Economics and Democracy

Jim O’Neill’s prediction on BRICs was responsible for a paradigm shift and moved the spotlight to ‘Emerging Markets’.

However, these four can hardly be called that as they move to become the top few economies of the world. His new book launched earlier this month, “The Growth Map – Economic opportunity in the BRICs and beyond”, covers the new emerging economies (the N11) of Indonesia, Mexico, Turkey, among others. BRICs have done better than he predicted and therefore he is now even more optimistic about their future.
Historically, countries have become democracies only after they have crossed a certain economic threshold – that of $10,000 per capita income. We seem to have two exceptions to this ‘rule’ -United Kingdom and now India even as the largest democracy in the world is well below this $10,000 benchmark; second exception being Russia and China with per capita incomes close to the bar, but showing no signs of morphing into democratic nations. Inglehart and Welzel in their book, “Modernization, Cultural Change, and Democracy – the Human Development Sequence”, make compelling arguments for the link between democracy and economic growth of nations. If one exception (UK and India) is successful, it is possible that the other one (that includes China and Russia) may be too. So those waiting for China or Russia to transform into democracies may be in for a big disappointment. However, Inglehart and Welzel do suggest that China would evolve into a democracy in 10-15 years’ time.

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