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.
For further enquiries or to confirm an interview with Ann Bernstein, Executive Director, CDE, please contact:
Communications Officer: Media
Tel: (011) 482 5140
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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