INSUBCONTINENT EXCLUSIVE:
By Tom Orlik and Justin JimenezSurveying the end of the Cold War in 1989, political scientist Francis Fukuyama famously argued in an essay
titled The End of History that Western liberal democracy was the culminating form of government
History, you might say, has returned.
Consider the Group of 20
output shrink in recent years
The most striking countertrend has been the rise of populism
President Donald Trump in the US is one prominent example
The Northern League and Five Star Movement swept into power there this year
Populists, according to our classification, now manage the largest bloc of the G-20 economies
oversaw.
A couple of things emerge from this analysis
First, the populist category jumped in 2016
category.
Second, the rise of China means that authoritarian regimes, with strong central power and limited political freedom, play an
important in that regard.
To put some numbers to it: When you add up the nominal output of the G-20 states plus Spain, their combined GDP is
Populist governments now control 41 percent of that
By contrast, in 2007, before the crisis roiled the world, the figure was only 4 percent.
Mainstream democratic parties, which typically
occupy the center of the political spectrum, have gone from dominance to minority
They preside over only 32 percent of the G-20 output
China accounts for almost 19 percent, up from 8 percent a decade ago.
There are, of course, issues of judgment
Should the US under Trump fall in the populist or mainstream democratic category Probably somewhere in between.
So is there another way to
tease out a populist trend One is to examine the share of popular vote garnered by the top two parties, which typically represent mainstream
Among major democracies, that share has fallen to 63 percent from 74 percent in 2007
Even so, the same pattern stands out: The mainstream is losing influence.
What consequences will economies face from the lurch toward
populism and authoritarianism Mainstream parties, and indeed economists, should be humble about how much they know about good policy
Failure to manage the forces that globalization unleashed created the conditions for the rise of populism in the first place.
Even so, as
traditional economic logic plays a diminished role in big policy decisions, it seems reasonable to ask if a slide toward populism and
authoritarianism will erect barriers to growth
The shift is, after all, producing plenty of violations of the good-policy playbook.
Leaving aside self-interested mismanagement of the
break the missteps into two categories: First are policies that damage growth potential
that undermine institutions
To be sure, Turkey and Italy are flirting with crisis, and the U.K
But looking at the G-20 as a whole, GDP growth rose to 3.8 percent in 2017, the fastest pace since 2011
They fed on economic discontent but ultimately inherited an upswing
Pro-cyclical policies, notably the US tax cuts, are giving growth an additional boost
A pro-business stance, with a bonfire of regulations in the US, China, and India, is also helping.
Those factors are important
But the persistence of growth reflects something more than just luck and stimulus
has gathered data in more than 200 countries on six dimensions of governance: voice and accountability, political stability and absence of
violence, government effectiveness, regulatory quality, rule of law, and control of corruption
An analysis using that data shows that high-quality regulation and government effectiveness correlate more closely with growth than
In those terms, the trajectory on governance in the G-20 looks less alarming
Democratic standards may be deteriorating, but quality of regulation and government effectiveness remain comparatively stable, even edging
that underpin good governance Count us skeptical
Government effectiveness and high-quality regulation are tough to maintain in the absence of policy debate and accountability for leaders
The return of history has not, so far, meant the end of growth
Jimenez is an associate economist in Hong Kong.)
