending on the author, sometimes includes all three components of political development.21 While the correlation between a strong, coherent state and economic growth is well established, the direction of causality is not always clear. The economist Jeffrey Sachs has maintained that good governance is endogenous: it is the product of economic growth rather than a cause of it.22 There is a good logic to this: government costs money. One of the reasons why there is so much corruption in poor countries is that they cannot afford to pay their civil servants adequate salaries to feed their families, so they are inclined to take bribes. Per capita spending on all government services, from armies and roads to schools and police on the street, was about $17,000 in the United States in 2008 but only $19 in Afghanistan.23 It is therefore not a surprise that the Afghan state is much weaker than the American one, or that large flows of aid money generate corruption. "
― Francis Fukuyama , The Origins of Political Order: From Prehuman Times to the French Revolution
24
" On the other hand, there are a number of cases where economic growth did not produce better governance, but where, to the contrary, it was good governance that was responsible for growth. Consider South Korea and Nigeria. In 1954, following the Korean War, South Korea’s per capita GDP was lower than that of Nigeria, which was to win its independence from Britain in 1960. Over the following fifty years, Nigeria took in more than $300 billion in oil revenues, and yet its per capita income declined in the years between 1975 and 1995. In contrast, South Korea grew at rates ranging from 7 to 9 percent per year over this same period, to the point that it became the world’s twelfth-largest economy by the time of the Asian financial crisis in 1997. The reason for this difference in performance is almost entirely attributable to the far superior government that presided over South Korea compared to Nigeria. "
― Francis Fukuyama , The Origins of Political Order: From Prehuman Times to the French Revolution
25
" Between economic growth and stable democracy The correlation between development and democracy was first noted by the sociologist Seymour Martin Lipset in the late 1950s, and ever since then there have been many studies linking development to democracy.25 The relationship between growth and democracy may not be linear—that is, more growth does not necessarily always produce more democracy. The economist Robert Barro has shown that the correlation is stronger at lower levels of income and weaker at middle levels.26 One of the most comprehensive studies of the relationship between development and democracy shows that transitions into democracy from autocracy can occur at any level of development but are much less likely to be reversed at higher levels of per capita GDP.27 Whereas growth appears to favor stable democracy, the reverse causal connection between democracy and growth is much less clear. This stands to reason if we simply consider the number of authoritarian countries that have piled up impressive growth records over recent years—South Korea and Taiwan while they were ruled dictatorially, the People’s Republic of China, Singapore, Indonesia under Suharto, and Chile under Augusto Pinochet. Thus, while having a coherent state and reasonably good governance is a condition for growth, it is not clear that democracy plays the same positive role. "
― Francis Fukuyama , The Origins of Political Order: From Prehuman Times to the French Revolution
30
" Among ideas, legitimacy, and all of the other dimensions of development Ideas concerning legitimacy develop according to their own logic, but they are also shaped by economic, political, and social development. The history of the twentieth century would have looked quite different without the writings of an obscure scribbler in the British Library, Karl Marx, who systematized a critique of early capitalism. Similarly, communism collapsed in 1989 largely because few people any longer believed in the foundational ideas of Marxism-Leninism. Conversely, developments in economics and politics affect the kinds of ideas that people regard as legitimate. The Rights of Man seemed more plausible to French people because of the changes that had taken place in France’s class structure and the rising expectations of the new middle classes in the later eighteenth century. The spectacular financial crises and economic setbacks of 1929–1931 undermined the legitimacy of certain capitalist institutions and led the way to the legitimization of greater state control over the economy. The subsequent growth of large welfare states, and the economic stagnation and inflation that they appeared to encourage, laid the groundwork for the conservative Reagan-Thatcher revolutions of the 1980s. Similarly, the failure of socialism to deliver on its promises of modernization and equality led to its being discredited in the minds of many who lived under communism. Economic growth can also create legitimacy for the governments that succeed in fostering it. Many fast-developing countries in East Asia, such as Singapore and Malaysia, have maintained popular support despite their lack of liberal democracy for this reason. Conversely, the reversal of economic growth through economic crisis or mismanagement can be destabilizing, as it was for the dictatorship in Indonesia after the financial crisis of 1997–1998.33 Legitimacy also rests on the distribution of the benefits of growth. Growth that goes to a small oligarchy at the top of the society without being broadly shared often mobilizes social groups against the political system. This is what happened in Mexico under the dictatorship of Porfirio Díaz, who ruled the country from 1876 to 1880 and again from 1884 to 1911. National income grew rapidly in this period, but property rights existed only for a wealthy elite, which set the stage for the Mexican Revolution of 1911 and a long period of civil war and instability as underprivileged groups fought for their share of national income. In more recent times, the legitimacy of democratic systems in Venezuela and Bolivia has been challenged by populist leaders whose political base is poor and otherwise marginalized groups.34 "
― Francis Fukuyama , The Origins of Political Order: From Prehuman Times to the French Revolution
