Economic Reform, Democracy and Growth During Post-Communist Transition

39 Pages Posted: 13 Aug 2001  

Jan Fidrmuc

Brunel University - Department of Economics and Finance; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

Multiple version iconThere are 2 versions of this paper

Date Written: March 2001

Abstract

This paper explores interactions between growth, economic liberalization and democratization during transition. The results can be summarized as follows: (1) Liberalization has a strong positive effect on growth during transition (also when controlling for endogeneity of liberalization in growth). (2) Democracy facilitates economic liberalization. (3) Because of its effect on liberalization, democracy has a positive overall effect on growth. Nevertheless, the marginal effect of democracy (after controlling for progress in economic liberalization) is negative during early transition. (4) The progress in democratization in turn depends on past economic performance in a surprising manner-the relationship between past growth and subsequent democracy appears negative. (5) Economic performance is an important determinant of electoral outcomes and, in particular, of support for reforms.

Keywords: Democracy, liberalization, economic performance, elections

JEL Classification: E63, O11, P26, P27

Suggested Citation

Fidrmuc, Jan, Economic Reform, Democracy and Growth During Post-Communist Transition (March 2001). William Davidson Institute Working Paper No. 372. Available at SSRN: https://ssrn.com/abstract=279819 or http://dx.doi.org/10.2139/ssrn.279819

Jan Fidrmuc (Contact Author)

Brunel University - Department of Economics and Finance ( email )

Uxbridge UB8 3PH
United Kingdom
+44 1895 266 528 (Phone)
+44 1895 269 770 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

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