What Democracy Can Do for East Asia

Between 1960 and 1997, East Asia's high-performing economies consistently grew faster than the world rate of growth. This remarkable record rests in part on innovations in policy and governance made by governments in Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Now, in the wake of the late 1990s financial crisis and in the midst of a worldwide economic downturn, these governments must make tough policy choices, some of which may upset the very groups who were the biggest "winners" from the high-growth years. What insights should guide today's leaders as they work to restore a unified commitment to genuine national development? How can democratic principles assist them in this task?

Anxious to counter Chinese belligerence and the spread of communism during the Cold War, East Asian leaders realized the need to craft strategic social compromises within their own societies. They adopted innovations in governance in order to reduce social divisions. While the primary intention may have been political, there were huge material benefits as well, for these reforms laid the groundwork for the extraordinary economic success that the region would enjoy throughout almost the whole of the late twentieth century.

Fearing enemies at the gate, elites throughout East Asia made short-term sacrifices in authority, rents, and privileges in order to improve the living standards of the rural poor and the working class. Convinced that economic failure could lead to national disintegration, the leaders of these countries gave technocrats authority over economic policy. ¹ With national survival demanding collaboration among different social strata, narrow redistributive goals gave way to more inclusive policies that required sacrifice and coordination to produce broad-based benefits. The resulting social cohesion--unique in the developing world--helped motivate East Asian populations to learn, to innovate, and to absorb new ideas.

Growth favoring one group over another would have undermined the political bargain needed to sustain national economic policies. Therefore government-sponsored credit schemes for business and industry were accompanied by improved access to jobs, housing, health care, and education for ordinary workers and citizens. This two-pronged approach was wise and necessary, but in recent years its once-hidden downside has become plain. Many firms favored for decades with political access and subsidized credit have become hothouse flowers, feeble and uncompetitive. Continuing to prop them up has involved unappetizing choices and high social costs, but standing by while established and prestigious firms flounder or even go under has also not been easy for officials to do. Policy makers throughout the region have continued to wrestle with this dilemma.

Ominously, in the years since the financial crisis of 1997, we have seen the East Asian capitals of Manila, Seoul, Bangkok, Kuala Lumpur, and Jakarta rocked by violent, class-tinged street demonstrations. Likewise, the Philippines, South Korea, Thailand, Malaysia, and Indonesia have all experienced a resurgence of regionalism in politics. The sprawling island nations of Indonesia and the Philippines are both facing strong secessionist movements.

Why are these things happening, and why now? One explanation is that at the end of the Cold War, East Asian leaders shifted gears, quietly downgrading the need to maintain the implicit social bargain. The result has been internal discontent and a consequent frustration of the very policy reforms needed to restore growth. These domestic schisms, even more than external threats, are the gravest threat to regional stability. Has increasing democracy, as some critics maintain, helped to bring these schisms to a head? Are there ways in which democracy can actually bolster social cohesion?

Where Have All the Leaders Gone?

Many say that the region's democratically elected leaders do not measure up to their authoritarian predecessors, who often oversaw the periods of fastest growth. Today's leaders, these critics claim, lack the will to implement bold and badly needed policy initiatives in their crisis-stricken states. These charges are far from baseless. The elected officials who came to power in Indonesia, South Korea...