Participation, Markets and Democracy by Deepak Lal*

This paper examines the role of popular participation, in particular through NGOs, in both promoting democracy (seen as essential for better governance) and the maintenance of a market economy. Making a crucial distinction between the forms and characteristics of good government, it finds no empirical relationship between the form of government and successful development. It argues that while democracy promotes liberty it may not promote opulence, while mass participation through pressure groups may harm rather than aid the attainment of both opulence and liberty. Finally, it examines the role NGOs should play in World Bank operations, and finds there is no presumption one way or another that this is desirable, and argues that the only test is the contingent one of cost-effectiveness. JEL classification: Bl, D72, D73, HOO, 019