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The Political Economy of Democratic Governance and Economic Development

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  • Manuel Couret Branco

    (Department of Economics, University of Évora)

Abstract

Pure mainstream economics, based on methodological and sociological individualism usually ignores politics; development economics, on the contrary frequently integrates social and political factors in order to explain economic progress. Within this branch of economics, politics can mainly be dealt in two different approaches. The classical and neoclassical approach takes politics essentially as an obstacle to the expression of agents? rationality, and, therefore considers it a disturbance. A more heterodox approach of development, on the contrary, puts politics at the heart of the process, development being an economic as much as a political process. Those, like A. Sen, that take human rights, both as a means and an end to development do not separate the two processes as well. Be that as it may, and despite the opposed ways in which these approaches take politics, all consider governance, and its democratic or authoritarian character, a key factor in the development process. The main purpose of this paper is to discuss the importance of the issue of democratic governance within the development process. In the first part of the paper I will make a review of the main literature concerning the impacts of democracy on economic development and the importance of promoting democracy. In the second part of the paper the analysis will focus on the political economy of democratization, namely on the obstacles standing before democracy, and on the economic policies and reforms needed to facilitate democratization. The diagnosis states that democratization needs to deal with inequality of income distribution, with institutional design in order to overcome cultural divisions within the nations, with diversification of the sources of income and with a new economic order characterized by an erased debt burden and a more equitable distribution of the benefits of international trade.

Suggested Citation

  • Manuel Couret Branco, 2006. "The Political Economy of Democratic Governance and Economic Development," Economics Working Papers 12_2006, University of Évora, Department of Economics (Portugal).
  • Handle: RePEc:evo:wpecon:12_2006
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    File URL: http://hdl.handle.net/10174/8441
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic Development; Democracy; Governance; Human Rights; Political Economy;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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