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Back | Programme Area: Governance (2000 - 2009) | Event: What Choices Do Democracies Have in Globalizing Economies?

What Choices Do Democracies Have in Globalizing Economies?

  • Date: 27 - 28 Apr 2000
  • Location: Palais des Nations, Room XVI, Geneva
  • Speakers: Attila Agh, Francis Akindes, Björn Beckman, Wiseman Chirwa, Javier Corrales, Robert Elgie, Richard Joseph, Junko Kato, Maureen Makintosh, Sylvia Maxfield, Pratap Mehta, Veronica Montecinos, Abdul Raufu Mustapha, Robert O'Brien, Doh Shin, Patricio Silva, Peter Pendersen, Ole Therkildsen
  • Project Title: Technocratic Policy Making and Democratization

Background Note

Democratization has expanded a great deal in most regions of the world. A large number of authoritarian regimes have lost power in competitive elections as citizens demand better forms of representation, openness and accountability in the governance of their societies. Despite its unevenness and setbacks in many countries, democratization seems set to continue to offer prospects for improving the institutions of government and encouraging participation in public affairs in the new millennium. The United Nations has been central in shaping the evolution of this process as part of its efforts to promote a humane, equitable and stable world order. Indeed, there is growing consensus in the international development community that democratic participation in decision making will lead to more effective and sustainable policies as well as better delivery of public services.

However, the worldwide quest for democratization is challenged by another major trend that has grown in strength with globalization and is likely to dominate the development policy debate in the new millennium. This trend is the increasingly technocratic style that has informed the making of economic policy in many countries and in global economic institutions generally. Globalization and pressures for open economies and sound finance increasingly mean that governments are restricting economic policy making to experts and insulating key public institutions, such as central banks, fiscal authorities and finance ministries, from democratic scrutiny. Technocratic styles of governance affect democratization in two substantial ways: national policy makers may become more accountable to international financial markets and multilateral economic institutions than to parliaments and citizens; and social policies that are central to the consolidation of democratic institutions may be treated as residual parts of macro-economic policy, and democratization as populism.

The UNRISD conference on Technocratic Policy Making and Democratization provides an opportunity for scholars, policy makers, development practitioners and civil society groups to discuss the emerging tension between democracy and insulated styles of policy making. If citizens believe that newly established democratic institutions can be ignored or downgraded in the making of decisions that affect their lives, they may adopt an instrumental view of democracy and seek solutions outside of these institutions. This may have negative consequences for political stability and economic development. As the Seattle ministerial meeting of the WTO has shown, civil society groups are already angrily protesting a variant of technocratic governance in the trade policy field, with some groups even questioning the legitimacy of the multilateral trade system itself. The United Nations system and the development community generally need to focus research and debate on this issue if the gains of globalization and democratization are to be protected.

The conference will open with a keynote address by a scholar who will speak on Globalization, Economic Policy Making and Democratization. The speech will provide an overview of current patterns of economic policy making and democratization in global and national settings. The second session will focus on Independent Authorities and Democracy. There is a growing trend in developed and developing countries alike to create a wide range of autonomous public authorities that will check the discretionary powers of governments or politicians in key areas of policy making. These institutions include central banks, tax authorities, and executive agencies in service delivery. Central banks in many countries increasingly enjoy independent powers in monetary policies, which explicitly give priority to price stability. The roles of finance ministries are also being curtailed in the field of fiscal policy as governments are pressured by international financial markets, multilateral lending agencies and regional economic blocs to lower budget deficits and debts.

Those who advance the case for central bank independence believe that bankers are more likely than politicians to develop the long-term horizon that monetary policy requires to stabilize the price level. There are also increasing calls to set up independent fiscal authorities to check the propensity of governments or politicians to manipulate tax policies during the electoral cycle. Independent fiscal authorities would enjoy flexibility in adjusting tax rates according to the business, not the electoral, cycle. Technocratic approaches to the making of economic policy have implications for employment, growth, social development and poverty eradication. They may affect the way governments respond to the concerns of citizens and parliaments. Pressures to break up central bureaucratic institutions into executive agencies under "new public management" reforms also have implications for democratic accountability. The panel of discussion will consist of contributions from scholars working on central bank independence, tax authorities and executive agencies in developing countries, the European Union and Japan, as well as inputs from a parliamentarian and a central bank official.

The third session will examine the links between Technocratic Policy Making, Democratization and Social Policy. Recent trends in developing countries suggest that democracies that do not address the social well being of citizens may be prone to instability or takeover by authoritarian or populist forces. Citizens may associate democratization with enhanced public spending on education, health, social security and poverty reduction schemes in general. Pressures for increased public expenditures may, in fact, increase during electoral cycles as politicians seek re-election. These pressures may be in conflict with the residual and targeted social policies that technocrats in the mainstream economic ministries may favour as they seek to control expenditures, meet multilateral loan obligations under structural adjustment programmes, and attract capital from international financial markets. Governments have indeed used residualist programmes of targeting and social safety nets as tools in the development of technocratic regimes and to insulate the fundamentals of macro-economic policy making from popular participation. One disturbing observation is the seemingly weak performance of governments in new democracies in advancing the fight against poverty. What are the implications of this for the consolidation of democratic institutions? Are there ways of managing national economies that can facilitate the consolidation of democratic institutions and improved welfare to citizens? The panel will consist of four presentations: the first two will be by academics working on social policy, structural adjustment and democratization; the third by a social policy adviser from a democratizing country with a strong commitment to social development; and the fourth by an official from an NGO or activist group involved in the monitoring or delivery of social services.

The issue of Technocratic Governance and Civil Society will be discussed in the fourth or concluding session of the day. The participation of civil society groups in policy making has long been recognized as essential for democratic accountability. However, globalization is also undermining the roles of civil society groups in economic policy making. For instance, trade union rights and the governance roles of labour in macro-economic policy are being questioned on the basis of the need to promote labour market flexibility, higher productivity and price stability. And decision making in key multilateral economic institutions often exclude the effective participation of civil society groups.

However, the process of exclusion is not unambiguous. Civil society groups are fighting back or resisting technocracy. There are growing pressures for openness and citizen participation in decision making. "Social pacts", "concertation", and "partnership", involving unions, NGOs, other civic groups, employers, the state and multilateral economic institutions, are increasingly on the agenda. The session will consist of five presentations. It will start with an analysis of efforts by civil society groups to influence decision making in multilateral economic institutions such as the WTO, the World Bank and the IMF. This will be followed by a discussion on labour unions, social dialogue on marco-economic issues and pact formation in the context of democratization. The third presentation will report on the World Bank's experience in promoting civil society participation in the review of structural adjustment programmes (SAPRI). A unionist and an NGO activist concerned with economic and social policy issues will make the last two presentations.

The first two sessions of the second day will be devoted to country case studies on Economic and Social Policy Making and Parliamentary Accountability. This is one of the themes that UNRISD has identified for field research under its new research project on Technocratic Policy Making and Democratization. Eight scholars from Argentina, Benin, Chile, Czech Republic, Hungary, India, Malawi, and Republic of Korea will lead the discussion. Each will examine the evolution of economic and social policy making in their respective countries; the changes in the institutional arrangements that may be leading to technocratic styles of governance; the role of parliament in influencing the evolution of such changes; and the ways in which governments try to co-ordinate the policy choices of parliamentary parties in the making of economic and social policies. How democratic or authoritarian are the methods of policy co-ordination?

The conference will end with a keynote address by a scholar or public figure that will speak on Globalization and the Strengthening of Democratic Institutions. It will suggest ways of consolidating democratic institutions and citizen participation in policy making under conditions of global economic change.