:00:00. > :00:00.scheme. Now on BBC News, it's time for
:00:00. > :00:10.Talking Business. With over 40% of the world's
:00:11. > :00:15.population headed to the polls this year, and the election results due
:00:16. > :00:21.in the world's is democracy, we ask, is democracy good for both? In
:00:22. > :00:43.Singapore, I'm Linda Yueh, these are my guests, we are talking business.
:00:44. > :00:49.Welcome to the programme. Nearly half of the world's population is
:00:50. > :00:53.headed to the polls this year with 40 elections taking place in
:00:54. > :00:59.countries ranging from the European Union to Indonesia. For Turkey, it
:01:00. > :01:02.would be their first ever democratically elected President,
:01:03. > :01:08.and for the US, the congressional elections could shape President
:01:09. > :01:12.Obama's second time. Not every country votes, China is ruled by the
:01:13. > :01:16.Communist Party, that selects its leader who served for a decade. But
:01:17. > :01:19.China has grown more quickly than the world's biggest democracy,
:01:20. > :01:25.India, whose election results are due this month and could see a
:01:26. > :01:29.dramatic change in power. Earlier, I spoke to the professor of
:01:30. > :01:34.international management at MIT. I asked him, why democracy will lead
:01:35. > :01:41.to faster economic growth. Democracy has a logging mechanism `` building,
:01:42. > :01:48.to provide public services to a broad segment of the population. And
:01:49. > :01:55.in many poor countries, it is the lack of investment in public
:01:56. > :02:00.sector, such as education and health, that are detrimental to
:02:01. > :02:08.economic growth. There is evidence to show that democracies are more
:02:09. > :02:12.effective in providing those educational and public health
:02:13. > :02:17.services than authoritarian countries. There are a couple of
:02:18. > :02:22.governments which are not democratic, but have grown extremely
:02:23. > :02:26.well. How would they, what do they tell you, in a sense, about the
:02:27. > :02:33.relationship between growth and political systems? For every China,
:02:34. > :02:36.there are three or four authoritarian governments that have
:02:37. > :02:41.failed fantastically. So it is very important when we draw policy
:02:42. > :02:45.implications that we do not just look at a few successful countries,
:02:46. > :02:50.we also need to look at other countries but also authoritarian,
:02:51. > :02:57.that have failed miserably. There are many African countries that were
:02:58. > :03:02.authoritarian, that did not grow, that did not provide health and
:03:03. > :03:09.education to their populations. So, it is, and I think the success in
:03:10. > :03:15.Singapore in China is due to the minority of evidence rather than the
:03:16. > :03:23.majority. Can you run us through some of the, I would say, perhaps
:03:24. > :03:26.why it is that multiparty systems in Africa, for instance, are more
:03:27. > :03:35.successful than single party once? That kind of removes the democracy,
:03:36. > :03:40.saying it is a pleura Litterick political system, is it better for
:03:41. > :03:44.growth? If you hold lots of other things constant, there is no
:03:45. > :03:49.evidence that democracy hurts economic growth. I have to say,
:03:50. > :03:56.there is not very strong evidence that democracy is strongly supported
:03:57. > :04:00.`` supportive of economic growth, to the extent there is evidence that
:04:01. > :04:06.democracy does hurt in terms of providing these basic public
:04:07. > :04:14.services `` does help, there are studies that show what Erin that
:04:15. > :04:21.might `` authoritarian governments that transfer do better. `` that
:04:22. > :04:25.transition. There is also evidence that democracy is that have
:04:26. > :04:30.transitioned back into authoritarian countries, typically they are the
:04:31. > :04:39.worst, those are stronger pieces of evidence to show that democracy is
:04:40. > :04:49.better for growth than authoritarian government. Joining me now to debate
:04:50. > :04:54.if democracy is good for growth, Richard Martin, managing director
:04:55. > :05:03.and business adviser. Head of portfolio management at Real
:05:04. > :05:07.Singapore. And Vice Dean of research at public policy. Richard, is
:05:08. > :05:10.democracy good for growth? The voters will hope that because they
:05:11. > :05:16.have just turned out for the elections in India, and in
:05:17. > :05:21.Indonesia, voting for change. They want growth and that is what these
:05:22. > :05:24.elections were about. As far as what is it, probably close to a billion
:05:25. > :05:32.voters are concerned, they hope it is. But is it? IMac democracy is not
:05:33. > :05:35.bad for growth. I think we can say at least that much. One thing that
:05:36. > :05:38.is clear is that if you want sustained growth, democracy is
:05:39. > :05:42.probably a good investment. If everyone is agreed on a process of
:05:43. > :05:47.reform and the way to move ahead, they are not going to go back after
:05:48. > :05:53.the next five years or whatever and change the mind. There is a process
:05:54. > :05:57.element. What do you think? I think it is not a necessary ingredient for
:05:58. > :06:00.growth, I think if you look at comparing the big countries like
:06:01. > :06:08.India and China, you can see the command type, the way of controlling
:06:09. > :06:13.a country that China has, we have seen the country grow by leaps and
:06:14. > :06:18.bounds more over the democratic ways in India, sometimes there is a bit
:06:19. > :06:22.of criticism, a lot of talk and not too much action. There are other
:06:23. > :06:32.factors as well. But it does grow faster than India. Richard, what
:06:33. > :06:36.about that? Democracy is a step towards what a society wants. What
:06:37. > :06:43.society wants is a deal, an agreement between those who rule and
:06:44. > :06:47.those who are ruled. In China, they are delivering on that deal. The
:06:48. > :06:52.government listens very closely to the people. You think about the
:06:53. > :06:57.spread of the internet and social media in China. You think, that will
:06:58. > :07:00.destabilise China. But I do not think so. I think what it does is
:07:01. > :07:04.provide the Government with another channel to listen carefully to the
:07:05. > :07:09.people. You start to see them modify what they do in China. Suddenly,
:07:10. > :07:14.corruption and pollution control, very big issues for people in China,
:07:15. > :07:18.leaked to the top of the agenda. The government does listen and attempt
:07:19. > :07:21.to respond. That is not democracy per se. You just want a government
:07:22. > :07:26.who has gone to respond to the people. That is a good point. We
:07:27. > :07:31.take a China does not have democracy, but on a narrow
:07:32. > :07:36.definition of democracy, it is true, but there are democratic elements of
:07:37. > :07:38.Chinese life. People are responsive, they participate,
:07:39. > :07:43.express themselves, increasingly over social media. This leadership,
:07:44. > :07:48.as well as past ones, have shown that they will take that into
:07:49. > :07:52.account. They cannot imperiously do whatever they feel like. I think
:07:53. > :07:55.that is quite important. When you do the contrast between India and
:07:56. > :08:00.China, it is unfair to say the China is not democratic at all. There are
:08:01. > :08:05.strong elements of participation by people in governments ``
:08:06. > :08:13.governance. Reporting on China and India, if you look at Africa,
:08:14. > :08:16.multiparty systems perform, outperform single party states. So,
:08:17. > :08:23.if you look around the world, is there something about participation
:08:24. > :08:26.that makes the difference? If you look across Asia, starting with
:08:27. > :08:30.Asia, the biggest change we have seen in the region in the last 25
:08:31. > :08:36.years has been the movement from what were dictatorships in several
:08:37. > :08:41.countries. Through to full`blown democracies. I think that is one of
:08:42. > :08:46.the reasons this region has grown very well in the last 25 years. It
:08:47. > :08:50.has got rid of the instability that would have occurred with people
:08:51. > :08:55.fighting over power. Do you agree? That is interesting, because putting
:08:56. > :09:00.ourselves back to the wedding 70s, just looking at Southeast Asia, that
:09:01. > :09:12.backed the 1970s, back then, the Philippines were ahead of Singapore
:09:13. > :09:15.in terms of development. In that sense, you had two autocratic
:09:16. > :09:19.leaders in charge. Put yourselves forward now a number of years, and
:09:20. > :09:25.you can see how the countries have developed. It boils down to the
:09:26. > :09:31.leadership rather than systems. Basically having that succession
:09:32. > :09:34.plan put forward. Richard made a great point about dictatorships and
:09:35. > :09:36.autocratic leaders, and I think the key to success in some of the
:09:37. > :09:43.Southeast Asian countries like Singapore, for example, is that a
:09:44. > :09:48.succession plan was put in place. The leaders did not stay too long.
:09:49. > :09:53.They actually had a plan, whereas in some of the other nations... Like in
:09:54. > :09:56.Africa, they stay too long? Coming back to Africa, I think it is an
:09:57. > :09:59.interesting case because they have had good growth rates over the last
:10:00. > :10:05.ten years, five, six percent on average. Democracy has something to
:10:06. > :10:08.do with it in Africa, where the base for economic development and growth
:10:09. > :10:15.is very low, and then democracy came along and unleashed all kinds of
:10:16. > :10:18.pent`up energy. Part of that is being expressed in entrepreneurship
:10:19. > :10:21.and risk`taking, a bloom of markets, and freedom. Very quickly, going
:10:22. > :10:34.around, is democracy just good, even if it is not necessary for growth?
:10:35. > :10:40.As an Indian, I would say yes. We love democracy. Richard? I am
:10:41. > :10:43.Australian originally. The whole reason we vote is to kick the other
:10:44. > :10:47.guys out. You want a change in government. Do not assume they will
:10:48. > :10:52.get it right. I agree to a certain extent, yes. More from my panel in
:10:53. > :10:55.just a few moments. A five week`long multistage process of voting in the
:10:56. > :10:58.world's largest democracy is about to end with India's growth having
:10:59. > :11:02.slowed down considerably in the past few years, could the outcome of this
:11:03. > :11:08.election set a stronger path for its economy? I caught up with Duvvuri
:11:09. > :11:11.Subbarao, the former central bank governor of India to find out how
:11:12. > :11:17.significant these elections are for the country's future. Quite
:11:18. > :11:20.important, I would say. In fact, very important, because over the
:11:21. > :11:23.last one year, indeed, over the last two or three years, growth has
:11:24. > :11:32.moderated, inflation has been stubborn. There has been enormous
:11:33. > :11:35.anticipation built up that has the elections are over, new government
:11:36. > :11:42.comes into office, the economy will revive, we will get back onto a
:11:43. > :11:45.growth trajectory. To that extent, I think the current elections are
:11:46. > :11:48.quite important, but at the same time, I must say that growth
:11:49. > :12:04.recovery is not going to be instantaneous, rapid. It is going to
:12:05. > :12:06.be quite modest, protracted, but nevertheless, it is important that
:12:07. > :12:09.growth gets back onto a growth track. What has caused the
:12:10. > :12:12.significant growth slowdown and what are the main reasons? I would
:12:13. > :12:17.actually say that the one main reason for the slowdown in growth is
:12:18. > :12:20.that investment has stalled. If you compare India today with India in
:12:21. > :12:26.the precrisis years, the one significant difference is the rate
:12:27. > :12:32.of investment. Investment today is production capacity for tomorrow. In
:12:33. > :12:34.the precrisis years there was lots of investment, notably significant
:12:35. > :12:40.corporate investment, that created productive capacity. In contrast,
:12:41. > :12:46.over the last three or four years, investment has declined,
:12:47. > :12:52.particularly corporate investment. For the first time, investment
:12:53. > :12:55.growth is slower than GDP growth. I think that is the most important
:12:56. > :12:58.reason growth has moderated. What about the crisis, because you talk
:12:59. > :13:06.about the precrisis and post`crisis? Has the crisis caused investment to
:13:07. > :13:12.fall? You must note that India recovered from the crisis very soon.
:13:13. > :13:23.Indeed, much sooner than most other emerging economies. In fact, we had
:13:24. > :13:27.the classic V`shaped recovery. Even in the crisis year of 2008`9, growth
:13:28. > :13:30.had gone down to only as low as 6.7%, which is still higher than the
:13:31. > :13:34.growth in the last two years, which has been below 5%. To attribute all
:13:35. > :13:45.of the growth moderation today to the aftereffects of the crisis, I
:13:46. > :13:50.think would be misleading. Also, wrong. What has caused growth
:13:51. > :13:55.moderation is a lot of domestic factors, particularly investment
:13:56. > :13:58.slowdown that I talked about. But investment slowdown is a consequence
:13:59. > :14:03.of a number of factors, including the government's shortcomings. With
:14:04. > :14:06.the elections and a massive transformation for the country,
:14:07. > :14:09.which is possible any time you have big elections, what kind of reforms
:14:10. > :14:26.will be needed to turn around investment? People talk about policy
:14:27. > :14:29.reforms. Policy reforms are important and necessary, but what is
:14:30. > :14:36.even more urgent is implementation reforms. There are lots of projects
:14:37. > :14:39.on the way, lots of projects which have stalled because of bottlenecks.
:14:40. > :14:49.Like land, raw material linkages, government clearances. Policy
:14:50. > :14:52.reforms are important but what is even more urgent are implementations
:14:53. > :14:58.to get the project going. That was Duvvuri Subbarao, the former Indian
:14:59. > :15:02.central bank governor. With elections spanning Europe to Asia to
:15:03. > :15:11.the US, it is a crowded diary. So, what can we expect? Later this
:15:12. > :15:14.month, the Europeans go to the polls to elect the 751 members of the
:15:15. > :15:17.European Parliament that will represent over 500 million people in
:15:18. > :15:20.28 countries. The MEPs will then elect the new president of the
:15:21. > :15:30.European Commission, which is hotly contested as Jose Manuel Barroso
:15:31. > :15:32.steps down. The worlds's third largest democracy, Indonesia, will
:15:33. > :15:34.hold its only third ever directly elected presidential contest in
:15:35. > :15:37.July. The opposition party did poorly in local elections which saw
:15:38. > :15:41.a public holiday declared in order to encourage the 190 million`plus
:15:42. > :15:44.voters to go to the polls. Turkey heads into uncharted territory as it
:15:45. > :15:49.plans to hold its first`ever elections to directly elect its
:15:50. > :15:52.president in August. Despite allegations of corruption and mass
:15:53. > :15:59.protests, the ruling party retained its position in the local elections
:16:00. > :16:02.held in March. Could the Turkish Prime Minister, Erdogan, who has
:16:03. > :16:06.served for over a decade become the first popularly elected president?
:16:07. > :16:09.Brazilian president Dilma Rousseff faces re`election in October to try
:16:10. > :16:15.and keep her workers' party in power after a 12 year run. Much will
:16:16. > :16:18.depend on the middle`class voters who have taken to the streets to
:16:19. > :16:21.protest against inadequate social spending against the large amount
:16:22. > :16:32.spent on the World Cup, to be held this summer. Still with me to
:16:33. > :16:35.discuss the significance of these elections are Kanti Bajpai, Vice
:16:36. > :16:38.Dean of Research at the Lee Kuan Yew School of Public Policy, Richard
:16:39. > :16:41.Martin, managing director at business adviser firm IMA Asia, and
:16:42. > :16:43.Daryl Liew, head of portfolio management at Reyl Singapore. Daryl,
:16:44. > :16:49.let me start with you. Will the elections coming up in Europe, will
:16:50. > :16:52.they be significant? I am not sure how significant they can be. If you
:16:53. > :16:56.look at the European experiment, there are lots of issues about
:16:57. > :16:59.whether it is truly working. You have got one kind of rulership for
:17:00. > :17:07.so many different countries with different interests. I think we are
:17:08. > :17:12.still going through a bit of the crisis. The Euro crisis is not over.
:17:13. > :17:17.There are still countries in rescue programmes, Greece and Cyprus.
:17:18. > :17:20.Moving closer to home, Indonesia has very big elections which are coming
:17:21. > :17:24.up. Will those be significant, because Indonesia has such growth
:17:25. > :17:30.potential? Could a change in government allow them to go on a
:17:31. > :17:33.faster growth path? I think so. Charges of corruption and a bit of
:17:34. > :17:36.fatigue with SBY, all that has brought Indonesia to the point where
:17:37. > :17:43.they want another personality, another take on how to move forward.
:17:44. > :17:49.As you say, it has great potential, there has been a cooling off, partly
:17:50. > :17:57.due to the global economy. Whoever it is will bring a renewed sense of
:17:58. > :17:59.purpose and direction. It is interesting that all these
:18:00. > :18:03.elections, in a sense, they have foregrounded economic issues very
:18:04. > :18:06.importantly. Do you agree that when you look at Turkey, Brazil, you're
:18:07. > :18:09.looking at countries which are having elections, and could these
:18:10. > :18:11.elections address some of the fundamental issues in the economy,
:18:12. > :18:21.if, for instance, Erdogan stays in power and so does Rousseff? Will the
:18:22. > :18:30.protests they have seen in their countries result in them staying in
:18:31. > :18:34.power or meaningful change? The opinion polls suggest that they are
:18:35. > :18:37.going to stay in power and what is probably going to keep them in power
:18:38. > :18:40.is as much as the middle`class, the urban middle class, does not like
:18:41. > :18:44.what is going on and wants change, it is one man per vote. We are
:18:45. > :18:47.talking about mass support at the lower level for these two
:18:48. > :18:50.candidates, these two leaders, to be returned to power. Both have been in
:18:51. > :18:56.for just over a decade and it looks like they will get through again.
:18:57. > :19:03.Rousseff's ploy has been to pump more money into the social welfare
:19:04. > :19:06.programmes that work at the bottom. 36 million Brazilians depend on that
:19:07. > :19:16.programme and she will lock that vote in. Erdogan as well, he proved
:19:17. > :19:19.in the local elections that as much as you have a secular middle`class
:19:20. > :19:22.in the urban areas that want change, that sort of right of centre
:19:23. > :19:30.religious group dominates across the country, it is very conservative and
:19:31. > :19:38.they like Erdogan. If you give them one man per vote, these two leaders
:19:39. > :19:40.stay in office. When we look at business conditions in these
:19:41. > :19:43.countries, and also other elections coming around the world, which
:19:44. > :19:46.elections are you keeping your eye on in terms of which vote could
:19:47. > :19:50.actually transform a country's business prospects? Effectively I am
:19:51. > :19:57.looking at India and Indonesia. As the two key ones? Yes, my main
:19:58. > :20:00.concern is that because there are so many parties, it is unlikely for one
:20:01. > :20:05.party to get the majority win anyhow. It is likely to be a
:20:06. > :20:08.coalition kind of government that will take power. Whatever impact
:20:09. > :20:17.that can achieve will be severely diluted. Richard, which elections
:20:18. > :20:22.are you keeping a keen eye on? Both of them. The markets, the capital
:20:23. > :20:25.markets, love these two leaders. They love the idea of Modi getting
:20:26. > :20:30.in. They love the idea of Jokowi getting in. We have seen a real bump
:20:31. > :20:35.in the currencies. I agree with the points you made. It depends on how
:20:36. > :20:40.good these guys are at building coalitions. As much as we like them
:20:41. > :20:43.as individuals, and they have proven they can do well in their own
:20:44. > :20:46.states, or at least Jokowi, where he was governor briefly for Jakarta,
:20:47. > :20:54.they have proven they can deliver, but the national stage is bigger,
:20:55. > :20:58.more complex. Let's see what the voters give us after the election,
:20:59. > :21:02.because that is still not clear, how it will go, and we will see if they
:21:03. > :21:05.can build workable coalitions. Finally, speaking of workable, the
:21:06. > :21:15.US Congress is having mid`term elections later this year. Could
:21:16. > :21:28.that be a game changer for President Obama's second term? I hope so. The
:21:29. > :21:31.US Congressional elections, they turn on local things as well. There
:21:32. > :21:35.is departisanship in the United States. Obama is now going into the
:21:36. > :21:38.second half of his presidency. It is not clear whether he will hurt the
:21:39. > :21:43.Democratic candidates out there or help them. All bets are off, but I
:21:44. > :21:53.sense there will be a bit of resurgence by the Democrats. That
:21:54. > :21:56.might be good in both houses. Thank you all very much indeed. That was
:21:57. > :22:00.Kanti Bajpai, Richard Martin and Daryl Liew. Billions of people are
:22:01. > :22:03.going to the polls this year with protests in countries ranging from
:22:04. > :22:06.Brazil to Turkey and concerns over political impasse in the US and
:22:07. > :22:09.Europe. The process can be messy and it is certainly unpredictable. But
:22:10. > :22:12.as Winston Churchill said, democracy is the worst possible system, except
:22:13. > :22:16.for all of the rest. That is all we have time for. Check out our website
:22:17. > :22:18.and me on Twitter. I am @LindaYueh. Join us next time for more Talking
:22:19. > :22:39.Business, with me, Linda Yueh. Good evening. We have got some
:22:40. > :22:41.strong winds out there at the moment. Still be heavy showers