Does Government Enhance Economic Development?

There are numerous governmental systems and economic policies in the world. A central argument amongst policy makers is what kind of government is best for its people? Advancing economic development is perhaps the central goal of each regime for its respective state. As stated by Michael Todaro, economic development “is an increase in living standards, improvement in self-esteem needs, and freedom from oppression as well as a greater choice.” Economic development is essentially advancing a population into a better all-around world. However, how does a state enhance economic development? There are several routes a state can explore. Nonetheless, economic development starts with a government that adheres to the wants of its population. Democracies often relate to free market, progress and accountability. For these reasons, democracy is positively correlated with economic development. It is important to note exactly what a democracy is and should be. A democratic government is one in which citizens’ voices are heard. Citizens should be able to vote, address concerns, and expect the government to act in the best interest of its people. Democracy and economic development run parallel to each other because the end goal of development is effectively democracy, a system where citizens live in freedom and are able to improve their standard of living. True democracies almost always engage in free market capitalism. This is because the freedom associated with democracy is carried over to a free economic policy. Free market capitalism is crucial for development because it presents the best opportunities for individuals to succeed. Under the free market, each individual has an equal opportunity to pursue their dreams. Meanwhile, in command economies, employment is often designated for each person. This designation can be inefficient and certainly does not follow the principles of freedom that one hopes to achieve in development. Furthermore, capitalism is critical for long term growth because it forces competition. Competition subsequently results in innovation, which must happen for an economy to continue growing in the long-run. Authoritative governments and their command economies can accelerate growth in the short term due to the nonexistent checks on power. Autocracies can pass programs quicker than democracies, but their short term expansion usually results in stagnation and eventually collapse. For example, we can observe the disasters that occurred in the USSR such as Holodomor. Furthermore, the failure of command economies can be seen in the collapse of the USSR and the problems that its largest former state, Russia, still faces compared to its European and American counterparts. Democracies tend to exhibit higher levels of technological progress because businesses are more likely to reinvest in a democratic state. The free market structure is the reason why investors tend to reinvest in democracies. This higher level of technological process results in higher labor efficiency due to the new …show more content…
Rather than the government being accountable towards elites (like in autocracies), democracies are held accountable by the public. Reelection terms put power in the hands of the people. If a leader is making poor decisions in a democracy, he/she will not get reelected. Democracies also have strong checks on power. The president/prime minister cannot pass legislation without going through a parliament or congress. This process lessens the possibility for corruption because more people are involved in the government. It is easy to get away with corruption in an authoritative state because the ruler answers only to himself. One can point out that there is a corruption issue, however, in intermediate democracies. Certain intermediate democracies have shown to have higher levels of corruption than …show more content…
Ferero explains how many Latin American states have grown frustrated with the slow process of democracy. The people want immediate change and development. This can be difficult to carry out in a new democracy because of the transition of power and the length of time it takes to pass legislation in democracies. Even after legislation is passed, democratic policies may take several years to take effect. Nonetheless, democracies eventually become the best solution for advancing economic development. A proper democracy is good for development because of its free market nature, accountability, and higher potential to grow. It can be difficult for a state to get to high-functioning democracy status, but when done right, democracy is positively related to development. Economic development is raising the standard of living of the population and democracy provides the avenues and opportunities to elevate