Is democracy becoming less important for a state’s ability to deliver a high quality of life? A recent study by UCLA’s Luskin School of Public Affairs and the Berggruen Institute suggests so.

After analysing the interconnections of various aspects of governance in 145 selected countries from 2001 to 2021, the report’s authors, Helmut Anheier, Joseph C. Saraceno and Theodore L. Knudsen found that while levels of democracy are decreasing globally, the provision of public goods – that is, quality of life – is on the rise. A serious blow to the notion that strong democracies and public goods provision are mutually contingent.

Gone are the days when Western political leaders hedged their bets on economic modernisation inevitably leading to political liberalisation. When the previous Chairman of the Peoples’ Republic of China, Deng Xiaoping, began rolling out a series of economic reforms liberalising the Chinese economy in the 1970s, the expectation was that the growth of a robust bureaucracy, openness to foreign investment, and creation of a Chinese middle class would turn the world’s largest autocratic state into the largest democratic one.

Similarly, the dissolution of the Soviet Union in 1991 provided further impetus for the idea that liberal democratic capitalism constitutes an inevitable end point of history. While liberal democracies rode high on waves of economic globalisation and financialisation (that later came crashing down), they were blind-sided to emerging vectors of change in regions on the periphery of the democratic and developed world.

Myopia is starker in hindsight, and those inaccurately observing the present will inevitably fall short of predicting the future. The 2008 financial crisis opened space for reflection for even the most die-hard believers in the inherent virtues of liberal democracy. There was a feeling, as the economist Dani Rodrik wrote in the wake of the crisis, that global economic integration, national sovereignty, and democracy had become “mutually incompatible.” New frameworks for understanding governance would have to be created.

Dawn Nakagawa, who was then Executive Vice President of the Pacific Council
on International Policy, joined the newly founded Berggruen Institute as its first
employee in 2010. “The Institute was born out of concern for political governance
after the financial crisis, to ask the question: how can we make democratic political
governance more effective?” Nakagawa says. “We were studying other forms of
governance – we did a lot of studying in China – but mostly focused on liberal
democracy. We worked with California on how to improve governance there, as
well as the EU in trying to figure out how to increase democratic accountability and expand the federal mandate through democratising the EU at a greater level.”

In Berlin, Professor Helmut Anheier, then President of the Hertie School, felt a shared concern for the future of democracy. He and Nakagawa decided to team up to work on reconceptualising the frameworks we use to understand what makes certain systems of governance more successful than others. This collaboration, involving the UCLA Luskin School of Public Affairs and the Hertie School, ultimately led to the creation of the Berggruen Governance Index (BGI), which in 2024 saw the release of its second edition.

What sets the BGI apart from other indicators is its emphasis on governance as a product of a triangular relationship between state capacity, democratic accountability, and public goods provision. And while these aspects of governance are certainly not absent from other indices, they tend to be highly aggregated and, most importantly, their causal relationships underexplored.

“The World Bank’s indicator, for example, is just one number, albeit a highly aggregated one bringing together many different things,” Anheier says. “It occurred to us that the governance of a country is very often driven by different forces which can be mutually reinforcing but also contradictory. In this sense, I think this framework gives us an advantage over other indicators.”

Understanding the global competition between democracy and autocracy in connection with both state capacity and ability of states to provide their citizens a higher quality of life has revealed insights that challenge long-held truths, Nakagawa says, particularly in the liberal democratic West. “There have been some embedded assumptions in our belief systems: for example, that higher democratic accountability was going to inevitably lead to better outcomes. That’s what we thought we would see consistently. That didn’t turn out to be true.”

Nakagawa and Anheier refer to this as the democratic sufficiency thesis. An inverted and equally fallacious version, the autocratic sufficiency thesis posits that robust state capacity alone is enough to achieve a high quality of life. The picture that emerges is that neither factor in itself is sufficient. Potentially valuable insights for those developing countries on the fence about which direction to choose for themselves. It should also serve as a wake up call for leaders in the West who have stubbornly trusted the inherent virtues and appeal of political liberalisation in a world where more countries are pushing in a more autocratic direction.

The 2024 report identifies four country clusters reflecting certain patterns of governance. The first of these are the ‘Successful Democratic States’, a familiar grouping of liberal market-based economies scoring high on all three aspects of governance. Despite worries of democratic backsliding, Anheier is “quite hopeful” for this cluster’s future, “as long as they pay attention to small erosions and deficiencies in the way they’re operating,” he says.

The second cluster represents the Index’s key finding best: ‘Successful Autocratic and Illiberal States’ such as Russia, China, the UAE, Singapore, Turkey, and Poland. While performing low on their levels of democratic accountability, they nonetheless perform generally average or above average when it comes to state capacity and have high levels of public goods provision. “These are the most dangerous for democracy,” Anheier says, “because if these autocracies become a model for the third and fourth cluster of countries, then we have a battle of narratives at play: what makes for successful development?”

The third and fourth clusters are ineffective states, where a high level of democratic accountability can’t translate into a high quality of life due to lacking state capacity, and struggling states, where all three aspects of governance are faltering.

Although the Index’s findings highlight the heated global rivalry between the Washington and Beijing Consensus, Nakagwa is hesitant to crown either as a more viable form of governance for developing countries in the future. Instead, she takes the opportunity to see these developments – struggling democracies pitted against rising autocracies – in their broader geopolitical, technological, and economic contexts.

“My personal opinion, which is not necessarily reflected in the Index, is that there is a great shift underway, away from allowing certain forms of government to be legitimised simply by how they were constituted. Once, democracy was the best form of governance and was what everybody wanted – and for many years, we saw more and more democracies emerge. That worked when there was a small number of voices that controlled the dominant narratives in our societies. It was a system where elites often had significant control over the media and politicians. So, we didn’t see a lot of variability, inclusion, and diversity at the top of these pyramids of governance,” Nakagawa says.

Since then, communication networks have deeply changed how political narratives are built and how power is maintained, both on a national and global level. “That’s a part of the reason why we’re seeing these fragmentations and political swings happening so severely within countries, and why the legitimacy of the global system is fracturing as well,” Nakagawa says.

She suggests that the Beijing Consensus will likely gain ground in the mid-term, whiledemocracies may have a more tumultuous future in store. Nakagawa notes one of the more surprising findings from the Index: at a certain level of economic development, high levels of democratic accountability slow down further growth, rather than speed it up. “Democracy is slow, not decisive, things can go back and forth.”

While ‘successful autocracies’ may serve as an attractive model in the short to mid-term, developing countries should be wary of copy & pasting autocracy for long-term, sustainable development. The state capacity of the wealthiest autocratic states – Russia, China, the Gulf States – should be analysed in the context of their unique positions in the global economy. In Russia and the Gulf States, high demand for natural gas and petroleum has allowed autocratic leaders to use revenue to ‘pay off’ their citizens with increased public goods. Similarly, China has perhaps been the biggest beneficiary of globalisation by positioning itself centrally in global supply chains.

The more interesting countries in the ‘successful autocratic and illiberal’ cluster are those without certain material circumstances, or being at the right place at the right time, that give them a comparative advantage. India, Thailand, Cambodia, and Bangladesh all fit in this category. Surveying such countries, all recently declining in their democratic accountability scores while improving quality of life for their citizens, will be more indicative than the Gulf States and Russia when assessing the direction other developing nations might move in the future.

Nakagawa also points out that just because the Index shows an uptick in public goods provision and a downtick in democratic accountability doesn’t mean there aren’t other variables at play influencing the picture. Another finding of the Index is that there exists an outsized impact on the provision of public goods by GDP growth: “GDP growth is not necessarily a product of any government decision in a globalised world, so that outsized influence may be distorting what the actual impact of governance on the provision of public goods is,” Nakagawa says.

At the end of their 2024 report, the authors call for a ‘new realism’ in tackling issues of global governance. Upon asking Anheier to elaborate further, the professor chuckles slightly. “Well, you caught me there. We haven’t really figured it out yet. First, there’s what it means geopolitically and then what it means for domestic politics.” He does, however, single out today’s multilateral institutions as the right place to start navigating this new paradigm:

“It’s specifically the specialised agencies set up to help countries which have clearly shown their limitations,” he says. “Not enough countries are becoming more democratic and more economically developed, and those that do, are often doing so for reasons unrelated to aid packages. I think this is where we need a serious rethinking about the role of multilateral institutions.” Anheier says.

“We don’t have a coordinated discussion or debate about something like that at all. We have a cacophony of countries and institutions that could be helping in a more coordinated way.”

Nakagawa shifts the discussion to democracy’s tenability in a future where it’s lost some of its attractiveness. “We are entering a kind of post-ideological world that’s going to be governed by a new kind of political pragmatism. We see it in the rise of autocracy and countries operating in national self-interest and pulling back from universal values.”

This, Nakagawa believes, could be one of the greater threats to the current democratic status quo. “It turns out that representative electoral democracy has heavily relied on a strong, deep and cohesive cultural narrative. If you have that, you can sustain democratic values despite all the noise. You have that in the Nordics, for instance. Then you take the other extreme, something like the US, which is a mosaic of lots of different cultures in the same place. The noise and fragmentation is extreme in this kind of information ecosystem.”

In the end, however, Nakagawa is unsure whether a world guided by political pragmatism rather than universalism will be for better or worse. “Frankly, our global nation state system has not effectively managed challenges like climate change. And so, we might ask whether there are ways in a less ideological and more pragmatic future in which certain opportunities become available to us that have been foreclosed to us prior.”

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