Out of the Blue? Democracy and Privatization in Postcommunist Europe
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This paper coins the term ‘privatization framework’ to capture postcommunist privatization's often neglected distributive dimension. Privatization frameworks are ranged from those that primarily reward political and enterprise insiders to those that reward outsiders. This paper then asks whether the choice and success of a privatization framework are related to political regime type. Illiberal democracies tend to choose privatization programs that reward insiders. This cements insiders' political influence and contributes to corrupt interaction between the public and private economic spheres. Subsequent poor economic performance combined with ongoing conflict over political institutions may produce a ‘break point’ at which societies can decide to move in a democratic direction. Liberal democracies, by contrast, have no predisposition to an outsider- or an insider-based privatization framework. Insiders will have more resources to bring to the fight over privatization programs where reform communists led or contributed to the ‘break’ from communism. Nevertheless, the competitive processes inherent to liberal democracies prevent even poorly managed insider privatization from prolonging destructive rent-seeking practices. As a result, liberal democratic regimes are likely to perform better than illiberal democratic and authoritarian regimes in implementing postcommunist structural reforms.
Keywordsprivatization democracy Czech Republic Poland Slovakia Croatia Serbia
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