However, democracy again offers a better way for developing countries to deal with such obstacles to holistic development. Through open discourse and political activity, it provides peaceful and more effective means for diverse groups within developing countries to negotiate answers to ethnic and regional cleavages, interest-group conflicts, and ideological differences. For instance, the late Costa Rican intellectual Luis Burstin suggests that revolutions in Latin America have been provoked not by poverty and social injustice but by rigid, undemocratic systems that block access to political power for emerging groups.

Democratic institutions thus provide constitutional, nonviolent alternatives that are otherwise absent in undemocratic states. This forestalls the buildup of dangerous tensions, which can erupt in sectarian violence as in Rwanda, Indonesia, Sri Lanka, and numerous other places. Because political and societal stability impacts a developing country's economic attractiveness, the absence of an open, participatory political system is, in fact, an obstacle to development.

Yet despite these arguments against the plausibility of an undemocratic governments' role in advancing economic development, some empirical evidence suggests that there is no tangible link between democracy in a country and subsequent growth. The work of Pei Minxin, a former Princeton professor of politics, used regression analysis to gauge the effect of democratization, rising incomes, and economic liberalization on one another and on governance. He found no evidence that democratic governments promote development better than authoritarian ones. Economist John F. Helliwell of the University of British Columbia analyzed data covering real per capita income and the level of democracy in 125 countries between 1976 and 1985 and showed that democracy's effect on growth is insignificant.

However, there is also empirical evidence in support of democracy's role in development. In "Free Societies, Free Markets and Social Welfare," Surjit Bhalla, formerly of the World Bank, examined 90 countries for the period 1973 to 1990 and looked at various measures of growth. The study isolated the impact of political and civil freedoms from those of economic freedoms and provides evidence as to the direct impact of democracy on development. Ranking countries on a seven-mark scale ranging from free (The United States=l) to not free (Iraq = 7), he showed that, all else equal, an improvement of one mark in civil and political freedom raises annual growth per capita by roughly a full percentage point. Although the results of this study seem admittedly optimistic, Bhalla's results have been remarkably robust and, at the very least, show that one cannot justifiably ignore the link between democracy and development.

The East Asian Crisis

Perhaps nothing more clearly illustrates the tenet that democracy and development go hand in hand than the events of 1997 in Asia, when the region was shaken by a series of financial crises. Before the crisis, proponents of the "South East Asian" school--the acknowledged position of many countries in that region--pointed to the Asian track record as evidence of the irrelevance of democracy to economic development. Of the Asian economic success stories, few would be considered a democracy, except by the loosest of definitions. These included China, a communist dictatorship; Indonesia, a military dictatorship and, until recently, a one-party authoritarian state; and South Korea and Taiwan, both authoritarian states for most of recent history. In none of these countries was political power transferred to an opposition party during these years of phenomenal economic success, and this was most often due to political repression. On the other side of the political coin, countries with recognizably more democratic regimes like India, Sri Lanka, and, more recently, the Philippines, have had more spotty economic success. Though it is true that many undemocratic states end in economic ruin, the presence of significant Asian economic successes undermined the belief that democracy is necessary for development.

The Asian economic crisis starkly revealed the vulnerability of Asian economies and showed that rampant government corruption was the basis for much of the economic growth. The most important lesson to take away from this is, perhaps, not just that democracy ameliorates economically harmful corruption, but also that democracies can better weather crises because of the legitimacy they command. Then-US Secretary of State Madeleine Albright asserted this belief, noting that governments in South Korea, the Philippines, and Thailand were more successful in dealing with the crisis than Indonesia "in part because their people were able to elect new governments, which started work in a climate of openness and trust, and with the moral legitimacy to call for shared sacrifice." South Korean President Kim Dae Jung agrees: "Democracy," he argues, "has to go hand-in-hand with economic growth."

The extent of this shift can be seen in the about-face of the World Bank, which had previously turned a blind eye to the issue of democratic governance. After the crisis, World Bank President James Wolfensohn joined Kim in declaring, "It is only through the simultaneous establishment of open governance and markets that genuine social development can be achieved." International Monetary Fund loans to stricken Asian countries now require greater government accountability and reform of democratic structures. Clearly, many people with significant global influence share this view. The belief that democracy is a prerequisite for development is here to stay.

Becoming A Democracy

Throughout history, countries that have enjoyed continuous periods of growth have gradually become democratic. Today, only Cuba, North Korea, and China are communist countries. The first can hardly boast of sustained economic growth, the second can scarcely boast of anything at all, and the third is coming under fire from the first two for becoming too "democratic." Studies show that with increasing affluence, the desire and movement toward greater freedom and democratic governance will inevitably strengthen. Indeed, even Asian proponents of autocracy now agree that, in the long run, undemocratic states are untenable.

It is clear that democratic institutions play a significant role in promoting economic growth--one might go so far as to conclude that they are indeed necessary for any long-term development. Even if, for now, there are exceptions to the norm, development, no matter the regime of origin, will eventually lead the country to agitate for greater freedoms. As economist Douglass C. North of Stanford's Hoover Institute points out, growth and prosperity cannot be sustained in an environment that is undemocratic. Al though, according to North, "over the short run, dictators can always get good growth," in time, if governments do not make things better for their people, the people will start making things better for themselves--be it through revolution or rebellion. Let this idea suffice: the eventual attainment of a democratic society with codified individual rights is a hallmark of development. A truly "developed" country is also a democracy.