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This article appears in the following Oxford Review of Economic Policy issue: THE POLITICAL ECONOMY OF DEVELOPMENT [View the issue table of contents]
Leadership and politics: a perspective from the Growth Commission
* Stanford University and the Hoover Institution, e-mail: dbrady{at}stanford.edu
** Stanford Business School, the Hoover Institution, and chairman of the Commission on Growth and Development; Nobel Laureate in Economics in 2001, e-mail: mspence98{at}gmail.com
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The paper attempts via case studies to illustrate the nature and importance of political structures and transitions in the course of rapid growth and development. The cases are drawn principally from Asia, where the pattern has often been a dominant single-party structure evolving into a full multi-party democratic structure. This results from the interaction of the politics and changes that result from the growth process itself, such as the emergence of politically active middle and entrepreneurial classes. The role of political leadership in managing, sequencing, and pacing these transitions is discussed. We do not yet have a general model for which these cases would be instances. The hope is that an in-depth understanding of the case dynamics will be a useful input to the development and testing of more general theories.
Key Words: growth • leadership • political transitions • development • institutions • dominant single party
1 The Growth Report identifies 13 countries that grew at an average rate of 7 per cent or more for a period of 25 years or more. This is very hard to do. These cases have many idiosyncratic features but all exhibit the open-economy approach (leveraging global knowledge and demand) and all have mobile resources and change the structural composition of the economy rapidly, using dynamic market forces of competition. The subtler policy judgments have to do with opening the economy up in such a way as to maintain balance between new job creation and job destruction and to avoid excessive volatility.
2 There are, of course, other problems. One is the political economy of self-interest and theft and the related corruption of the democratic process. A second is a failure on the economic side to get public-sector investment up to the level that will support private-sector investment and sustain high growth.
3 Recent research in political economy and development is shedding new light on the endogenous economic and political forces that give rise to both superior and inferior economic performance. Acemoglu and Robinson (2006) is particularly good.
4 Justin Lin, the Marshall Lectures, University of Cambridge, 31 October to 1 November 2007.
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