A democratic political system is an essential condition for sustained economic progress.(International Business)

The democratic political system emphasizes in the free market operation where the market operates as per the demand and supply that exhibits in the economy.  There is no governmental intervention and it supports capitalism. There is no risk of business nationalization and business persons are allowed to enjoy the return of their hard work. The democracy fosters freedom and assures free movement of factors of production whereas, in the context of the communist system, the factors of productions are controlled by the state, the risk of nationalization prevails.

The top ten countries globally favorable for doing business as ranked by the World Bank in 2018 are democratic. New Zealand holds the first position followed by Singapore, Denmark, South Korea, Hong Kong, and the US in the 6^th which is followed by the UK (World Bank, 2018). Further, China holds 78^th and Venezuela is 188^th, my country is 105^th.  In general, democratic countries have transparency, strong political base, are less corrupted and also public budget are well utilized fostering social infrastructures, a requirement for the success of the business. The sound economic condition creates social justice and social innovation.  The democracy builds up trust and assures sound legal and political environment which leads to sustainable economic progress.

Democracy certain promotes the growth through the inclusion of institutions, governance, rule of law and confidence to the investor.  But, often it has paralyzed the economy when the parties and people miss-utilized their power. Nepal was ruled by a monarch(king) for more than 100 years, we had multi-party democracy. Later on, after the people’s revolution, the monarch was dethroned and now its “Federal Democratic Republic of Nepal”.  Indeed, in the context of my country, democracy alone has not assured sustainable economic growth.  Rampant corruption, budget deficits, negative balance of payments, unstable government and negative net exports has reduced the confidence of domestic as well as international investors.  The pace of foreign direct investment(FDI) has been decreasing and economic stability is not maintained.

But when we see the countries like Sweden, Holland, Denmark, New Zealand, though are geographically small, their democratic policies along with rules and code on conduct base governance has maintained their economic domain.  As per the Transparency International, (2017), New Zealand in the least corrupt country of the globe followed by Denmark and Finland. Nepal ranks 122th and Venezuela is at 169^th.   

In contrast, communism which focuses on socialism is not a fault ideology at all, depending upon the circumstances and situation, socialism has also uplifted the social innovation and lead economic development.  China’s economic development is led by one-party nondemocracy (Acemoglu, 2014) which was led by a reasonably enlightened group of peoples but the ramification of the socialist dictator in Venezuela jeopardize the nation, eroding the life of citizens and reducing the business confidence.

So, as far I am concerned, definitely I incline with the democratic political system for sustainable economic growth rather than the totalitarianism. But equal importance should be given to the right conduct of political philosophies through politicians which should encapsulate good governance through strong legislation, execution, and independent judiciary.

Bibliography

Acemoglu, D. (2014, May 20). Does democracy boost economic growth? Retrieved from www.weforum.org: https://www.weforum.org/agenda/2014/05/democracy-boost-economic-growth/

World Bank. (2018). Doing Business 2018, Reforming to Create Jobs. World Bank.