At the Indian Economy Blog, Nitin Pai asks "Is there something in the nature of democratic governments that constrains the building of good infrastructure?", and says "When authoritarian governments decide to do it they often do so quite well."
I think he has Singapore in mind, but I think he simply being unfair to democracy. For contrast, consider the track records of North Korea, the GDR, China under Mao (remember The Great Leap Forward?) or Cuba.
One would expect right-leaning dictatorships to be more successful at managing an economy, as they would at least permit businesses to flourish, and the histories of Spain under Franco, Chile under Pinochet, and Portugal under Salazar suggest that this is true. Of course, the people of those countries paid a high price for this growth.
I think that whats happening is more subtle. Small countries under authoritarian regimes reflect their rulers. Thus, a benevolent despot can guide them to prosperity, though he cannot teach them to govern themselves once he is gone. In larger countries, however, authoritarianism results in increasing anarchy at the periphery, as the lawlessness at the center spreads outwards. The Undercover Economist describes a visit to Liberia, and the rampant corruption that he saw there- not attributable to any excess of democracy.
Democracy works exactly like any other market-place. Together with a free press, it provides feedback, and puts checks on producers (politicians).
The problem in India is not democracy, but that there has not been sufficient checks on the consumers (citizens). Russia is in a similar state, though they are much, much worse off than we are- 70+ years of communism, along with the sham of the "privatizations" of the 1990s has had the result that citizens mistrust businessmen, and look to the government for security. People fear change, and politicians can thrive by promising security and re-distribution rather than growth. What solutions? Not to abandon democracy, but to agree that the government has limits to its powers. When government stops trying to change society, it may be able to concentrate on promoting economic growth, and we may find that this is more effective at promoting social change than any direct attempt to re-engineer society.