Hostname: page-component-586b7cd67f-g8jcs Total loading time: 0 Render date: 2024-11-28T02:06:15.316Z Has data issue: false hasContentIssue false
  • English
  • Français

The Politics of Economic Transformation: Is Third World Experience Relevant in Eastern Europe?

Published online by Cambridge University Press:  13 June 2011

Joan M. Nelson
Joan M. Nelson
Affiliation:
Associate at the Overseas Development Council in Washington
Get access

Extract

Two sets of Third World nations can shed light on the politics of economic transformation in Eastern Europe. First, there are nations that pursued particularly vigorous reforms in the 1980s. They shared three key political features: popular consensus that basic reforms were imperative; antireform groups largely in disarray or suppressed; and substantial executive autonomy in economic management. The first of these features is clearly present in Eastern Europe; the second is questionable; and the third is present but precarious and probably temporary. Second and also relevant to Eastern Europe is the growing group of Third World nations seeking to consolidate political openings simultaneously with major economic reforms. Economic and political liberalization conflict with, yet are crucial for, each other. Proposals that they be sequenced are unrealistic. In Eastern Europe as in the Third World, a crucial dilemma is reconciling public demands for access to decision making with sufficient executive autonomy for coherent economic management.

Type
Research Article
Information
World Politics , Volume 45 , Issue 3 , April 1993 , pp. 433 - 463
Copyright
Copyright © Trustees of Princeton University 1993

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 See Barbara Stallings, “International Influence on Economic Policy: Debt, Stabilization, and Structural Reform,” and Miles Kahler, “External Influence, Conditionality, and the Politics of Adjustment,” both in Haggard, Stephan and Kaufman, Robert, eds., The Politics of Economic Adjustment: International Constraints, Distributive Politics, and the State (Princeton: Princeton University Press, 1992).Google Scholar On “trough” theory (the depth of domestic economic difficulties) specifically, see Callaghy, Thomas, “Lost Between State and Market,” in Nelson, Joan, ed., Economic Crisis and Policy Choice (Princeton: Princeton University Press, 1990), 263.Google Scholar

2 Major articles on these themes are Skidmore, Thomas, “The Politics of Economic Stabilization in Postwar Latin America,” in Malloy, James, ed., Authoritarianism and Corporatism in Latin America (Pittsburgh, Pa.: University of Pittsburgh Press, 1977)Google Scholar; Remmer, Karen, “The Politics of Economic Stabilization: IMF Standby Programs in Latin America,” Comparative Politics 19 (October 1986)CrossRefGoogle Scholar; idem, “Democracy and Economic Crisis: The Latin American Experience,” World Politics 42 (April 1990); Haggard, Stephan and Kaufman, Robert, “The Politics of Stabilization and Structural Adjustment,” in Sachs, Jeffrey, ed., Developing Country Debt and Economic Performance (Chicago: University of Chicago Press for the National Bureau of Economic Research, 1989).Google Scholar

3 Malloy, James M., “Democracy, Economic Crisis, and the Problem of Governance: The Case of Bolivia,” Studies in Comparative International Development 26, no. 2 (1991), 51–52CrossRefGoogle Scholar; Gamarra, Eduardo A., “The Politics of Stabilization: Political Pacts and the New Economic Policy in Bolivia” (Manuscript, Florida International University, Miami, 1991), 9.Google Scholar

4 Kaufman, Robert, Bazdresch, Carlos, and Heredia, Blanca, “The Politics of the Economic Solidarity Pact in Mexico” (Paper presented at the World Bank conference on the Political Economy of Democratic Transitions, Washington, D.C., May 4–5, 1992), 7.Google Scholar

5 In Ghana, Rawlings displaced a weak elected government that had held office for only a year; Rawlings and his followers were hostile to both the inept civilian government and the earlier series of corrupt and ineffective military governments.

6 Malloy (fn. 4), 21.

7 There are several reasons for this bias in research. Policy-oriented analysts have understandably been preoccupied with getting reforms under way. Moreover, policy choices provide a fairly sharp focus for research: the time period, the key events, and the key actors are all fairly clear. In contrast, consolidation is a much more gradual and diffuse process during which expectations, incentives, public and private institutions, and recognized self-interests grow up around a reform and make it increasingly difficult to reverse.

8 See World Bank, Report on Adjustment Lending II: Policies for the Recovery of Growth (Washington, D.C.: World Bank, March 1990), 54–57Google Scholar; idem, Adjustment Lending: An Evaluation of Ten Years of Experience (Washington, D.C.: World Bank, 1989), 89–91.

9 Stallings, Barbara, “Political Economy of Democratic Transition: Chile in the 1980s,” in Stallings, and Kaufman, , eds., Debt and Democracy in Latin America (Boulder, Colo.: Westview Press, 1989), 190–93.Google Scholar

10 Kaufman, Bazdresch, and Heredia (fn. 4).

11 For an elaboration of this point, see Evans, Peter, “The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change,” in Haggard and Kaufman (fn. 1).Google Scholar

12 For useful reviews of political reforms in sub-Saharan Africa, see Bratton, Michael and Walle, Nicolas van de, “Popular Protest and Political Reform in Africa,” in Hyden, Goran and Bratton, Michael, eds., Governance and Politics in Africa (Boulder, Colo: Lynne Rienner, 1991)Google Scholar; Lancaster, Carol, “Democracy in Africa,” Foreign Policy 85 (Winter 1991–1992).Google Scholar

13 For example, O'Donnell, Guillermo, Schmitter, Philippe C., and Whitehead, Laurence, eds., Transitions from Authoritarian Rule (Baltimore: Johns Hopkins University Press, 1986).Google Scholar This path-breaking five-volume study includes only one chapter on economic policies. More recently, interactions between economic and political liberalization have begun to draw more attention. See, e.g., Haggard, Stephan and Kaufman, Robert, “Economic Adjustment and the Prospects for Democracy,” in Haggard and Kaufman (fn. 1)Google Scholar; and also Laurence Whitehead, “On Reform of the State and Regulation of the Market” (Paper presented at the European Centre for the Study of Democratization conference on Economic Liberalization and Political Democratization, Forli, Italy, April 2-A, 1992) and other papers for the same conference.

14 See Przeworski, Adam, Democracy and the Market (Cambridge: Cambridge University Press, 1991), 180–87CrossRefGoogle Scholar; O'Donnell, Guillermo, “Delegative Democracy” (Paper presented at the East-South Systems Transformation Project, 1991).Google Scholar

15 On this point, see Laurence Whitehead (fn. 13), 19–25.

16 Haggard, Stephan and Kaufman, Robert R., “Economic Adjustment in New Democracies,” in Nelson, Joan M., ed., Fragile Coalitions (New Brunswick, N.J.: Transaction Books for the Overseas Development Council, 1989).Google Scholar The cases were selected mainly for availability of detailed studies of the adjustment process; they include most major debtors. Measures of macroeconomic management include the ratio of fiscal deficit to GDP, the ratio of changes in expenditures to GDP, and expansion of central bank credit.

17 Haggard and Kaufman (fn. 13), 338.

18 International Monetary Fund, International Financial Statistics (Washington, D.C.: International Monetary Fund, 1989)Google Scholar, World Tables, 164–65 and 116–17.

19 For survey evidence on public attitudes toward old and prospective political and economic systems in Eastern Europe, see Rose, Richard, New Democracies between State and Market: A Baseline Report, Studies in Public Policy no. 204 (Glasgow, Scotland: Centre for the Study of Public Policy, University of Strathdyde, 1992), 33–37Google Scholar, 45–46.

20 Parallel factors, including the attraction of membership in the European Community, played an important part in the successful structural adjustment of Spain in the mid-1980s.

21 That is, the list of policy principles spelled out in Williamson, John, ed., Latin American Adjustment: How Much Has Happened? (Washington, D.C.: Institute of International Economics, 1990), chap. 1.Google Scholar

22 See, e.g., Fanelli, Jose Maria, Frenkel, Roberto, and Rozenwurcel, Guillermo, Growth and Structural Reform in Latin America: Where We Stand (Buenos Aires: CEDES 1990)Google Scholar; Szlajfer, Henryk, “Promise, Failure, and Prospects of Economic Nationalism in Twentieth Century Poland” (Paper presented at the annual conference of the Economic History Society, Leicester, England, 1992).Google Scholar

23 In some of the East European nations there were substantial wage differentials between top managers and the least skilled workers in large public enterprises. Constraints on acquisition of private wealth kept income differentials comparatively narrow.

24 For data on the distributive impact of social expenditures in Eastern Europe, see the World Bank series summarized in Transition 2, no. 11 (December 1991), 10, published by the Socialist Economic Reform Unit, Country Economics Department, World Bank. Regarding attitudes toward income inequality, poll results in Hungary as of late 1990 indicated that only a fifth of working-class respondents and much smaller proportions of those better-off favored virtual equality. Moreover, these figures were not dramatically different from U.S. patterns and showed greater tolerance for inequality than polls in Spain in 1986. See Laszlo Bruzst and Janos Simon, “The Great Transformation: Opinions on Democracy and Capitalism in Hungary” (Manuscript, Budapest, Erasmus Foundation for Democracy, March 1992), 14–15. Fear of insecurity, rather than generalized distaste for inequality, may turn out to be the more important issue in Eastern Europe.

25 See, e.g., Tamas, G. M., “Socialism, Capitalism, and Modernity,” Journal of Democracy 3, no. 2 (July 1992).CrossRefGoogle Scholar

26 Richard Rose offers an additional reason for low mobility. Drawing on survey evidence, he argues that most East Europeans depend for survival not only on their formal jobs but also on a portfolio of informal, sometimes illegal activities entailing networks of friends and contacts. Even if they lose their formal jobs, moving means leaving behind these networks and the modicum of security they provide. See Rose (fn. 19), 26.

27 See, e.g., Pehe, Jiri, “The Controversy over Communist Managers,” Report on Eastern Europe 1 (September 7, 1990), 9.Google Scholar

28 For a discussion of the “orthodox paradox,” see Miles Kahler, “Orthodoxy and Its Alternatives,” in Nelson (fn. 1).

29 Bulgarian Agency for Economic Coordination and Development, Monthly Business Survey (December 1991), 10.Google Scholar Note that in Argentina, where social security does have broad coverage but real pensions have declined steadily, pensioners are a potent voting bloc and have been actively protesting the Menem government's reforms.

30 Contrast, for instance, the effects of devaluation and import liberalization on large state farms growing grain for domestic consumption and on private farms (in Poland) or plots producing livestock, vegetables, and fruit partly for export.

31 Milanovic, Branko, “Poland's Quest for Economic Stabilization, 198S–90” (Manuscript, World Bank, October 1990), 13.Google Scholar

32 Pehe, Jiri, “An Overview of the Democratic Revolution,” Report on Eastern Europe 1 (March 9, 1990), 7.Google Scholar

33 For a discussion of this process in Latin America, see Whitehead, Laurence, “Economic Liberalization and the Consolidation of Democracy in Latin America: Mutually Reinforcing or Potentially Conflicting Processes?” (Paper presented at the Inter-American Dialogue workshop on Political and Economic Liberalization, June 1990).Google Scholar

34 Körösényi, Andràs, “Stable or Fragile Democracy? Political Cleavages and Party System in Hungary” (Manuscript, Eötvös University of Budapest, March 1992), 3–4.Google Scholar

35 Economist Intelligence Unit, Hungary: Quarterly Report, no. 2 (1991), 8.Google Scholar

36 Economist Intelligence Unit, Hungary: Quarterly Report, no. 1 (1991), 7.Google Scholar

37 Przeworski (fn. 14), 186–87.

38 See, e.g., Palma, Guiseppe Di, To Craft Democracies: An Essay on Democratic Transitions (Berkeley: University of California Press, 1990), chap. 5, esp. 97.Google Scholar

39 Torre, Juan Carlos, “America Latina: Governing Democracies in Hard Times” (Paper presented at the Fifteenth Congress of the International Political Science Association, Buenos Aires, July 1991).Google Scholar

40 See, e.g., Cameron, David R., “Social Democracy, Corporatism, Labour Quiescence and the Representation of Economic Interest in Advanced Capitalist Society,” in Gold-thorpe, John H., ed., Order and Conflict in Contemporary Capitalism (Oxford: Oxford University Press, 1984)Google Scholar; Katzenstein, Peter J., Small States in World Markets: Industrial Policy in Europe (Ithaca, N.Y.: Cornell University Press, 1985).Google Scholar For a discussion of these and other theories and their relevance in developing nations, see Nelson, Joan M., “Organized Labor, Politics, and Labor Market Flexibility in Developing Countries,” World Bank Research Observer 6 (January 1991).CrossRefGoogle Scholar

41 Much of this line of argument is usefully summarized in Ajit Singh, “Close versus Strategic Integration with the World Economy and the Market-Friendly Approach to Development versus an Industrial Policy: A Critique of the World Development Report 1991 and an Alternative Policy Perspective” (Manuscript, Cambridge University, April 1992). For an argument relying much less on the Asian experience, see Carlos, Luiz, Pereira, Bresser, Maravall, Jose Maria, and Przeworski, Adam, “Economic Reforms in New Democracies: A Social-Democratic Approach” (Paper presented at the Conference on Democracy, Markets, and Structural Reforms in Latin America, organized by the North-South Center of the University of Miami in collaboration with CEDES, and held at the Simon Rodriguez Foundation, Buenos Aires, March 25–27, 1992).Google Scholar

42 Among the key studies on Asian experience are Amsden, Alice, Asia's Next Giant (Cambridge: Cambridge University Press, 1989)Google Scholar; and Wade, Robert, Governing the Market (Princeton: Princeton University Press, 1990).Google Scholar

43 See Johnson, Chalmers, “Political Institutions and Economic Performance: The Government-Business Relationship in Japan, South Korea, and Taiwan,” in Deyo, Frederic C., ed., The Political Economy of New Asian Industrialism (Ithaca, N.Y.: Cornell University Press, 1987)Google Scholar; Evans, Peter, “The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change,” in Haggard and Kaufman (fn. 1), esp. 163–65.Google Scholar