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June 23, 2011

Economist predicts that China will be a democracy by 2017

Charles Robertson, chief economist of Renaissance Capital, predicts that China will be a democracy by 2017

China could be a democracy by 2017 assuming the economy grows and annual incomes rise to $15,550 a head.

A groundbreaking report analyses 150 countries and 60 years of history, and concludes that rising levels of wealth are entrenching democracy in many emerging markets.

According to the report, Russia is highly likely to become a strong democracy within the next few years; China will become a democracy by 2017; and Kenya and Ghana are set to follow Nigeria towards ever-safer democracy levels. It concludes that trade and investment in “non-democracies” should be increased, rather than imposing sanctions on them.

The report asserts that democracies are “immortal” above the per-capita GDP level of $10,000, which probably now includes Mexico, Brazil and Turkey, as well as all EU member states and South Korea. It notes that autocracies have less chance of becoming democracies than vice-versa up to the $3,500 per-capita GDP level; and that rising income levels will lead to democracy unless the country is an energy exporter. “Controversially, it would appear that trade, investment and even tourism to foster growth is a better policy option than sanctions for Western governments hoping to promote democracy in non-energy exporting states,” the report concludes.

He is probably using PPP per capita



The big exception are energy producers, notably in the Middle East, where autocracies have survived with very high income levels, beyond $19,000 annually. Robertson says the answer is straightforward – these states don’t need to tax their citizens.

The $6,000 per capita GDP seems to be a crucial level, marking the point where a country is likely to shift to democracy. Tunisia, which early this year triggered the wave of uprisings against autocracy across the Arab world, recently crossed that threshold.

Conversely, democracy is most fragile at the lowest income levels and when incomes are shrinking.

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