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Strong political parties generate economic growth

Political parties are part of the reason why we have a stable and financially well-functioning society. In fact, strong parties generate economic growth, according to new research from Aarhus BSS. Signs of increased personalization of politics should therefore alarm us.

2018.04.12 | Ingrid Marie Fossum

It can be detrimental for long-term growth that many of the old and established democracies are seeing a decreasing number of party members and an increased personification of politics. Photo: Colourbox.com/James Edward Bourne

One of the biggest societal questions is which factors generate economic growth and development. New research from Aarhus BSS shows that there is a robust association between the strength of political parties and economic growth.

“The stronger the parties are, the more economic growth can generally be observed. Strong parties are characterised by cohesion, a centralised organisation with branches on different levels and a broad member base. In different ways, these aspects all affect the politics of a country and how it is implemented. For example, we see that political decisions promoting health, education and infrastructure also promote economic growth. Interestingly, this correlation between party strength and economic prosperity can be observed in democracies as well as autocracies,” says Svend-Erik Skaaning, professor of political science at Aarhus BSS.

Together with an international research team from the US and Sweden, Skaaning has used a comprehensive dataset to explore the correlation between party strength and economic growth in almost all countries in the world from 1900 until today. The statistical analyses demonstrate a very solid and rather strong correlation. The results have been gathered in the article ”Party Strength and Economic Growth”, which has just been published in the top journal World Politics.

Exchanging knowledge through the party apparatus

“Our findings underline the fact that political parties are important drivers for stability and growth. For this reason, it can be detrimental for long-term growth that many of the old and established democracies are seeing a decreasing number of party members and an increased personification of politics. In addition, most new third-world democracies are characterised by relatively weak parties, and in many undemocratic countries, the political parties are merely just for show, while all the important decisions are made by a strong man in charge who fails to consider the welfare of the party members and society as a whole,” says Skaaning.

The population generally benefits from the knowledge sharing, control of incumbents and level of efficiency that follow from strong parties. Skaaning elaborates:

“In countries with strong parties, the party organisation will make sure that there is a efficient link between the party management and the members. On one hand, relevant knowledge concerning specific requests and local conditions are channelled from the bottom to the top. This information channel is particularly useful in autocracies where the media is controlled by the government. On the other hand, the party’s management is held somewhat at bay by the grassroots and the party apparatus and party leaders are thus less likely to be involved in corruption and embezzlements,” he says.

The government is also able to draw on the network when implementing new policies. This makes the implementation of new policies more efficient and more in line with the purpose.

Long-term policies for the benefit of society as a whole

Another characteristic of countries with strong parties is that they typically consider the whole rather than individuals. In this way, a country is more likely to produce public sector services that will benefit the general population. This could be infrastructure, education and health services that all create a basis for economic growth.

Countries with strong parties also tend to be more peaceful and stable. This reduces uncertainty and calls for more long-term political perspectives and investments. Ultimately, this increases productivity.

“Some reforms are unpopular in the population, but will benefit society in the long run. Examples could be pension reforms that increase the pension age and reduce the benefits of retiring for some groups thereby creating growth in the long term as the workforce is increased and the pension costs are kept under control. These kinds of reforms would be difficult to implement in countries with weak parties,” says Skaaning.

The downside

However, having strong parties is not always a good thing. Here Skaaning points towards China and the USSR:

“Although the communist parties in countries such as China and the Soviet Union were some of the first to invest heavily in education, health and industrialisation, they did so while oppressing the population at the same time. Not until the last few decades has the Chinese Communist Party promoted an economic growth that has made China the envy of the world.”  

Further information:

The research is highly based on the Varieties of Democracy Dataset, which includes 350 indicators that are primarily related to the level of democratisation in the country, but also include a number of indicators that can be used to measure the strength of the party. The data covers all the countries in the world from 1900 until today. 

Svend-Erik Skaaning, Professor of Political Science
Aarhus BSS, Aarhus University
Email: skaaning@ps.au.dk
Telephone: 8716 5595 / 6133 5244  

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