Institutional Persistence in Eastern Europe: Economic and Political Legacies of Empires and Communism

This dissertation seeks to advance our understanding of the roles that institutions play in economic development. How do institutions evolve? What mechanisms are responsible for their persistence? What effects do they have on economic development?

I address these questions using historical and contemporary data from Eastern Europe and Russia. This area is relatively understudied by development economists. It also has a very interesting history. For one thing, for several centuries it was divided between different empires. For another, it experienced wars and socialism in the 20th century. I use some of these exogenous shocks as quasi-natural social experiments to study the institutional transformations and its effects on economic development both in the short and long run.

This first chapter explores whether economic, social, and political institutions vary in their resistance to policies designed to remove them. The empirical context for the analysis is Romania from 1690 to the 2000s. Romania represents an excellent laboratory for studying the persistence of different types of historical institutional legacies. In the 18th and 19th centuries, Romania was split between the Habsburg and Ottoman Empires, where political and economic institutions differed. The Habsburgs imposed less extractive institutions relative to the Ottomans: stronger rule of law, a more stable and predictable state, a more developed civil society, and less corruption. In the 20th century, the Romanian Communist regime tried deliberately to homogenize the country along all relevant dimensions. It was only partially successful. Using a regression discontinuity design, I document the persistence of economic outcomes, social capital, and political attitudes. First, I document remarkable convergence in urbanization, education, unemployment, and income between the two former empires. Second, regarding social capital, no significant differences in organizational membership, trust in bureaucracy, and corruption persist today. Finally, even though the Communists tried to change all political attitudes, significant discontinuities exist in current voting behavior at the former Habsburg-Ottoman border. Using data from the parliamentary elections of 1996-2008, I find that former Habsburg rule decreases by around 6 percentage points the vote share of the major post-Communist left party and increases by around 2 and 5 percentage points the vote shares of the main anti-Communist and liberal parties, respectively.

The second chapter investigates the effects of Stalin’s mass deportations on distrust in central authority. Four deported ethnic groups were not rehabilitated after Stalin’s death; they remained in permanent exile until the disintegration of the Soviet Union. This allows one to distinguish between the effects of the groups that returned to their homelands and those of the groups that were not allowed to return. Using regional data from the 1991 referendum on the future of the Soviet Union, I find that deportations have a negative interim effect on trust in central authority in both the regions of destination and those of origin. The effect is stronger for ethnic groups that remained in permanent exile in the destination regions. Using data from the Life in Transition Survey, the chapter also documents a long-term effect of deportations in the destination regions.

The third chapter studies the short-term effect of Russian colonization of Central Asia on economic development. I use data on the regions of origin of Russian settlers and push factors to construct an instrument for Russian migration to Central Asia. This instrument allows me to interpret the outcomes causally. The main finding is that the massive influx of Russians into the region during the 1897-1926 period had a significant positive effect on indigenous literacy. The effect is stronger for men and in rural areas. Evidently, interactions between natives and Russians through the paid labor market was an important mechanism of human capital transmission in the context of colonization.

The findings of these chapters provide additional evidence that history and institutions do matter for economic development. Moreover, the dissertation also illuminates the relative persistence of institutions. In particular, political and social capital legacies of institutions might outlast economic legacies. I find that most economic differences between the former empires in Romania have disappeared. By the same token, there are significant discontinuities in political outcomes. People in former Habsburg Romania provide greater support for liberalization, privatization, and market economy, whereas voters in Ottoman Romania vote more for redistribution and government control over the economy.

In the former Soviet Union, Stalin’s deportations during World War II have a long-term negative effect on social capital. Today’s residents of the destination regions of deportations show significantly lower levels of trust in central authority. This is despite the fact that the Communist regime tried to eliminate any source of opposition and used propaganda to homogenize people’s political and social attitudes towards the authorities. In Central Asia, the influx of Russian settlers had a positive short-term effect on human capital of indigenous population by the 1920s, which also might have persisted over time.

From a development perspective, these findings stress the importance of institutions for future paths of development. Even if past institutional differences are not apparent for a certain period of time, as was the case with the former Communist countries, they can polarize society later on, hampering economic development in the long run. Different institutions in the past, which do not exist anymore, can thus contribute to current political instability and animosity.

Of Marx and Makers: an Historical Perspective on Generative Justice

In Marxist frameworks “distributive justice” depends on extracting value through a centralized state. Many new social movements—peer to peer economy, maker activism, community agriculture, queer ecology, etc.—take the opposite approach, keeping value in its unalienated form and allowing it to freely circulate from the bottom up. Unlike Marxism, there is no general theory for bottom-up, unalienated value circulation. This paper examines the concept of “generative justice” through an historical contrast between Marx’s writings and the indigenous cultures that he drew upon. Marx erroneously concluded that while indigenous cultures had unalienated forms of production, only centralized value extraction could allow the productivity needed for a high quality of life. To the contrary, indigenous cultures now provide a robust model for the “gift economy” that underpins open source technological production, agroecology, and restorative approaches to civil rights. Expanding Marx’s concept of unalienated labor value to include unalienated ecological (nonhuman) value, as well as the domain of freedom in speech, sexual orientation, spirituality and other forms of “expressive” value, we arrive at an historically informed perspective for generative justice. 

Suomen turvallisuuspoliittisen ratkaisun lähtökohtia

Suomi luopui puolueettomuuspolitiikasta turvallisuuspoliittisena linjanaan kun se liittyi Euroopan unioniin ennen kaikkea turvallisuussyistä. Vaikka Suomi on EU-jäsenyyden myötä poliittisesti liittoutunut ja vaikka se on jatkuvasti laajentanut ja syventänyt yhteistyötään NATOn kanssa, Suomi on yhä sotilaallisesti liittoutumaton valtio. Suomen turvallisuuspoliittinen toimintaympäristö on ollut poikkeuksellisen vakaa kylmän sodan jälkeen ennen kaikkea siksi, että maailman voimakkain suurvalta Yhdysvallat on yhä sotilaallisesti läsnä Euroopassa ja Euroopan integraatio on jatkunut ja syventynyt. Suomi on sitonut nykyisen turvallisuuspoliittisen linjansa turvallisuusympäristönsä pysyvyyteen. Viime vuosina NATOn laajentuminen entisen Neuvostoliiton alueelle on voimistanut läntisten suurvaltojen ja Venäjän välistä valtakamppailua ja turvallisuuskilpailua Suomen lähialueella. Viimeistään Ukrainan konflikti on tehnyt ajankohtaiseksi myös kysymyksen Suomen sotilaallisesta liittoutumisesta. Tässä artikkeliteoksessa turvallisuuspolitiikan asiantuntijat analysoivat keskeisimpien ulkoisten toimijoiden – EU:n, Ruotsin, Viron, Venäjän, Yhdysvaltojen ja NATOn – merkitystä Suomen turvallisuuspoliittisen toimintaympäristön vakaudelle ja Suomen turvallisuudelle sekä pohtivat, onko Suomen syytä muuttaa nykyistä turvallisuuspoliittista linjaansa turvallisuusympäristössä tapahtuneiden muutosten vuoksi. Kirjoittajat myös arvioivat Suomen mahdolliseen sotilaalliseen liittoutumiseen liittyviä etuja ja haittoja verrattuna nykyiseen turvallisuuspoliittiseen ratkaisuun. Teoksen kirjoittajien toisistaan poikkeavat näkemykset Suomen turvallisuuspoliittisen toimintaympäristön vakaudesta, NATOn laajentumisen vaikutuksista Itämeren alueella, Venäjän valtapolitiikasta ja sen Suomelle muodostaman sotilaallisen uhan voimakkuudesta, NATOn pelotteen uskottavuudesta ja Yhdysvaltojen sitoutumisesta liittolaistensa puolustamiseen sekä Suomen NATO-jäsenyyden eduista ja haitoista valaisevat laajasti kysymystä Suomen turvallisuudesta ja turvallisuuspoliittisesta ratkaisusta. Suomelle sen geopoliittinen asema Venäjälle strategisesti elintärkeiden Kuolan alueen ja Pietari–Moskova-ydinalueen välittömässä läheisyydessä on ongelmallinen maan turvallisuuden kannalta. Suurvalta Venäjä onkin edelleen keskeisin Suomen turvallisuuteen ja turvallisuuspoliittiseen ratkaisuun vaikuttava ulkoinen toimija. Neuvostoliiton hajoamisen jälkeen Suomella on ollut ainutlaatuinen mahdollisuus liittoutua Yhdysvaltojen kanssa NATO-jäsenyyden myötä Venäjän potentiaalista sotilaallista uhkaa vastaan. Toisaalta Suomella ei kuitenkaan ole ollut pakottavaa tarvetta siihen, koska se on välillisesti hyötynyt Yhdysvaltojen suurstrategiasta Euroopassa ja koska Venäjän valtapolitiikka on kohdistunut ennen kaikkea entisen Neuvostoliiton alueelle. Vaikka Ukrainan konflikti onkin lisännyt poliittista ja sotilaallista jännitettä Itämeren alueella, tämän teoksen perusteella on kuitenkin mahdotonta antaa yksiselitteistä vastausta siihen, pitäisikö Suomen sen turvallisuuspoliittisessa toimintaympäristössä tapahtuneen muutoksen seurauksena liittyä NATOn jäseneksi vai ei. Halutessaan Suomi voi siis edelleen jatkaa nykyisellä turvallisuuspoliittisella linjallaan sotilaallisesti liittoutumattomana valtiona, mutta samalla sen täytyy kuitenkin pitää myös sotilaallinen liittoutuminen avoimena turvallisuuspoliittisena vaihtoehtona tulevaisuudessa.

University Reforms in the Context of the Bologna Process

Georgia, a former Soviet Union state, has undergone a lot of political, social, economic and of course educational changes. This article shows how Georgia’s higher education system has developed after the collapse of the Soviet Union. As an independent country, Georgia has started developing a free nation with a new type of the education system. The government of Georgia chose the European system of higher education and their major aim was to become a part of the Bologna process. Reforms made in Georgian higher education system have been essential for the country and indeed a lot has changed since the starting period. Georgia managed to hold unified national entry exams and has implemented the ECTS system; there are modern curricula that meet the requirements of European standards. etc. But still, even though a lot is being done, a lack of funding, outdated teaching methods and old facilities in some universities are still unresolved problems.

Soviet history in hindsight : a comparative study of history textbooks in Russia, Ukraine and Estonia between 1980 and 2010

L’effondrement du communisme en 1991 en Russie a conduit à la révision des manuels scolaires d’histoire en Russie et dans les anciennes républiques de l’URSS. Ce travail propose d’évaluer l’histoire récente post-communiste enseignée dans les classes supérieures du secondaire dans trois pays post-communistes. Nous allons s’attarder sur la présentation des divers périodes historiques de l’histoire Soviétique dans les manuels scolaires d’histoire en Russie, Ukraine et Estonie. Ce travail tente également d’examiner les diverses approches dans l’enseignement d’histoire dans ces trois pays, ainsi que de répondre à la question comment les nouveaux manuels redéfinissent la perception de la culture et d’histoire des élèves dans chaque pays.

The Eurasian Economic Union – more political, less economic. OSW Commentary Number 157/20.01.2015

The Eurasian Economic Union is undoubtedly the most comprehensive form of economic integration of the post-Soviet countries since the break-up of the Soviet Union. However, the way in which the integration process has been unfolding, as well as Russia’s aggressive policy over the last year, are indications that the EEU has become primarily a political project, and the importance of its economic aspects has eroded. This has triggered a change in the way Kazakhstan and Belarus treat the EEU. Initially, the two countries viewed integration as an opportunity for the development of genuine economic co-operation. However, Russia’s annexation of Crimea and the conflict in Ukraine have revealed the real significance of the EEU project – as a tool to reinforce Russian influence in the post-Soviet area and isolate the post-Soviet countries from the West and China. While the Kremlin presents the EEU as the Eurasian equivalent of the European Union, the project is in reality an imitation of integration. The reasons for this include the nature of the political systems in the participating countries, which are authoritarian, prone to instrumentalise law, and affected by systemic corruption; the aggressive policy that Russia has been pursuing over the last year; and Russia’s dominant role in defining the shape of the EEU. The EEU appears to be based on forceful integration, and is becoming less and less economically attractive for its member countries other than Russia. Moreover, it is clearly assuming a political dimension that those other member countries perceive as dangerous. For these reasons, its functioning will depend on the power and position of Russia. In the longer term it is likely that the other member states will try to ‘sham’ and delay closer integration within the EEU. This means that if Russia becomes politically and economically weaker, the EEU may evolve into an increasingly dysfunctional organisation – a development that will be reinforced by the low standards of legal culture in its member states and their reluctance to integrate. Should Russia’s power increase, the EEU will become an effective instrument of Russian dominance in the area of the former USSR.

Historical and Personal Perspectives on the Fall of the Berlin Wall, 1989: address to 20th anniversary forums.

The story of the fall of the Berlin Wall was an aspect of the “imagination gap” that we had to wrestle with as journalists covering the collapse of the Eastern Bloc in Europe. It was scarcely possible to believe what you found yourself reporting, and that work became a two-track process. On one hand a mass social movement was dictating the pace and direction of events; on the other, the institutional business of politics as usual, to provide a framework for all the change that was happening, had to be managed – and reported on. In later analyseds we could see, that crisis in the Soviet Union led to the crisis over the Berlin Wall; and from the fall of the Wall, came Germany’s reunification, and with that also, formation of the European Union as it is today. The government of the Federal Republic of Germany convinced its neighbours that a reunited Germany, within an expanded EU, would be a very acceptable “European Germany” -- not the leader of a “German Europe”. It committed itself financially, supporting the new Euro currency. The former communist states of Eastern Europe demanded to join and expand the EU; in order to remove themselves from the Soviet Union, enjoy human rights, and share in Western prosperity. So today, following on from the events of 1989, the European Union is an amalgam of 27 member countries, with close to 500 million citizens and accounting for 30 % of world Gross National Product.