Are democracies better at reducing poverty?

Poverty is a broad and relative notion: it cannot be measured by an economic benchmark alone, like the UN’s official 1.90 cents a day criteria for the “extreme poverty” line. There is now the idea of “multidimensional poverty,” developed by the Oxford Poverty and Human Development Initiative and released by the United Nations Development Program.

This makes poverty a broader concept that takes into account indicators other than income level, such as malnutrition, lack of health care, limited access to clean water, electricity, education, and work opportunities.

These additional measures are part of what is known as human security. So what matters in poverty reduction is not reducing the number of people below a certain level income, but increasing human security for people. Even if a country achieves growth and reduces poverty by counting the income, it does not mean it has really reduced poverty.

There is no question that democracies are not necessarily better at poverty reduction. In Asia, both China and India have done well in poverty alleviation, despite very different political systems. According to the Pew Research Center, between 2001 and 2011, the poverty rate in China declined to 12 percent while in India it fell to 20 percent. This meant China lifted 356 million of its people out of poverty, while India did the same for 133 million of its own citizens.

By this count, China did and continues to do better than India. But India, according to the Oxford Institute, led the world in lifting as many as 270 million people out of multidimensional poverty between 2005-2006 and 2015-2016.

India also provides robust evidence that democracies do well in addressing famine. Some electoral democracies have not done as well, such as in Africa, although this has much to do with their weak institutional capacity, rather than democracy per se.

At the same time, many authoritarian countries have done poorly in poverty reduction. North Korea is a striking example. And let us not forget, poverty levels increase when a country slides into authoritarianism. Thus, Myanmar, after the 1962 military coup, went from being the rice bowl of Asia to one of the world’s poorest nations.

Authoritarian regimes with good institutions and governance may reduce poverty faster (again, depending on what one means by poverty), but this also comes at a cost of loss of civil liberties, limited mobility of people across different states and urban centers.

The third point is that democracy is certainly not sufficient for development and poverty reduction. Aside from institutional capacity, good governance also matters. On this score, Singapore and China have done well in poverty reduction. But good governance ultimately requires democracy.

As democracy expert Larry Diamond notes: “Good governance involves the capacity and commitment to act in pursuit of the public good, transparency, accountability, citizen participation and the rule of law. Bad governance prevents the accumulation of the financial, physical, social, and political capital necessary for development. Democracy should provide a corrective to bad governance by holding corrupt, unresponsive or ineffectual leaders to account and enabling citizens to participate in making policy.”

So there is no excuse to justify authoritarian rule in the name of poverty alleviation.

A vicious cycle is emerging between the COVID-19 pandemic, poverty, and loss of democracy. COVID-19 has increased the level of poverty worldwide while reducing democratic space.

This is worrisome. In October 2020, the World Bank predicted that thanks to the pandemic, global extreme poverty would rise in 2020 for the first time in over 20 years, thus increasing the number of people in extreme poverty by 88 million to 150 million by 2021. This means the extreme poverty will remain between 9.1 percent and 9.4 percent of the world’s population in 2020, instead of dropping to 7.9 percent had there been no pandemic. It also noted that the new poor will be disproportionately in countries with already high poverty rates.

Add to the more severe effect of the pandemic on poor people and minorities. A study of the impact of COVID-19 in five of the largest democracies—the US, India, Brazil, the Philippines, and Indonesia—by Joshua Kurlantzick of the Council on Foreign Relations concluded that the pandemic has killed more poor people and minorities per capita than middle class or rich people in these countries. This, along with poor government response, has reduced the number of wage-earners for the affected families, making their future recovery much more challenging. The Jakarta Post/Asia News Network

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Amitav Acharya is Unesco chair in Transnational Challenges and Governance at American University, Washington, DC. This text is based on his speech in the 14th Bali Democracy Forum, Dec. 9, 2021.

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The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.