The UK Government’s stated commitment to open societies is unequivocal. In the wide-ranging Integrated Review of Security, Defence, Development and Foreign Policy published in March this year, open societies are lauded as both a moral end in themselves, and the best means to achieve human prosperity and security.^[1] Open societies are mentioned repeatedly in the Review and cut across each of the Government’s four high level objectives in this area for the next decade, alongside human rights and an international rules-based system. In the combined Foreign, Commonwealth and Development Office (FCDO) the Government has created an Open Societies and Human Rights (OSHR) Directorate that will support civil society, democratic governance, human rights, and the rule of law. This is extremely welcome in the context of the well documented increase in authoritarianism and autocratic government around the world (an estimated 68 per cent of the world’s population live in autocracies), and a decrease in the number of democratic states over the past 15 years or so.^[2]

Many readers would infer from this a concomitant commitment to defending civic space – the place, physical, virtual, and legal, where people exercise their rights to freedom of association, expression, and peaceful assembly, and the engine room of any free and open society. But a pledge to proactively defend civic space and the people in it is not as forthrightly made in the Integrated Review, which in fact sets out policy which could either promote or further harm civic space around the world. Setting up a ‘Civil Society and Civic Space’ department within the OSHR Directorate is potentially a good start, but can only help deliver the UK Government’s commitments to open societies if it has an ambitious strategy with the necessary resources and political championing from the Foreign Secretary to ensure it reaches beyond its departmental silo to positively influence policy and action across government in the realms of trade, development, security, and defence.

Civic space is under attack on every continent. From the criminalisation of peaceful protest, to measures restricting freedom of expression (censorship, internet shutdowns, surveillance and attacks on journalists and academics), and administrative harassment through restrictive NGO laws (making registration and financing of NGOs difficult), and the smearing and harassment, attacks and killings of activists has become routine.[3] This is stifling individuals, movements, non-profit organisations and donors, and it is hampering the innovation which comes from the civic realm, and which would create the solutions to local and global problems that we all desperately need. It is affecting people working on every critical social issue – from climate change and environmental justice to the rights of racial, ethnic, religious minorities, women’s and LGBTI rights, to economic equality and public health. Counter-terrorism is notably often cited as justification for this repression, but it is clear that governments are exceeding proportionate responses to terrorism risks and curtailing critical freedoms.

Those like the UK who maintain that openness is a strength and a necessary condition for good governance and human prosperity, and an antidote to authoritarianism, must more consistently raise the profile of this problem, and push hard for a reversal of the clampdown.

As the Integrated Review’s new policy direction unfurls, and the UK’s leaders, diplomats, trade negotiators and key representatives set out the UK stall, we recommend an additional headline commitment to defending and expanding civic space, and action to back this up at home and overseas. If it is serious about advancing the cause of openness and democracy over the coming decade, the UK should:

• In bilateral relations and multilateral fora, press governments to respect the rights and civic freedoms of human rights defenders and other civil society actors, and model this commitment by providing flexible and sustainable funding and emergency protection for those who need it;
• Establish politically smart, adaptable, longer term programmes to foster more sustainable and resilient civic space environments, with broad levels of support across societies (including the domestic private and philanthropic sectors) and government institutions;
• Use and expand its new ‘Magnitsky-style’ sanctions regime to ensure rapid, coordinated and targeted sanctions against high level officials involved in orchestrating gross human rights violations of fundamental civic freedoms;
• Champion safeguards for civic space in the UN Global Counter Terrorism Strategy and ensure existing and emerging norms on countering terrorist financing, content moderation and travel surveillance are not used to restrict freedoms of association, expression and movement;^[4]
• Use multilateral fora – including the Open Government Partnership Summit and the Summit of Democracies to impose obligations on all states to switch pandemic response away from the use of emergency security powers and reset it squarely around public health;
• Work multilaterally and in collaboration with civil society to put human rights and civic space considerations at the centre of cybersecurity policy development. The UK should also ensure transparency of such policy development so that it is available for public scrutiny; and
• Ensure trade and investment in new science and technology adhere to the most stringent of human rights safeguards. When any new technology with offensive, surveillance or mass data capture capability is under consideration, there must be meaningful practice of consultation with human rights experts and assessment of risk of harm.

Why is civic space under siege and what are the long-term implications?

There are attacks on the right to assemble and protest, and on free expression both on and offline, on every continent. In Thailand scores of democracy protestors have been arrested this year after also being attacked with rubber bullets, while in Nigeria #EndSARS activists have been harassed, arrested and put under surveillance. After the Black Lives Matter protests following the murder of George Floyd in the USA last year, around 20 state legislatures responded by considering laws restricting the right to protest. In Hungary and Poland, LGBTQI Pride protestors have been singled out by their governments as a threat to the moral order.

Over the last decade governments in every region have passed new anti-NGO laws, sometimes copied from one another, which impose onerous registration requirements, and give authorities powers to monitor and interfere in the work of human rights defenders and civil society organisations, and restrict access to international funding. Amnesty International found that, between 2016 and 2018 alone, almost 40 such laws were proposed and passed.^[5] Over the past year new laws have been passed in Guatemala, Nicaragua, Turkey, and Libya, while existing restrictive NGO laws have been tightened in Russia (including adding journalists to the register of foreign agents) and India (severely limiting the NGOs’ ability to access vital funds from overseas donors).[6]

Over the last 18 months governments have used the COVID pandemic to justify increased repression and bring in new laws and measures affecting freedom of expression, privacy and limiting assembly, such that the UN Secretary General was moved to sound the alarm on countries using COVID emergency laws as a pretext to crush dissent and curb freedoms. He has called for a return to universal human rights as the starting point for the pandemic response.^[7]

What is driving this?

Last year the Funders Initiative for Civil Society published an investigation of the trends and drivers of this crackdown on civic space, talking to more than 150 civil society representatives across the world. It found that the constriction has indeed been severe over the last 20 years, and that while its causes are complex, and intertwined with the inequalities and exploitation perpetuated by concentrated economic power and populist movements, it is the abuse of counter-terrorism laws, policies and ‘temporary’ emergency measures that is the dominant driver of closing civic space.^[8] Since 9/11 in particular, governments have stepped up the claim that they need to restrict rights to assemble, to organise and to protest in order to keep us safe. UN Security Council resolutions and a now sprawling UN Office for Counter-Terrorism set in motion a template for curbs on protest and free expression, pre-emptive surveillance, travel watchlists, funding controls and a ‘security-justifies-almost-anything’ narrative, which have led some to say counter-terrorism is now effectively the UN’s informal but well-funded fourth pillar, alongside peace and security, human rights and development.^[9]

States must act to keep citizens safe, but the creep of using exceptional counter-terrorism measures on a routine basis now sees progressive activists regularly termed ‘extremists’, and essential work on climate, women’s rights, human rights, democracy, racial justice, freedom of religion/belief and migration and land rights made much more difficult. In Hong Kong it is ‘national security’ which is cited when democracy activists are arrested and imprisoned, while in Myanmar counter-terrorism laws have recently been used to prosecute journalists. Egypt has so frequently used anti-terrorism laws to harass and prosecute human rights defenders and journalists that the UN Special Rapporteur on the situation of human rights defenders this year singled the country out for clear misuse of anti-terrorism laws to criminalise civil society and appealed for an immediate halt.[10] A high-profile Saudi women’s rights defender was imprisoned when she challenged the country’s strict guardianship laws and the state used anti-terror laws against her, accusing her of ‘pursuing a foreign agenda’.[11] In India, activists fighting the draconian anti-Muslim citizenship laws have been arrested and imprisoned using counter-terror laws.[12] Governments are increasingly citing counter-terrorism as justification for cracking down on civic space and their opponents.

As we mark 20 years since the horrific 9/11 attacks and the loss of thousands of lives which ensued, there is considerable reflection on whether the policies and action pursued since have kept us all safe. The UN Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism found, in a comprehensive 2019 report, that measures introduced to prevent terrorism and violent extremism (including funding restrictions, travel surveillance, content moderation, protest bans) are in practice primarily being used to criminalise activism and dissent.[13] States that purport to be stalwart guardians of human rights have failed to uphold adequate rights protections in the international counter-terrorism agenda, allowing it instead to be co-opted and funded by authoritarian states, such as Qatar and Saudi Arabia.[14]

The UK Government’s Integrated Review acknowledges increasing authoritarianism and says political and economic power are set to be more contested this decade, with increasing complexity and a shift to multi-polarity as the world and its stumbling governance gets to grips with the climate crisis, managing pandemics, persistent conflict, humanitarian disasters and poverty. It assesses the UK’s prospects as based on its relatively large economy, its place at key tables including the UN, and being a ‘soft power superpower’. If the UK is to be a ‘force for good’ in the world, it must be prepared to champion civil society and unfettered civic space at these tables and make the case for reversing the measures which have harmed civic space and which threaten openness and shared prosperity for us all.

Where is UK policy in tune with protecting civic space, and where might UK policy lead to harm?

The Integrated Review includes a comprehensive setting out of the geopolitical context in which new UK foreign, defence, security, and development policy will be developed. These include, of course, complex, meta-level challenges that no single state could ever solve alone. This is where the critical bridge to protection of civic space needs to be made. It is the people in open and free civic space that will generate many of the ideas and action we need to tackle these problems, but they cannot do that when they are harassed and under siege.

There is commitment in the Integrated Review to long-term UK work to protect human rights, the rule of law and implicitly civic space. The UK Government’s initiation and high-level championing of the Global Media Defence Fund, recognising the targeting of journalists and offering both individual casework support as well as pushing for better legal protection of journalists in the first place, is very welcome. Civil society cannot thrive while those who would report impartially and hold power to account are threatened for doing so. It is worrying that one of the first tests of this policy however, ensuring Afghan journalists who had worked with UK media outlets were among those prioritised for help to leave when the Taliban took over, saw hesitation and delay.

Equally, the UK’s adoption of its new independent ‘Magnitsky-style’ sanctions regime for putting travel bans and asset freezes on those who commit human rights violations indicates a willingness to challenge those who do harm, even when there may be diplomatic and other costs for the UK. But it currently stops short of providing protection to those targeted for exercising their civic freedoms. People standing up for democracy and basic rule of law are routinely attacked by several of the UK’s strategic security and trade partners including India, Kenya, Uganda and Saudi Arabia to name only a few. In line with developments in some G7 countries, the UK could use and expand its regime to ensure rapid, coordinated and targeted sanctions against high level officials involved in orchestrating gross human rights violations of fundamental freedoms of association and assembly, expression and information, and participation.

Similarly, in order to succeed when promoting openness internationally, the UK needs to have its own house in order. Laws and policies that undermine civic space, such as the Police, Crime, Sentencing and Courts Bill, which threatens to not only restrict but criminalise the right to protest, can easily be cited by governments overseas telling the UK not to interfere in their activities. The current proposals to weaken judicial review, not to mention the terrible accompanying political rhetoric demonising human rights lawyers, need urgent reconsideration. And, as forces across the UK pilot facial recognition technologies, and transport hubs and shopping centres are scanning millions of people’s faces without consent, the UK could demonstrate its leadership on privacy by introducing an immediate ban on police and private company use of facial recognition in areas open to the public. For the same reasons, the proposals to limit the reach and authority of the Information Commissioner precisely at the moment the UK moves away from the gold standard European data protection regulations should also be re-examined. As a first step the UK could demonstrate its commitment to civic space at home by requesting the OECD’s Observatory of Civic Space to conduct a Civic Space Scan of the UK (as Finland has recently done) that will benchmark the status of domestic civic space and offer expert guidance on ways to strengthen existing frameworks and practices.[15]

The Integrated Review sets out the UK’s welcome commitment to ‘active diplomacy’, ‘maximising the UK’s convening power’ and its intent to seek election to new multilateral fora that will ‘shape the international order.’ There is huge potential to be a ‘force for good’ here. As a Security Council member, the UK is very well positioned to substantially influence the UN’s counter-terrorism agenda, and should seize the opportunity to ensure public security frameworks have proper clarity of scope (including through clear and narrow definitions of terrorism and extremism), and that civil society groups are included in counter-terrorism policy development. Concrete action might also include pushing for stronger safeguards for civic space and civil society in the UN Global Counter Terrorism Strategy and future UN resolutions regarding civic space; support for a clear compendium of all COVID-related emergency measures, with a scheme to review these and set dates for their repeal; pushing for the creation of an independent human rights impacts monitoring mechanism and indicating that further funding to the UN Office of Counter Terrorism conditional on this; and action to reset the international ‘countering-terrorism financing’ controls which have had the unintended consequence of removing civil society’s access to critical funds.[16]

The Integrated Review underscores the UK’s commitment to leadership in development of international cybersecurity and internet governance frameworks, aligned with freedom of expression, freedom of assembly and association, access to information and privacy. Such a commitment is welcome as it is critical to safeguarding meaningful civic space around the world. The tremendous power of new and emerging information technologies means that as well as promising huge social and economic benefits, they are also very attractive to those who would use them to monitor and restrict democratic activities. As part of its commitment to openness the UK should advocate for rights respecting policy and governance in this area, and the deterrence of trade in ‘dual use’ technologies that may do harm – perhaps even joining the call for a moratorium on the export of surveillance technologies that can be used against human rights defenders and other members of civil society.[17] Similarly the UK’s policy on and conduct of trade negotiations needs to be coherent with the commitment to open societies and protecting civic space, meaning privacy standards and data protection must not be on the bargaining table.

How might the UK use its resources to meet its commitments to supporting open societies?

To make scarce resources work harder, the UK could combine innovation and collaboration with like-minded donors from public and private funding communities through strengthening existing and forming new pooled funds that support networks and coalitions addressing three essential pillars of an enabling environment for civil society. Firstly, with continuous waves of peaceful demonstrations occurring worldwide, existing legal defence and protection groups and mechanisms are overwhelmed, struggling to mobilise sufficient resources to provide quality assistance to detained activists. There is a specific opportunity for the UK to pool donor funds to resource a new global network of national, regional, and international organisations, coordinated by CIVICUS, to defend the right to protest and dissent on and offline. Secondly, with the increase of large-scale crises such as the ones in Belarus, Myanmar and increasing risks in Afghanistan, the existing international human rights defenders’ protection mechanisms supported by bilateral and multilateral agencies (such as Lifeline: Embattled CSO Fund and ProtectDefenders.eu), and several excellent regional funds (including in the UK’s priority geographies of the Indo-Pacific and Sub-Saharan Africa) are struggling with capacity and resourcing. The UK should increase its contributions to those mechanisms and design a common strategy to increase the efficiency in delivering assistance to activists at risk. Thirdly, if the UK wants to effectively tackle the drivers and enablers of authoritarianism and closing civic space, especially with regard to the rights implications of emerging counter-terrorism and cybersecurity frameworks, it could consider contributing to a new, ground-breaking Global Initiative on Civic Space and Security supported by our organisations that will facilitate flexible and aligned collaboration among donors, civil society and other partners (such as from the tech and creative arts sectors).

How the UK funds this work is also important, especially given the signal in the Integrated Review to evolve the UK’s offer ‘using a variety of funding models’ and considering the reckoning the FCDO has to make with decolonising aid, increasing diversity and inclusivity, and shifting power toward a more ‘locally-led’ approach to rights-based development. The FCDO could model how to fund civil society advancing open societies and civic space in two ways: (1) by ensuring it funds in line with the G7 Open Societies statement and the newly agreed OECD DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Assistance, which prioritises in Pillar One ‘Respecting, Protecting And Promoting Civic Space’;[18] and (2) by modelling with other bilateral agencies, such as the Swedish International Development Cooperation Agency (SIDA), and building on their ‘Guiding Principles for Engagement With and Support to Civil Society’, an approach rooted in trust-based financial support and grant making that follows locally led decisions about priorities, in line with what civil society groups say they need to successfully defend and expand civic space and open societies.[19]

A real ‘force for good’

The UK is not the only liberal democracy at a critical juncture in its domestic and diplomatic relationship with countering terrorism and promoting open societies and human rights. The last 20 years have seen enormous costs to human rights and security, and not least in handing authoritarian governments an extended licence to justify any new measure as ‘counter-terrorism’ and restrict civic space. As we look ahead to a decade of enormous challenges, we desperately need multilateral solutions forged with as much good faith as can be built. Active diplomacy, convening new accountable fora and using elected positions wisely, and with integrity, could make all the difference. There is a Summit for Democracy on the horizon, where profiling civic space and commitments to its protection and expansion can be made on the world stage. The work to ensure civil society thrives in free and open civic spaces needs doing both quietly and on platforms, bilaterally and multilaterally, and needs resource as well as good intentions.

And it is not only the UK Government who needs to step up; civil society should stand up for its own. A wide range of UK actors should be prominent and active in naming the attacks on civic space and helping to demolish the impunity it currently has. MPs across all parties partake in many inter-parliamentary fora, where there are opportunities to raise the profile of these issues, and the Speaker and his office, should be on hand to support and promote such efforts. The Westminster Foundation for Democracy should build on its existing research and utilise its networks and close relationship with parliaments, parties, and civil society to push for the expansion of civic space through its country offices.[20]

The philanthropy community, including our organisations, are ready to support this work in tandem with the UK Government and multilateral bodies. We have an analysis, networks, strategies and resources ready to power up and challenge the crackdown on civic space.

Iva Dobichina is Division Director with the Open Society Human Rights Initiative. Previously she worked for Freedom House, an independent, US-based watchdog organization, where she served as director of programs for Central Asia. 

Poonam Joshi is Director of The Funders Initiative for Civil Society. She is a lawyer and was previously at the Sigrid Rausing Trust and Amnesty International UK.

Sarah Green is a consultant for The Funders Initiative for Civil Society, and works in human rights and gender-based violence advocacy and campaigns

James Savage is the Program Director of the Enabling Environment for Human Rights Defenders at The Fund for Global Human Rights, and previously worked at Amnesty International UK and for Peace Brigades International.

[1] HM Government, Global Britain in a competitive age: The Integrated Review of Security, Defence, Development and Foreign Policy, March 2021, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/975077/Global_Britain_in_a_Competitive_Age-_the_Integrated_Review_of_Security__Defence__Development_and_Foreign_Policy.pdf

[2] V-Dem Institute Democracy Report, March 2021, https://www.v-dem.net/en/publications/democracy-reports/; Economist Intelligence Unit, Democracy Index, 2020, https://www.eiu.com/n/campaigns/democracy-index-2020/; Sarah Repucci and Amy Slipwitz, Democracy Under Siege, Freedom House, 2021, https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege

[3] Frontline Defenders Global Analysis 2020, https://www.frontlinedefenders.org/sites/default/files/fld_global_analysis_2020.pdf; and Last line of Defence, Global Witness, September 2021, https://www.globalwitness.org/en/campaigns/environmental-activists/last-line-defence/

[4] United Nations: Office of Counter-Terrorism, UN Global Counter-Terrorism Strategy, https://www.un.org/counterterrorism/un-global-counter-terrorism-strategy

[5] Amnesty International, Laws designed to silence: The global crackdown on civil society organizations, February 2019, https://www.amnesty.org/en/documents/act30/9647/2019/en/

[6] International Center for Not-For-Profit Law (ICNL) Civic Freedom Monitor, https://www.icnl.org/resources/civic-freedom-monitor

[7] International Center for Not-For-Profit Law (ICNL) COVID Tracker https://www.icnl.org/covid19tracker/; and Antonio Guterres, The world faces a pandemic of human right abuses in the wake of COVID-19, The Guardian, February 2021, https://www.theguardian.com/global-development/2021/feb/22/world-faces-pandemic-human-rights-abuses-covid-19-antonio-guterres

[8] Ben Hayes and Poonam Joshi, Rethinking civic space in an age of intersectional crises: a briefing for funders, The Funders Initiative for Civil Society, May 2020, https://global-dialogue.org/rethinking-civic-space/

[9] Ali Altiok and Jordan Street, A fourth pillar for the United Nations? The rise of counter-terrorism, Saferworld, June 2020, https://www.saferworld.org.uk/resources/publications/1256-a-fourth-pillar-for-the-united-nations-the-rise-of-counter-terrorism

[10] OHCHR, Egypt’s targeting of human rights defenders must stop, says UN expert, January 2021, https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=26682

[11] Amnesty International, Saudi Arabia: Verdict upheld against Loujain al-Hathloul, March 2021, https://www.amnesty.org/en/documents/mde23/3869/2021/en/

[12] Human Rights Watch, India: Activists Detained for Peaceful Dissent, April 2020, https://www.hrw.org/news/2020/04/15/india-activists-detained-peaceful-dissent

[13] UN Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism, Annual Report 2019, see: https://www.ohchr.org/EN/Issues/Terrorism/Pages/Annual.aspxsee

[14] UN Office of Counter-Terrorism, Funding and donors, https://www.un.org/counterterrorism/funding-and-donors

[15] Organisation for Economic Co-operation and Development (OECD) Observatory of Civic Space: https://www.oecd.org/gov/open-government/civic-space.htm

[16] ECNL submission to the UN Human Rights Council’s on the impact of counter-terrorism financing measures on human rights , see: https://www.ohchr.org/Documents/HRBodies/HRCouncil/AdvisoryCom/Terrorism/EuropeanCenter.pdf

[17] OHCHR, Spyware scandal: UN experts call for moratorium on sale of ‘life threatening’ surveillance tech, August 2021, https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=27379&LangID=E

[18] OECD Development Assistance Committee (DAC) Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Assistance, July 2021, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-5021

[19] Swedish International Development Cooperation Agency (Sida), Guiding Principles for Sida’s Engagement with and Support to Civil Society, 2019, https://www.sida.se/en/publications/guiding-principles-for-sidas-engagement-with-and-support-to-civil-society-full-version

[20] WFD, Time to stop talking about ‘closing space’ for civil society?, October 2017,https://www.wfd.org/2017/10/31/time-stop-talking-closing-space-civil-society/; Julia Keutgen, 4 things parliaments can do to protect citizens’ democratic freedoms, WFD, March 2021, https://www.wfd.org/2021/03/05/4-things-parliaments-can-do-to-protect-citizens-democratic-freedoms/; Julia Keutgen and Susan Dodsworth, Addressing the global emergency of shrinking civic space and how to reclaim it: A programming guide, WFD, March 2021, https://www.wfd.org/2021/03/02/shrinking-civil-space/

The challenge of defending and advancing democracy around the world is intertwined with economic challenges facing the UK and other societies:

“Open and democratic societies like the UK must demonstrate they are match-fit for a more competitive world. We must show that the freedom to speak, think and choose – and therefore to innovate – offers an inherent advantage; and that liberal democracy and free markets remain the best model for the social and economic advancement of humankind.” – Foreword from the Prime Minister to the Integrated Review.[1]

Indeed, while the enduring strength of democracy lies in the legitimacy of near universal values, democracy must deliver tangible benefits to citizens to be sustained and demonstrate its superiority over other forms of government. Citizens expect their system of government to enable or provide economic growth, individual opportunities, public goods, and social services. Open economies—based on individual liberty, rule of law, and equality of opportunity—help make democracy deliver on these expectations, giving citizens a stake in their society. At the same time, the dynamics of open economies serve as a check on authoritarian tendencies.

To overlook open economies in a democracy assistance strategy would be at best to limit reform space and demand for accountable government, and at worst to risk succumbing to populist pressures, authoritarian interference, or corrupt interests. Much as policymakers in the development field have been exhorted to ‘think politically’, policymakers in the democracy assistance field should consider the economic influences on political life. They should take into account how the values and institutions of open economies reinforce democratic values and institutions, how private sector interests and organisations relate to civil society and power structures, and how models of economic governance shape the rule of law, rights, and democratic governance.

This chapter summarises the relationship between open economies and open societies, illustrates strategic opportunities to support democracy with an open economy approach, and recommends actions to respond to current challenges and integrate economic development into democracy assistance. The chapter is informed by the experiences of the Center for International Private Enterprise (CIPE), which was founded on the idea that political and economic rights are mutually reinforcing, and that private sector participation in policy discourse enlarges the constituency for democracy.

Contributions of open economies to open societies

The connections between economic growth, prosperity, and democracy have been extensively studied. Although there remains debate about causal relationships, meaningful patterns have been established. Recently for example, the Heritage Foundation illustrates how its index of economic freedom correlates well with the Economist Intelligence Unit’s democracy index.[2] One of the takeaways from the literature is that open economies are more closely linked to democratic development than is raw economic growth, which can be initiated by state-driven industrialisation or natural resource rents under different types of regime. Another takeaway is that the conditions for democracy must be cultivated; one cannot assume that democracy is the necessary outcome of economic development.

There are several lines of argument about these connections, beginning with modernisation theory. Seymour Martin Lipset observed that a number of socioeconomic aspects of development were supportive of democratisation, namely education, rising income, urbanisation, and industrialisation.[3] Similarly, the emergence of a strong middle class has historically been associated with rising demand for democracy. As Barrington Moore noted, “No bourgeoisie, no democracy.”[4] The “third wave” of democratisation since 1974 was actively led by participation from the urban middle class.[5]

Open economies are distinguished from extractive economies by their normative basis. “The concepts that underpin a free society are fundamental to free markets, too: values like transparency, open competition, and the rule of law.”[6] Constituencies for change can coalesce around these values. The competitive private sector (unlike crony capitalists) has a stake in liberal, democratic systems that respect rights, manage conflicts, and invest in public goods and human capital. Therefore, business has often led the way in seeking accountable government.[7]

Peter Berger observed that an open economy, also referred to as a market economy or capitalist economy, “provides the social space within which individuals, groups, and entire institutional complexes can develop independent of state control” and “creates space and opportunity for civil society.” [8] Authoritarian and statist growth models do not tolerate this space, nor do they tolerate economic competition which may generate autonomous sources of power and pluralism.[9] Indeed, democratic theorist Robert Dahl argued that competitive politics requires a pluralistic social order, which in turn requires a decentralised economy.[10]

What is a market economy?

A market economy (as an ideal) is a competitive economic system where the rules are the same for all participants.

• A private sector economy is not necessarily a market economy. If the behaviour of private economic actors revolves around rent-seeking, corruption, and cronyism, it is not a market economy.
• A laissez-faire policy is not adequate for markets to function. A market economy can emerge when the government guarantees consistent, fair laws and rules.[11]

The logic of competition explains the persistent relationship between open economies and open societies:

“Open access orders maintain their equilibrium by allowing a wide range of economic and social interests to compete for control of the polity. Creative economic destruction produces a constantly shifting spectrum of competing economic interests. The inability of the state to manipulate economic interests sustains open political competition: politicians cannot cripple their opponents by denying them economic resources.”[12]

Market economies, by permitting and encouraging open competition, stimulate greater pluralism and regular renewal. A competitive, responsible private sector in an open economy provides an important counterweight to the state, injects dynamism into political discourse, and makes possible a vibrant civil society.

Finally, economic rights and governance constrain the uses and abuses of authority. “Private ownership of the means of production is a crucial bulwark against an overweening state and eventual political tyranny.”[13] The same government that could arbitrarily seize private property could violate civil liberties and repress opposition. Market economies and sustainable growth require institutional structures that protect property rights, enforce contracts, ensure open competition, and facilitate access to information, all within a system of rule of law. Once in place, these institutions serve to uphold a political order based on constitutional, not arbitrary rule.

Critics of modernisation theory point out that the causal relationships are unclear and that not all good things go together. One famous study by Przeworski et al. concluded that development, as measured by per capita GDP, was important to sustaining democracy but not to its emergence.[14] Notable cases of capitalist systems that were not associated with democracy include Singapore and pre-democratic Chile (which made the transition in 1990). China adopted elements of a market economy, though the state sector remains privileged and state influence over the private sector has been reasserted. All in all, the body of evidence for synergies between development and democracy holds up well but the critiques draw attention to diverging country experiences and the need to identify mechanisms of change.[15]

If not all things necessarily go together, would it be better to sequence reforms in order to focus on ‘preconditions’ for democracy, such as economic development and state capacity? Thomas Carothers has cautioned against this version of sequencing, noting that enlightened autocrats who promote economic development and rule of law are actually quite exceptional. Instead, policymakers would do better to adopt gradualist, iterative strategies to expand competition and choice.[16] More important than sequencing may be the adoption of integrated governance and growth strategies that “work with the grain” in each country.[17]

Strategic Opportunities

Fortunately from a strategic standpoint, there are multiple avenues to promote open economies that are conducive to democratic openings or transitions. Five broad areas of opportunity are described below. The best opportunities in each case will be a function of local conditions and demand.

Fighting corruption

Corruption holds back democracy by undermining public systems, sapping public trust, and subjugating citizens’ will to private interests. It prevents business from thriving by rendering contracts arbitrary and hard to enforce and exposing business to extortion and legal risk. If one views corruption as an institutional problem rather than a moral problem, effective responses involve reducing incentives and opportunities for corrupt behaviour, as well as improving institutions of governance. Such an anti-corruption strategy would tackle underlying causes of corruption: unclear, complex, and frequently changing regulations; lack of transparency and accountability; barriers to competition (and exemptions for cronies); and implementation gaps between laws on the books and their de facto application.

Business can be the source of corruption or the victim, but it can also be the solution. Private sector initiatives for collective action set a higher standard that rewards the participating companies and reduces the vulnerability of companies that resist paying bribes. The B20 Collective Action Hub contains many example initiatives and resources.[18] Across Africa, CIPE’s Ethics 1^st initiative sets a governance and corporate ethics compliance benchmark, adapted for emerging markets from internationally recognised standards, to de-risk investment into African economies and better integrate companies across the continent into global value chains.

Bolstering democratic governance and defending against authoritarianism

Although democratic legitimacy begins with the people’s choice of representatives through elections, it is sustained when governments deliver on promises. Between elections, citizens need avenues to participate in decision-making, offer feedback, and hold government accountable for its performance. For instance, structured public-private dialogue (PPD) enables participatory policymaking, improves the quality of representation, and builds transparency and accountability into policymaking and policy implementation.[19] In Kenya, PPD platforms exist at all levels from the Presidential Roundtable to county budget forums.[20] Participation by groups like the Kenya Private Sector Alliance, Kenya Association of Manufacturers, and Kenya Association of Vendors and Traders shaped numerous laws, among them the Transition to Devolved Government Act, Bribery Act, and Micro and Small Enterprise Act, and helped improve local services such as roads, sewage systems and street lighting.[21] Donors such as the World Bank, GIZ, SIDA, USAID, and UNDP have supported dialogue platforms on a wide range of topics from business competitiveness and inclusive growth to the green economy, Sustainable Development Goals, responsible investing, and governance.

Increasingly, democratic governance must be defended against external authoritarian influence. In 2018, CIPE identified the challenge of “corrosive capital” originating in China, Russia, and other countries, which lacks transparency, accountability, and market orientation.[22] When opaque finance enters recipient countries through governance gaps, it commonly has negative impacts on human rights, the environment, small business, and labour, not to mention exacerbating governance challenges. CIPE has reported on these financial flows and associated problems in the Western Balkans, Southeast Asia, and other regions. Counter-measures to neutralise corrosive capital include: enacting policies that clearly govern foreign investment, strengthening public procurement systems, increasing transparency of public budgets, and enabling civil society monitoring, and potentially tapping new sources of development finance. Enabling well-governed, “constructive” investments can drive the creation of a more transparent and market-oriented business culture, leading to a virtuous economic cycle that augments the efficiency of markets and fosters greater social inclusion.[23]

Promoting ethical practice and respect for human rights

Business and human rights and responsible business conduct are topics of growing interest in the democracy and development communities. While relevant standards have largely been focused on multinational enterprises, there remains scope to assist local businesses in adapting international best practices (United Nations Guiding Principles on Business and Human Rights) to their context and adopting compliance systems, as well as having a voice in emerging human rights legislation.[24] Corporate governance initiatives, anchored in stakeholder governance models and risk management, provide a solid framework for raising standards at the firm or industry level.

The United Nations Global Compact assists companies to “move from commitment to action” on human rights through five areas of business engagement: awareness raising, capacity building, recognising leadership, policy dialogue, and multi-stakeholder partnerships.[25] Resources on these topics are also available from the Business and Human Rights Resource Centre and from BSR (formerly Business for Social Responsibility). The International Finance Corporation has related resources on corporate governance, stakeholder engagement, and risk management.

Supporting civic values and civil society

Business increasingly recognises that liberal values are being challenged, and that it cannot be passive in the defense of values. The US Chamber of Commerce Foundation has established a Civics Forward initiative to convene business leaders around civic education and civil discourse, declaring, “informed and active citizens make for a stronger country, a stronger economy, and a stronger workforce.”[26]

Not to be forgotten, non-profit business associations represent significant constituencies within civil society—including small business and diverse entrepreneurs. Alexis de Tocqueville, in Democracy in America, recognised the important roles of associations in preserving political independence and pursuing common aims. Independent, organised business can resist arbitrary government action and provide space for plurality of expression. In closed regimes, advocacy for economic reform is often one of the few avenues available to exercise freedoms of association and speech. Donors that support public-private dialogue toward policy reform commonly include association capacity building as a component of their programmes. In Ethiopia, CIPE has worked with more than 50 membership-based organisations and established a Civic Engagement Hub for civil society organisations.

Opening pathways for new groups to access opportunity

Most thinkers on democracy, starting with Robert Dahl, would agree that extreme inequality is harmful to democracy because it limits citizens’ ability to participate effectively and reduces their trust in the regime. Thus, economic inclusion, typically part of development work, should be paired with strategies for democracy assistance. One important dimension of inclusion, women’s economic empowerment, can change the status of women within households and communities, and even increase their ability to participate in politics. To empower individual women in Papua New Guinea, CIPE, supported by Australia’s Department of Foreign Affairs and Trade (DFAT), established a Women’s Business Resource Centre for women of all backgrounds to access business services, training, and support, with childcare services provided.[27] To lower systemic barriers and reduce inequities, collective action through CIPE’s Women’s Business Agenda process has been employed in South Asia and Africa. In Nigeria, a coalition first formed in 2013 now has 52 member organisations representing more than four million women entrepreneurs and businesswomen and updated its platform in 2020 to raise issues of security, access to electricity, infrastructure, gender equality and access to finance.[28]

Recommendations for UK strategy

In order to support open economies in ways that reinforce democratic development and open societies, the UK can take a leadership role by shaping foreign assistance in line with its values while learning from the experience of other development partners.

The adaptability of democracy will depend on finding satisfactory solutions to current challenges:

• Restoring trust in open markets and free enterprise: This will require assuring citizens that market institutions fairly apply the same rules to everyone, that corruption is under control, and that businesses operate ethically.
• Reducing inequality within countries: This will require expanding economic opportunities and ensuring access to opportunity by disadvantaged groups in addition to democratising services and providing social safety nets.
• Countering the erosion of democratic institutions by domestic and external forces: This will require constraints on authoritarian finance, anti-corruption measures, and new roles for business in defending the pillars of open societies.

By the nature of these challenges, as Thomas Carothers as argued, economic concerns should be integrated into democracy support, replacing the typical silos of development and democracy within foreign assistance programmes. This does not entail adding new programmes or detracting from rights-based approaches so much as identifying complementary resources and approaches. Integration could include: focusing on contributions of economic governance to rule of law and respect for rights; engaging grassroots business constituencies and supporting women entrepreneurs and business leaders to engage in politics; treating economic inclusion as a path to enfranchisement; and handling issues of development policy within countries as opportunities for participatory governance. On the development side of the equation, integration could include: embracing democratic governance as part of improving human welfare; enhancing governance as a means to improve performance management or the legitimacy of country ownership; and applying politically smarter methods in development programmes.[29]

Depending on a country’s conditions with respect to freedom, institutional development, and civil society, UK strategy can target interventions that leverage economic drivers of change and business constituencies who share a stake in competitive, rules-based, and value-based reforms. Once the strategic opportunity has been targeted, the UK can select modalities from its repertoire that fit the purpose. Many widely used modalities for private sector engagement, as identified by the OECD, are quite amenable to democracy assistance, namely: knowledge and information sharing, policy dialogue, technical assistance, capacity development, and finance. Of these, finance tends toward transactional activities, but more broadly construed could involve support for civil society and democratic institutions.

Country-level strategy for open economies should be informed by high-level discussion and co-creation with the private sector, civil society, economists, and others. Too often, donors take a top-down approach to engaging partners.[30] In democracy assistance, it is even more vital to engage varied interests—as in open access orders—and not confine assistance to the technical aspects of institution building and governance. A coherent strategy for open economies must support inclusive, market-driven approaches based on positive incentive structures; establish robust partnership frameworks (such as the Kampala Principles);[31] and nurture the development of broad reform coalitions that sustain the political economy of reform.

Conclusion

Open economies and open societies have delivered tremendous human progress, yet in recent years have not fully lived up to expectations. The resurgence of competing models signals three things. First, the institutional ‘infrastructure’ of market economies and the liberal order must be restored to be more resilient, responsive, and equitable. Second, the enabling environment for technological, economic, and social innovations must be improved to develop new markets, business models, and governance mechanisms that expand opportunity and meet today’s challenges. Third, defenders of open societies and open economies should come together to counter authoritarian, illiberal, populist approaches and show that their model offers effective, more legitimate, and more sustainable solutions to citizens’ needs.

The UK has existing capabilities for private sector engagement, business climate reform, and anti-corruption, all of which could be paired effectively with democracy assistance mechanisms. The purpose of this integration would not be to redirect democracy support but to reinforce democratic values, rights, and institutions with corresponding values, interests, rule of law, and pluralism in the economic sphere. The targeted application by the UK of mutually reinforcing strategies, in support of locally driven change, will help sustain both democratic openings and more inclusive growth. This new focus on the economic dimension of democracy assistance can bolster democratic legitimacy and performance in democracy that delivers.

Kim Eric Bettcher leads the Center for International Private Enterprise’s (CIPE) Policy and Program Learning department, including knowledge management and applied research. PPL facilitates the international exchange of good practice, lessons learned, and policy options for democratic and market transitions. Dr. Bettcher has created numerous programme resources for CIPE on democratic governance, private sector engagement, entrepreneurship ecosystems, public-private dialogue, and other themes. He also manages the secretariat of the Free Enterprise & Democracy Network. Previously a research associate at Harvard Business School, Bettcher holds a Ph.D. in political science from Johns Hopkins University and a bachelor’s degree from Harvard College. 

[1] HM Government, Global Britain in a competitive age The Integrated Review of Security, Defence, Development and Foreign Policy, March 2021, https://www.gov.uk/government/publications/global-britain-in-a-competitive-age-the-integrated-review-of-security-defence-development-and-foreign-policy

[2] Heritage Foundation, Economic Freedom Around the World: The Key to Human Progress, in the 2021 Index of Economic Freedom, https://www.heritage.org/index/pdf/2021/book/2021_IndexofEconomicFreedom_CHAPTER03.pdf

[3] Seymour Martin Lipset (1981). Political Man: The Social Bases of Politics. Baltimore, Maryland: Johns Hopkins University Press.

[4] Barrington Moore, Jr. (1966). Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World. Boston: Beacon Press.

[5] Samuel P. Huntington (1991). The Third Wave: Democratization in the Late Twentieth Century. Norman, OK: University of Oklahoma Press. pp. 65-68.

[6] Andrew Wilson, Business Values Are Democratic Values, Voice of America, May 2016, https://blogs.voanews.com/us-opinion/2016/05/17/business-values-are-democratic-values/

[7] Larry Diamond, Democracy and Economic Reform: Tensions, Compatibilities, and Strategies for Reconciliation, in Economic Transition in Eastern Europe and Russia: Realities of Reform, ed. Edward P. Lazear (1995). Stanford: Hoover Institution Press. pp. 111–112; Ben Ross Schneider (2004). Business, Politics, and the State in Twentieth-Century Latin America. Cambridge: Cambridge University Press. pp. 246–250; Didi Kuo (2018). Clientelism, Capitalism, and Democracy: The Rise of Programmatic Politics in the United States and Britain. Cambridge University Press.

[8] Peter Berger, The Uncertain Triumph of Democratic Capitalism, in Capitalism, Socialism, and Democracy Revisited, eds. Larry Diamond and Marc F. Plattner (1993). Baltimore: Johns Hopkins University Press.

[9] Note that Scandinavian-style welfare state systems still have high levels of economic freedom. Heritage Foundation, 2021 Index of Economic Freedom.

[10] Robert A. Dahl (1971). Polyarchy: Participation and Opposition. New Haven: Yale University Press. p. 60.

[11] Kim Eric Bettcher, CIPE Guide to Governance Reform, CIPE, August 2014, https://www.cipe.org/resources/cipe-guide-governance-reform/

[12] Douglass C. North et al., Limited Access Orders in the Developing World: A New Approach to the Problems of Development, World Bank Policy Research Working Paper 4359, September 2007, p. 19, https://openknowledge.worldbank.org/handle/10986/7341

[13] Larry Diamond, Political Freedom and Human Prosperity, Hoover Institution Essay Series on Socialism and Free-Market Capitalism: The Human Prosperity Project, Stanford University, 2020, p. 2.

[14] Adam Przeworski et al. (2020). Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990. Cambridge: Cambridge University Press.

[15] Carles Boix and Susan C. Stokes, Endogenous Democratization, World Politics 55 no. 4, July 2003, https://www.jstor.org/stable/25054237; Julian Wucherpfennig and Franziska Deutsch, Modernization and Democracy: Theories and Evidence Revisited, Center for Comparative and International Studies, ETH Zurich and University of Zurich, Living Reviews in Democracy 2009, https://ethz.ch/content/dam/ethz/special-interest/gess/cis/cis-dam/CIS_DAM_2015/WorkingPapers/Living_Reviews_Democracy/Wucherpfennig%20Deutsch.pdf

[16] Thomas Carothers, How Democracies Emerge: The ‘Sequencing’ Fallacy, Journal of Democracy 18 no. 1, January 2007, https://journalofdemocracy.org/articles/how-democracies-emerge-the-sequencing-fallacy/

[17] Brian Levy (2014). Working with the Grain: Integrating Governance and Growth in Development Strategies. Oxford: Oxford University Press.

[18] Basel Institute on Governance, B20 Collective Action Hub, Baselgovernance.org/b20-collective-action-hub

[19] Kim Eric Bettcher, Benjamin Herzberg, and Anna Kompanek, Public-Private Dialogue: The Key to Good Governance and Development, CIPE, January 2015, https://www.cipe.org/resources/public-private-dialogue-key-good-governance-development/

[20] KEPSA, Public private dialogue, https://kepsa.or.ke/public-private-dialogue/

[21] CIPE, Kenya Cumulative Assessment Report, September 2017.

[22] John Morrell, Channeling the Tide: Protecting Democracies Amid a Flood of Corrosive Capital, CIPE, September 2018, https://www.cipe.org/resources/channeling-the-tide-protecting-democracies-amid-a-flood-of-corrosive-capital/

[23] Eric Hontz, Building a Market for Everyone: How Emerging Markets Can Attract Constructive Capital and Foster Inclusive Growth, CIPE Insights, October 2019, https://www.cipe.org/newsroom/building-a-market-for-everyone-how-emerging-markets-can-attract-constructive-capital-and-foster-inclusive-growth/

[24] OHCHR, Guiding Principles on Business and Human Rights, April 2011, https://www.ohchr.org/documents/publications/guidingprinciplesbusinesshr_en.pdf

[25] United Nations Global Compact, Human Rights: The Foundation of Sustainable Business, 2018, https://www.unglobalcompact.org/library/5647

[26] U.S. Chamber of Commerce Foundation, Civics Education, https://www.uschamberfoundation.org/civics-education

[27] PNG WBRC, see website: https://www.pngwbrc.com/

[28] Association of Nigerian Women Business Network, Women National Business Agenda, https://www.anwbn.org.ng/women-national-business-agenda-2/

[29] Thomas Carothers and Diane de Gramont (2013). Development Aid Confronts Politics: The Almost Revolution. Washington, DC: Carnegie Endowment for International Peace.

[30] Donor Committee for Enterprise Development, How Donors Can Make the Transition to Strategic Private Sector Engagement: Programming Innovations and Organisational Change, DCED Briefing Note, March 2017. https://www.enterprise-development.org/wp-content/uploads/DCED_Making_the_Transition_to_Strategic_Pivate_Sector_Engagement.pdf

[31] Global Partnership for effective Development Co-operation, Private Sector Engagement, https://www.effectivecooperation.org/landing-page/action-area-21-private-sector-engagement-pse