Democracy, Governance and the Market


Since the early 1980s, the world has witnessed an unprecedented trend toward democracy and market-based economies. Nonetheless, much work remains to be done to reinforce this progress and to prepare nations for the political and economic realities of the 21st century including globalization. Even long established democracies such as Colombia, Peru and Venezuela have seen their political and economic stability threatened. Other countries including Turkey, Indonesia, and Ukraine are under severe pressure as they attempt to establish a democratic rule- of-law society, now seen as the minimum requirement for business and economic growth.

Contemporary history has shown that countries with democratic, market-based systems are best equipped to respond to the challenges of globalization. Specifically, there are three essential aspects of democracy that have proved to be crucial to long term economic and social development.

  • A stable democratic system is the best guarantor of political stability, which is essential for long term economic growth.
  • Democratic practices such as transparency and accountability are essential for effective and responsive government and for efficient and prosperous economic activity. (The financial crises Asia and Russia experienced in the late 1990s are cases in point.)
  • Sound legal and regulatory codes backed by the rule of law must exist if business is to thrive in a market economy.
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