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China

Is Authoritarianism Better for Economic Growth?

Ryan Avent has an excellent post taking issue with Matt Steinglass’ assertion that China’s economy is thriving precisely because they have an authoritarian government, while the US and the EU’s economies are struggling under the weight of their democratic regimes.

Avent rightly points out that China, for all its rapid growth, is still not a wealthy country, despite their high total GDP. In 2010, GDP based on purchasing-power-parity per capita (PPP) in China stood at $7,519, which ranked 94 in the world. Among the economic juggernauts that have a higher PPP than China: the Dominican Republic (88), Romania (69), Mexico (59), and Croatia (48) to name a few.

To hammer home his point, Avent compares China’s GDP per capita to the per capita GDP of the 10 wealthiest, large countries in the world (who all happen to be democracies):

“… if we look at the world’s richest large countries (say those with 10m people or more) in terms of per capita GDP, we see that the league tables are dominated by democracies. In order: America, the Netherlands, Australia, Canada, Belgium, Germany, Taiwan, Britain, France, Japan, South Korea, Spain, Italy, Greece, Cyprus, Czech Republic. The first non-democratic large country to make the list? Saudi Arabia. And I don’t think we need to chalk its wealth up to sound macroeconomic management.”

Now, this isn’t to say that what has happened in China since liberal reforms started being introduced in 1978 has been anything less than an economic miracle, but it does highlight just how far China has to go to reach Western levels of prosperity and decent living standards for the vast, vast majority of their 1.3 billion citizens.

I’ll be the first person to tell you that PPP can often be a crude measurement of a country’s wealth and well-being, but in the case of China I think it shows just how difficult it is to effectively argue that authoritarian regimes foster economic growth better than democracy.

I plan to write a much longer follow up post on China to explore this issue a little more thoroughly. Just putting “authoritarianism” in exhibit A, and “democracy” in exhibit B, then making sweeping generalizations as to the effectiveness of each system is not satisfactory when trying to explain the complexity of the challenges China faces in the coming decade.

Stay tuned…

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