Economic Research Forum (ERF)

Lessons and pitfalls of transitions to democracy

339
Under what circumstances is a country most likely to make a successful transition to democracy? This column outlines the roles of both human agency and structural factors such as class or economic interests. Key to the process of democratisation is the kind of incentives that encourage elite groups in society to reach compromises even in the face of ideological differences.

In a nutshell

The nature of democratic transitions shapes the subsequent quality of democracy.

Transitions that are ‘pacted’ among elites may result in relatively smooth transitions to electoral democracy, but they tend to permit political and economic elites to maintain their privileges, leading to less inclusive democracy.

The most vociferous opponents of economic liberalisation may not be the marginalised mass publics but rather well connected elites who benefited under authoritarian rule.

The struggles over institution-building that followed the uprisings across the Arab region in 2011 underscore the importance of elite bargaining in shaping the direction of regime change. For example, if the army had opposed the ouster of Mubarak in Egypt or Ben Ali in Tunisia, incumbent rulers might have held onto power; while elite unity, particularly in the ranks of security officers, helps to explain the Assad regime’s retention of power in Syria.

Questions about the relative importance of ‘structure’ versus ‘agency’ have long dominated scholarly debates about regime change. Structural explanations emphasise factors that are relatively fixed and are not amenable to manipulation by individuals or groups, such as economic growth, class interests or the presence of indigenous civil society groups. Agency-based approaches point to the often-unwitting impact of human actions and interactions – particularly by economic and political elites – in producing democratic transitions.

Of course, both sets of factors may be consequential at different points in the process of democratisation. The historical record suggests that when elites are willing to compromise, even in the face of profound ideological differences, the probability of successful democratic transitions increases. Human agency is therefore central to successful democratisation.

But under what conditions do elites engage in constructive exchanges? If elite decisions to adhere to or defect from authoritarian coalitions (as well as the dynamics of elite bargaining during periods of institutional flux) shape the outcomes of regime transitions, then it is vital to identify the incentives that elites face to make such consequential choices.

To understand why elite compromise occurs, we need to turn to more structural factors. Elite resources and strategies are themselves shaped by structural conditions, such as the relative weight of social groups prior to the overthrow of incumbent dictators. The economic and political contexts – that is, the factors that constitute ‘structure’ – shape the interests and goals of elites and, hence, their propensity to make concessions to political rivals and to work together productively.

One factor that clearly plays a key role in guiding transition processes is leadership. This may come in the form of a single leader who has broad credibility, enabling the construction of coalitions across the political spectrum. In some cases, an initial period of instability facilitates support for moderate leaders because the population is fed up with extremists whose struggles only prolong disorder and uncertainty.

But the capacity of individual leaders to form bridging coalitions among key stakeholders is contingent on the evolving political terrain. The experiences of many Arab countries indicate that extreme ideological polarisation inhibits elite cooperation. If not ideological compatibility, then at least a common set of political goals is essential for democratisation to take root. It is particularly vital that potential spoilers agree to abide by a core set of principles, embodied in institutional rules.

Politicised ethnic or religious cleavages can also pose serious obstacles to democratic transitions. But external incentives and shared economic interests can help to overcome the serious obstacles they pose.

The nature and durability of incumbent patronage networks have important effects on the potential for democratisation. When existing networks remain strong, elite defection and, hence, the likelihood of authoritarian breakdown is reduced. Conversely, when authoritarian rulers either face dwindling resources or do not co-opt key political and economic elites with patronage, their incumbency is threatened.

Once a successful transition occurs, the type of transition – and its implications for the continuity of patronage networks – shape the quality of democracy. The defection of economic elites from authoritarian bargains does not automatically produce elite consensus behind an alternative ruler or system of government. This depends in part on whether elites remain incorporated in patronage networks during and after the transition.

When there is a transition ‘pact’ between regime incumbents and members of the opposition, patronage networks are more likely to remain intact, facilitating a smooth transition but at the price of poor democratic quality. When ‘pacted’ transitions permit political and economic elites to maintain their privileges, democracy will be less inclusive.

Under these conditions, the poor and marginalised components of society may not experience tangible improvements in their lives and will not have equal access to opportunities. The resultant poor quality of democracy can undercut the legitimacy of the new system, undermining citizen trust in government and opening the way for popular disenchantment with the transition. Transitions to formal democracy therefore do not necessarily bring about substantive improvements in economic and social life.

This lesson is of great relevance for the transitioning Arab countries, where the economic interests of many former regime cronies remain off limits and big capitalists who benefited under authoritarian rule have maintained their holdings and behind-the-scenes influence. Politicians in newly minted democracies are often loath to implement policies that generate widespread popular opposition, increasing the incentives for politicians to enact populist measures at the expense of longer-term growth and development.

Yet the most vociferous opponents of economic liberalisation may not be the marginalised mass publics but rather well connected elites who benefited under authoritarian rule. Forging a more inclusive political and economic system is challenging, in no small part because it is difficult to dislodge authoritarian coalitions even after democratic transitions have ostensibly occurred.

Further reading

Cammett, Melani (2016) ‘Lessons and Pitfalls of Transitions to Democracy’, ERF Policy Perspective No. 17.

Cammett, Melani, Ishac Diwan, Alan Richards and John Waterbury (2015) A Political Economy of the Middle East, Fourth Edition, Westview Press.

Most read

Fair competition is needed to empower women economically in the Arab world

The participation rates of women in the labour market in Arab countries are the lowest in the world. This column argues that remedying the under-representation of women in the labour force is a social and economic imperative for the region. There are three dimensions for action to realise the potential of Arab women: amending laws and regulations; instilling fair competition in markets; and promoting the digital economy.

Recession without impact: why Lebanese elites delay reform

The survival of Lebanon’s political elites is highly dependent on the wellbeing of the economy. Why then do they delay necessary reform to avoid crisis? This column examines the role of politically connected firms in delaying much-needed economic stabilisation policies.

Competition laws: a key role for economic growth in MENA

Competition policy lacks the attention it deserves in the countries of the Middle East and North Africa (MENA), a region characterised by monopolies and lack of market contestability. As this column explains, there are many questions about the extent of anti-competitive barriers facing new market entrants in the region. What’s more, MENA’s weak overall performance on competition is likely to be hindering economic growth and the path towards structural transformation.

The future of Egypt’s population: opportunities and challenges

Egypt’s potential labour supply depends on the growth and changing composition of its working-age population. This column reports the latest data on labour supply and fertility rates, concluding that the country has a window of opportunity with reduced demographic pressures to try to address longstanding structural challenges for the labour market.

Formidable challenges facing the Middle East require a sea change in economic policies

Weakening global growth, endemic conflicts and increased tensions within the Middle East and North Africa (MENA) – as well as emerging challenges such as climate change and rapid demographic shifts – are likely to have an adverse impact on the region’s economic, social and political stability in the coming years. This column outlines the policy responses that are needed to avert disaster.

Domestic demand and competition: a new development paradigm for MENA

A lack of competition in domestic and regional markets is holding back development in the Middle East and North Africa. This column argues that the region and the international community must ensure that barriers to market entry and exit are eliminated, and that independent regulatory bodies at the national and regional levels help to promote domestic demand as the main engine for sustainable and inclusive growth.

Effects of urbanisation on productivity and wages: evidence from Turkey

Are the substantial productivity gains associated with larger cities in developed countries similar for developing countries? This column provides evidence on urbanised economies in the non-Western world by focusing on Turkey, a country that has experienced fast urbanisation and a high rate of growth of the urban population.

Gender discrimination in small business lending: evidence from Turkey

Discrimination in access to financial services can prevent women from exploiting their entrepreneurial potential. This column reports on a ‘lab-in-the-field’ experiment to test for the presence of gender discrimination in small business lending in Turkey.

How import dependence could lead to corruption in MENA

Export-led development strategies have had little success in MENA countries; what’s more, instruments of earlier import-substitution strategies – such as state-owned enterprises, high tariffs and subsidies – have survived. As this column explains, these legacies have created crony-capitalist industries that have limited the level of competition in many sectors of the economy and furthered the region’s dependence on imports.

Social security for young workers in Arab countries

Social security coverage of young workers in Arab countries is low – in part because many are employed in informal jobs; and in part because they do not see the value of the system. This column reports survey evidence on young workers’ attitudes towards participation in both social security and politics. It also explores policy reforms that might make access to social security universal for young workers.