The political economy of change after communism

I survey the first twenty-five years of economic change in the former communist countries after the fall of the Berlin Wall. While diverging sharply from one another, these countries have converged economically and politically towards their nearest neighbors outside the Soviet bloc. The typical country experienced a spurt of economic reform in the early 1990s, slowing dramatically from around 1996. Speed in these early years determined which countries would achieve liberal market economies and which would get stuck halfway: the race went to the hares not the tortoises. A longer history of communist rule and an Islamic religious tradition correlate with less movement towards democracy after 1989; slower democratization, in turn, predicts less market reform. Even controlling for numerous aspects of the setting in which they governed, certain leaders’ terms saw significantly more or less rapid reform, suggesting the importance of leaders’ choices at critical historical junctures.