Building States and Markets after Communism: The Perils of Polarized Democracy

Description

Does democracy promote the creation of market economies and robust state institutions? Do state-building and market-building go hand in hand? Or do they work at cross-purposes? This book examines the relationship between state-building and market-building in 25 post-communist countries from 1990 to 2004. Based on cross-national statistical analyses, surveys of business managers, and case studies from Russia, Bulgaria, Poland, and Uzbekistan, Timothy Frye demonstrates that democracy is associated with more economic reform, stronger state institutions, and higher social transfers when political polarization is low. But he also finds that increases in political polarization dampen the positive impact of democracy by making policy less predictable. He traces the roots of political polarization to high levels of income inequality and the institutional legacy of communist rule. By identifying when and how democracy fosters markets and states, this work contributes to long-standing debates in comparative politics, public policy, and post-communist studies.

Timothy Frye is the Marshall D. Shulman Professor of Post-Soviet Foreign Policy and the Director of the Harriman Institute at Columbia University. He previously taught at Ohio State University and has worked as a consultant for the World Bank, the European Bank for Reconstruction and Development, the US Agency for International Development, and the Bloomberg Foundation. He is the author of Brokers and Bureaucrats: Building Markets in Russia (2000), which won the 2001 Hewett Prize from the American Association for the Advancement of Slavic Studies. His articles have appeared in the American Political Science Review, World Politics, American Economic Review Papers and Proceedings, the American Journal of Political Science, and Comparative Political Studies, among others.

"From a leading scholar of post-communist political and economic development comes a new analysis that applies a familiar insight - economic reforms are less credible when political polarization is severe and policy reversal more likely - to a new and important problem: distinct patterns of economic reform and growth since the fall of Communism in the countries of Eastern Europe and Central Asia. Timothy Frye uses careful qualitative and quantitative analysis to chart the path from nationalism in the Soviet era to political polarization after Communism to policy reform and its (in)consistency to growth. By examining every link in a complex causal chain, he opens a black box that has often remained closed. His analysis, and the way he goes about it, make a signal contribution not only to the study of the region, but more generally to our understanding of the political economy of reform and development." - Philip Keefer, Lead Economist, Development Research Group, The World Bank "Timothy Frye's Building States and Markets after Communism is a superb addition to the growing literature on the political economy of post-communism. Frye develops a powerful and original model to explain the level of comprehensiveness and coherence of economic reform in 25 post-communist countries. Frye subjects his theory to a variety of empirical tests, using evidence from surveys of business people in the region, data on economic performance, and thorough case studies of Russia, Bulgaria, Poland and Uzbekistan. Written in a clear and accessible style, the book will stand as an authoritative analysis of the political and economic development of the post-communist region." - Thomas F. Remington, Emory University "Frye's account of the diverse fortunes of post-communist states distinguishes itself through attention to a critical intervening political mechanism: the greater or lesser partisan polarization around questions of economic reform that shapes the behavior of politicians, economic producers, and voters in the post-communist polity. Frye also explains how polarization comes about, is reproduced at the micro-level in the investment behavior of firms, and persists over time. Such quantitative analysis is complemented by meticulous case studies highlighting the empirics of centrifugal and centripetal political competition and its political-economic consequences. This carefully-crafted investigation will command the attention of anyone who plans to study the political economy of post-communism." - Herbert Kitschelt, Duke University "Tim Frye's book provides a major new perspective on the political economy of investment and growth in the countries of Eastern Europe and the former Soviet Union. His analysis of the effects of party system polarization pushes well beyond earlier theories of partial and inconsistent market reforms. His theoretical claims are built on an impressive combination of econometric analysis, original survey research, and new case studies. This ground-breaking study makes a significant contribution to our understanding of post-socialist countries and will be an important point of reference for analyses of economic reform in other parts of the developing world." - Robert Kaufman, Rutgers University "Drawing on his deep knowledge of the post-communist experience, Tim Frye demonstrates that history can overwhelm attempts to get the institutions right. Conceptually bold and meticulously researched, Building States and Markets after Communism should be read by anybody who wants to understand the political economy of economic reform." - Scott Gehlbach, University of Wisconsin, Madison