Electoral Cycles, Term Limit and Economic Development

Thu, 11 Aug 2011 Source: Idun-Arkhurst, Kobina

Electoral Cycles, Term Limit and Economic Development

In his last days in office, President Kufuor proposed extending the presidential term limit for each incumbent from the current maximum of two 4-year terms to two 5-year terms. According to this view, the current term limit does not allow incumbents enough time to implement their development programmes. However, the precise link between term limit and economic development has not been well-discussed in our public discourse. Instead, the issue has been dismissed as only reflecting the desire of incumbents to continue to enjoy the benefits of political power. Below, I consider below why the issue must be given serious attention and propose one maximum term limit of eight years.

Let’s begin with some observations on the link between democracy and economic development. Orthodox development thinking and practice suggest that democratic accountability and rule of law, including strong property rights protection, are institutional pre-requisites for economic development. Yet, the most rapid post-war transformations in the developing world occurred in East Asia when most countries in the region were lacking in such institutions. In East Asia these institutions emerged largely as by-products of the economic development process. This is consistent with patterns observed in the development experience of most parts of the West but in sharp contrast with the post-war development experience of Africa in two senses.

First, unlike in East Asia and elsewhere (e.g. in Chile), the one-party state and military regimes in Africa failed to become agents of much transformation. Second, many of the successive market democracies have performed equally poorly, in some cases even more abysmally than the authoritarian regimes before them. In fact, while Western donors were busy shoehorning democratic institutions into Africa, Western investors were overlooking Africa and heading for the largely authoritarian East Asia. So why did authoritarian governance in East Asia provide such attractive climate for global investors?

In terms of institutions, two main factors explain the success of East Asia and raise important questions for considering longer term limits in poor democracies. The first is the commitment of the authoritarian regimes to promote economic development by facilitating the growth of businesses, private or public, local or foreign. This commitment provided a substitute for rule of law and property rights protection, although this system often encouraged personalised, even corrupt, relationships. The second factor that underpinned the attractiveness of East Asia as an investment destination was the commitment of pro-growth regimes to invest in the physical and human capital that would facilitate broader economic investment and drive economic growth and employment.

The whole point about rule of law and property rights protection, in terms of economic development, is to ensure consistency of rules and confidence about the safety of private investment. While it is important, rule of law, good governance generally, adds nothing to the production process itself, so that a country whose entire public arena is fixated on “good governance” does not necessarily become a competitive platform for production and therefore for employment creation. Instead, a country that can supply adequate, efficient infrastructure, as well as productive labour, enhances firm productivity and competitiveness.

This is where the problems of both autocracies and democracies in Africa begin. In most of Africa, both political systems have failed to focus on rapid capital accumulation and to commit to a consistent, sustained programme of economic development. Instead, successive regimes have tended to wipe out, rather than build on, achievements of predecessors, however modest, as the only way to establish legitimacy. Under authoritarian rule, the absence of checks and balances allowed incumbents to siphon public resources for personal and regime maintenance, while neglecting the development needs of their societies. This is the central conundrum of the widely-known resource curse problematic.

But resource curse does not necessarily go away with the introduction of democratic rule and greater recognition for the wisdoms of the crowds. In fact, democratic rule can reinforce it. Worldwide, democracies have a hard time focusing on the kind of public capital accumulation that drives future investment, growth, and employment. This is because popular pressure for immediate consumption often forces incumbents to focus on short-term redistribution in order to win the next election. One can deduce, therefore, that the shorter, and the more frequent, the electoral cycle; the less the likely political pay-offs in focusing on long-term investment. While these challenges are faced by almost all democracies, they have particular salience in poor democracies. There are two reasons for this.

One reason is that poor democracies start from a weak base of infrastructure development and the challenges outlined above don’t help overcome this structural weakness easily. The other is that most poor democracies are heavily dependent on aid from Western donors, whose policies have tended to shift away from investment in growth to non-governmental and humanitarian approaches that help recipient societies only scrape by rather than transform. Here, one has to be sympathetic towards Western donors because their own aid policies are substantially driven by the ideological mood swings and postmodernist fantasies of their own electorate s.

One way to solve some of the above challenges is to lock up resource rents and other revenues in productive public investments through legislation, as we have recently tried to do with the bill on oil revenues. Another is to consider reducing the frequency of electoral cycles and the incentives for short-term political calculations. In this regard, I propose a maximum one-term limit of eight years for each elected leader, after which they may not stand for re-election. The proposal for a one-term limit applies to only the president, not to parliamentarians. Lawmakers usually get better the longer they serve. However, parliamentarians may also be elected, or re-elected, every eight years. The short electoral cycles in the current two 4-year terms provide stronger incentives for the politics of redistribution and patronage.

Our current system of winner-takes-all politics also means that incumbents often take about a year to find their feet in government before they begin to seriously implement their policies. But by the end of the second year, they are back on the campaign train in preparation for the next election. This results in the misallocation of government effort and time from governing to campaigning. If the sitting president is challenged from within for the ruling party’s flag-bearer slot, this process may start earlier, become highly distractive, and accentuate electoral misgovernance.

The current proposal should not necessarily eliminate the benefits of political competition. An incumbent president would have only one but sufficient term to establish his or her legacy. Failure also means that the ruling party loses the next election and the cost of this lost may be going into opposition for 16 years or more, if the next alternative government performs better. For the country, there can be cost savings in reducing the frequency of elections and paying end-of-service benefits to parliamentarians every four years, that is, if such payments are necessary at all.

However, some concerns about the current proposal must be anticipated. For example, a longer term limit could saddle the country with an incompetent leader/government that could have been changed under the current system of two 4-year terms. This might not only eliminate any anticipated benefits, but, perhaps, also increase the risk of the return of the military. Given the historical evidence, this fear is justified. But the historical evidence also suggests that military coups succeeded because they were initially welcomed by the populace. Recent events in places like Guinea show that popular tolerance for coups in Africa is now very weak.

After welcoming coup after coup in expectation that the promised development would come at last, many in Africa have arrived at an important conclusion: better to enjoy political freedoms and be economically poor than lose such rights and still be poor. Still, this is no reason for democracy to fail to bring material betterment to the population. We must evolve democratic systems that deliver not only “good governance” but also better living standards for the mass of our people. This also raises the question of civic responsibility and discipline. An eight-year electoral cycle would increase the cost of bad electoral decisions, such as those made for tribal and religious reasons. We might begin to exercise our right to vote in more responsible ways and show more interest in having a more responsive, non-partisan institution to undertake civic education.

More important in terms of benefits, a longer presidential term limit may alter the incentive structure facing politicians and encourage them to focus on long-term investments. There is always a trade-off between our demands for immediate consumption on the one hand and future growth and jobs on the other. There is good reason to limit the former and encourage the latter. Certainly, we don’t want to continue living on foreign aid forever.

Kobina Idun-Arkhurst.

With emphasis, the writer has no partisan affiliation in Ghanaian politics and has raised the current subject in the spirit of the debate on constitutional review in Ghana.

Columnist: Idun-Arkhurst, Kobina