The debate on the political obstacles to economic reform in postcommunist countries has centered around two interrelated theories. Adam Przeworski argues that short-term negative distributional consequences can stall economic reform. Joel Hellman contends that industry insiders and political elites have incentives to stall economic reform. Although both sets of theories contend that the distributional aspects of economic transition affect reform, important differences remain in their interpretation of the relationship between the rising levels of poverty and income inequality in transition economies. This article empirically examines the relationship between the pretransition levels of poverty and income inequality in 17 postcommunist transition economies using cross-sectional regressions. The central finding in this article is that countries with large spans of the population hovering above poverty are less likely to achieve high levels of economic reform, lending support to theory that adverse socioeconomic conditions prior to transition can impede economic reform.
Ackland, R. , & Falkingham, Jane. (1997). A profile of poverty in Kyrgyzstan. In Jane Falkingham (Ed.), Household welfare in central Asia. London: Macmillan.
2.
Aghion, Philippe , & Commander, Simon. (1999). On the dynamics of inequality in the transition. Economics of Transition, 7(2), 275-298.
3.
Appel, Hillary . (2000). The ideological determinants of liberal economic reform: The case of privatization. World Politics, 52(4), 520-549.
4.
Aslund, Anders . (1995). How Russia became a market economy. Washington, DC: Brookings Institution.
5.
Birdsall, Nancy , Ross, David, & Sabot, Richard. (1995). Inequality and growth reconsidered: Lessons from East Asia. World Bank Economic Review, 9(3), 477-508.
6.
Blais, Joseph , Kroumova, M., & Kruse, D. (1997). Kremlin capitalism: Privatizing the Russian economy. Ithaca, NY: Cornell University Press.
Cameron, David R. (1978). The expansion of the public economy: A comparative analysis. American Political Science Review, 72(4), 1243-1261.
9.
Castanheira, Micael , & Roland, Gerard. (2000). The optimal speed of transition: A general equilibrium analysis. International Economic Review, 41(1), 219-240.
10.
Coudouel, A. (1998). Living standards in Uzbekistan. Doctoral dissertation, European University Institute, Florence
11.
Dewatripont, Mathia , & Roland, Gerard. (1996). Transition as a process of large-scale institutional change. Economics of Transition, 4(1), 1-30.
12.
European Bank for Reconstruction and Development (EBRD) . (1998). Transition Report 1998: Financial sector in transition. London: Author.
13.
European Bank for Reconstruction and Development (EBRD) . (2000). Transition Report 2000: Employment, skills and transition. London: Author.
14.
Falkingham, Jane . (2000). Income, poverty and well-being in Central Asia. In Sandra Hutton & Gerry Redmond (Eds.), Poverty in Transition Economies. New York: Routledge.
15.
Fernandez, Raquel , & Rodrik, Dani. (1991). Resistance to reform: Status quo bias in the presence of individual-specific uncertainty. The American Economic Review, 81(5), 1146-1155.
16.
Ferreira, Francisco H.G. (1999). Economic transition and the distribution of income and wealth. Economics of Transition, 7(2), 377-410.
17.
Fidrmuc, Jan . (2000). Political support for reforms: Economics of voting in transition countries. European Economic Review, 44(8), 1491-1513
18.
Garrett, Geoffrey . (1998). Partisan politics in the global economy. Cambridge, UK: Cambridge University Press.
19.
Geddes, Barbara . (1994). Politician's dilemma: Building state capacity in Latin America. Berkeley: University of California Press.
20.
Haggard, Stephan , & Kaufman, Robert R. (1995). The political economy of democratic transitions. Princeton, NJ: Princeton University Press.
21.
Havrylyshyn, Oleh , & McGettigan, Donal. (2000). Privatization in transition economies. Post- Soviet Affairs, 16(3), 257-286.
22.
Havrylyshyn, Oleh , & Smee, John Odlin. (2000). Political economy of stalled reforms. Finance and Development, 37(3), 7-10.
23.
Hellman, Joel . (1997). Constitutions and economic reform in the postcommunist transitions. In Jeffrey Sachs & Katharina Pistar (Eds.), The rule of law and economic reform in Russia. Boulder, CO: Westview Press.
24.
Hellman, Joel . (1998). Winners take all: The politics of partial reform in postcommunist-transitions. World Politics, 50(2), 203-234.
25.
Hellman, Joel , Jones, Geraint, & Kaufmann, Daniel. (2000). Seize the state, seize the day: State capture, corruption, and influence in transition (World Bank Policy Research Working Paper 2444). Washington, DC: World Bank.
26.
Hellman, Joel , Jones, Geraint, Kaufmann, Daniel, & Schankerman, Mark. (1999). Measuring governance, corruption, and state capture (World Bank Policy Research Working Paper 2312). Washington, DC: World Bank.
27.
Jensen, Nathan . (2002). Economic reform, state capture, and international investment in transition economies. Journal of International Development, 14, 973-977.
28.
Kopstein, Jeffrey S. , & Reilly, David. (2000). Geographic diffusion and the transformation of the postcommunist world. World Politics, 53(1), 1-37.
29.
Kramer, Mark . (1995) Polish workers and the post-communist transition, 1989-1993. Europe- Asia Studies, 47(4), 669-712.
30.
Liberman, Ira , Nestor, Stilpon, & Desai, Raj. (1997). Between state and market: Mass privatizations in transition economies. Washington, DC: World Bank.
31.
Milanovic, Branko . (1998). Income, inequality, and poverty during the transition from planned to market economy. Washington, DC: World Bank.
32.
Olsen, Mancur . (1965). The logic of collective action. Cambridge, MA: Harvard University Press.
33.
Prescott, Edward C. , & Kydland, Finn E. (1977). Journal of Political Economy, 85(3), 475-492
34.
Przeworski, Adam . (1991). Democracy and the market: Political and economic reforms in Eastern Europe and Latin America. Cambridge, UK: Cambridge University Press.
35.
Rodrik, Dani . (1997). Has globalization gone too far?Washington, DC: Institute for International Economics.
36.
Rogowski, Ronald . (1989). Commerce and coalitions: How trade affects domestic political alignments. Princeton, NJ: Princeton University Press.
37.
Tsebelis, George. (1995, July). Decision making in political systems: Veto players in presidentialism, parliamentarism, multicameralism and multipartyism. British Journal of Political Science, 25, 289-325.
38.
Turkey's economy: Harsh medicine. (2001, May 19-25). The Economist, p. 48.
39.
Williamson, John . (1994). The political economy of policy reform. Washington, DC: Institute for International Economic.
40.
World Bank . (1999). World Development Indicators 1999 (CD-ROM). Washington DC: Author.
41.
Zagorski, Kyzysztof . (1994). Hope factor, inequality, and legitimacy of systemic transformations. Communist and Post-Communist Studies, 27(4), 357-376.
