Does Democracy Lead to Economic Development? by Roger R. Betancourt

This question began to attract attention in the 1990’s. Mobarak’s (2005) findings in the Review of Economics and Statistics provide a good marker on the current conventional wisdom on one aspect of the question under consideration: Democracy has no direct effect on average growth but it does reduce the volatility of growth and the latter impacts growth negatively. The logic underlying the result makes sense as checks and balances reduce the probability of economically very attractive or unattractive projects being undertaken by a society. The result implies that democracy has no effect on the average quality of economic projects undertaken by a democratic society relative to an authoritarian one but it reduces the range symmetrically. (more…)

Does Economic Development lead to Democracy? by Roger R. Betancourt

This question has attracted the attention of many writers in political science and political economy. In political science this issue is often referred to as the ‘modernization hypothesis’ and associated with a famous paper by S. Lipset (1959) who answered the question affirmatively. He also suggested that other variables also associated with a higher per capita income such as urbanization and education had an independent role in bringing about democracy.

In the 50 plus years since Lipset’s classic paper, subsequent writers brought to bear statistical analysis on this question. Earlier findings suggested a positive association between the level of per capita income and indexes of democracy across countries. This finding holds whether electoral democracy is measured directly in terms of political rights using Freedom House’s index of political rights or using indirect measures of political rights, related to balance of power considerations, such as in terms of the Polity indexes. Almost all writers focused on electoral democracy when looking at this issue. Thus, they concentrated on political rights. Nonetheless, the same finding of a positive association between per capita income and democracy held for liberal democracy when civil liberties are measured by Freedom House’s index of civil liberties in one of the few studies that did so, Barro (1999). Click here to read Barro’s study.

This finding was questioned from a number of perspectives. In political science some suggested the need for a more historically oriented perspective through the use of analytical narratives rather than statistical methodology. Advances in the latter area, however, led to the use of panel data and the adoption of more advanced statistical methods in order to address this topic. In a well-known book on democracy and development four political scientists, Przeworski, Alvarez, Cheibub and Lmongi (2000), concluded that economic development in terms of per capita income did not lead to bringing democracy into existence or democratization but it generated stability for both democratic and authoritarian regimes. (more…)

What is Democracy? by Roger R. Betancourt

We think we know what it is and what it means. But when we start probing more systematically into the answer a number of issues arise.

For instance, a simple answer from armchair theorizing is any situation where elections are held periodically and power is peacefully transferred from one regime or administration to another. A complex answer available in the academic literature is that one can identify in the large political science literature on the subject, Coppedge et al (2011), at least six conceptions of democracy: electoral, liberal, majoritarian, participatory, deliberative and egalitarian.

The first answer is too simple. For several decades Mexico had periodic elections every six years but the same party always won. Hence it is customary to insist that the elections be free and fair, which also means competitive so that different parties have a reasonable chance to alternate in holding power. For example, two highly regarded political economists, D. Acemoglu and J. Robinson, in their book on Dictatorship and Democracy (2006) put forth the following answer borrowed from Schumpeter ( p.42) “…the institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote.”. This is a commonly accepted view of what we mean by electoral democracy. (more…)

What if…the U.S. Ended the Cuba Travel Ban and the Embargo? by Jaime Suchlicki

Ending the embargo and lifting the ban for U.S. tourists to travel to Cuba would be a major concession totally out of proportion to recent changes in the island. If the U.S. were to lift the travel ban without major reforms in Cuba, there would be significant implications:

  • Money from American tourists would flow into businesses owned by the Castro government thus strengthening state enterprises. The tourist industry is controlled by the military and General Raul Castro, Fidel’s brother.
  • American tourists will have limited contact with Cubans. Most Cuban resorts are built in isolated areas, are off limits to the average Cuban, and are controlled by Cuba’s efficient security apparatus. Most Americans don’t speak Spanish, have but limited contact with ordinary Cubans, and are not interested in visiting the island to subvert its regime. Law 88 enacted in 1999 prohibits Cubans from receiving publications from tourists. Penalties include jail terms.
  • While providing the Castro government with much needed dollars, the economic impact of tourism on the Cuban population would be limited. Dollars will trickle down to the Cuban poor in only small quantities, while state and foreign enterprises will benefit most. (more…)

What is the US Cuban Embargo? by Roger R. Betancourt

Embargoes are restrictions on economic activities for political or policy purposes. Embargoes involving international trade are perhaps the most notorious due to their impact on international relations. Since these restrictions are imposed unilaterally they are usually viewed as acts of hostility toward the recipients of the restrictions. Embargoes differ in terms of three dimensions: 1) the aspects of international economic interactions that are subject to the restrictions; 2) the purposes for which the restrictions are imposed; and 3) the economic agents to whom the restrictions apply. The US Cuban embargo is unique due to a combination of its duration, the extent of restrictions , the purposes for which they apply, the economic agents to whom they apply and their interactions. (more…)

What are the Main Determinants of the Current Form of the US Cuban Embargo? by Roger R. Betancourt

Two events standout as formally determining the main current features of the US Cuban Embargo: one is normally associated with the embargo and one is not.  The first event is the Helms- Burton Act of 1996.  It represents a tightening of the embargo in almost all aspects: with respect to the number and type of transactions involved; with respect to its purpose, through a more aggressive advocacy of regime change in the direction of democracy; and perhaps most importantly with respect to a substantial extension of the economic agents subject to the restrictions, potentially and unilaterally including all countries.


Should the US Lift the ‘Embargo’? by Roger R. Betancourt

Since the embargo has three different economic aspects in terms of the restrictions involved, one can partition the answer in terms of which set of restrictions are lifted: the ones on transactions of goods and services; the ones on labor flows and the ones on capital flows.  With respect to restrictions on transactions of goods and services, the changes would matter little economically to both sides.  After so many years Cuba has adjusted to the additional costs of the ‘embargo’ by switching to next best available alternatives.  (more…)

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