THE IMPACT OF GLOBALIZATION ON

NEW AND RESTORED DEMOCRACIES

Rehman Sobhan

June 2003
Dhaka
 THE IMPACT OF GLOBALIZATION ON NEW
AND RESTORED DEMOCRACIES

INTRODUCTION

The Argument of the Paper

This paper argues that the process of globalization represents an involuntary

constraint on the sovereignty of decision making in a country. To this extent
globalization may appear to be inimical to democracy which represents the sovereign
will of the people. Countries with weak democratic institutions and undiversified,
externally dependent economies are particularly vulnerable to the pressures of
globalization. The extent to which a country can cope with globalization depends on
the strength of their democratic institutions and their capacity to structurally diversify
their economies. Strengthening democracy and widening the incidence of benefits
from globalization will serve to enhance the legitimacy and sustainability of the
process.

The Scope of the Paper

Globalization, as a process, impacts on all countries, old democracies, new

democracies, restored democracies and even non-democracies. The point of departure
of this paper is to trace the impact of globalization on a sub-set of countries which
have been rather loosely categorized as new and restored democracies (NRD). To
establish such a linkage it is useful to spell out what we mean by globalization, and
what variety of countries may fall into the category of new and restored democracies.
We would then need to identify the specific structural characteristics of such variants
of democracy and to examine the extent to which globalization may have a
differentiated impact on these countries.

The paper is structured into four parts:

(i) The concept of globalization, the varying approachs and incidence of
globalization and its underlying political economy.
(ii) The concept of the NRD and an evaluation of the state and sustainability
of their democratic institutions

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 (iii) The interface between globalization and democracy in the NRDs
(iv) The scope and ways to enhance the capacity of the NRDs to more
beneficially participate in the globalization process.

I: GLOBALIZATION
The concept of globalization
There is a well developed discourse on globalization which does not merit repetition
(Oxfam, Stiglitz, Rodrik). For our purposes we need to isolate specific features of the
globalization process which are likely to impinge on the workings of the
democratization process. In any understanding of globalization it is important to
differentiate between globalization as a verb, which is a process, and globalization as
a noun, which relates to a set of policy interventions ostensibly designed to expose
countries to the benefits of globalization. This distinction is more than just an exercise
in semantics.

The verb globalization, remains a process where the participation of countries has an
element of the involuntary which originates in the structural feature of a country’s
economy and its interface with the global economy. The noun globalization, on the
other hand, derives from conscious policy decisions, which may serve to enhance or
even erode the capacity of a country to became part of the globalization process. It
can of course be argued that many countires are left with little choice but to embrace
globalization-oriented policies. However, it is this very issue of choice, available to
countries on variable terms, which governs their interface with globalization, which
will be used in this paper to establish connectivity between globalization and
democracy.

Globalization as a process
Globalization as a process is part of a country’s historical experience. Over the
millennia countries, in varying degrees, have been exposed to globalization. Exposure
to globalization has come through trade, capital flows, technology transfer or
movement of people. Some of these exchanges have originated in the market place.
Others have owed to conquest and its institutionalization in the structures of
colonialism so that the incidence of globalization has been far from equitable.
Participation in the process has thus not always been voluntary and the terms of

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participation owe more to the discipline of political economy than the laws of
economics.

Whilst the process of globalization may be universal the extent of a country’s

exposure to globalization depends on its history, geography and economic structure.
More mature DCs such as China, Brazil, India or ROK participate in the process on
quite different terms from Bangladesh, Chad or Bolivia. Similarly, a person with a
degree in computer science, in a DC will face a quite different set of opportunities as
a globalized world from those available to a subsistence farmer or garment workers.
This paper suggests that attempts to force the pace of globalization on a country
through an indiscriminate application of a set of externally driven policy reforms
could have quite unforseable consequences not just on its economy but its politics.

The calibrated exposure to globalization registered in the more mature developing

economies was, however, quite distinct from the externally driven globalization
process which was vouchsafed most developing economies and particularly the least
developed countries (LDCs). For most of the DC and transitional economies (TEs)
drawn from the former Socialist countries of the USSR and Eastern Europe, exposure
to globalization was driven by a regime of policy reforms largely induced by pressure
form the Bretton Woods Institutions (BWI), the IMF and the World Bank (Stiglitz). It
was these countries who were compelled, under IMF stabilization programmes and
World Bank driven Structural Adjustment Reforms (SAR) to further integrate
themselves into the global economy. The BWI version of structural reforms was built
upon the ideology of the so-called Washington Consensus, which emphasised a
regime of import liberalization, privatization, budget stabilization and financial
deregulation, which included the exchange rate, interest rates and the opening up of
the capital market. This interpretation of the Washington Consensus has recently been
rejected by its intellectual author, John Williamson, who argues that his version
presented a more nuanced view of policies of liberalization which has been confused
with the more neo-liberal policy agendas associated with the Reagan and Thacher
regimes (Williamson et al). The BWI appears to have been more influenced by the
neo-liberal paradigm. For the purposes of this paper we will use the SAR policy
package as being used interchangeably with the Washington Consensus as it is

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popularly conceived. The SAR must accordingly be seen as the policy instrument of
choice to enhance the links of a country with the globalization process.

Varying Approachs to Globalization

The SAR package, as it was deployed by the BWI as part of its lending strategy in the
1980s and 1990s across the DCs and TEs, was homogenized and applied to countries
of all sizes and structures from Brazil to Nepal. However, the East Asians, particularly
ROK, Taiwan Province (TP), Singapore, introduced their own policy variants to
define their terms of interaction with globalization, which remained distinctive from
the BWI reform agenda (Amsden, Wade). The South East Asian integration process
followed its own distinctive path specific to each country.

A particular feature of the approach of ROK and the South East Asian economies
such as Indonesia, Thailand and Malaysia, to globalization had been to regulate their
capital account and exchange rate. This policy sought to insulate their economies
from short term speculative inflows of capital and unanticipated fluctuations in the
external value of their currency. Throughout their phase of rapid growth in the 1970s
and 80s, this policy served the East and SE Asians well (Stiglitz). Eventually the East
Asians were put under international pressure to deregulate their capital market (ibid).
In the case of ROK, capital market liberalization was made a precondition for their
admission as a member of the rich man’s club, the OECD. Otherwise there was no
strong reason for ROK to abandon a policy which not only discouraged short term
capital inflows but was not even very receptive to FDI (Amsdem). Whatever FDI was
admitted into ROK had to meet a variety of stringent preconditions about enhancing
the domestic content of the investment within a time-bound framework (ibid).

This selective approach to FDI has also been applied by China which is today the
world’s second largest recipient of FDI after the United States. Other South East
Asian countries had a much more open approach to FDI than ROK, but with the
exception of Singapore and Hong Kong, they restricted short term capital inflows.
The move in the 1990s to open up their economies to short term capital inflows
encouraged a surge of speculative inflows from abroad to take advantage of their
booming economies and strong capital market which left them vulnerable to the
instabilities of the global capital market (Islam). It has been argued that it was this

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opening up of their economy which precipitated the Asian financial crisis of 1997
(Islam, Stiglitz, Rodrik).

Measures of globalization
The globalization of the world economy remains driven by structural compulsions
both of an economic and political nature. Some countries, by virtue of their economic
structures are going to remain highly globalized whatever may be their policy
direction. It may be useful to assess the varying measures of globalization by looking
at the trends in a selection of countries classified as new and restored democracies
(NRDs). In table I, we attempt to measure the globalization of these NRDs by looking
at two indicators, export of goods and services and overseas development assistance
(ODA). The ODA enables countries to enhance their import levels beyond their
export earnings. Table I, shows that a large number of NRDs have enjoyed a high
external exposure and that many of these have been strongly exposed to globalization
even in the pre-reform period of the 1960s.

This globalization may in many cases be driven by a high level of export dependence
or may originate in rising aid dependence. Thus, for example, some countries such as
Niger and Burundi who have relatively low export dependence retain a high aid
dependence. Countries such as Libya, Algeria, Gabon and Nigeria with a heavy
dependence on energy exports, were much less aid dependent. Some countries such as
Zambia, which remains heavily dependent on copper exports, has supplemented its
export dependence with a rise in its aid dependence.

This external dependence amongst NRD’s derives from their economic structures
which are dependent on the export of a narrow range of primary products, goods and
services. Among the NRDs the LDCs operate from a narrow production base which
has constrained their development, reduced their savings and investment capacity and
has driven such countries to depend on aid to both sustain public investment and even
current consumption. Thus, the very economic survival of many NRDs whether they
be wealthy energy exporters or LDCs, depends on their participation in the global
economy, as exporters and/or aid recipients.

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In most of these countries with a high external dependence the state of the global
economy, insofar as it impinges on the market and price of their principal export
products, narrows their economic as well as political choices. To the extent that the
development of these resources remain dependent on FDI, these countries also have to
be particularly sensitive to the dictates of an external capital market. Those with a
high aid dependence are faced with a further narrowing of their policy options, which
tend to be influenced by the policy agendas imposed on them by their respective aid
donors in order to remain eligible for aid (Sobhan 1982 and 1990). In such
circumstances, what may pass for democratic opinion at home, has to be subordinated
to the need to attract FDI as well as the dictates of the market. In particular countries,
foreign investors assume a larger than life role with a capacity to influence domestic
economic and even political policy (Hertz).

The political economy of globalization

In most countries listed as NRD, more enhanced exposure to globalization originated
in a set of policy decisions which were taken by their respective governments over the
course of the last two decades. While some of these countries may have taken the
decision to reform their economies, suo moto, most were induced to reform their
economies through the policy conditionalities imposed by the BWI in extending loans
under various SAR and stabilization programmes (SAPRIN). Without entering into a
more detailed review of the decision making process in each of the respective
countries under review it is difficult to say how far these policy reforms, designed to
enhance the global exposure of their economies, would have moved ahead at the pace
and to the extent that they did, without such external pressure.

Much more rigorous research is required to work out the precise mix between
structural constraints, autonomous decision making in the country, and BWI pressure
in defing the pace, intensity and outcome of the SAR process. Out of such research
we may come to a clearer understanding of the extent to which national sovereignty
and democratic concerns are overridden by exposure to globalization. Within this
paper we will attempt to summarily diagnose the underlying political economy of the
globalization process which compromises the autonomy of policy making at the
national level.

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In most NRDs, the commitment to a policy agenda to promote globalization does not
necessarily originate in a democratic mandate such policies are more likely to depend
on the prevailing objective conditions and political economy of the country. In
countries where a protected and overregulated economy, with a bloated and
misgoverned state sector has become a fetter on the expansion of productive forces
there will be strong domestic pressure for reform. However, the manifestation of such
pressure will depend on the openness of the political environment and the strength of
civil society to give voice to the specific group concerns which are constrained by
state policy.

The distinctive feature of the NRDs lies in their relatively underdeveloped democratic
institutions as well as the weak voice of civil society in projecting its concerns before
the state. The extent to which the state responds to the democratic aspirations of its
citizen’s measures the health of the democratic system. If we look at the upper end of
the democratic spectrum, the states of Western Europe and North America are
characterized by strong democratic institutions which include a plural political
system, a functioning parliament which holds the executive accountable for its
actions, an independent judiciary which protects the rights of the citizen and a free
press. The sustainability of such institutions requires a strong civil society which give
voice to the concerns of citizens on every aspect of public life from the state of the
environment to the deprivatization of single mothers. In such societies, political
misgovernance and policy failure are normally punished by the electorate through a
system of free and fair elections.

We, however, need not be too carried away with this idealized would of democracy.
In many of the NRDs, democracy is becoming a process in which only the rich can
participate as candidates or sources of policy influence (Hertz). The free press is less
free than it seems, since much of it is owned by wealthy people who use it to pursue
their own private agendas (Hertz, Klein). Legislatures are often used as lobbies for
special interest groups. However, making due allowance for the limitations in the
working of the democratic system in the West, it does tend to provide checks and
balances to the functioning of the state rather more effectively than in the NRDs.

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II. THE NEW AND RESTORED DEMOCRACIES (NRD)

Conceptualizing the NRD

The concept of the NRDs raises it own analytical problems. The dividing lines in the
characterizing of these countries between new, restored and old democracies remains
narrow. New democracies presumably refer to countries which had never been
exposed to the norms of a democratic system. Presumably, this categorization would
apply to the former Socialist states of Europe (FSE) or the one-party states of Sub-
Saharan Africa (SSA) such as Tanzania and Zambia or the autocracies such as Zaire
or Pakistan under military rule. However, even here there are grey areas. Singapore,
Malaysia, Kenya or Mexico, were states which for many years were ruled by one
party. But all these states retained power through a process of elections where the
dominant party, time and again, renewed its mandate to rule. In the case of both
Malaysia and Singapore, notwithstanding the autocratic nature of the state and the
limited pluralism of it’s democratic order, both regimes enjoyed electoral legitimacy
based on their strong economic performance and effective governance.

In contrast, both Mexico and Kenya which have been virtual one party states for
many years, have recently seen the dominant party defeated in elections. The fact that
such regimes stayed in power for so long, notwithstanding a poor record of
governance, also implies that the democratic system did not work so well over many
years. Thus, the `newness’ of their democracy originates in an hithertoo unfair system
of elections being reformed sufficiently to provide the political space to the opposition
to contest and defeat the ruling party. The precise circumstances whereby this space
was created to permit a democratic opening, merits investigation and analysis.

In contrast to the new democracies, the restored democracies are supposed to have
once had exposure to democracy. Countries such as Argentina, Chile, Peru, Brazil,
Bangladesh, Nepal, Pakistan, Philippines, were once functioning democracies. Some
of these countries such as Bangladesh, Pakistan, Ghana, Argentina and Brazil, have
had long exposures to democracy but this was periodically interrupted by military rule
(Przeworski et al). These countries have thus been exposed to several episodes of
`restoring’ democracy. Between 1958 and 2000 Pakistan has been exposed to 4

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episodes of military interventions to overthrow parliamentary rule with each
intervention being punctuated by periods of democracy. Bangladesh has been exposed
to two episodes of military coups in 1975 and 1982. Argentina between 1950-90 was
exposed to eight regime changes between various forms of autocracy and democracy.
In a number of the countries military coup makers have shed their uniform and had
themselves elected, often under questionable circumstances, as political leaders. It is
not clear whether such regimes should be classified as democratic or really as
autocracies in the garb of democracy.

Very few countries in the developing world have enjoyed an unbroken exposure to
democracy. However, within the NRDs themselves, countries which have had longer
exposure to democratic rule, before succumbing to a military coup, may be expected
to have stronger institutions of democracy as well as civil society. In such countries
political parties, with a strong popular base and organizational structures, may survive
the oppression of military rule and remain strong enough to organize a democratic
resistance to autocratic rule. This survivability of democratic forces in particular
NRDs obviously depends both on the intrinsic strength of these forces and the
ruthlessness of the autocratic regime in suppressing democratic voices. However,
strong political parties and traditions survive, it may also do so because of a strong
civil society (Haggard et al). Both political and civil society institutions help to
sustain the struggle to restore democracy and enhance its effectiveness when it is
restored.

The state of democracy and governance in the NRDs

In most of the NRDs absence of any exposure to democracy or the damage inflicted
on its institutions, through long exposure to autocratic rule, leave weak political
institutions. This weakness compromises the workings of the democratic process. In
Table II we have attempted to measure the quality of democracy in particular NRDs.
In constructing this table we have drawn upon the classifications developed in the
latest UNDP Human Development Report of 2002 on Deepening Democracy in a
Fragmented and World. In this report UNDP has rather heroically attempted to
quantify subjective and objective indicators of democracy and governance which may
provide a useful proxy of the strength of democratic institutions. As in all such
exercises which attempt to measure such imprecise concepts as democracy and

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governance and to assign relative rankings, the available data has to be used with
great caution. Most of these indices developed by such institutions as Freedom Watch
or Transparency International are enumerated on the basis of subjective assessments,
provided by a small sample of focus group interviews in each country, so their
accuracy is open to challenge. To attempt inter-country comparisons remains even
more problematic since different groups of people chosen from each country, rather
than a single set of global examiners, have provided their subjective assessments.

Table II, evaluates the state of democracy and governance in 79 NRD countries. We
have set certain arbitrary cut off points, based on the measures used by UNDP in each
column, in order to determine sub-standard performance of particular institutions of
democracy and governance in each country. Obviously countries which rank one
point above or below the baseline used by us as a cut off point may be no better than
those within our subset, so again our assessments remain indicative rather than
definitive.

The most conspicuous evidence from Table II, indicates that the Sub-Saharan African
countries score rather poorly on the democracy and governance scale, whether we
look at the polity score, civil liberties, freedom of the press or law and order. From 50
to 80% of the listed NRDs from SSA score poorly. In contrast Latin America and the
Caribbean countries score better in the area of the polity, civil liberties, political rights
and press freedom but remain weak in political stability, voice and accountability, law
and order, rule of law, government effectiveness and graft. The Asian record is better
on the polity score (40%), and political rights (30%), law and order and government
effectiveness, but they score poorly in corruption, rule of law, voice and
accountability and press freedom. One of the most poorly performing regions remains
the states of the former USSR (FSU for short). With the exception of the polity score
(40%) and law and order (40%), 70-80% of the FSU states remain sub-standard
performers. However, in the case of law and order only 2 out of 10 FSU states under-
perform. This is surprising given the reported extent of crime in some of these
countries such as Russia (Reddaway).

In contrast, the former European socialist states (FES for short), perform better in
most countries than all other NRD regimes, except in the area of government

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effectiveness and graft where 4 out of 7 FES states score below our performance line.
The general average for the FES is good where no state scores below the line in
polity, or in voice and accountability. This suggests that amongst all the NRDs the
FES states have assimilated the democratic process more effectively than in other
regions. However, this evidence, in some areas, remains open to challenge for
particular FES countries.

However, we should keep in mind that Table II, reviews the evidence on the NRDs
from a more aggregated regional perspective. If we look at Annexure I, from which
Table II, is derived, we see considerably variations in country performance, within the
respective regions.

If we were to sum up the evidence on the state of democracy in the NRDs it is evident
that the introduction to or return to democracy remains in most countries rather
shallow. If the polity score serves as a proxy for the workings of democratic
institutions then such institutions in the NRDs have a long way to go before they
become effective enough to ensure a sustainable democratic process.

In most NRDs across the world political stability and lack of violence, weak rule of
law, lack of law and order, weak government effectiveness and graft, appear endemic.
These measures of weak governance reflect the lower levels of democratisation in
these countries. However, even countries with a better record of democratization, such
as Romania and Bulgaria or Moldova and Indonesia, have lagged behind in
addressing the issue of rule of law, law and order or corruption. In contrast, some
countries with low levels of democratization appear effective in maintaining political
stability, as well as law and order. For example, Morocco, Tunisia, and Malaysia have
low or weak performances in such areas as polity, civil liberties, press freedom but
score well on account of stability, law and order, rule of law and government
effectiveness.

The weaknesses in the democratic process in the NRD which has led to poor
governance owes to many reasons which relate to the political history, economic
structures, institutions and social arrangements of each country. More careful
investigation of these underlying forces may in some cases provide an altogether

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different assessment of the state of democracy in these countries, compared to the
relatively simplistic measures which have been used in the UNDP study (Reddaway
and Glinski). Whilst there is a well developed literature which draws on these political
numerates to link democracy with development, there is no corresponding literature to
assess how far exposure to globalization has in fact impacted on the workings of
democracy. We can at best aim to develop a working hypothesis to establish such a
causality, which can eventually be exposed to more rigorous analysis and empirical
validation.

III. THE INTERFACE BETWEEN GLOBALIZAITON AND DEMOCRACY

Policy ownership in a globalized world

It is argued in this paper that the globalization process has itself contributed to the
erosion of state sovereignty which has thereby weakened democratic institutions and
compromised the legitimacy of the elected governments under the NRDs. This
erosion in state legitimacy has, in turn, compromised the quality of governance in
particular countries and weakened their capacity to implement reforms. The central
argument in this paper states that the exposure to the process of globalization has
weakened the capacity for policy action by elected governments. The extent to which
freedom of action is compromised naturally depends on the economic structures of a
country. But this freedom of action can be enhanced by strong democratic institutions
and effective governance.

Increasing exposure to globalization makes affected countries vulnerable not just to

changes in the health of the global economy but the policy regime of the more
advanced countries. Policy changes in these countries may influence not just the
aggregate level of trade but its direction. Thus, all DCs remain sensitive to policies in
such countries which may enhance or reduce market access or provisions of ODA.
Since many such decisions originate from political and strategic concerns, democracy
and governance in the developed world is as relevant as in the NRDs. Thus, for
example, political decisions behind the Everything but Arms (EBA) initiative offered
by the European Union to the LDCs at the LDC conference in Brussels in the spring
of 2001 and the U.S. Trade and Development Act (USTDA), offering duty and quota

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free access to the US market, to Sub-Saharan and Caribbean Basin countries, remain
of crucial significance in influencing the globalization process for the affected DCs.

Constraints on sovereignty

Whilst we all recognize the growing influence of globalization the relevant point at
issue is its impact on the autonomy of decision making in the NDRs. Here it is not the
extent of external exposure of a country which is relevant but the nature of this
exposure and the constraints on sovereign decision making. Countries with a limited
resource basis and weak capacity to make decisions remain the most vulnerable. Most
LDCs fall into this category. However, many NRDs who are not LDCs remain no less
vulnerable. The Baltic States for example, remain more heavily dependent than
Bangladesh or Nepal not just on world exports markets but also on capital flows to
sustain their economic growth.

Even China, which is today the largest exporter of goods and recipient of FDI in the
developing world remains much more sensitive to the workings of the globalization
process than it was a decade ago. It is, thus, argued here that this exposure to
globalization abridges the freedom of decision making by governments in both China
as well as Bangladesh. China today has had to digest quite significant changes not just
in its economic policies but its economic institutions in order to obtain membership of
the WTO. This was accepted by China, because they deemed membership of the
WTO as crucial to its future economic fortunes. Correspondingly China has had to
accommodate its external positions and policies, to ensure that its access to its
principal economic markets remains uninterrupted. In the same way, Bangladesh’s
external relations today are driven by its dominant concern for ensuring unrestricted
access not just to the European market but to the US market, which accounts for 40%
of its RMG exports, in order to retain its competitiveness vis a vis the more privileged
beneficiaries of market access under the USTDA.

Structural constraints

Whilst countries such as China are strong enough to exercise significant negotiating
leverage in determining the terms of their entry in the globalization process, weaker

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economies, particularly LDCs, feel compelled to tailor their domestic policies to the
advice of the BWI and demands of the WTO. The BWI points out to all countries
seeking their assistance that in order to retain access to both markets and capital
inflows, countries have to accommodate their domestic policies to the dictates of the
SAR. It has been argued by the BWI that in an open trading regime, unregulated
financial and foreign exchange markets and macro-economic stability are essential to
sustain both export and capital inflows. The BWI point out that accepting such
policies is not a matter of ideology but derives from what capital markets demand of
capital importing countries.

This argument by the BWI has a strong element of truth in it but does not command
universal applicability. Countries such as ROK and China, have protected their
domestic markets, managed their interest rates and external value of the currency,
restricted the terms of capital inflow and have sustained a strong state sector (Rodrik).
Such a policy regime has not prejudiced either their export growth or access to FDI. It
is perhaps more likely that short term capital inflows may be less prone to enter
markets with restricted capital account convertibility and will look for a regime of
high interest rates to enter such markets. It is no less evident that macro-economic
stability or an unregulated financial system encourages the inflows of FDI to all
countries. However, the early ROK and contemporary Chinese experience suggest
that there are other dynamics at work than a faithful adherence to the Washington
Consensus. Their experience suggests that the relevant issue is not the financial and
trade liberalization reforms but the underlying dynamics of domestic and export
growth in a country and the specific types of capital inflows needed to sustain such
growth (Amsden).

It is argued that most developing countries have been pressured by the BWI to
liberalise their economies on the questionable assumption that capital inflows are
essential to the growth of their economies. This argument for capital market
liberalization minimizes the distinction between encouraging FDI and short term
capital inflows. There would be few economists who would argue that FDI deserves
to be encouraged in developing countries. It was the guru of most British trained left
wing economists, Joan Robinson, who once presciently observed that the only thing
worse than being exploited by foreign capital is not being exploited by it. Attracting

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FDI does not need comprehensive capital account liberalization but needs to ensure
that investors can earn a good profit on their investment which can be freely
repatriated along with their capital if and when the feel they need to do so.

Globalization and democratic choice : The Asian Financial Crisis

The compulsion to encourage short term capital inflows, in order to sustain growth or
exports, is thus far from convincing. The financial crisis in East Asia in 1997,
successive crises in Latin America and in Russia, have originated in the opening up of
the capital market to short term movement of speculative capital (Stiglitz). The
opening of the capital market in Russia in the early 90’s, as part of the programme of
shock therapy applied by the IMF to marketise the economy, led to massive outflow
of capital from the country, including a significant part of the associated IMF loan
(Reddaway).

The critical problem associated with such capital movements is the policy
compulsions it imposes on host governments in determining domestic interest rates as
well as establishing the external value of the currency. To balance a budget in order to
attract short term capital flows, may demand budgetary austerity. The universal advise
of the IMF to any country facing a speculative outflow of capital, whether in East
Asia or Latin America, has been to cut public expenditure and raise interest rates. In
most cases, but particularly in East Asia, this advise exacerbated their financial crisis
by propelling the economy into a deflationary spiral when it needed a strong stimuli
package to boost economic activity (Stiglitz, Feldstein).

When it is argued that domestic policymakers have become hostages to the forces of
globalization it is their compulsion to open the economy to short term capital inflows,
which is cited as one of the main examples of the tyranny of globalization (Hertz).
However, what we need to recognize is that it is not the process of globalization but
the particular policy portal through which a country chooses to connect with the
global market which is at issue. The compulsion to keep the economy open to such
short term capital inflows, correspondingly constrains the policymaker’s ability to
stimulate economic activity through deficit financing, to lower interest rate policy to
stimulate aggregate demand and sectoral investment and to use exchange rate policy
to contain a potentially destabilizing outflow of capital or to stimulate exports

15
(Stiglitz). The apprehension that such heterodox policy measures will go against some
`immutable’ laws of globalization rather than insulate an economy from speculative
movements of capital in and out of its economy, needs to be laid to rest.

Countries such as China, Vietnam, Malaysia and most of South Asia, have chosen to
make this distinction between short and long term capital inflows. These countries
have all restricted short term capital movements. This policy has served to insulate
them from the more damaging effects of the Asian financial crisis of 1997 and had
left them with a degree of autonomy in managing their domestic economies. In
contrast, ROK, Thailand and Indonesia who were exposed to a severe flight of short
term capital felt compelled to seek assistance from the IMF to contain the impact of
the 1997 crisis. For this commitment to openness they paid a heavy price in having to
accept the IMF’s stabilization programme to qualify for financial relief as also a
financing package put together by the World Bank and the Asia Development Bank
(ADB). More to the point the IMF held out the inducement that acceptance of their
stabilization package would facilitate the rescheduling of the external debt and open
these countries up to a return of the fugitive short term capital which destabilized their
economies in the first place.

The three countries in East Asia who opened themselves up to the IMF programme,
following the 1997 financial crisis were influenced by the structure and strength not
just of their domestic economy but by the strength of their political institutions
(Rodrik, Haggard). The strength of their institutions impacted on their ability to bear
the political the costs of the remedial measures needed to address the crisis. Thus, all
three countries went through a process of regime change, sometimes peacefully,
where the system of free elections served to bring new governments to power
respectively in ROK and Thailand.

In contrast, in Indonesia, a mass uprising was needed to precipitate regime change

because the state of the political system did not permit for a peaceful transfer of
power through free elections (ibid). In Indonesia, the uprising originated from the
austerity programme imposed on the country by the IMF. This externally driven
reform process was epitomized by the eloquent picture of the President of the IMF,
Michael Camdessus, standing with crossed hands, in the image of a feudal overlord,

16
over President Suharto, as he signed the agreement between Indonesia and the IMF.
This externally imposed austerity programme did not enjoy a democratic mandate
since it exposed the common people of Indonesia, to rising prices of public services
which fuelled inflation while budgetary austerity promoted unemployment and
aggravated the impact of the recession. An economic crisis, originating from
externally driven reforms, delegitimized the authority of Suharto in the eyes of the
average Indonesia and created the preconditions for the downfall of a regime which
had exercised absolute state power for over three decades.

Democracy and Globalization in the Transition Economies

The case of Indonesia represents a parable of the political impact of globalization.
There are many other case histories which merit similar scrutiny. One of the most
severe casualties of a reform process designed to rapidly globalize their economies
was the exposure of the Transition Economies of the FES and FSU to the shock
therapy administered by the IMF. Shock therapy exposed a country such as Russia
which was once deemed a global superpower, to instant pauperization (Reddaway,
Dudwick). Under pressure from the IMF the shock deregulation of prices wiped out
the savings of an entire generation and reduced a large segment of the population,
including the emerging middle class, to penury and a life of continuing insecurity.
The impact of the shock therapy varied in its outcome on the different countries of the
FSU as well as the FSEs. The reform package of budgetary stabilization,
desubsidisation, deregulation and privatization, destabilized the economies of all the
countries, exposing them to a rapid decline into poverty which had been virtually
banished from these countries over the last three decades and contributed in most
cases to a deterioration in their human development (UNDP Regional Bureau,).
Obviously, there were variations, in the depth of the crisis, depending on the structure
and institutions of the country, the strength of democratic institutions and the quality
of governance.

Table III shows that most TEs experienced deterioration in their GDP growth during
the 1990’s, faced a sharp rise in poverty and a conspicuous increase in income
inequality. This deterioration in the condition of life as a result of the exposure of
these countries to the forces of globalization was not without impact on the political
life of these countries. Governments in Poland, the Czech Republic, Hungary and the

17
Baltic states, which presided over the reform process were rejected by the electorate.
In some countries such as Poland, Hungary and the Czech Republic, the former
communist parties, now reincarnated as Social Democrats, were returned to power. In
Poland where the Communist’s returned to power, a more flexible application of
reforms has permitted a degree of economic recovery not visible in the FSU states or
even most FES states (ibid, Reddway). However, in most other countries there was
little scope for changing the direction of policy so that the ex-Communist Parties,
even in Poland, felt compelled to persist with the policy reforms designed to enhance
the integration of their economies into the globalized system. For the Czech Republic,
Poland, Hungary and the Baltic States, the more immediate goal was integration into
the European Union. The neo-liberal policy reforms which had to be embraced by
these governments as pre-conditions for their acceptance into the EU, left little scope
for exploring more flexible policy alternatives in these aspirant countries. Bulgaria
and Rumania, who also remain in line for later entry into the EU and have had to
structure their policies according to the dictates of the EU, were also exposed to
severe economic and social crises.

The fact that most regimes in the FES could be politically evicted by their electorate
due to the heavy cost of their globalization points to their relatively healthy political
institutions. The fact that the newly elected regimes could do little to resolve the
problems of these countries points to the transcendence of global forces over the
workings of democratic institutions in the FES.

Policy failure and the crisis of democracy in the FSU

In contrast to the European experience, most of the FSU countries have managed to
escape regime change inspite of the much sharper deterioration in their economies,
compared to the FES. The only ex-Socialist country outside the FES which has
witnessed regime change has been Mongolia, where sharply deteriorating economic
conditions, as a consequences of their exposure to globalization, has led to the return
of the former Communist party to power. This suggests that Mongolia’s democratic
institutions appear to be one of the most robust amongst all former Socialist countries.
This impression is supported by the indices of democracy cited in Annexure I.

18
In the case of the FSU countries, led by Russia, incumbent regimes have survived in
power in Russia, Ukraine, Belarus, Georgia and Central Asia inspite of an
extraordinary decline in their conditions of life and contraction in their economy. The
growing degree of exposure to globalization in the form of exposure to shock therapy
in Russia through aggressive measures of rapid import liberalization, ending of
subsidies and extensive privatization had a devastating effect on the Russian economy
(Reddaway and Glinski). GDP per capita in Russia in 2000 was 35% below levels in
1989 whilst investment declined at a rate of 13.3% between 1990 and 1999. Poverty
levels in Russia have risen from 2% in the late 80s to 45% in 1993/94, whilst the Gini
coefficient measuring inequality rose from 0.27 to 0.41 in the same period.

The re-election of Boris Yeltsin as President of Russia in 1997, inspite of the

unprecedented deterioration in the economy and impovishment of a large segment of
the population reflected the weaknesses in the democratic system in Russia, at the
time (ibid). The monopoly of the Russian media by a number of powerful financial
oligarchs who had a heavy stake in the reelection of Yeltsin, the weaknesses in
establishing the norms of a system for holding free and fair elections, and the resort to
more blatant electoral malpractises may have contributed to the outcome of the
Russian elections (ibid). However, the substantive problem may lie in the political
parties themselves and the general disillusion of the electorate with the democratic
process.

In most of the other countries of the FSU the very nature of the democratic process
may have compromised the credibility of the electoral process. Thus, the ruling
parties have effectively remained unaccountable for their stewardship of the economy
and their ability to better the life of the population. In all such cases, casual
generalizations, seeking to link economic performance with their democratic
outcomes, demands more specific investigation. Some of the work in the realm of
development politics, attempts to address such issues in the context of a selected
group of the more advanced DCs (Haggard). But this literature has not succeeded in
linking the impact of particular policy regimes and their outcomes to the actual
quality of the democratic process as distinct from the actual outcome of the electoral
system. We need to develop an analytical basis for seeing how far the quality of
economic management and its outcomes automatically translates into particular

19
political outcomes and how far this causal linkage can be compromised by the
workings of the political system. Correspondingly we need to understand how far the
efficacy of economic reforms and their outcome are, in turn, influenced by the
efficacy of the political system.

If we look at Annexure I, which evaluates the quality of democracy and governance in

the NRDs we can observe the state of democracy in the FSUs. In the area of
democracy, most countries reported a negative score, though Russia scored 7 out of
10. This figure from Russia is somewhat surprising because the corresponding scores
for civil liberties, political rights press freedom, voice and accountable and political
stability are not impressive. Nor are Russia scores on account of the quality of
governance impressive. The more comprehensive analysis of Russia under Yeltsin by
Reddaway and Glinski indicates a far from healthy polity in Russia.

The data in Table III and Annexure I, needs to be more systematically analysed and
correlated with two sets of data: (i) on economic performance and social outcomes (ii)
on the change of regimes via the democratic process. This exercise may be attempted
more substantively in another paper where the actual quality of democracy can be
evaluated with the same rigour as was attempted in the work of Reddaway and
Glinski on Russia.

Policy making under globalization

We have observed that the globalization process has served to abridge the autonomy
of decision making in many countries. The structural constraints of the economy
generate a sense of helplessness in many of the less developed countries. But in most
countries it is the hegemony over policy choices which has been established by the
BWI which has eroded domestic ownership over the policymaking process. In the
specific case of the European NRD their policy options are further constrained by the
need to conform to the demands of the EU which has laid out a strict policy regime
for prospective new members wishing to establish their eligibility for joining the EU.

The emergence of the WTO has now imposed its own constraints on the freedom of
choice of all countries which are its members or aspire to be members. In most cases

20
the BWI and WTO policy agendas overlap. In many areas the BWI agenda is more
advanced and comprehensive than that of the WTO and many NRDs have already
embraced policy reforms under the aegis of the BWI well before they were obliged to
do so by the terms of their accession to the WTO.

In such circumstances the average Finance Ministers of an NRD may feel that he
enjoys few economic policy choices. The freedom to pursue an industrial policy,
which seeks to usher in a new generation of industries, needed to diversify the
production and export base of the economy is constrained by the pressure to liberalise
the economy (Amsden). The regime of protection for infant industries, once available
to promote the industrialization, is no longer an acceptable option for NRDs.
Commitments on budgetary balances, in order to attract capital inflows, impinges on
the volume and prioritization of choices in public expenditure. The move to privatize
infrastructure development, which was once the domain of the public sector where it
was heavily supported by the aid regime, has both affected the volume of public
investment as also its pace and scheduling. In all such areas, policy advise from the
BWIs is sanctioned by the denial of ODA in areas disfavoured by the donors is
increasingly being targeted to areas preferred by donors.

Obviously the degrees of freedom enjoyed by NRDs to make their own policy
decisions will depend on the strength of the economy as well as the political
institutions in a country, China, may in most cases, exercise greater freedom of choice
over its policy decisions because it has a strong political support base, is much less
dependent on aid and can, in most cases bargain on equal terms with FDI partners.
Nepal or Togo may not enjoy such degrees of freedom because they are more aid
dependent, their political support base is not strong enough to lend itself to any
serious disagreement with donors or investors.

A country with a strong economy and political base can thus negotiate better terms of
engagement with the global system so that its choices may, more closely reflect what
it aspires to do. The position of such countries draws strength from the degrees of
support they command at home to enforce their own policy. In practicing
democracies, building a political consensus behind globalization-oriented reforms
remains a feasible political option. But in the case of countries with weaker polities,

21
such as the NRDs, the power to suppress or divert dissent against the direction and
consequences of globalization, may constrain the choices of political leaders seeking
autonomy in negotiating entry of their country into the WTO.

In such circumstances globalization policies, tend either to be externally driven

through incurring commitments to the BWI as part of aid induced SAR or to the
WTO. In only a few cases are reforms embraced by the political leadership of a
country, out of an awareness of the appropriateness of the polices. In most cases there
is a range of choices before the leadership, from total compliance under external
pressure to considerable overlap in the agenda of national policymakers and external
sponsors. Here again the actual literature on how far such reforms enjoy popular, as
distinct from regime support, is less evident. In fact even within reforming regimes,
policy reforms tends to be ghettoized in the Finance Ministry. In many such NRDs,
Finance Ministers tend to be unelected technocrats who often derive their support
from the patronage of the BWI rather than a democratic mandate. Thus, globalization
reform often becomes a clandestine process negotiated in Washington DC, outside the
scrutiny of the public or parliament of the reforming country. The unpopularity of
many such reforms is not surprising. The ongoing demonstrations against
globalization, at every international event, remain the most immediate and generalized
manifestation of the discontents with globalization (Klein). But in most countries
dissent, whether pervasive or episodic, suppressed or vocal, remains an ongoing
byproduct of the globalization process.

The inequity of globalization

Globalization has served to open up a growing divide between governments in the

NRDs and their citizens (Klein, Hertz). This divide reflects the external sponsorship
of the process and the weakness in the democratic institutions in these countries.
Whilst globalization may be immediately beneficial to some people, in the longer run,
many more may be affected by its discontents. The democratic process demands that a
large number of people, perhaps an electoral plurality, should be persuaded at the time
the policy is being finalized that such a process is advantageous for them as
individuals and for the country as a whole.

22
In country after country exposed to globalization a segment of people from workers in
export oriented industries or agriculture, to migrant workers, have been directly or
indirectly benefited by globalization, though few would appreciate this. A much
larger number of worker and farmers as well as those affected by budget cuts or more
expensive water and electricity, have been disaffected by the process. It is only a very
narrow segment of people, owners of export oriented enterprises and the collateral
beneficiaries of this process, brain drain professionals, a class of aid intermediaries
such as consultants, contractors, commission agents, and a larges class of importers
benefiting from a liberalized trade regime, who are enjoying the income and fruits of
a liberalized economy, who have emerged as the unquestioning votaries of
globalization. But this class is numerically very limited. Their presence reflects the
increasing social polarization and concentrated nature of political power in NRD’s
exposed to globalization.

In country after country the political task of coping with the growing inequalities is,
undermining the sustainability of the democratic process (Hertz). A political
leadership committed to an agenda of globalization, linked to a privileged elite, is
now compelled to retain political power to sustain the globalization process. It is not
surprising that there is very little attempt to build a political consensus or public
support for globalization. Because of the externally driven nature of this process and
its narrow support base, globalization today lacks political legitimacy in most
countries. To the extent that political leaders embrace such policies, under external
pressure, often at the cost of their electorate, correspondingly devalues the quality of
the political institutions in such countries.

Our paper argues that a delegitimised leadership can only sustain itself in power
through a malfunctioning political system. Otherwise regimes, which preside over
irregular growth, rising inequalities, persistent poverty and visible manifestations of
malgovernance, would not normally expect to be elected or be able to stay in power.
It is not surprising that the polities in such societies, reflect weak political institutions,
with an unaccountable executive, malfunctioning legislatures, a media dominated by
financial interests, a weak civil society mostly sustained by aid money, the growing
power of special interest groups and is exposed to endemic corruption. The available
numbers from Annexure I provide a certain superficial validation of this hypothesis.

23
But such numbers cannot tell the full story of how the numbers interconnect to
compromise the effectiveness of the political system and serves to alienate citizens
from the globalization process.

IV. COPING WITH GLOBALIZATION

Enhancing Democracy

The process of globalization is here to stay. The relevant issue is to determine the
construct of the globalization process itself and the terms on which individual
countries connect to this process. Global institutions can play an important role in
helping countries, such as the NRDs to cope with the specific pressures originating
from globalization. However, such international interventions need to be reinforced
by enhancing democracy at the national levels. Thus, coping with globalization
demands more not less democracy at the global as well as the national level. NRDs
need to enhance their democratic capacities whilst global institutions need to both
help NRDs in strengthening their policymaking and governance capacities whilst also
democratizing the global order.

The role of global institutions

The Elusive Quest for a New International Economic Order
Global democracy has been on the table for a long time. During the 1970s the search
for a New International Economic Order (NIEO) was central to what came to be
known as the North-South dialogue. The goal of this dialogue was to build a more
democratic world order which would eradicate the structural injustices of the global
economic system and give the Third World greater voice in its management. The
search for NIEO became an incidental casualty of the neo-liberal revolution of the
1980s. However the policy failures, crisis in governance and lack of unity in the Thrid
World were no less responsible for the lack of success in the quest for a NIEO.

In the last two decade of the 20th century, the global system, not only witnessed the
weakening of the institution of the United Nations, but saw the erosion in aid flows
and the growing ascendance of private capital transfers as the central dynamic of the
global economic system. Not only were Third World governments marginalized from

24
the decision making process in the international system but within their own countries
there was an erosion of sovereignty over the decision making process. The policy
preferences of the BWI, and the interests of foreign investors, were prioritized by
these governments over their obligations to their electorate.

Today everyone is in agreement that global democracy needs to be enhanced.

However, the way in which some of the major powers have overridden democratic
opinion in the United Nations on the waging of war and enforcing the peace does not
bode well for building a democratic world order. In the event that a multilateral world
order can be salvaged from the debris of the war on Iraq the need to reconstruct the
World Bank, the IMF and the WTO, would demand urgent attention. This is a long
standing issue with its own literature, which needs to be addressed elsewhere
(Oxfam).

Enabling NRDs to participate in the globalization process

If we move beyond the issue of democratizing the international institutions we need to
enhance the capacity of countries to participate more effectively in the world trading
system. Some of the more advanced DCs have indeed developed a strong capacity to
benefit from the global system. Some NRDs, for example the FES states and the
Baltic republic, are seeking to secure their future by integrating themselves with the
European Union. Some LDCs have established new market niches for themselves in
the global economy, though these gains may not be sustainable. However, the
majority of the NRDs, particularly the LDCs, still remain captive to the unequal
incidence of the globalization process and its destabilizing features.

In order to cope with globalization, the most underprivileged among the NRDs, the
LDCs as a group, have made a variety of demands on the international system. These
expectation have been captured in the recommendations of the LDC conference in
Brussels held in the spring of 2002. However, the most recent set of concerns voiced
by the LDCs relates to the emerging dangers faced by them from their accession to
the WTO process. The following programme of action is therefore suggested for the
LDCs to help them to cope with globalization as it impacts on them through the
WTO:

25
(i) The people in the LDCs should be given an opportunity to participate and
benefit from the globalised world market. For this, the granting of duty free
and quota free market access by developed countries to all products exported
by LDCs is an immediate priority. The consolidation of such duty free and
quota free treatment, within a contractual instrument in the WTO, should be
the first priority at the WTO conference in Cancun to be held later this year.
(ii) Duty-free and quota free access must be complemented by improved and
simplified rules of origin that take into account the industrial weakness and
technological backwardness of LDCs and their difficulty in adding value so
that LDCs exports will actually benefit from these preferences. There should
also be binding obligations to provide LDCs with the necessary measures,
including technical and financial assistance, to enable them to overcome
difficulties in enhancing their capacity to both negotiate and trade.
(iii) Free access to markets will not be meaningful for LDCs, if they are required to
compete with the treasuries of the richest countries. Export subsidies,
including export credits, on agricultural products which compete with those
produced by LDCs, should be eliminated as a matter of priority. Domestic
subsidies which result in such products entering world markets at dumped
prices should also be eliminated.
(iv) Given the overwhelming importance of the agricultural sector in the
economies of LDCs in particular its role in human development, food security
and rural development, LDCs should retain full flexibility in this sector, and as
such not be required to make commitments on subsidies or tariffs.
(v) LDCs should also have the opportunity to participate in world trade in
services. This requires more commitments in their favour with respect to
movement of natural persons (MNP) and temporary migration. In a globalized
world the labour market also needs to be gradually opened up in the same way
as the market for goods and capital. People from the DCs should, thus, be
given the right to enter the labour market of the developed world on a
temporary base so that DCs can exploit their national comparative advantage.
(vi) LDCs must also be enabled to compete in the global market. This would
require (a) effective access to global markets in the developed world (b)
Substantial revisions in WTO provisions to enable LDCs to protect the rights
of farmers, indigenous people and local communities, including by the

26
 formulation of a sui generis system of protection of plant varieties, and (c)
Prohibiting patents on life forms.
(vii) A major commitment needs to be made to enhance ODA flows into the LDCs.
Currently very few industrial countries have met their obligation to channel
ODA to a level of 0.7% of their GDP, to the DCs. This enhanced flow of aid
should not be encumbered by excessive aid conditionalities imposed by
donors. Such conditionalities are today growing in their scope and
intrusiveness to a point where democratic decision making in the NRDs may
be undermined. Instead, the capacity of DCs to design and own their policy
reforms should be significantly enhanced.
(viii) ODA needs to be targeted to the following areas:
(a) Human resource development
(b) Infrastructure development
(c) Enhancing their access to Information Technology

(ix) Resources will be needed from both ODA as well as FDI to support LDCs in
diversifying their production base to enable them to compete in the global
system. Access to such ODA and FDI should move away from the
ideologically driven agenda of the BWI so as to develop a more flexible policy
regime where the use of industrial policy should not be excluded. To enable
LDCs to design and enforce an industrial policy will require significant
investment through both technical assistance as well as foreign investment.

Coping with globalization at the national level

We will briefly focus on the issue of how the approach to globalization, at the national
level, can be more effectively linked to the development and sustainability of
democracy.

It is argued that in order to cope with globalization all countries need to:
• Build strong states
• Strengthen the democratic system
• Strengthen the institutions of civil society

27
These institutional changes will enable such states to:
• Improve the terms on which a country relates to the globalization process
• Help to restructure the economy to democratise the benefits from globalization

Building Strong States

Building strong states is integral to responding to the eroded legitimacy of the state.
Table II, and Annexure I, have already measured the ineffective nature of the state in
many NRDs. In an era of externally driven reforms there has been a persistent effort
to emphasise the worthlessness of governments and their need to withdraw from most
areas of economic life. This has undermined the authority of elected leaders and
sapped the morale of public officials. In such circumstances a directionless and
undermotived state is more inclined to lapse into predatory habits. It is not surprising
that in an era where the state is supposed to have been in retreat from all segments of
the economy, corruption has grown exponentially in most NRD countries, indeed in
most countries.

Unless governments can both enhance their credibility by widening their democratic
outreach as well as strengthening their professional capacity, they will be reduced to
spectators of the globalization process. Such countries will retain few levers to control
their own affairs so that their capacity to cope with the downside of globalization will
be severely compromised. In such circumstances the widening social divisions created
by globalization may lead to a progressive breakdown in law and order and the
corresponding spread of terrorism inspired by those who feel totally alienated from
the process of globalization and remain hostile to its inequitable outcomes.

Strengthening the democratic system

A strong state can only build its strength through consolidating its democratic
mandate. A weak state is the handmaid of a weak democratic system which has
surrendered its decision making prerogatives to external forces. Strengthening the
democratic mandate of governments will give the state greater authority to negotiate a
programme of reforms which commands sizeable popular support. Building such a
democratic mandate involves two components:

28
 • Establishing an ongoing process of consultations with the people
• Giving a stake to citizens in the outcomes of the globalization process.

Consultations with the people

A process of public consultations needs to draw on specific constituencies which may
include:
(a) Elected representatives
In a democratic system parliament is central to policy and decision making. In
malfunctioning democracies parliament tends to be subordinated to the executive and
is often completely bypassed in the design of reforms. It is worth attempting a
comprehensive study within the NRDs to see how far policy reforms were either
discussed as an electoral issue, were debated in the Cabinet and were tabled in the
legislature for discussion by the elected representatives (Haggard). To the extent that
the preconditions for a building a democratic reform mandate for reform were met it
is worth exploring whether the outcome of the reforms were sustainable, as distinct
from merely successful over the short run.

(b) Consultation with affected groups

Usually the government tends to discuss the reform process with the business
sector. However, in most cases such consultations tend to be restricted to the upper
echelons of the business sector, usually those who may benefit from globalization,
such as exporters. It would be particularly useful for the government to hold
consultations with those entrepreneurs hurt by import liberalization, with the
managers and workers of divested state enterprises, with small entrepreneurs
particularly those in the small towns and rural areas who mostly serve a local market,
with women’s groups, with farmers, with workers, including those who have been
disemployed by globalization, with slum dwellers and with religious and ethnic
minorities. All such groups are distinguished by the likelihood of their being excluded
from the benefits of globalization. Here again the interface of democracy and
globalization in NRDs may be gauged by the extent of consultation and the sincerity
with which a government takes cognizance of these voices of the excluded.

(c) Listening to civil society

29
The voice of Civil Society, represented not just by NGOs but community based
organizations (CBOs), human rights activists and advocacy groups, are worth hearing
insofar as they voice the concerns of the deprived. However, engaging with civil
society should not be seen as a substitute for consulting with the deprived.

It should be kept in mind that there is also an institutional face to civil society in the
form of trade unions, farmer’s association, business communities, professional bodies,
faith based organizations. These groups articulate specific interests, but should be
heard because they often have a greater capacity for collective action to resist or even
support reforms since their group interest may be involved. When we are gauging the
strength and relevance of civil society we should not limit ourselves to head counts of
registered NGOs. It should be kept in mind that many NGOs are sponsored and
sustained by donor funding and mostly exist as aid contractors who deliver particular
public services on behalf of donors (Babar Sobhan). Many such NGOs eschew
advocacy which is seen as contrary to their primary mission of service delivery. In
such circumstances, we need a more focused and sensitized assessment of the strength
and relevance of civil society, in all its manifestations, in all the NRDs. Such an
exercise would need to be able to guage the quality and efficacy of these institutions
and should be able to assess the strength and impact of civil society in influencing the
policy making and governance process.

Developing Stakeholders
In the final analysis globalization has to be an inclusive process if it is to enjoy a
popular mandate. However much a government may consult with its citizens to build
support for reforms, unless it can assure them that there is some benefit from such a
process they will remain skeptical of its outcome. The reality however indicates that
the benefits of globalization have tended to be limited and remain highly
exclusionary. Thus, to measure the outcome of globalization in terms of GDP growth
or even a strengthened balance of payment, may be `sound’ macro-economics, but
remains poor politics. There may or may not be a trickle down effect from growth on
poverty reduction. The current academic fashion popularized by the World Bank of
using economic models to establishing a statistical correlation between high growth
and poverty reduction is good for seminars but carries little conviction in electoral
debate or with the poor themselves (World Bank 2001). Poor people do not see import

30
liberalization or capital account convertibility as a source of improvement in their
lives. What they see is lost jobs from closed factories.

If people are to be benefited from globalization they have to be given a direct stake in
the process (Sobhan, 2001). This stake may extend from enhanced job opportunities
for the working poor to higher market or procurement prices for small farmers. It
must provide visible evidence of new and better schools and health care facilities,
better roads connecting farmers to markets and factories to ports, ubiquitous and
regular power supply, including to rural entrepreneurs, stable prices for consumers,
particularly of basic staples and improved security for all where the workings of the
state machinery are not commoditized in the service of the rich.

However, ordinary people may need to be moved beyond low wage jobs and stable
prices and may need to share in the value addition provided by access to global
markets. This enhanced stake in the market can be realized if the poor are given
ownership rights not just in the land they till but in the enterprises which add value to
their labor and primary produce (ibid). This rethinking of the poverty discourse would
take the policy agenda beyond micro-credit, which has played a very salutary role in
reducing poverty. We would need to ensure that poor people, including workers, can
be given opportunities via the macro-financial system, to own corporate wealth,
where marginal farmers and producers of cash crops can become shareholders in
agro-processing enterprises both at the national and multinational level, where
workers in mines and in energy extracting conglomerates can be given shares in these
enterprises and citizens in various tourist paradises can be given an ownership stake in
the tourism sector (ibid).

In the final analysis globalization is an inexorable process. However, unless the

pervasive concerns of the deprived, spread across the world, are recognized and
structural changes initiated to make them direct stakeholders in the benefits of
globalization, this process will remain under perpetual challenge. This challenge will
not just involve demonstrations at Seattle or Evian but could escalate into a challenge
on the sustainability of the democratic order not just in the NRDs but across the
world.

31
 Table I
Measures of Globalization
Among new and restored Democracies
Country Exports of goods and services Manufactured exports Official development assistance (ODA) received Globalisation measures
(as % of GDP) (as % of merchandise exports) (net disbursements)e (Exports + ODA as % of
2000 As % of GDP GDP)
1965 2000 1990 2000 2000
Africa
Seychelles 78 .. 9.8 3.0 81.0
Libya 53 .. .. .. ..
Tunisia 19 44 77 3.2 1.1 45.1
Cape Verde 23 .. 31.8 16.9 39.9
Algeria 19 42 2 0.4 0.3 42.3
South Africa 27 29 54c .. 0.4 29.4
Equatorial Guinea 95 .. 46.0 1.6 96.6
Gabon 43 37 .. 2.2 0.2 37.2
Morocco 18 31 64 4.1 1.3 32.3
Swaziland 66 .. d 6.4 0.9 66.9
Zimbabwe .. 30 28 3.9 2.4 32.4
Ghana 17 49 15 9.6 11.7 60.7
Kenya 31 26 21 13.9 4.9 30.9
Congo 79 .. 7.8 1.0 80.0
Comoros 26 8 18.1 9.2 35.2
Sudan 15 17 3b 6.2 2.0 19.0
Togo 20 36 31 16.0 5.7 41.7
Madagascar 16 25 50 a 12.9 8.3 33.3
Nigeria 13 52 (.) 0.9 0.4 52.4
Djibouti 45 .. 46.4 12.9 57.9
Uganda 26 10 6 15.5 13.3 23.3
Zambia 49 31 .. 14.6 27.3 58.3
Senegal 24 31 30 14.4 9.7 40.7
Democratic republic of 36 .. .. 9.6 ..
Congo
Côte d ’Ivoire 37 46 14 6.4 3.8 49.8

32
Country Exports of goods and services Manufactured exports Official development assistance (ODA) received Globalisation measures
(as % of GDP) (as % of merchandise exports) (net disbursements)e (Exports + ODA as % of
2000 As % of GDP GDP)
1965 2000 1990 2000 2000
Eritrea 16 .. .. 29.0 45.0
Benin 13 15 3b 14.5 11.0 26.0
Guinea .. 26 30 10.4 5.1 31.1
Gambia 48 5b 31.3 11.6 59.6
Angola 90 .. 2.6 3.5 93.5
Malawi 26 .. 26.8 26.2 52.2
Mali 12 25 .. 19.9 15.7 40.7
Chad 19 17 .. 18.0 9.3 26.3
Burkina Faso 9 11 .. 12.0 15.3 26.3
Mozambique .. 15 10 a 40.7 23.3 38.3
Burundi 10 9 (.) 23.3 13.5 22.5
Niger 9 15 2b 16.0 11.6 26.6
Sierra Leone 30 17 .. 6.8 28.7 45.7

Some Other Countries

Macedonia, TFYR .. 7.0 7.0
Armenia .. 11.3 11.3
Philippines 2.9 0.8 0.8
Maldives 10.7 3.5 3.5
Albania 0.5 8.5 8.5
Kyrgyzstan .. 16.5 16.5
Moldova, Rep. Of .. 9.5 9.5
Tajikistan .. 14.4 14.4
Mongolia .. 22.4 22.4
Cambodia 3.7 12.5 12.5
Pakistan 2.8 1.1 1.1
Nepal 11.7 7.1 7.1
Bangladesh 7.0 2.5 2.5
Source: Compiled from Table 9 from World Development Report 1989 financial Systems and Development World Development Indicators, World Bank and table- 14 from
Human Development Report 2002: Deepening Democracy in a Fragmented World, UNDP.
Note: a. Data refer to 1999

33
 b. Data refer to 1998
c. Data refer to the South African Customs union, which comprises Botswana, Lesotho, Namibia, South Africa and Swaziland
d. Included in the data for South Africa
e. ODA receipts are total net ODA flows from DAC countries, other OECD countries, multilateral organisations and Arab countries as well as Estonia and Israel. A negative
value indicates that the repayment of ODA loans exceeds the amounts of ODA received. Aggregates include net official aid. See the definitions of statistical terms.

Source: column 2 and 3: World Bank 2002b; aggregates calculated for the Human Development Report Office by the World Bank. Column 5 and 6: calculated on the basis of data on
ODA from OECD, Development Assistance Committee (2002d) and data on GDP from World Bank (2002d).

34
 Table II
Indicators of Governance (Subjective and Objective)
Democracy Governance

Country (no. of Polity scorea Civil Political rights b Press freedomc Voice and Political stability and Law and Rule of lawd Government Graft (corruption)d
total countries 2000 Libertiesb 2000 2000 accountabilityd,e lack of violenced orderf 2000-01 effectivenessd 2000-01
used for data (-10 to 10) 2000 (7 to 1) (100 to 0) 2000-01 2000-01 2001 (-2.50 to 2.50) 2000-01 (-2.50-2.50)
analysis) (7 to 1) (-2.50 to 2.50) (-2.50 to 2.50) (0-6) (-2.50-2.50)

No. of 4-7 4-7 50 - 100 No. of negative No. of negative points 1-3 No. of negative No. of negative No. of negative
negative score points points points points

Africa (38) 21 31 28 29 29 25 20 31 22 22

Latin America and 1 3 2 2 6 5 7 8 8 10

Caribbean (12

Arab world (2) 2 2 2 2 2 1 1 1 1 2

Asia (10) 6 3 5 6 5 4 6 4 7

Former USSR (10) 4 7 7 8 7 7 2 8 8 8

European Socialist 0 1 2 1 0 3 1 3 4 4
Countries (7)
Source: Compiled and calculated from Human Development Report 2002: Deepening Democracy in a Fragmented World, UNDP, Table A1.1 and A1.2

35
 Table III
Income, Poverty & Human Development Indicators in the Transition Economies

Countries Poverty: headcount index Real net wages Human Development Daily Calorie intake per GDP growth Inflation, Gross Domestic
(% of population) (1989 = 100) Index capita (annual %) consumer prices investment
(annual %) (% of GDP)

averageb

averagec
1993/19

average
1990’s

1990’s

1990’s
1980sa

1995a

1994/
1995

1997

1989

1995

1989
Late

94
Central Europe 1.8 6.0 81.1 0.864 0.862 3216.8 2864 0.7 41.0 30.9 23.2
Average

Eastern Europe 3.0 34.5 48.4 0.703 0.794 3054.5 2580 -3.0 168.0 23.2 17.9
Average

Baltic States 1.0 37.0 51.4 0.829 0.750 2685.0 .. -4.6 191.8 34.2 26.0
Average

Slavic Republics 1.7 36.3 48.2 0.859 0.762 3234.0 2598 -6.0 661.3 30.6 30.3
Average

Caucasus Average 20.3 .. 13.1 0.707 0.641 2606.0 1956.5 -8.7 1633.1 31.4 18.2

Central Asia 20.8 59.5 .. 0.721 0.664 .. .. -6.5 577.6 33.4 27.6
Average

Transition 8.1 34.7 48.4 0.780 0.745 2959.3 2499.6 -4.7 545.5 30.6 23.9
Economies Average

OECD countries .. .. .. 0.919 0.911 .. .. 2.0 .. .. ..

Average

World Average .. .. .. 0.759 0.764 .. .. 2.0 .. .. ..

Source: Compiled from the statistical appendix of Regional Bureau for Europe and the CIS, July 1998 Poverty in Transition UNDP
Sources: Countries include: Central Europe-Czech Republic, Hungary, Poland, Slovakia; Eastern Europe- Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Moldova, Romania, Slovenia, The FYR of Macedonia,
Yugoslavia; Baltic States-Estonia, Latvia, Lithuania; Slavic Republics- Belarus, Russia, Ukraine; Caucasus- Armenia, Azerbaijan, Georgia; Central Asia- Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan,
Uzbekistan

36
Source: column 1-2: World Bank 1997a; column 3: UNICEF1997a; column 4-6: UNDP 1995 and UNDP 1997; column 7 – 9: UNICEF 1997a; column 10: own calculations based on UNICEF 1997a; column 11 and
12: own calculations based on World Bank 1997a and UNICEF 1997b; column 13: World Bank 1997a.
Note:
a. data for Armenia, Azerbaijan, Georgia and Tajikistan taken from Atkinson et al 1992. data for remaining countries taken from Milanovic 1996
b. for the period 1990 - 1997
c. for the period 1990-1997; Czech Republic, Bulgaria, Slovakia, Bosnia and Herzegovina, Yugoslavia: for the period 1994-1997

37
 Annexure I

Indicators of Governance (Subjective and Objective)

Democracy Governance Participation Civil society

HDI Country Polity Civil Political Press Voice Political Law Rule of Govern Graft Latest Year Seats in Trade Non-
rank scorea Liber- rights b free- and stability and lawd ment (corruption)d election for received parliam union govern
2000 tiesb 2000 domc account- and lack orderf 2000- effectiv 2000-01 lower or right to ent held members mental
(-10 2000 (7 to 1) 2000 abilityd,e of 2001 01 enessd (-2.50-2.50) single housei votej by hip organisa
to 10 (7 to (100 2000-01 violenced (0-6) (-2.50 2000- women (as % of tions
1) to 0) (-2.50 to 2000-01 to 2.50) 01 Year Voter (as % non- 2000
2.50) (-2.50 to (-2.50- turn of agricultur (number)
out
2.50) 2.50) total)k al labour
(%)
force)l
1995
Africa
47 Seychelles .. 3 3 51 .. .. .. .. .. .. 1998 87 1948 23.5 .. 195
97 Tunisia -3 5 6 74 -0.61 0.82 5.0 0.81 1.30 0.86 1999 92 1957, 11.5 10m 748
1959
100 Cape Verde .. 2 1 32 0.92 .. .. 0.15 .. .. 2001 54 1975 11.1 17 120
107 South Africa 9 2 1 23 1.17 0.07 2.0 -0.05 0.25 0.35 1999 89 1930, 29.8q 22 1590
1994
111 Equatorial Guinea -5 7 7 79 -1.30 .. .. -1.20 .. .. 1999 95 1963 5.0 .. 80
117 Gabon -4 4 5 55 -0.40 -0.44 3.0 -0.44 -0.45 -0.58 2001 44 1956 11.0 2 287
125 Swaziland -9 5 6 77 -0.93 .. .. 0.15 .. .. 1998 .. 1968 6.3 19 264
128 Zimbabwe -5 5 6 69 -0.90 -1.25 0.5 -0.94 -1.03 -1.08 2000 49 1957 10.0 14 714
129 Ghana 2 3 2 55 0.02 -0.11 2.0 -0.08 -0.06 -0.28 2000 62 1954 9.0 26m 625
134 Kenya -2 5 6 70 -0.68 -0.83 2.0 -1.21 -0.76 -1.11 1997 65 1919, 3.6 17 822
1963
136 Congo -6 4 6 71 -1.38 -1.36 2.0 -1.11 -1.58 -0.49 1998r - 1963 12.0 .. 303
137 Comoros -1 4 6 38 -0.35 .. .. .. .. .. 1996s 20s 1956 -s .. 84
139 Sudan -7 7 7 85 -1.53 -2.01 2.0 -1.04 -1.34 -1.24 2000 55 1964 9.7 .. 414
141 Togo -2 5 5 72 -1.06 -0.62 3.0 -0.82 -1.32 -0.48 1999 .. 1945 4.9 .. 364
147 Madagascar 7 4 2 32 0.28 -0.34 3.0 -0.68 -0.35 -0.93 1998 .. 1959 8.0o .. 369
148 Nigeria 4 4 4 55 -0.44 -1.36 2.0 -1.13 -1.00 -1.05 1999 41 1958 3.3 17m 894
149 Djibouti 2 5 4 63 -0.44 .. .. -0.19 .. .. 1997 57 1946 0.0 .. 130
150 Uganda -4 5 6 40 -0.79 -1.13 4.0 -0.65 -0.32 -0.92 2001 70 1962 24.7 4 487

38
 Democracy Governance Participation Civil society

HDI Country Polity Civil Political Press Voice Political Law Rule of Govern Graft Latest Year Seats in Trade Non-
rank scorea Liber- rights b free- and stability and lawd ment (corruption)d election for received parliam union govern
2000 tiesb 2000 domc account- and lack orderf 2000- effectiv 2000-01 lower or right to ent held members mental
(-10 2000 (7 to 1) 2000 abilityd,e of 2001 01 enessd (-2.50-2.50) single housei votej by hip organisa
to 10 (7 to (100 2000-01 violenced (0-6) (-2.50 2000- women (as % of tions
1) to 0) (-2.50 to 2000-01 to 2.50) 01 Year Voter (as % non- 2000
2.50) (-2.50 to (-2.50- turn of agricultur (number)
out
2.50) 2.50) total)k al labour
(%)
force)l
1995
153 Zambia 1 4 5 62 -0.17 -0.42 4.0 -0.39 -0.75 -0.87 2001 68 1962 12.0 12 489
154 Senegal 8 4 3 34 0.12 -0.68 3.0 -0.13 0.16 -0.39 2001 67 1945 19.2 22 565
155 Democratic .. g 6 7 83 -1.70 -2.59h 1.0 -2.09 -1.38 -1.24 1993s .. 1967 -s .. 480
republic of Congo
156 Côte d ’Ivoire 4 5 6 77 -1.19 -0.95 2.5 -0.54 -0.81 -0.71 2000 32 1952 8.5 13 556
157 Eritrea -6 5 7 68 -1.04 -0.38 .. -0.43 .. -0.97 1994 .. 1955 14.7 7 78
158 Benin 6 2 2 30 0.47 -0.72 .. -0.57 0.12 .. 1999 70 1956 6.0 .. 371
159 Guinea -1 5 6 71 -0.98 -0.99 3.0 -0.59 0.41 0.13 1995 62 1958 8.8 2 249
160 Gambia -5 5 7 70 -0.73 0.49 5.0 0.00 0.41 0.13 2002 69o 1960 2.0o .. 237
161 Angola -3 6 6 80 -1.26 -1.98 3.0 -1.49 -1.31 -1.14 1992 91 1975 15.5 .. 235
163 Malawi 7 3 3 52 -0.14 0.03 3.5 -0.36 -0.77 0.10 1999 92 1961 9.3 .. 318
164 Mali 6 3 2 22 0.32 -0.13 3.0 -0.66 -1.44 -0.41 1997 22 1956 12.2 14 298
166 Chad -2 5 6 72 -0.88 .. .. -0.86 .. .. 1997 49 1958 2.4 .. 190
169 Burkina Faso -3 4 4 39 -0.26 -0.54 4.0 -0.79 -0.02 -0.93 1997 45 1958 11.0 .. 340
170 Mozam- 6 4 3 48 -0.22 0.20 3.0 -0.32 -0.49 0.10 1999 80 1975 30.0 .. 311
Bique
171 Burundi -1 6 6 80 -1.35 -1.54 .. -1.07 -1.14 -1.40 1993 91 1961 14.4o .. 226
172 Niger 4 4 4 62 0.11 -0.61 2.0 -1.17 -1.16 -1.09 1999 .. 1948 1.2 .. 253
173 Sierra Leone .. g 5 4 75 -1.35 -1.26 3.0 -0.38 -1.60 -0.45 1996 50 1961 8.8 .. 328
Liberia
Sao Tome
Somalia
Latin America and Caribbean
34 Argentina 8 2 1 33 0.57 0.55 4.0 0.22 0.18 -0.36 2001 75 1947 31.3 25 1,666

39
 Democracy Governance Participation Civil society

HDI Country Polity Civil Political Press Voice Political Law Rule of Govern Graft Latest Year Seats in Trade Non-
rank scorea Liber- rights b free- and stability and lawd ment (corruption)d election for received parliam union govern
2000 tiesb 2000 domc account- and lack orderf 2000- effectiv 2000-01 lower or right to ent held members mental
(-10 2000 (7 to 1) 2000 abilityd,e of 2001 01 enessd (-2.50-2.50) single housei votej by hip organisa
to 10 (7 to (100 2000-01 violenced (0-6) (-2.50 2000- women (as % of tions
1) to 0) (-2.50 to 2000-01 to 2.50) 01 Year Voter (as % non- 2000
2.50) (-2.50 to (-2.50- turn of agricultur (number)
out
2.50) 2.50) total)k al labour
(%)
force)l
1995
38 Chile 9 2 2 27 0.63 0.87 5.0 1.19 1.13 1.40 2001 87 1931, 10.1 16m 1262
1949
73 Brazil 8 3 3 31 0.53 0.47 2.0 -0.26 -0.27 -0.02 .. .. 1934 6.7 32 m 1830
93 Ecuador 6 3 3 40 -0.14 -0.80 3.0 -0.76 -0.94 -0.98 1998 .. 1929, 14.6 10 728
1967
94 Dominican 8 2 2 30 0.42 0.46 2.0 0.01 -0.24 -0.20 1998 66 1942 14.5 17 519
Republic
103 Guyana 6 2 2 22 0.94 -0.70 4.0 0.13 0.02 -0.45 2001 89 1953 20.0 25p 284
104 El Salvador 7 3 2 37 0.21 0.62 3.0 -0.65 -0.25 -0.33 2000 38 1939 9.5 7 460
116 Honduras 7 3 3 45 -0.04 0.25 1.0 -1.06 -0.58 -0.63 2001 73n 1955 5.5 4m 438
118 Nicaragua 8 3 3 40 -0.06 0.31 4.0 -0.79 -0.73 -0.80 2001 75 1955 20.7 23 408
120 Guatemala 8 4 3 49 -0.33 -0.77 2.0 -1.00 -0.63 -0.69 1999 54 1946 8.8 4m 587
146 Haiti -2 5 6 59 -0.80 -0.38 2.0 -1.45 -1.32 -0.84 2000 60 1950 9.1 .. 308
Asia
27 Republic of Korea 8 2 2 27 0.98 0.50 4.0 0.55 0.44 0.37 2000 57 1948 5.9 9 1315
59 Malaysia 3 5 5 70 -0.13 0.31 3.0 0.34 0.53 0.13 1999 .. 1957 14.5 12 1065
70 Thailand 9 3 2 29 0.37 0.21 5.0 0.44 0.10 -0.46 2001 70 1932 9.6 3 1028
77 Philippines 8 3 2 30 0.53 -0.21 2.0 -0.49 0.03 -0.49 2001 79 1937 17.2 23 1071
98 Iran 3 6 6 72 -0.36 0.02 4.0 -0.39 -0.21 -0.64 2000 83 1963 3.4 .. 1
110 Indonesia 7 4 3 47 -0.40 -1.56 2.0 -0.87 -0.50 -1.01 1999 93 1945 8.0 3 1033
113 Mongolia 10 3 2 28 0.73 0.72 4.0 0.42 0.39 -0.19 2000 82 1924 10.5 .. 232
130 Cambodia 2 6 6 61 -0.77 -0.13 .. -0.38 0.34 0.34 1998 .. 1955 9.3 .. 136
142 Nepal 6 4 3 57 -0.06 -0.26 .. -0.65 -1.04 -0.31 1999 66 1951 7.9 o .. 398
145 Bangladesh 6 4 3 60 -0.20 -0.57 2.0 -0.76 -0.54 -0.64 2001 75 1972 2.0 4 593

40
 Democracy Governance Participation Civil society

HDI Country Polity Civil Political Press Voice Political Law Rule of Govern Graft Latest Year Seats in Trade Non-
rank scorea Liber- rights b free- and stability and lawd ment (corruption)d election for received parliam union govern
2000 tiesb 2000 domc account- and lack orderf 2000- effectiv 2000-01 lower or right to ent held members mental
(-10 2000 (7 to 1) 2000 abilityd,e of 2001 01 enessd (-2.50-2.50) single housei votej by hip organisa
to 10 (7 to (100 2000-01 violenced (0-6) (-2.50 2000- women (as % of tions
1) to 0) (-2.50 to 2000-01 to 2.50) 01 Year Voter (as % non- 2000
2.50) (-2.50 to (-2.50- turn of agricultur (number)
out
2.50) 2.50) total)k al labour
(%)
force)l
1995
Former USSR (FSU)
42 Estonia 6 2 1 20 0.94 0.73 4.0 0.78 0.86 0.73 1999 57 1918 17.8 26 897
49 Lithuania 10 2 1 20 1.00 0.29 4.0 0.29 0.26 0.20 2000 59 1921 10.6 .. 848
56 Belarus -7 6 6 80 -1.04 0.04 4.0 -0.81 -0.99 -0.06 2000 61 1919 18.4 96 474
60 Russia 7 5 5 60 -0.35 -0.41 3.0 -0.87 -0.57 -1.01 1999 62 1918 6.4 75 m 1752
76 Armenia 5 4 4 59 -0.22 -0.84 3.0 -0.35 -1.03 -0.80 1999 52 1921 3.1 .. 287
81 Georgia 5 4 4 53 -0.07 -1.00 .. -0.43 -0.72 -0.69 1999 68 1918, 7.2 .. 397
1921
88 Azerbaijan -7 5 6 76 -0.70 -0.70 4.0 -0.78 -0.95 -1.05 2000 68 1921 10.5 75 223
102 Kyrgyzstan -3 5 6 61 -0.57 -0.32 .. -0.72 -0.61 -0.85 2000 64 1918 6.7 .. 130
105 Moldova 7 4 2 59 0.12 -0.29 5.0 -0.42 -1.10 -0.83 2001 70 1978, 12.9 .. 276
1993
112 Tajikistan -1 6 6 79 -0.69 -1.77 .. -1.25 -1.31 -1.08 2000 94 1924 12.4 .. 90

Former European Socialist (FES) Countries

33 Czech Republic 10 2 1 24 1.04 0.74 5.0 0.64 0.58 0.31 1998 74 1920 14.2 36 1891
35 Hungary 10 2 1 28 1.19 0.75 4.0 0.76 0.60 0.65 1998 56 1918 8.3 52 2050
37 Poland 9 2 1 19 1.21 0.69 4.0 0.55 0.27 0.43 2001 46 1918 20.7 27 2084
62 Bulgaria 8 3 2 26 0.59 0.37 4.0 0.02 -0.26 -0.16 2001 67 1944 26.2 51 m 1277
63 Romania 8 2 2 44 0.50 -0.08 4.0 -0.02 -0.54 -0.51 2000 65 1929, 9.3 41 m 1390
1946
65 Macedonia 6 3 4 44 0.03 -1.45 .. -0.33 -0.63 -0.51 1998 73 1946 6.7 .. 383
92 Albania 5 5 4 56 0.01 -0.60 2.0 -0.71 -0.89 -0.60 2001 60 1220 5.7 .. 389

41
Source: Compiled from Human Development Report 2002: Deepening Democracy in a Fragmented World, UNDP, Table A1.1 and A1.2
Note: The data in this table are subjective measures of governance and thus are open to dispute and should not be taken as authoritative. The measures are from a variety of institutions
and are based on different methodologies and scoring systems. Thus higher numbers may reflect better or worse scores, depending on the measure. The range of scores for each
measure is shown in the column heading, with the first number representing the worst score.

Source: Column 1: Polity IV 2002; columns 2 and 3: Freedom House 2001; column 4: Freedom House 2000; columns 5,6,8,9 and 10: World Bank 2001c; column 7: PRS Group 2001
Columns 11 and 12: IPU 2002a; column13: IPU 1995; column 14: Human Development Report Office calculations based on data on parliamentary seats from IPU 2002b; column 15:
ILO 1997; column 16: UIA 2000.

a. Developed by the University of Maryland ’s Polity IV project, this measure reflects the presence of institutional factors necessary for democracy —whether laws and institutions
allow democratic participation — but not the extent of political participation. Scores range from –10 (authoritarian) to 10 (democratic).
b. Freedom House designates countries with an average score for civil liberties and political rights between 1 and 2.5 as free, those with a score between 3 and 5 as partly free and
those with a score between 6 and 7 as not free. Countries with an average score of 5.5 could be classified as either partly free or not free, depending on the underlying data used to
determine their civil liberties and political rights scores.
c. Freedom House designates countries with a score between 0 and 30 as having a free press, those with a score between 31 and 60 as having a press that is partly free and those with a
score between 61 and 100 as having a press that is not free.
d. This indicator, developed in World Bank research, is based on a statistical compilation of perceptions of the quality of governance. The data are from a survey covering a large
number of respondents in industrial and developing countries as well as non-governmental organizations, commercial risk rating agencies and think tanks. The measures in no way
reflect the official position of the World Bank, the supplier of these data. Estimates are subject to a large margin of error. For further details on methodology see appendix A1.1 and
Kaufmann, Kraay and Zoido-Lobatón (2002).The index ranges from around –2.50 to around 2.50 (higher is better).
e. The voice and accountability index combines several indicators of the political process (including the selection of governments) with indicators of civil liberties, political rights and
press freedom and independence.
f. The law and order measure, from the International Country Risk Guide, ranges from 0 to 6 (higher is better).
g. Country has had a complete collapse of its central political authority.
h. Score falls outside the approximate range specified in the column heading.
i. Data are as of 8 March 2002.
j. Data refer to the year in which the right to vote on a universal and equal basis was recognized. Where two years are shown, the first refers to the first partial recognition of the right
to vote.
k. Data are as of 18 March 2002.Where there are lower and upper houses, data refer to the weighted average of women ’s shares of seats in both houses.
l. Data are derived from various national sources using different methodologies for data collection. For further information see ILO (1997).
m. Data refer to a year other than that specified.
n. Data refer to average turnout in the 1990s.No official data are available. The figures are from International IDEA (1997).
o. Information for the most recent elections was not available in time for publication; data refer to previous elections.
p. Data refer to union membership as a percentage of the economically active population.
q. Calculated on the basis of the 54 permanent seats (that is, excluding the 36 special rotating delegates appointed on an ad hoc basis).
r. Transitional appointed unicameral parliament created by decree.
s. Parliament has been dissolved or suspended for an indefinite period.
t. Refers to the former People ’s Democratic Republic of Yemen.

42
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44