Inequality, fiscal capacity and the political regime: lessons from the post-communist transition

Using panel data for twenty-seven post-communist economies between 1987-2003, we examine the nexus of relationships between inequality, fiscal capacity (defined as the ability to raise taxes efficiently) and the political regime. Investigating the impact of political reform we find that full political freedom is associated with lower levels of income inequality. Under more oligarchic (authoritarian) regimes, the level of inequality is conditioned by the state’s fiscal capacity. Specifically, oligarchic regimes with more developed fiscal systems are able to defend the prevailing vested interests at a lower cost in terms of social injustice. This empirical finding is consistent with the model developed by Acemoglu (2006). We also find that transition countries undertaking early macroeconomic stabilisation now enjoy lower levels of inequality; we confirm that education fosters equality and the suggestion of Commander et al (1999) that larger countries are prone to higher levels of inequality.

Inequality, democracy and taxation:lessons from the post-Communist transition

Using data for the period 1989 – 2002, we examine the determinants of income inequality in post-communist economies. We find a strong positive association between equality and tax collection but note that this relationship is significantly stronger under authoritarian regimes than under democracies. We also discover that countries introducing sustainable democratic institutions early are characterised by lower inequality. We also confirm that education fosters equality and find that larger countries are prone to higher levels of inequality.

De-industrialisation and the post-communist transition:Rowthorn and Wells' model revisited

In this paper we present a simple three-sector model explaining the structural change in employment, which is a modified version of Rowthorn-Wells (1987). We supplement the theoretical analysis with simple econometric tests, which illustrate how the modified Rowthorn-Wells model can be used to (i) motivate empirical estimates of the link between the level of development and structures of employment, (ii) illustrate structural distortions under the command economies, and the structural adjustment that happened during the post-Communist transition. We demonstrate that in the case of these economies, the transition process leads to an adjustment to the employment structures predicted by the model.

Deindustrialisation:lessons from the structural outcomes of post-Communist transition

Theoretical and empirical studies show that deindustrialisation, broadly observed in developed countries, is an inherent part of the economic development pattern. However, post-communist countries, while being only middle-income economies, have also experienced deindustrialisation. Building on the model developed by Rowthorn and Wells (1987) we explain this phenomenon and show that there is a strong negative relationship between the magnitude of deindustrialisation and the efficiency and consistency of market reforms. We also demonstrate that reforms of the agricultural sector play a significant role in placing a transition country on a development path that guarantees convergence to EU employment structures.

Deindustrialisation and structural change during the post-Communist transition

The aim of this paper is to model the evolution of employment structure in post-communist economies in the broader context of deindustrialisation. The paper builds on the model of structural change developed by Rowthorn and Wells (1987). We show that the starting point of high industry sector share in total employment and its direct fall when productivity of sectors changes in favour of services can be explained in terms of this framework. Moreover, the model can also describe the phenomenon of a further expansion of the agriculture, observed in countries classified as "less consistent" in the reforms implementation. Hence, we distinguish two development paths, the efficient one, called "horizontal", and the inefficient one called "vertical". We illustrate it with empirical data, using alternative measures of structural change and patterns of structural evolutions during transition. Finally, we discuss the link between the EBRD indicators of reforms and structural change. We show that the "quality" of reforms, not the initial GDP level determines a country's development path.

Did mass privatisation really increase post-communist male mortality?

A recent article in the Lancet, by David Stuckler, Larry King and Martin McKee, investigated anew the fluctuations in adult male mortality rates that have come to characterise the so-called post-communist mortality crisis. Adopting a cross-country, time-series perspective the authors examined how the economic policy strategies of the 1990s impacted upon observed fluctuations in mortality. They conclude that the adoption of a strategy of rapid (mass) privatisation contributed to the adverse mortality trends. We subject that finding to closer scrutiny using the same data from which the Stuckler et al claim stems. We find that their claim that mass privatisation adversely affected male mortality trends in the post-Communist world does not stand up to closer examination. It is not supported empirically and is at odds with what we know about both transition in the post-communist world and about health trends over time in this region.

Nation, region and history in post-communist transitions:identity politics in Ukraine, 1991-2006

Since independence in 1991, issues of nation and identity have become highly debated topics in Ukraine. This monograph explores not only how national identity is being (re)constructed by the Ukrainian state, but also the processes by which it is negotiated through society. The central argument of this work is that too much attention, concerning identity in Ukraine, has focused on markers of ethnicity and language. Instead, the author advocates a regional approach, engaging with the issue of how Ukraine's regional differences affect nation-building processes. Following the tumultuous events of the 'Orange Revolution', the view of Ukraine as a country inherently 'divided' between 'East' and 'West' has (re)emerged to become a popular explanation for political events. The study outlines the necessity for academics, policymakers and indeed politicians to veer away from this simplistic 'West versus East' divide. The book advocates an analysis of Ukraine's unique brand of regionalism not in terms of divisions, but in terms of regional differences and diversity. The author deconstructs the concept of 'Eastern Ukraine' by focusing on three Ukrainian localities, all adjacent to the Ukrainian-Russian border. The study examines how individuals provide 'their' own understanding of the place of their region within the wider processes of nation building across Ukraine. In doing so, the book develops a 'regional' approach to the study of identity politics in Ukraine.

Post-communist recessions re-examined

We apply simple econometric methods to evaluate the factors that determined the length and depth of the post-Communist recessions. Early implementation of the stabilisation and liberalisation programmes made the recessions weaker. Wars had strong negative impact. Initial trade dependence made recessions more serious. The results are discussed with reference to the existing explanations of the 'transitional recessions', in particular Calvo and Coricelli (1992, 1993), Blanchard and Kremer (1997) and Blanchard (1997).

Political parties and trade unions in the post-communist Poland:class politics that have never a chance to happen

Trade unions in Poland have not built the stable and long-term relations with political parties as are observed in Western democracies. By analysing the historical and symbolic background of the transformation to a democratic civil society and free market economy, political preferences of working class, trade union membership rates, and public opinion polls, we argue that, in case of Poland, the initial links between political parties and trade unions weakened over time. Polish trade unions never had a chance to become a long-term intermediary between society and political parties, making the Polish case study a double exception from the traditional models.

The choices for Europe:national preferences in new and old member states

Drawing on the existing body of literature that deals with national preference formation and building on the role played by vulnerability and deficits in shaping policy choices at the European level, this article provides a synthetic framework to explain the stances of the Older Member States (OMS) and New Member States (NMS). We subsequently apply the model to NMS, focusing largely, although not exclusively, on Poland. We argue that although many of the policy preferences can be explained by the framework, the size of states, especially with regard to ambition and capacity, and the nature of the country's post-communist transition appear significant for the NMS and need to be incorporated into future theory-building. We conclude by highlighting areas in need of further empirical research. © 2009 Blackwell Publishing Ltd.

Economic transition in Central Europe and the Commonwealth of Independent States

Fifteen years ago, twenty-seven countries in Europe and Central Asia embarked on their economic transition paths. For some, the outcome was a considerable success. Several others are still struggling to shed the inheritance of the past and to correct more recent policy mistakes. Why were post-Communist recessions so long in some countries and growth disappointing? Why was fiscal performance so different? Was democracy a factor, which facilitated reforms or rather slowed them down? This book discusses these questions in the context of new empirical evidence, including a critical examination of the main themes in the economics of transition.