A Note on Democratization and Economic Conditions in Eastern Europe

Posted: 15 May 2002

See all articles by Bernd Hayo

Bernd Hayo

University of Marburg - School of Business & Economics

Abstract

Some people have suggested that it is possible to separate the transformation of the political system and the reform of the economic system ("Asian way"). A pre-condition for such an approach is that this separation is valid in practice. This note empirically investigates whether people's attitude towards the progress in political transformation in Eastern Europe are influenced by economic factors. Thereby it addresses the question of independence between economic and political system. Using a large panel data set, containing about 68000 observations on individuals from 19 countries over 6 years, this question is analyzed in the framework of an appropriately adjusted ordered logit model. It is found that both subjective and objective personal economic experiences, such as the development of the financial situation of the household or its position in the income distribution, as well as objective aggregate data, such as inflation or the private sector share, have a significant influence on people's opinion with respect to progress in democratization. Thus, studies on transition countries should take into account that there appear to be important spill-overs from people's economic experience to their assessment of progress in transforming the political system. Consequently, in the case of Eastern Europe, there appears to be no alternative to a simultaneous transformation of both political and economic system.

Keywords: Eastern Europe, Political Economy, Democracy, Transformation

JEL Classification: D72, P26, O52

Suggested Citation

Hayo, Bernd, A Note on Democratization and Economic Conditions in Eastern Europe. Journal of Socio-Economics, 30(6), 2001, Available at SSRN: https://ssrn.com/abstract=305368

Bernd Hayo (Contact Author)

University of Marburg - School of Business & Economics ( email )

Universitaetsstr. 24
Marburg, D-35032
Germany
++49(0)6421-28-23091 (Phone)
++49(0)6421-28-23193 (Fax)

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