Democratic Development and Business Interests By Ma Ngok Hong Kong University of Science and Technology
Enhancing Democratic Participation Project 2003 Published by Civic Exchange - March 2003
Democratic Development and Business Interests
2. How can democracy promote economic development?
Part 1: Democracy and Stability Conservatives have long argued that democratisation would harm Hong Kong’s overall interest. They claim that democratisation would result in confrontational politics, which could cause the kinds of social and political instability experienced by transitioning states in Latin America, Africa and parts of Asia. However, Hong Kong’s situation is very different from these states, which experienced “simultaneous transitions” within a short period of time, including democratisation, modernisation, industrialisation, nation-building and urbanisation. Hong Kong already has many of the institutional safeguards of an advanced economy. Thus its democratic transition is unlikely to cause instability.
Democracies demonstrate more stable economic performance over time because: • Democracies provide better mechanisms to correct policy failures and allow for the peaceful replacement of incompetent leaders; • Policy-makers in democracies are accountable to the people for their actions and thus they will be more cautious when making and implementing policies; • Democracies enable better flow of information and press freedom, which facilitates more rational decision-making; • Policy failures can be detected earlier as democratic institutions within democracies provide better feedback mechanisms; and • Democracies are more conducive to successful economic reform in times of economic adversity.
Part 2: Democracy and Economic Development 1. Outdated arguments During the 1980s, some people saw the successful economic development of the “Four Asian Tigers” (Hong Kong, Taiwan, South Korea and Singapore) as proof of the fact that authoritarian states were more capable of achieving economic development. However, later studies showed that a greater number of authoritarian regimes, such as North Korea and Burma, have experienced economic failure.
Part 3: Democracy and Business Interests 1. Further misconceptions Some people in Hong Kong fear that democratisation will cause a “free lunch” system and a rapid increase in taxes. However, the historical experience of advanced capitalist states shows that democratisation gives governments the legitimacy to tax more broadly, providing more resources for further economic development.
Conservatives and business leaders in Hong Kong have also stated that the functional constituency system is crucial in protecting their interests. These groups argue that this is the only mechanism within the political system for representing business. However, the reality is that business leaders have considerable resources and influence and do not need to rely on the functional constituency system for protection of their interests.
• Do you think business should have special representation in Hong Kong’s legislature? How else could business interests be represented? • What form(s) of democratic government would be feasible in Hong Kong and what would be the implications of each for the business community?
Enhancing Democratic Participation Project 2003 2. Why should business people welcome full democracy? Business people do not have to be worried about democratisation in Hong Kong because: • Democracies are more capable of protecting business interests in a capitalistic society; • Democratic institutions can better safeguard the core values and institutions of capitalism; • Democracies provide a more level playing field; • Businesses can exert major influence in capitalist democracies by endorsing candidates and supporting political parties, thus influencing elected leaders to consider their interests; and • Businesses could well gain an upper hand in open electoral competition.
Part 4: Issues for Discussion • What are the respective advantages and disadvantages of an authoritarian government and a full democracy in terms of economic development?
This pamphlet is written and produced as a part of Civic Exchange’s Enhancing Democratic Participation Project 2003. We have invited scholars and experts to help frame some key issues relating to Hong Kong’s democratic development. These papers and pamphlets can be used to enrich community deliberation. A commissioned survey will also be carried out and results published. We encourage people to organise their own gatherings to discuss issues relating to democratic development. By way of assistance, modest funding may be available. We also link groups to professional facilitators who may be able to help them design and manage gatherings in a democratic manner. We hope this Project helps people to think about and practise democracy. Civic Exchange will record the entire process and publish a final report to share observations gained from the Project before the end of 2003. For further information call Ms. Yip Yan Yan at 2893-0213 or email yyip@civic-exchange.org An electronic version of all the papers and pamphlets can be found at www.civic-exchange.org