ABSTRACT
This chapter addresses the relationship between democracy and economic development. Parliamentary democracy offers mechanisms which are better adapted to peaceful, albeit gradual, change and economic development in the long term. A country's resource base, economic and educational strategy, quality of governance and susceptibility to natural disasters are also key contributing factors to economic success. The chapter further examines a number of political systems both inside and outside the Commonwealth. In principle, democratic systems are consistent with market systems. Both involve freedom of activity in the political and economic arenas. Both decentralize and spread participation in decisions from central government. Markets seem to require democracy to limit arbitrary political intervention in the market. A liberal democratic system can facilitate economic reform through peaceful change. Through elections a government with failed economic policies can be peacefully replaced by another with alternative policies.
