Murder by the State

Policy Reports | Crime

No. 211
Monday, September 01, 1997
by Gerald W. Scully

Growth Paths in Democidal Countries

Figure III - Growth of Per Capita Output as a Function of the Savings Rate

The relationship between the rate of growth of real per capita income (gy = growth rate of output per head) and the savings rate (gk) is shown in Figure III. At high (or low) rates of saving, the growth rate is higher (or lower). [For calculation of the growth paths, see the Technical Appendix]

Figure IV illustrates the path of per capita income, yt, over time. It is drawn as a nonlinear function to reflect diminishing returns. Thus growth rates are higher at low levels of per capita income than at high levels.

If some outside shock to the savings rate occurs, such as might arise with democide, the lower savings rate switches the growth path of the economy to a lower level. The time that elapses before the economy returns to its original growth path depends on the circumstances and psychology of the people whose behavior was altered by democide.

For example, consider the evolution of the path of real GDP per capita in the Philippines from 1960 to 1990, as shown in Figure V. From 1950 to 1972, the economy grew at a per capita compound rate of 2.9 percent per annum. Ferdinand Marcos was elected president in 1965 and reelected in 1969. Facing mandatory retirement in 1973, in September 1972 he declared martial law and suspended the constitution. He lifted martial law in January 1981 but continued to rule by decree. From 1973 to Marcos's demise in 1986, the Philippine economy did not grow. The growth rate averaged -3.0 percent from 1982-86 as the Marcos regime practiced more violence to stay in power. Marcos won the fraudulent 1986 election, but the population rioted and the military eventually backed Corazon Aquino. There were about a half-dozen attempts to topple the Aquino government, but state-sponsored killing stopped and the economy turned upward. The average annual real per capita growth from 1987 to 1990 was 3.6 percent.

Figure IV - Path of Per Capita Income Over Time

In principle, the rent-seeking losses associated with the democide of the Marcos regime can be calculated by comparing the evolution of the economy before and after the democide with its path during the killing. But that comparison would be dubious. Politics has long been violent and dangerous in the Philippines. Political murder is not an infrequent event. We do not know whether the path of per capita income prior to the democide of the Marcos regime was free of political uncertainty or whether the people fully recovered from it after Marcos was overthrown. A better comparison would be with the growth path of countries that were broadly similar to the Philippines in political and economic development but have not experienced democide.

Figure V - Path of Per Capita Output in the Phillipines

Read Article as PDF