Francis Fukuyama

How can Uzbekistan achieve prosperity?

Professor Fukuyama has done extensive research on development, international politics, and political issues. Professor Fukuyama and I talked about Central Asia, Uzbekistan, and its development so far. We have also touched on the relationship between the quality of governance and democracy and prosperity in development.

Watch the full dubbed video in Uzbek:

Read the full transcript:

Hoshimov:  Hi everyone. This is Hoshimov Iqtisodiyoti or Hoshimov’s Economics and I am Behzod. Today we have a really special guest. Our guest is Francis Fukuyama. Welcome, professor Fukuyama.

Fukuyama: Thank you very much.

Hoshimov:  I will introduce you. Professor Francis Fukuyama is a Senior Fellow at the Freeman Spogli Institute for International Studies here at Stanford. He is the Director of FSI's Center on Democracy, Development, and the Rule of Law. He is also a Professor of Political Science here at Stanford. I think F. Fukuyama is best known for his 1992 book, called “The End of History and the Last Man”. He has written widely on the issues of development and international politics and policies. Today I would like to talk with Professor Fukuyama about development, Central Asia and Uzbekistan. Welcome again.

Fukuyama: Thank you. 

Hoshimov: My first question is about your relatively recent book called "The Origins of Political Order”. In the book, you talk about countries getting to so-called Denmark, to the top. You propose theories about the creation of stable, peaceful, and prosperous societies that many countries want to achieve. I know that you had had an experience and expertise thinking about the post-Soviet world. Since I am from Uzbekistan and this show will be watched primarily, by people who care about Uzbekistan and Central Asia. Let me ask you, how a country like Uzbekistan, which is relatively peaceful, and I would say quite stable in many ways can achieve prosperity?

Fukuyama:  Well, Uzbekistan has not done that badly compared to some of its neighbors in terms of economic growth. But, I think that a lot of the growth is unbalanced because it tends to be based on a relatively small number of commodities, and I think that really the long-term economic growth in a society depends on developing the human capital of the population. Which is basically education and the acquisition of skills. And possibly by exploiting Uzbekistan's position as a hub between the Far East, Europe, and the Middle East. You know it is a part of the “Belt and Road” Initiative of Xi Jinping. In the future that might be one source of growth as a processing terminal along that route.

But really, the growth of any society depends on its people. The level of education they achieve, and their connections to the outside world. I think that would probably be the major challenge for Uzbekistan.

Hoshimov: Thank you. We all know that Uzbekistan has been a part of the Soviet Union for a long time and it started to reform its political institutions only a few years ago. It was largely authoritarian, and I think it remains so. Freedom of speech was questionable. Rule of law is one of the main weak points in my opinion. And given all that those things are important for growth, how exactly do you think the change happens? You know, the things that we care about such as human capital as you mentioned, are endogenous to the other set of existing institutions. How can society increase its human capital without reforming its institutions?

Fukuyama: Well, I am not sure it is completely endogenous. I think sometimes you can get growth in a commodity-producing country without very strong institutions. Institutions sometimes come later. I don't think you need to stick to a rigid order. I think that one of the big obstacles in Central Asia is, what I called in my book, Patrimonialism. That is to say, you have a state, it has a certain amount of stability, but it is very much based around personal relationships between the ruler and his family and friends. So, you develop a kind of to close crony capitalism in economic growth in that kind of society. And one of the big challenges of getting to Denmark, as I say, is how do you get past this kind of patrimonial political system to having one that is really inclusive for all citizens or citizens who relate to the state without necessarily having connections to the presidency or powerful elites. How do you open up the economy so that there's real competition so that the people who do get rich are not simply people who are being rewarded by their connections to the President or political power, but because they actually create value? I think those are the kinds of institutions that characterize Denmark - the actual country Denmark. And I think that you would need that in Uzbekistan as well. 

Hoshimov: Are you saying that if we continue a path of growth, sooner or later, the institutions may follow?

Fukuyama: Sometimes. One of the things that happen as you grow is that your human capital stock grows and really, in order to keep the growth going you need, you know, university-educated people, you need people with general literacy, with basic math skills, these sorts of things. And I think that any society that has successfully modernized has focused on developing those skills in its population. So, I think that you know, those are some of the drivers of more long-term growth. I don't think it's the case that you necessarily create institutions first and then the growth automatically happens. Because that actually wasn't the pattern in many European countries. They had, in many ways, weak institutions, but they still grew very relatively rapidly. So, I wouldn't be too rigid about saying you have to approach things in a certain sequence.

Hoshimov: One thing I kind of wonder about post-Soviet countries especially in terms of access to education is that even Tajikistan, for instance, had an almost universal school coverage. Even the very far Tajik villages had schools. People were able to do basic math, read and write. Soviets had very high coverage of higher education: the access to the universities and so forth, much higher than it is right now. Russia especially was quite educated. They did a lot of scientific research. Uzbekistan too had also a lot of Soviet [the union] level research institutions. Once the country (Soviet Union) collapsed, this human capital emigrated or deteriorated.

In other words, we had a competitively educated populace in 1992. We had schools and universities. But the people who came out of the Soviet educational system were not able to demand and build the sort of institutions that we thought they would. And so that's why I'm kind of a little more pessimistic about the role of human capital.

Fukuyama: Well, I was actually talking about one of the prerequisites for economic growth, not necessarily for democracy. Democracy is a little bit more complicated an issue. And then this brain drain problem that you're talking about, I think, has been true virtually for every post-communist country – in the former Soviet Union and Eastern Europe. Because unfortunately, one of the characteristics of globalization is that for an individual, it's oftentimes much easier to do well for yourself by moving to a high-income country than it is to try to make your rather poor country succeed. I don’t know if there is a good solution to that. I think, probably the reaction to immigration in many rich countries is going to limit the number of people that will be allowed to move across the borders. But that’s not a very happy solution for those problems. 

Now, the question about democracy is slightly different. I think you need education, but it's a certain kind of education, which I would say, revolves around critical thinking. You know, many people were educated as scientists or engineers in the former Soviet Union, but they were taught those skills in a very mechanical way, like, you know, you just listen to the lectures, memorize things, apply formulas. And that's really about it. You weren’t taught to question the ideas that you are given, you were not taught to speak up, you were not taught to think for yourself. And I think in a way that was the secret of Western Europe's economic success, that they at a very early stage, you know, in the Middle Ages, beginning of the Renaissance, and then after the Protestant Reformation developed an intellectual culture that was willing to question authority. To say, well, I, as an individual, have my own opinions and I can give you my own reasoning for this. And I've seen this in many of the young people I worked with, you know, from Ukraine and from Georgia, from other parts of the former communist world. They are very westernized culturally in certain ways. But they still do lack a little bit of that, you know, independence of thought that I think is really necessary to sustain a more democratic culture.

Hoshimov: Thank you. Actually, I think this is a very spot-on answer. If you look at Soviet universities, most of them were very specific in the subjects they teach at the undergraduate level. For example, “airplane engineering” was an institution on its own, or the “institute of railroad construction”. But there weren't too many schools like Stanford, you know, that are general education institutions, in which students are taught about both Aristotle and Shakespeare and also mechanical engineering. It was more like “if can you build this bridge here is your diploma" type of universities. I think that’s very insightful.

Since we are talking about democracy and growth, the natural question is in this debate is about whether growth causes democracy or democracy causes growth. This question has been out there for, I would say, 80 years now, where do you stand in that debate? 

Fukuyama: Well, I think, it's hard to show that democracy itself causes growth. I think there have been a lot of successful authoritarian countries that have grown very rapidly, you know, Singapore, China. Taiwan and South Korea were both dictatorships in the early days when they grew very rapidly. And I don't think that it's necessarily bad for growth because the richest countries in the world are democratic, but I don't think there's a necessary connection between growth and democracy. There is a modernization theory that says that growth should produce demand for political participation. Because as people get more educated, as they begin to own property, they become more middle class, they have a stake in having some accountability in their government. And that, I think, is something that happened in South Korea and Taiwan, as their populations, as they were industrialized, as their populations became better educated. The big contradiction to that rule is China. Because China has actually passed the point where Taiwan and South Korea had already democratized in the 1980s. They are richer than that, and yet it doesn't seem to be a lot of middle-class demand for democracy. And I think, that doesn't necessarily mean that the theory is wrong. It just means that there are many other factors that, you know, explain whether the population demands democracy other than whether it has achieved the middle-class status or not.

Hoshimov: I see. I know you have talked about the number - like six thousand dollars per capita or something. When you're talking about China, you are referring to that number? 

Fukuyama: It was done in a study by a couple of political scientists a while ago. What it said is you can transition to democracy at any level of the per capita income, but there are very few cases of transitioning backward once you reach the level that I think is probably now closer to ten thousand or twelve thousand dollars in purchasing power parity. But you know, unfortunately, we have seen countries beyond that level that are regressing, Hungary or Poland within European Union. So, I'm not sure that rule looks as strong as it did maybe 15, 20 years ago.

Hoshimov: So let's talk on the margins: if we are talking about a poor country that wants to prosper when they think about development, should they care more about building state capacity, managerial abilities, or should they think more about democratizing because there's some type of trade-off and tension in that. Right? Let's talk about Uzbekistan. If we think about the democratization process, we know there could be drawbacks: there might be rent-seeking behavior, there may be corruption, and so forth. But on the other hand, democracy has universal benefits: transparency, accountability, and so forth. So how would we think about democracy in this case?

Fukuyama: First of all, it depends on what quality of authoritarian government it is. There is absolutely no correlation between being authoritarian and having good policies that promote economic growth. I mean people point to Lee Kuan Yew who was an example of such a ruler. But for every Lee Kuan Yew, there is Museveni or some other horrible authoritarian leader. I think, Karimov wasn’t a great visionary in terms of economic modernization and, therefore, that autocracy did not do necessarily well. 

You know, the other problem is I don't think that countries can simply decide to sequence when you develop these institutions. It's very hard once you have a population that starts demanding democracy to say “no, no, just wait for another generation, we are not ready for democracy yet. Let's have another generation of economic growth”. I think, so many countries have to pursue these things simultaneously, which was not a historical pattern in many places. But I think it's hard to avoid the demand for doing everything at once.

Hoshimov: Do you think the Tiananmen Square was sort of “no, no, wait for more years of economic growth” kind of story?'

Fukuyama: Well, it would have been nice. But the Communist Party didn't want democracy at any point. It's not just a question of putting it off.

Hoshimov:  You know, I also think about the origins of growth, development, and modernization, and I feel like this is a linear algebra problem. There are more unknowns (variables), then there are equations. There are not enough equations or observations because a handful of countries in the world are developed. In linear algebra, we call this underdetermined system, in which we have either infinite solutions or no solution. Do you feel the same way?

Fukuyama:  Yeah, I mean, this is the trouble in human behavior at a macro scale in general. It's a multivariate phenomenon. There are many, many variables. Many of the variables you don’t even know exist. You know, it used to be very popular in the World Bank to do these cross-country regressions about determinants of growth; and over time they kept adding new variables because, you know, at first they did not pay attention to institutions or the politics. Then they realized its importance. you have to add rule of law, democracy, political stability, all of these sorts of things. And you know they have pretty much given up on that because, as you said, there are too many variables and it's very, very hard to find general rules by which you know you need exactly this combination of variables in order to get either growth or democracy.

Hoshimov: I know you think a lot about conflicts and how societies become peaceful. If someone reads history on a macro scale in the last seven hundred years or so, the number of people who are suffering from extreme levels of violence has declined rapidly. And Steven Pinker has a wonderful book that documents that. Why do you think that is happening? Why is humanity becoming more peaceful?

Fukuyama: Well, let me make one comment before that. I think that if you look at human history, violence, unfortunately, has actually played an important role in development because it actually provided a stimulus, for example, for state-building, because you need to defend yourself. Therefore, you need a competent state, you need tax collection, and you need the military, training and you need meritocracy, and so on and so forth. And sometimes a lot of social conflicts, unfortunately, can't get settled except by violence like in the American Civil War that was necessary to get rid of slavery. But that being said, you know, if you can do things peacefully, it's much better, and the reason we have democratic and liberal institutions is to resolve conflict without violence. That’s why you need political institutions.

I think that there's probably been a shift in the overall levels of violence simply because of in a way communications and greater empathy. Because it used to be that, you know, if you live in a tribal society, the only people you recognize as fellow human beings are your immediate relatives, people who live with you in a group of 30, 40 people and there is another tribe over there. You think they are devils and you want to kill them. Even though ethnically and racially and in terms of religion they are exactly the same people as you are. But, you know, because you've divided up into these little groups, you feel in competition. And I think that's happened progressively as there's been this human consciousness: larger and larger groups of people share certain basic characteristics, among which are certain demands for rights that all human beings are one. Nobody wants to be tortured. Nobody wants to be unfairly incarcerated. Nobody wants to be treated as a sort of, you know, the garbage that the regime can just throw away. And I think that this realization that there is a broader shared sense of humanity is something that's been growing over time. And as long as that's the case, it's not possible to hold people as enemies quite in the same way that it used to be.

Hoshimov: What about within tribe violence? If you read the anthropological studies, there was a lot of within tribe violence.

Fukuyama: I think there is violence at all levels. What’s happened over time and this is probably another answer to your question is that the structures that control violence have also scaled up. So you have, you know, a tribal elder that keeps peace in a small tribal hunter-gatherer society; and then it becomes a larger council and the state appears and then a democratic state, and all of these institutions operate at larger and larger scales to the point where now you can control the population with hundreds of millions of people under a single governor that basically provides overall social order.

Hoshimov: So there is some type of cultural shift in minds of humans with respect to cooperation as well?

Fukuyama:  And I think both cultural shift and growth of these institutions. 

Hoshimov: Since we are talking about culture, I think one of the final questions here is that what do you think the role of culture, religion, and all things those things that economists call “unobservables” in this system of the equation of development? How important is culture?

Fukuyama: Well, it's important if you understand culture properly. First of all, it's one of the several factors. The material incentives matter, culture matters, geography matters, all of these affect the nature of your overall development; and also, culture changes, and so culture is not a fixed set of beliefs that are handed down over generations. It's actually something that evolves over time.

So, if you look at any of the major world civilizations like Christianity, Hinduism, or Islam, that they've gone through lots of changes over the years and they interact with one another. They borrow from one another. Sometimes they fight and clash, but they're not necessarily fixed. So, I think anybody who doesn't recognize the importance of culture, doesn't really understand, you know, what holds human society together. But if you think that it's, you know, the most important thing, you're also going to be misled because there are many other factors that matter.

Hoshimov:  Then, what do you think of this Huntingtonian thinking about the Clash of Civilizations? 

Fukuyama: I think he suffered from some of that same problem is that he believed you have seven or eight of these big world cultures: Islam, Hinduism, Christianity. And that all these big, very separate, and they are fixed, and the world is going to be recognized around them. What we are finding out is that you know, they may constitute, I mean, Islam is really the only religion that really thinks of itself as a separate civilization these days. In Asia, they don't say Confucianism is our culture, our religion. I mean, that's just not the case. And in fact, many of the biggest fights these days are within cultures. So, the Middle East has been divided by a Sunni Shiite divide between Iran and Saudi Arabia, that's played out in Lebanon, Syria, Yemen and, you know, many other countries. And that's all happening within the world of Islam. And, you know, in Europe, the wars of religion in the 16th and 17th centuries were all within Christianity, there are different Christian sects. And so, I'm not sure that these big cultural units that Huntington talked about are actually the most important ones.

Hoshimov: Now, I'm even more confused in a way that since we can't pinpoint whether it is culture or not. We’ve added like N more variables into a way of thinking.

Let me ask you a question that may link the whole conversation. We are in the middle of a pandemic now, that’s why we are sitting far apart and not indoors. There has been a huge heterogeneity in the way countries responded to this pandemic. Some countries did much better than others. A country’s response to the pandemic: what can we learn from it in terms of state capacity, in terms of culture, in terms of other variables that we’ve talked about?

Fukuyama: I think there are basically three characteristics that were important. The first one was state capacity. Because obviously, if you don't have the doctors and the health systems and the funding for them, it's going to be hard to deal with the epidemic. The second one, I think, is basically social trust. The US did very badly, I think, because, you know, the US is highly polarized these days, so wearing the mask became a political statement. If you support President Trump, you didn't wear a mask, which I think is a kind of silly position to take. But that's what happens when there's low social trust between citizens and there's a low degree of social trust in governments. So many people are saying they will refuse to take a vaccine even if it's available because they don't trust the government when it says that the vaccine is safe. So trust is important. And then finally, I think, you need to have the right kind of leadership. We've had a number of populist leaders like Trump or Bolsenaro in Brazil or Lopez Obrador in Mexico or, Lukashenko in Belarus who didn't take the disease seriously and as a result let it spread and had a very poor performance. Unfortunately, it is another one of your multiple variable situations where you can have some combination of those, but if you don’t have all of them, you may not end up doing very well in ending the epidemic.   

Hoshimov: Thank you so much, Professor Fukuyama. It was really nice talking to you. One thing I want to mention is that you have never been to Uzbekistan. So I brought you a book. I hope you will read it and be our guest in Uzbekistan.

We can’t shake hands so let me just say thank you.

Fukuyama: Ok. All right. Thank you!