Document Library

Key Text Rights and Economic Growth: Inevitable Conflict or ‘Common Ground’?

Author: A McKay and P Vizard
Date: 2005
Size: 134 pages (76 KB)

Access full text: available online

Summary

Is there a conflict between rights and economics? Are freedoms and rights in tension with growth and the optimal allocation of resources? This paper, by the Overseas Development Institute, argues that there are significant complementarities between economic growth and rights in terms of poverty reduction objectives.

Policies to achieve rights can have a positive impact on growth, and are consistent with theoretical and empirical work on the determinants of growth. Growth in turn is important in achieving rights outcomes more quickly and fully. Growth needs to be sustained partly so that the commitment to the progressive realisation of rights can be honoured, but also because downturns often hit poorer groups harder and they respond less quickly in recovery periods.

There is much less conflict between the realisation of rights and economic concerns than is often assumed. It is largely a matter of differences in language and approach. Authoritarianism is not more effective at achieving high rates of economic growth. Conversely, democracy does not have an adverse impact on growth. Furthermore:

Key freedoms are important for growth, as well as for preventing downturns or managing them more effectively.
Effective institutions are crucial in sustaining economic growth through their ability to guarantee key freedoms. These include the rule of law and security of property rights, managing conflict and providing security in economic downturns.
It is not just the rate of growth that matters, but also its distributional pattern and its sustainability (seeking to avoid downturns).
Imperfect, incomplete and asymmetric information are sources of market failure, hence inefficiency. These will have adverse effects on investment and public and financial sector development, which play a central role in growth.
A range of different complementary institutions (political, economic, legal etc.) is necessary for achieving accountability and efficient resource allocation. Elections are unlikely to be sufficient.

Ultimately, economic growth is important for freedoms and rights - and freedoms and rights are important for economic growth. Recognising rights can:

Strengthen the political influence of vulnerable groups through the political process and by influencing public policy.
Change the institutional environment in which markets function by broadening social opportunity and market access.
Result in improved access to information and promote efficient resource allocation by strengthening accountability and ensuring that appropriate “democratic control mechanisms” are in place.

Access full text: available online

Source: McKay, A. and Vizard, P., 2005, ‘Rights and Economic Growth: Inevitable Conflict or "Common Ground"?’, Overseas Development Institute, London
Author: Overseas Development Institute (ODI), http://www.odi.org.uk/