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'Democracy vital for economic well-being'

>From the Hindu newspaper
By P.S. Suryanarayana
14th July 1999

SINGAPORE, JULY 13. Viewing economic development as freedom, Prof.
Amartya K. Sen, Nobel laureate in economics, said here today that the
concept was wider in scope than the perception of the right to
development as a fundamental human right. He was answering a question
from this correspondent at a lunch-reception hosted by the Indian High
Commissioner to Singapore, Mr. Prem Singh.

Prof. Sen said there was a connection between these two perceptions, one
being the means to the other. 'Development as freedom' is the theme of
Prof. Sen's book to be published in September.

Delivering the "Asia and Pacific lecture" last night, under the auspices
of the Singapore Institute of South East Asian Studies and the Japan
Center for International Exchange, Prof. Sen advocated the
architecturing of a democratic dimension as an integral part of a new
"Eastern strategy" for reviving economic growth in crisis-hit countries.
An "Eastern strategy" so "broadened" could still be rooted to its
moorings and could also be applied elsewhere in the world, he suggested.

Describing democracy as a friend of the poor, the Nobel Laureate said,
"The recent problems of East and South East Asia bring out, among many
other things, the penalty of limitations on democratic freedom ....
Involving the neglect of two important instrumental freedoms -
protective security and transparency guarantee."

Elaborating, he said, "Once the (recent) financial crisis in this region
led to a general economic recession, the protective power of democracy -
not unlike that which prevents famines in democratic countries - was
badly missed in some countries in the region. The newly dispossessed did
not have the hearing they needed in say Indonesia or (South) Korea. Even
a fall of five or 10 per cent of total national income (or of GNP)  can
decimate lives and create misery for millions, if the burden of
contraction of growth) is not shared together but allowed to be heaped
on those - the unemployed or those newly made economically redundant -
who can least bear it."

Another "connection between the lack of democracy and the nature of the
recent economic crisis" in parts of East and South East Asia was
manifest in the absence of "public participation in reviewing financial
and business arrangements". He emphasised that a "big difference" could
have been made by a democratic process that would have enabled the
people to "challenge the hold of selected families or groups" over the
national economy in Indonesia or Korea as the case was.

Commending the "great practical significance" of this magnitude as could
be guaranteed by "democratic governance", Prof. Sen said that the
"economic incentives", which "the market system" could provide as
remedies for a crisis, should be complemented by "political incentives"
for the people. "The often-repeated belief that authoritarian regimes
are better in fostering economic growth (a claim largely based on
selective evidence) has not received any serious general empirical
support in extensive inter-country comparisons," he said. He also
underlined that, "Two decades of empirical work brings out very clearly
that the success of a market economy is facilitated by a supportive
economic environment, rather than by the harshness of the political
climate" in any given country.

Making a comparative assessment of India and China in this context, the
Nobel Laureate said, "China has done more to make use of the efficiency
of the market than India has. .... China has done a great deal more in
general human development (too) .... India's underdevelopment in basic
education and health care - aside from reducing the quality of life of
its people - is also a very big barrier to its use of the opportunities
of global trade and exchange."