India is widely heralded as being the “world’s largest democracy.”  China is regularly castigated for being the opposite—an authoritarian country that oppresses its people.  What if I were tell you the opposite is true?  What if I were to tell you that China is actually closer to democracy than India?  Would that change your world view a bit? 

 

Convincing you that an obviously non-democratic country is more democratic than a country you think is clearly democratic won’t be easy.  So I would ask you to indulge me as I provide you with some nerdy but necessary background information.   

Measuring corruption: The Corruption Perception Index (CPI)

The Corruption Perception Index (CPI), compiled annually by NGO Transparency International, is based on surveys of business people and government officials.  A score of 100 means “No Corruption” while a score of “0” means “Total Corruption.” 

Measuring democracy: Freedom House

Freedom House is an NGO that scores and ranks democracies around the world every year, with zero meaning not democratic at all and 100 being a perfect democracy.  Freedom House’s ranking focuses mostly on the institutional arrangements of a political system, not how the system actions functions, which I think is a short-coming of their scoring system.  Still, their work is very helpful, including the fact that for each country they also provide a description as to the weaknesses of each country’s political system. 

70 years of elections and still highly corrupt

The first point to make relative to India is that its most recent CPI score is 38 which indicates a high level of corruption and is comparable to China’s and other developing countries (Russia 28, Brazil 43, etc.).  In fact, there is an interesting pattern relative to the CPI.  High income countries generally score above 70.  Low income countries all score roughly 40 or below.  Rich countries are significantly less corrupt than poor ones.  That’s an important point to remember.  Another important point is this—elections don’t seem to improve corruption.  India has held elections for almost 70 years but is still as corrupt as China. 

India has many other rule of law problems

Corruption reflects weakness in the rule of law.  The CPI is actually a good proxy for rule of law in general because when there is great weakness in one area there tends to be weakness in all areas.  According to Freedom House’s most recent assessment of India, its political system suffers from an array of non-democratic issues including:   

 

Bribery at all levels, including lower level judges and police; security forces implicated in extrajudicial killings, rape, torture, arbitrary detention, kidnappings, and destruction of homes: approximately 1.8 million people are victims of police torture every year (likely an underestimate); security laws, criminal defamation legislation, hate-speech laws, and contempt-of-court charges are used to curb critical voices.

 

The above is just a sampling of India’s democratic challenges.  It is important to note that India is not alone in this regard.  Many countries suffer from the same rule-or-law related shortcomings. 

Rich countries are less corrupt than poor countries

There are three conclusions we can draw from the above.  First, although we tend to focus on elections, real democracy requires much more, including the rule of law.  Scholars have coined the term “ineffective democracy” to describe countries that might have elections but are otherwise broadly dysfunctional relative to democracy.  Secondly, India is clearly an “ineffective democracy” suffering from substantial weakness in the rule of law.   Thirdly, the issues highlighted above suggest a particular pattern—developed countries have stronger rule of law than less developed countries. 

Taiwan focuses on capitalism; India focuses on democracy

With that in mind, let’s consider the development of India and Taiwan.   India broke from England in 1947. Taiwan broke from China in 1949.  Both were poor, backward, and mostly agrarian at that time.  India immediately established the institutions of democracy but over the next fifty years maintained a socialist-orientation to its economy.  Taiwan, on the other hand, maintained martial law for forty years, granting virtually no political freedoms to its people, but pursued economic liberalization including policies to encourage private property, trade, foreign investment, and entrepreneurship. 

Taiwan soars, India stagnates

Today, India remains a low income country, still among the poorest in the world.  Taiwan is now an upper middle income country with per capita GDP 14 times larger than India.   Corruption also improved in Taiwan, with its CPI rising to a respectable 61, likely to continue rising as it develops, while India’s CPI, as was mentioned above, remains stuck at an abysmal 38 (highly corrupt).  India’s Freedom House score for political freedom is 77, which I think is too generous because it doesn’t adequately discount India’s rule of law issues.  Still, while Taiwan averaged a Freedom House score of about 25 (very unfree and undemocratic) during the martial law period, after martial law was lifted in the late 1980’s Taiwan’s score quickly rose into the 80’s and now stands at 89, significantly above India’s 77. 

On the road to democracy, capitalism comes first

So, to summarize, India chose elections and socialism.  Taiwan chose martial law and capitalism.  Tawain vastly outperformed India, not only economically but politically.  The main reason is that economic development drove cultural change in Taiwan which strengthened the rule of law.  India’s lack of economic success left it immersed in cultural challenges including weakness in the rule of law.  It is worth noting that not only Taiwan followed this “capitalism before democracy” approach.  So did South Korea, Hong Kong, and Singapore.  They all outperformed India, Nigeria, Brazil, and all of the others who tried democracy first. 

China is way ahead of India economically, might lead to being a better democracy

If elections were all a country needed to be democratic, India would be a role model.  But without other cultural factors supporting the institutions of democracy, including the rule of law, elections are actually relatively meaningless.  China is following a path similar to Taiwan’s—economic liberalization before political liberalization.  Because China has so overwhelming outperformed India over the last 35 years, China’s economy is estimated to be almost 5 times larger than India’s on a per capita basis.  This means that, although it isn’t showing yet, China already has a significant lead on India in terms of driving cultural change and improving the rule of law.  If China maintains that kind of economic advantage over India, like Taiwan, it will no doubt surpass India as a democracy.  This is why I would say that China is actually closer to being a democracy than India.  We’ll know the real answer in 30-50 years.  I wouldn’t bet against China.