Trial Balloon


The Nobel Peace (and Economics) Prize

Given that we are The Institute for Economics and Peace, it seems only fitting to comment on both the Nobel peace prize and the Nobel prize for Economics (although it’s not technically a nobel prize).

Congratulations to the joint winner of the 2011 Nobel Peace Prize: Ellen Johnson Sirleaf, Leymah Gbowee, and Tawakel Karman. A summary of their achievements can be found here.

Congratulations also to Thomas J. Sargent and Christopher A. Sims. An extensive summary of Sargent’s work can be found here, and of Sims here.

Peace, GDP, Population, and Governance

A recent blog post by Harvard development professor Dani Rodrik posed the question: Can you get rich without democracy? Using the Polity IV data as a measure of democracy, Professor Rodrik suggested that if oil rich countries are excluded from the analysis (countries where fuel exports are more than 50% of export revenues), it seems that democracy and economic prosperity are inseparable (for the exceptions, see this graph), and that $5000 GDP per capita (in 2005 PPP dollars) is the limit for non-democracies.The future outcomes for countries on this GDP threshold thus seem to be transform, stagnate, or revolt.

The Institute for Economics and Peace has found a similar link between GDP per capita and Peace:

Interestingly, there also appears to be a ‘peace limit’ or ‘peace pivot’ at the GPI score of 2 (slightly less than the 2011 GPI average score of 2.05). Nations with better GPI scores less than 2 seem to have exponentially increasing GDP per capita (although once again, there are a number of exceptions).

What, if any, are the links between GDP, peace, and democracy? It’s possible to combine GDP per capita, peacefulness, and governance (as well as the confounding factor of population size) into one chart. In the chart below, the vertical red line is the ‘peace pivot’ whilst the horizontal red line is the GDP per capita cut off point. The size of the bubbles is reflective of population size, and the different colours represent different styles of government, as measured by the EIU’s democracy index.

A disaggregated version of the chart more clearly shows how the different government types fare when it comes to both peacefulness and prosperity:

Although there are a few authoritarian and hybrid regimes that are both peaceful and prosperous (all of them with small populations), there are no full democracies that are not peaceful and prosperous, with the exception of the US. The big question for Professor Rodrik is whether or not China will transition peacefully to a more democratic country (or at least to a hybrid regime)

Of course, none of this analysis allows us to conclusively demonstrate causation. However, existing research by the World Bank suggests that historically, good governance leads to growth, whilst growth does not necessarily lead to good governance. Thus we should expect to see prosperous and peaceful democracies, whereas authoritarian regimes might become prosperous, but rarely peaceful as well.