Suchergebnisse

Building on a model that integrates reforms into exogenous and endogenous growth models, this paper designs an econometric model of the interplay between economic reform measures, political decisions and economic performance. Several key hypotheses about transition are tested using two-stage least squares on a logit model using data for six countries (Bulgaria, the Czech Republic, Estonia, Hungary, Russia and Slovakia) over their first ten years of freedom. We draw three conclusions from the empirical evidence. (1) Contrary to the litany that everyone favors reforms, we find that voting for strong reform parties leads to more reforms. (2) History matters, even in a model of forward looking rational agents. Where communism was relatively popular, Russia, Hungary and Bulgaria, reform is slower, more problematic, and aimed toward a welfare state not US-style capitalism. The cost of debunking communist ideology evidently slows progress considerably. (3) Better economic performance does not result quickly from reforms. From a public choice perspective the immediate identifiable social costs of reforms often appear stronger than the eventual diffuse benefits. Though not surprising this result does not auger well for reformers. Finally, critical macroeconomic data for the earlier years around the transition period are very poor quality. Indeed economic data seems to be too poor to reveal much about changing economic circumstance. Measured output may actually move in the opposite direction of realized output. International agencies could contribute greatly to analysis of transition by quickly and deeply engaging the local statistical agencies.

Five generic reforms, price liberalization, property privatization, macroeconomic stabilization, microeconomic restructuring and trade liberalization, are integrated into both exogenous and endogenous growth models. This integration allows one to assess the implications of each reform for a representative consumer. If one assumes that in assessing a prospective reform each voter, given his unique characteristics and circumstances, acts as if he were the representative consumer, then this framework allows one to evaluate quantitatively the prospects of each reform for each distinct group. This model can be used to forecast how different voters, young-old, flexible-rigid, working-retired, taxpayer-transfer recipient, will respond to each proposal. This can in turn be used to determine the likelihood of success of a democratic polity in transition to capitalism.