After democracy? [Archives:2006/989/Business & Economy]
By: Raidan Al-Saqqaf
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Yemen is currently at a high in its democratic development, with hugely successful presidential and local council elections, a democracy that is integrating deeper into the society and a government that is taking concrete steps towards more democratic and accountable forms of governance. It therefore seems President Saleh is determined to consolidate political freedoms with democratic development and good governance towards a more prosperous future in Yemen especially during his new term in office.
There are many reasons to celebrate his determination and the current democratic wave, reinforcing political freedoms and human rights are a cornerstone of development, but what about the other pressing priorities of the Yemeni people? Such as economic development, better infrastructure and improved government services. How distant are those from the current wave of democracy and what can, if anything, Yemen's democratic development do for its economic development and well-being of citizens?
Empirical evidence suggests that, on average, countries which become democracies do not miraculously achieve faster economic growth due to democratic development, and similarly failed democracies do not do much worse in terms of economic development than they used to do. Therefore our democracy is not a magical spell to boost Yemen's economic development, in spite of the additional salaries and perks the government is paying its employees and the advance payment of next month's salary. The widespread association of Yemen's recent democratic milestone with more cash on hand for government employees and affiliates (over 500 thousand) is not only misleading but it is wrong. Yemen's democracy didn't provide for the additional salary and does not put bread on the table; Yemen's economy does.
The long-term success of a democracy depends on the strength of the underlying economic system; a democracy is more likely to persist as a successful political system if the country grows richer, not by a mere additional salary or perk but by successful economic reforms resulting in enhanced business and production activities. To sustain our democratic development we need high-paced and tangible economic development. So far Yemen still has an unstable economy; evident in the fluctuation in the prices of vegetables due to increased demand during Ramadan. The impact of this fluctuation is only an indicator how the cycles of boom and bust affect consumer prices and in turn disrupt the fragile economy of Yemen.
My concern is the interaction between the political development and the economic system. History books show us that a democracy born in an encouraging economic environment with a functioning market system, thriving foreign direct investments, and sizeable international trade, is likely to consolidate economic liberalism, stabilize expectations, and hence lead to more investment and faster growth. On the contrary, if an economy is shrinking and is controlled by the state or a few trading groups, has little investment and minor capital movements, or relies on rents from exhaustible resources and extractive industries to obtain foreign currency, then the transition to democracy is very likely to be overwhelmed by the economic demands of the citizens and is destined for a long path of political struggle, hurting economic growth and provoking those who are currently mislead to think that democracy is a ticket towards economic prosperity.
Which one of those two scenarios is more likely to be witnessed in Yemen in the next decade? What comes after for Yemen's democracy? The answer for these questions is dependent on Yemen's economic growth, if we successfully meet the 7 percent growth rate target needed to result in any sort of development and in turn strengthen our fragile economy, then it is a bright future for Yemen's democracy, otherwise the second scenario will unfortunately prevail, and it will be downhill for Yemen's democracy.
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