Op-ed: Democracy is the only way

16 October 2014, Ann Bernstein for Financial Mail. Read this article at the Financial Mail.

 

This article is based on CDE’s “Democracy Works” project. Read more about the project here and read the reports here.

Should the future of the developing world be dominated by authoritarian governments? Are autocracies the best means of producing economic growth and inclusion? One often cited statistic is that India’s GDP almost doubled between 1980 and 2007, but China’s increased seven-fold. This and other examples appear to suggest that initial periods of industrialisation are more effectively directed by autocracies than within democracy. But after two years of research with experts in India, Brazil and SA, the Centre for Development & Enterprise released a report refuting this view. The experiences of these three countries demonstrate that it is not necessary to give up individual freedoms, rule of law, independent institutions, a free press and regular elections.

On the contrary, democratic rights and freedoms can promote sustained development, higher economic growth and effective routes out of poverty.

The argument in favour of autocracy is based partly on the idea that authoritarian governments can force society to delay reaping benefits in favour of first reaching a higher level of development. This has worked in some societies, but has failed elsewhere.

Our study found SA’s democracy has improved the quality of life for millions of people in a short 20 years. Brazilian poverty and unemployment are in single digits. In India, the size of the economy doubled between 2005 and 2012, with nearly 200m people lifted out of absolute poverty in two decades.

All three countries have flexible political systems. Many outsiders see people protesting and quickly interpret this as a threat to the stability of the regime. More often it is a way for citizens to push for reform, not revolution. In exercising their right to dissent they can renew the political system and open the way to better policy making.

Democratic freedoms can also foster economic and social innovation that authoritarian systems find difficult to produce. By protecting dissenters, creating independent universities, entrenching intellectual property rights and freeing up the business environment, democracies can encourage and protect innovators with radical new ideas.

This is not to ignore the challenges. All three countries need reform if they are to make further strides in overcoming poverty and underdevelopment. Macroeconomic discipline must be maintained. Microeconomic reforms must reduce the cost of doing business, open up competition and markets for new firms and workers, promote a positive approach to the role of business and stop the slide in global competitiveness. All three must strengthen competence and capacity in government.

Growth, in a developing country, must be sustained and labour intensive.

It must produce higher revenues to expand basic services, quality education and access to health for those historically excluded from the economy.

As in most other countries, corruption is a challenge. This requires greater transparency, effective democratic institutions, and more representative democracy, not less. It is hard to see how authoritarian states can compete with this.

It is not democracy that inhibits growth and inclusion of the poor in India, Brazil and SA. All three are in trouble because of bad policy choices, a failure to embrace markets and to sell the benefits of competitive capitalism to voters. It is weak institutions (riddled with political appointments) that succumb to corruption and crony capitalism. It is the failure of leadership — politicians captured by special interests rather than a new definition of the national interest.

Shift the spotlight towards the democratic developing world and it is possible to develop a more optimistic perspective on the future of democracy. There is an emerging democratic route to growth and development — if coupled with markets and if India, Brazil and SA implement essential and bold reforms.




India and the Pursuit of Inclusive Growth

 

India and the Pursuit of Inclusive Growth discusses the strengths and weaknesses of the current Indian political and economic system. The report is based on four specially commissioned research papers and draws on insights that emerged from a workshop held in New Delhi. It explores in detail how India’s democratic institutions (political pacts, elections, parliament, courts, and civil society) emerged and have affected the country’s attempts to promote growth, reduce poverty, stimulate innovation and keep corruption in check.

 

DOWNLOAD REPORT

 Background reports

 




Video: Ann Bernstein talks to CIPE about Democracy Works!

Executive Director of the Centre for Development and Enterprise (CDE) Ann Bernstein highlights the findings of a research project to uncover a consensus on democratic governance from the leading emerging markets of Brazil, India, and South Africa.




Video: What is ‘Democracy Works’?

In this short video produced by the Legatum Institute, the project partners explain why they commissioned the Democracy Works project and what it aims to do.




Video: Democracy Works! presentation highlights at the Johannesburg launch

The Democratic Alternative from the South: India, Brazil and South Africa was officially launched in South Africa on 11 September 2014 in Johannesburg. A panel discussion in response to Ann Bernstein’s presentation was held and chaired by Andile Sangqu, a member of CDE’s board, and sustainability and group risk executive at Impala Platinum. CDE secured the participation of Maite Nkoana-Mashabane, South Africa’s minister of international relations, who appeared as a panellist and delivered a lengthy presentation in response to the report. The other panellist was Justice Malala, an analyst and well-known columnist for The Times of Johannesburg and the Financial Mail, a well-respected business magazine. There was much robust discussion around the document which was praised as ‘ground-breaking’ by Minister Nkoana-Mashabane.




Video: Democracy Works! Johannesburg launch panel discussion and Q&A

The Democratic Alternative from the South: India, Brazil and South Africa was officially launched in South Africa on 11 September 2014 in Johannesburg. A panel discussion in response to Ann Bernstein’s presentation was held and chaired by Andile Sangqu, a member of CDE’s board, and sustainability and group risk executive at Impala Platinum. CDE secured the participation of Maite Nkoana-Mashabane, South Africa’s minister of international relations, who appeared as a panellist and delivered a lengthy presentation in response to the report. The other panellist was Justice Malala, an analyst and well-known columnist for The Times of Johannesburg and the Financial Mail, a well-respected business magazine. There was much robust discussion around the document which was praised as ‘ground-breaking’ by Minister Nkoana-Mashabane.

 

 




Op-ed: Growth Does Not Have To Be At The Expense Of Democracy

By Ann Bernstein. Published in Business Day, 12 September 2014. Read the article at BDLive.

 

This article is based on CDE’s “Democracy Works” project. Read more about the project here and read the reports here.

 

A battle of ideas — a global contest between democratic and authoritarian approaches to growth and development — is playing itself out in countries around the world.

Are autocracies the best way to produce inclusive economic growth for the vast majority of the population? The evidence from three important democratic developing countries, India, Brazil and SA (Ibsa), is compelling and supports a resounding “no”. It is not necessary, as many are arguing in Africa, to give up individual freedoms, rule of law, independent institutions, a free press and regular elections, if you are struggling with the challenges of poverty. On the contrary, democratic rights and freedoms can in numerous ways help promote sustained development, faster economic growth and effective routes out of poverty.

Over the past 25 years, SA and its Ibsa partners, India and Brazil, have demonstrated that the challenges of development and poverty can be tackled using the combination of democracy and market reforms. Between 1986 and 1996, each country had its own economic crisis and, in response, all three governments introduced fiscal discipline and market reforms. In the years since, these reforms have yielded impressive results. In SA, the combination of democracy and market reform has improved the quality of life of millions of people in ways that were unimaginable under apartheid. Brazil’s poverty rate is now in single digits. In India, the size of the economy doubled between 2005 and 2012, with nearly 190-million people lifted out of absolute poverty.

Despite these achievements, India, Brazil and SA still have a long way to go in moving large parts of their population out of poverty and reducing inequalities. All three countries now face serious and remarkably similar challenges if they are to return to the rates of growth and inclusion they desperately need. A two-year research project run by the Centre for Development and Enterprise (CDE) and partner think-tanks in India and Brazil has concluded that each of these developing countries requires the urgent introduction of a multifaceted reform package.

In SA, the economy is being held back by inefficiencies and unnecessarily high costs, with competitiveness sliding in a tough global environment. While maintaining macroeconomic discipline, microeconomic reforms are needed to reduce the costs of doing business, and open up competition and markets for new firms and the unemployed. Considerable deregulation would serve the interests of the economy as well as of politics: too many regulations and subsidies create opportunities for corruption, as well as slowing growth.

SA has the world’s highest recorded rate of unemployment, at 35%, and 60% for people aged 18-24. In part, this is because SA’s labour laws favour workers in formal employment and discriminate against the jobless. India and Brazil’s labour laws are complex and costly. In both countries, pressure is growing for labour market reform, with some Indian states leading the way. This is a priority area for fundamental reform for SA.

Well-functioning state institutions are needed to ensure that the gains of economic growth are translated into genuine assets and opportunities for all. And a competent, honest state committed to public service, with a positive attitude to private enterprise, is vital to support and regulate market players.

In India and SA, the state’s sponsorship of social mobility has emphasised particular groups and the politically connected. This undermines its role as the provider of public goods, guardian of the national interest, and sponsor of inclusion and upward mobility for all citizens. In part, this has to do with policies of redress (reservations in India and black empowerment in SA), which give preference to caste, race and political insiders rather than merit. Such policies create public servants who take office with the assumption that “it’s our turn now” instead of a commitment to serving the public good. In all three countries, broad-based social mobility is held back because weak schooling systems leave so many people badly educated.

State bureaucracies in the three societies are too inefficient to manage infrastructure delivery effectively on their own. Governments either cold-shoulder private infrastructure investment or mismanage it. In Brazil, experts note that President Dilma Rousseff’s backward-looking socialist and nationalist prejudices block the most efficient ways to bridge Brazil’s huge infrastructure backlog. These comments could apply equally to SA.

Faster economic growth requires popular recognition that markets, entrepreneurs and companies are vital for future prosperity. The “trust deficit” between the state and private sector must be eliminated. Political attacks on business also have another source. In India, SA and, to a lesser extent, Brazil, previous market reforms are believed to have disproportionately benefited large companies, politically connected people and “crony capitalists” of all kinds. A second wave of reforms should ensure that new firms and entrepreneurs can take advantage of an improved and more competitive environment.

The central question facing policy makers is not whether reforms can be identified, but whether they can be carried out. Democracy can prove an advantage in this respect.

Real change will require new political coalitions. Reformers will need to identify, reach and mobilise new constituencies that will benefit from higher growth, better education and more efficient poverty programmes. Alternate sources of information and media freedom and diversity make this possible in democracies. Second, reformers must actively “sell” the benefits of high economic growth to voters. Capitalism rarely sells itself. Politicians can and should openly argue that higher economic growth, sustained over time, will not just create a few rich people, but can move the majority of people from the margins of existence to a job, a house, literacy, and basic services. And that the only way to achieve that growth in SA is through open and competitive markets that encourage business expansion and the flourishing of new enterprises.

Too often, reformers fail because they avoid the contested and difficult issues. Stuck in the politics of the moment, they cannot envision the politics of the future: how coalitions are shifting, how future support for change might be built from the bottom up. This is the great strength of democracy. SA has a flexible political system that provides politicians and those that influence them with the ability to renew themselves, deal with challenges and learn from their mistakes, opening the way to a better future.

In the end, democratic capitalism and market competition will succeed only if they are widely perceived to be fair, and if they are regulated by effective and independent institutions that support competitive markets and do not undermine enterprise.

Corruption undermines faith in public institutions; it also undermines faith in the market economy and its key players in the private sector. Rule of law and the effective and fair administration of justice have an economic value — they secure property and contracts — as well as political significance. When citizens see that equality before the law, fairness and justice are applied to rich and poor, powerful and unknown, then they are more likely to accept the system as legitimate. This is the true democratic dividend.




Op-ed: Southern Democratic Pillars Stand Tall

Ann Bernstein for The Mail & Guardian, 12 September 2014. Read the article at the M&G website.

This article is based on CDE’s “Democracy Works” project. Read more about the project here and read the reports here.
M&G: After the fall of the Berlin Wall, Western democratic capitalism seemed to have triumphed. But the 2008 economic crisis, and the relative decline of Western influence that followed, significantly undermined the appeal of Western democracy in the developing world. While Western powers struggle to overcome political gridlock and slow growth, the Chinese authoritarian political establishment, using a mix of market mechanisms and state capitalism, continues to deliver high levels of growth, lifting millions out of poverty.

As a result, it is now far more respectable to advocate authoritarianism in the developing world than it was a decade ago. For example, President Jacob Zuma has argued: “The economic crisis facing countries in the West has put a question mark on the paradigm and approaches that a few years ago were celebrated as dogma to be worshipped.”

But one important piece of the debate is missing. The global conversation rarely refers to the large and diverse group of democratic market economies beyond the industrialised world, including countries such as Turkey, Indonesia, Mexico and Chile.

To correct that omission, the Centre for Development and Enterprise and its think-tank partners in Delhi and Rio de Janeiro set out to examine the relationship between political democracy and inclusive economic growth in three important democratic developing societies: India, Brazil and South Africa, three very different countries that confront some remarkably similar challenges.

All three are developing countries with many poor people and high levels of inequality. At the same time, they combine internationally competitive economic sectors and world-class companies with enormous underdevelopment. Each has experienced relatively high levels of economic growth in the recent past and in each country large numbers of people, not just a tiny minority, have benefited from that success. Last but not least, all three are stable democracies that have for the most part been able to deal with racial, ethnic, religious and other conflicts that have destroyed many of their neighbours.

The achievements of the three countries over the past three decades is impressive. In response to economic crisis some 20 to 30 years ago each country, albeit reluctantly, introduced market reforms and overcame significant hurdles to set their economies on the path to prosperity and the inclusion of the poor and disadvantaged within vibrant democratic cultures.

Democracy means more than elections. These matter, of course; they are a way of choosing leaders and policies and periodically “throwing the rascals out” when necessary. They offer different constituencies in a country the opportunity to compete for representation rather than the Chinese approach, where in default of an open and transparent voter choice, a handful of pre-selected men emerge from predetermined, secret “elections” to govern the country.

Democratic societies are also characterised by a free media and freedom of speech, the freedom to associate and organise, and the recognition that the state exists to serve individuals and not vice versa. Successful representative democracies also establish institutions that are independent of both politicians and voters, including nonpartisan electoral commissions, central banks and sometimes special courts or ministries designed explicitly to deal with corruption.

Their many achievements notwithstanding, the three societies face significant challenges today: high costs of doing business, inflexible labour markets, declining manufacturing sectors, reluctance to establish public-private partnerships to build essential infrastructure, schooling systems that mainly fail to deliver quality education, and national and local governments with limited capacity.

All three find their competitiveness slipping in a tougher global economic environment. Urban, lower- and middle-class citizens now frequently protest against poor services, high taxes, unemployment and corruption. It is important not to take democracy for granted. Once it is achieved, there are no guarantees: democratic rights and freedoms can easily be eroded and there are signals of this in each country.

All three countries need a second “wave” of reforms if they are to hold on to their many achievements and make further big strides in overcoming poverty and underdevelopment. In each country, reforms need to take place in four different but inter-related areas:

  • The quality of democracy: the transparency and accountability of democratic representation, institutions and processes must be strengthened.
  • Further market reforms: macroeconomic fiscal discipline has to be maintained. Microeconomic reforms must reduce the costs of doing business in each country, open up competition for new firms and labour-intensive factories for the unemployed, promote a positive approach to the role of business and stop the slide in global competitiveness in each of the economies. Deregulation would serve the interests of the economy as well as of politics; complex taxes, tariffs, regulations and subsidies create multiple opportunities for corruption and also slow growth.
  • The competence and capacity of government as the vital facilitator of growth, employment, infrastructure and human capital development must be strengthened: people in developed countries often take the basic functions of their governments for granted, and underplay the role of government in their own history. An efficient state is just as important in the developing world. Well-functioning state institutions are required to ensure the gains from economic growth are translated into genuine assets and opportunities for all. Public provision does not necessarily entail public production, thus a competent civil service must have the expertise to regulate and manage market players. Reforms to improve state capacity and governance are a vital priority if these democracies are to continue delivering.
  • Policies that expand opportunities for the poor and disadvantaged: markets are the engine of development, but in countries with enormous development challenges, poverty and a history of discrimination and disadvantage against large parts of the population, they are insufficient. Helping the poor, unemployed and disadvantaged to survive and cultivate the skills essential to their participation in a modernising society and economy is vital. It is also important politically. If well-chosen policies are rolled out effectively and at significant scale, they can buy time while economic reforms are implemented. They also demonstrate a national commitment to include and recognise those who are struggling. In each country, the package of policies in this area needs considerable reform to ensure value for money, affordability, effectiveness and the elimination of costly unintended consequences.

Our study of India, Brazil and South Africa leads us to believe that they can build on the many strengths of democracy to put together the new political coalitions that will support and sustain this second wave of essential reforms.

After all, all of them have done this before: in the 1990s, in response to economic and political challenges, democratic governments in these three developing countries successfully implemented a series of economic and governance reforms and reaped significant benefits. If they are to negotiate the less accommodating global conditions and the troubling and tricky phase they now find themselves in, they and their citizens need more democracy, not less, in order to grow and improve the lives of the poorest.

India, Brazil and South Africa are three pivotal examples of the democratic alternative from the Global South. Their efforts to leverage democratic processes and institutions and achieve faster and more inclusive growth in the next decade will be closely watched.




The Democratic Alternative from the South: India, Brazil and South Africa

11 September 2014

 

This release is based on CDE’s “Democracy Works” project. Read more about the project here and read the reports here.

 

India, Brazil and South Africa all need to introduce bold reforms to achieve faster and more inclusive growth and ensure political stability.

This has emerged from a two-year research project on democracy and inclusive growth in India, Brazil and South Africa undertaken by the Centre for Development and Enterprise (CDE) in partnership with leading think tanks in India and Brazil.

All three democracies successfully met pressing economic and political challenges in the late 1980s and early 1990s with measures that included a greater role for the market.

“South Africa now needs a second wave of bold reforms,” explains CDE Executive Director, Ann Bernstein. “The priorities include a deepening of democracy, transparency, and accountability; further market liberalization; a more competent, less corrupt state with a positive attitude to business; and a new approach to expanding opportunities for the poor.”

Based on extensive research and workshops in India, Brazil and South Africa, the project examines the relationship between political democracy and inclusive growth in these three important developing democracies – very different countries which face some remarkably similar challenges.

With the rise of China, it is now far more respectable to advocate authoritarianism in the developing world than it was a decade ago. According to Bernstein, “A battle of ideas – a global contest between democratic and authoritarian approaches to growth and development – is now playing itself out in many countries across the globe.”

The project focused on India, Brazil and South Africa as three large, successful democracies in the developing world, all of which have achieved growth over the past two decades without Chinese-style authoritarianism.

The project has produced 15 reports on the individual countries and a main synthesis report, The Democratic Alternative from the South: India, Brazil and South Africa, written by Ann Bernstein.

While paying tribute to the positive relationship between democracy and growth in all three countries, the report concludes that they all now find themselves in a difficult new phase.

Despite their achievements, India, Brazil and South Africa still have a long way to go in moving greater numbers of their population out of poverty and reducing inequalities.

Their economic competitiveness has declined and their fiscal discipline is slipping in a tougher global environment: Inadequate education leaves the majority of young people ill-equipped for the struggle to get jobs; and a growing number of lower and middle class citizens are protesting about corruption and other governance and delivery failures.

“The economies of all three countries are being held back by the high costs of doing business; inflexible labour markets; stagnant or declining manufacturing sectors; an inability to deliver essential infrastructure; poor quality schooling systems; and national and local governments with limited capacity,” says Bernstein.

The solution lies in leveraging democracy to promote sustained development, higher economic growth and effective routes out of poverty.

Bernstein explains that, “Each country needs to redefine its ‘national interest’ and build a new political consensus, a coalition for reform. This consensus must include a more determined and vocal commitment to market economics, because fast inclusive growth and effective delivery will be difficult to achieve in these societies in any other way.”

The research on India, Brazil and South Africa makes CDE believe that these essential reforms can take place. “These countries have all done it before in the late 1980s and early 1990s: in response to similar economic and political challenges, democratic governments in these three developing countries successfully introduced and implemented a series of economic and governance reforms with good returns.”

“By implementing bold reforms to strengthen democracy and labour intensive and faster growth, South Africa could become a wealthier, more stable and a much more inclusive society,” Bernstein concludes.

The Democratic Alternative from the South: India, Brazil and South Africa and the reports on individual countries are available at www.cde.org.za

ENDS

Find attached the executive summary .To view the full report online click on the following link:

http://democracy.cde.org.za/publications/

For further enquiries or to confirm an interview with Ann Bernstein, Executive Director, CDE, please contact:

Marius Roodt 

Communications Officer: Media

Tel:          (011) 482 5140

Cell:          082 779 7035

Email:   media@cde.org.za

ABOUT THE CENTRE FOR DEVELOPMENT AND ENTERPRISE

The CDE is an independent policy research and advocacy organisation. It is one of South Africa’s leading development think tanks, focusing on critical development issues and their relationship to economic growth and democratic consolidation. Through examining South African realities and international experience, CDE formulates practical policy proposals outlining ways in which South Africa can tackle major social and economic challenges.

CDE QUOTES FROM THE PUBLICATION

“The Democratic constitutions of India, Brazil and SA provide a common set of values, ideas and rights”

“Democratic rights and freedoms protect and empower individuals – even those who do not come from a privileged class”

It is not necessary to give up individual freedoms, rule of law, independent institutions, a free press and regular elections in countries struggling with the challenges of poverty”

“It is important not to take democracy for granted. Democrats need to be vigilant and democracies need to renew and protect their hard won freedoms”

“Deregulation would serve the interests of the economy as well as of politics: complex taxes, tariffs, regulations and subsidies create multiple opportunities for corruption as well as slowing growth”

“Markets are the engine of development but not always sufficient in the fight against poverty”

“In the 1990s India, Brazil and South Africa responded to economic and political challenges by introducing and implementing a series of economic and governance reforms with good returns”

“India, Brazil and South Africa must now find ways of harnessing markets and increasing their competitiveness in order to increase growth and inclusion”

“India, Brazil and South Africa can build on the strengths of democracy to put together the new political coalitions that will support a second wave of essential reforms”

QUOTES FROM PROMINENT VOICES FROM THE SOUTH 

‘I prefer the noise of a free press to the silence of dictatorships’ Dilma Rousseff, President of Brazil

‘Democracy has proven an effective and perhaps the only mechanism for holding India together’ – Pratap Bhanu Metha, President, Centre for Policy Research, India

‘Brazil has witnessed a democratisation of privileges with the steady extension of benefits and discriminatory policies to a range of special interests groups’ Marcus Lisboa, Former Minister of Planning and Secretary of the National Treasury of Brazil

‘India should increase public sector spending on things that people actually need while cutting wasteful expenditure. We spend billions on economically misguided and socially counterproductive activities’ Azem Prenji, Indian Business Tycoon and Philanthropist

‘In India no party has bothered to explain the difference between being pro-market and pro-business. In contrast to crony capitalism, a pro-market economy fosters competition which helps keep prices low, raises the quality of products and leads to a rules based capitalism that serves everyone’, Gucharan Das, Indian author, commentator and public intellectual




Op-ed: The Future of the Developing World Can Be Democratic

Ann Bernstein for the Diplomatic Courier, 8 August 2014. Read this article at the Diplomatic Courier.

This article is based on CDE’s “Democracy Works” project. Read more about the project here and read the reports here.

A recent essay by The Economist claims, “democracy is going through a difficult time”. The journal blames the “weaknesses of democracy in its Western strongholds”, the turmoil that followed the Arab Spring and now engulfs the Ukraine, as well as the rise of autocratic China for the loss of democracy’s “forward momentum”.

We must widen our focus when considering the future of democracy. It is all too easy to concentrate on the flashpoints and dramatic failures, while ignoring developing democracies that have gained significant achievements and have the potential to build dynamic, inclusive societies to rival China in the future, without limiting hard-won democratic values.

India, Brazil, and South Africa are three important democracies spanning the global South (Asia, Latin America, and Africa). They have raised incomes, reduced poverty and become more inclusive in ways that are often not sufficiently acknowledged either within these countries or by outsiders.

The democratic constitutions of India, Brazil, and South Africa promote the rule of law, vibrant and competitive media, freedom of association and religion, and robust civic organisations. Despite shortcomings, the judicial system in all three countries stands above party politics ensuring that justice is done, even if often too slowly.

South Africa’s democracy has improved the quality of life for millions of people in ways that were unimaginable under apartheid. Although the population grew from 40 million in 1994 to 52 million in 2012, the percentage of poor people also fell, from 50 percent in 1992 to 44 percent in 2006. Access to electricity, running water, telephones, and many other basic services improved for millions of households, with the vast majority of South Africans now having access to these services.

Brazilian poverty is now in single digits. The poor and previously excluded have benefited greatly from recent economic expansion. Between 2001 and 2011 the household income of people classified as extremely poor grew by an average of 14 percent per annum, in contrast to incomes for people living in households classified as upper class, which grew by only 2 percent per annum.

In India, the proportion of the population below the poverty line fell from 44.5 percent in 1983 to 27.5 percent in 2004/5, and by some estimates down to 22 percent by 2011. Some 190 million people were lifted out of absolute poverty during this period.

In addition to lifting living standards for the poor, India, Brazil, and South Africa have become centres of business excellence. All three now contain companies which compete internationally with the largest and most sophisticated companies in Europe and North America.

However, to highlight these achievements is not to ignore the significant challenges that all three countries currently face. First, it is important not to take democracy for granted. Once achieved, there are no guarantees: democratic rights and freedoms can easily be eroded.

Second, all three countries need a new wave of reforms if they are to make further strides in overcoming poverty and underdevelopment. Macroeconomic fiscal discipline must be maintained. Micro-economic reforms must reduce the costs of doing business in each country, open up competition and markets for new firms and workers, promote a positive approach to the role of business and stop the slide in global competitiveness in each of the economies.

All three countries must strengthen the competence and capacity of government as the vital facilitator of growth, employment, infrastructure and human capital development. We believe it is possible that these essential reforms can take place. Democratic governments have choices in how they respond to economic difficulties or crises, vested interests, and electoral pressures. They can build on the many strengths of democracy to put together the new political coalitions that will support and sustain a new wave of essential reforms as these three countries did in the 1990s.

By shifting the spotlight away from the West and China, and by gaining informed, realistic insights into what is actually happening in the diverse countries of the democratic South, it is possible to develop a more optimistic perspective on the future of democracy. Based on our analysis of India, Brazil, and South Africa, we believe that there is every possibility that the future of the developing world will be democratic.