Globalization and catching-up: from recession to growth in transition economies

The transitional recession in countries of Eastern Europe and the former Soviet Union has lasted much longer than expected. The legacy of the past and recent policy mistakes have both contributed to the slow progress. As structural reforms and gradual institution building have taken hold, the post-socialist economies have started to recover, with some leading countries building momentum toward faster growth. There is a possibility that in the wider context of globalization several of these emerging market economies will be able to catch up with the more advanced industrial economies in a matter of one or two generations.     

Divergent politico-legal responses to past presidential corruption in Zambia and Kenya: catching the ‘big fish’, or letting him off the hook?

The criticisms of globalisation and international institutions often confuse the current state of multilateralism and its asymmetrical organisation; the economic theories it uses (the ‘Washington consensus’); and the reforms it promotes, such as liberalisation. Economic stagnation, however, has many causes other than the multilateral organisations’ reforms, which may have little impact on growth. These reforms may be efficient, irrelevant or powerless vis-à-vis the other determinants of growth. The paper discusses the several determinants of growth other than policy reforms, such as countries' structural and institutional characteristics, and analyses the consequences of reforms, in particular trade liberalisation. These consequences constitute a challenge to the credibility of reforms, but may also lead to deeper thinking about the determinants of economic growth and further developmental reforms.     

Post-Soviet Developmentalism and the Political Economy of Russia’s Electricity Sector Liberalization

Observers of Russian state market relations typically consider the state as an entity engaged in creating rent-seeking opportunities for bureaucrats or powerful economic interests. The trajectory and outcomes of electricity sector reforms demonstrate the limits of this perspective and serve to highlight a developmental strand in Russian economic policy, which I call post-Soviet developmentalism. I found that post-Soviet developmentalism is key to understanding the patterns of market institutions that have emerged in the newly liberalized electricity sector and that they cannot be adequately explained if the state is largely seen as a predator or as captured by oligarchic interests. A close analysis of the institutional underpinnings of new electricity markets suggests that they were shaped in political bargains, in which the government sought to enlist Russia’s oligarchic conglomerates for its modernization agenda and developmental priorities. The paper links this discussion to three sets of theoretical literatures: It speaks to the debates on the post-Soviet transition, more broadly to the political economy of market reform, and finally, it addresses the developmental state literature.     

Why Have Chinese Reforms Come to a Halt? The Political Economic Logic of Unfinished Transformation

This study approaches the Chinese reform process from a political-economic point of view, focusing primarily on institutional changes. Besides revealing the main factors behind the different phases of the reforms, it argues that in the framework of the current authoritarian regime, vested interests work against the continuation of the reforms, making it impossible to fully establish the institutional framework of a market economy. Current rents and privileges also deter the elite from implementing serious political reforms, leading to a trap that prevents the completion of the transition process.     

Reform Styles of Political and Administrative Elites in Majoritarian and Consensus Democracies: Public Management Reforms in New Zealand and the Netherlands

One of the most important claims advanced by comparative public management reform studies is that these reforms have been more successfully implemented in majoritarian than in consensus democracies. The claim is built on the premise that the institutional structure of a majoritarian democracy enables a parliamentary majority to implement policies unilaterally and in a desired way whereas the institutional structure of a consensus democracy forces parliamentary majorities to negotiate compromises. This claim, we argue, lacks sufficient empirical backing, is biased by studies focusing on the initiation of reforms, and needs serious rethinking in the light of recent empirical studies that downplay the salience of institutions as an explanatory factor for variations in policy reform. With The Netherlands and New Zealand as cases, this article first shows that far-reaching reforms can be implemented in consensus systems too; secondly, it develops a model that centres on the interplay between institutions and politicians' reform styles and applies this to these countries.     

From race to citizenship: The indigenization debate in post-socialist Tanzania

Neoliberal economic reforms in post-socialist Tanzania heightened racial as well as anti-foreign hostilities, while liberal political reforms made possible the expression of these antagonisms in electoral politics. Newly formed opposition parties mobilized popular support by advocating anti-Asian indigenization of minority rights. This prompted the ruling party, which had initially denounced advocates of indigenization as racist, to alter its position. In doing so, ruling party leaders redefined the meaning of indigenization, shifting the focus of the debate away from racial issues and Asian control of the economy toward issues of free trade, foreign investment, and foreign economic domination. By implementing indigenization measures targeting non-citizens and featuring anti-liberal economic policies, including tariff barriers, local content laws, and restrictions on property ownership, the government faced the danger of losing international support from foreign donors and international financial institutions. The trajectory of the indigenization debate reveals the role of electoral competition and party formation in shaping race relations and national identity in post-socialist Tanzania. It suggests the need for event-centered studies of the way in which political identities are constructed in processes of conflict within the institutional arenas created by liberal political reforms. Ronald Aminzade is professor of sociology at the University of Minnesota-Twin Cities. His publications concerning the social and political consequences of capitalist development includeBallots and Barricade: Class Formation and Republican Politics in France, 1830–1871 (Princeton University Press, 1993) andClass, Politics, and Early Industrial Capitalism: A Study of Mid-Nineteenth Century Toulouse, France (State University of New York Press, 1981). He is also co-editor ofSilence and Voice in the Study of Contentious Politics (Cambridge University Press, 2001) andThe Social Worlds of Higher Education (Pine Forge Press, 1999). For making this research possible I would like to thank the University of Minnesota and the Center for Advanced Study in the Behavioral Sciences, which provided support through National Science Foundation Grant #SBR-9601236. I am grateful to James Brennan, Susan Geiger, Erik Larson, Mary Jo Maynes, Marjorie Mbilinyi, Jamie Monson, Richa Nagar, Anne Pitcher, Eric Sheppard, Thomas Spear, Charles Tilly, Eric Weitz, Erik Olin Wright, and several anonymous reviewers for helpful comments on an earlier draft.     

Dilemmas and choices in educational policies: The case of South Korea and Taiwan

In the face of a similar challenge for economic development, South Korea and Taiwan differed greatly in their approaches to educational reform. South Korea permitted a rapid expansion in educational system, allowed the development of academic education, and pursued a relatively high tuition policy for higher education. In contrast, Taiwan controlled the growth of education, promoted vocational education, and maintained a relatively low tuition policy for higher education. Political dynamics, rather than economic efficiency considerations, explain the divergent choices in the educational reforms of these two countries. Tun-jen Cheng is associate professor of government, College of William and Mary, Williamsburg, Virginia, 23187–8795. He has published extensively on politicl economy and democratic change in East Asian newly industrializing countries. He is currently working on institutional designs of Korean democracy.     

THE ODYSSEY OF ADMINISTRATIVE REFORMS IN GREECE, 1981–2009: A TALE OF TWO REFORM PATHS

In Greece, two distinct reform paths led to institutional building and economic managerial types of reform. These two reforms, with the exception of the period 1996–2004, when both institutional and economic reforms were attempted, did not attract the same degree of attention. Institutional reforms were more successful than attempts at managerial reforms; reform implementation on the other hand varies. Economic and managerial reforms can be observed with regard to economic competition, the opening up of the market, and reducing the size of public sector, all areas where pressure from the EU has been stronger. Decentralization reforms were more important politically than administratively. Citizens' rights and service delivery were conceived as reforms of democratization and modernization rather than as managerial reforms. ‘Agencification’ amounted to circumventing existing ministerial structures. Change was incremental, and reforms were minimally guided by the New Public Management paradigm, because of little emphasis on changes imbued by managerial and economic values. Reform dynamics benefited not only from outside pressures but also from the operation of internal, ‘modernizing’ forces.     

The political economy of global firms from India and China

This article attempts to build a bridge between contemporary studies of global firms from emerging economies and existing theories in comparative political economy. It argues that given the primacy of the state as an economic actor in developing countries, the variety of capitalism literature could provide a theoretical foundation for firm-level analyses of emerging market multinationals. For example, the authors suggest that China and India may be moving towards a ‘hybrid market economy’. They also offer a typology of Indian and Chinese corporates to demonstrate an empirical approach to analysing domestic business–government relationships and the ways in which these firms are shaped by the peculiarities of their respective institutional setting. Finally, they identify some of the likely pitfalls of doing cross-national comparisons of emerging market multinationals, particularly with respect to the reliability of corporate data.     

NAFTA: The institutionalisation of economic openness and the configuration of Mexican geo-economic spaces

Since the second part of the 1980s, and with the negotiation and implementation of the North American Free Trade Agreement (NAFTA), Mexico's growth-and industry-orientated policies have shifted from the realm of public policy to a market-driven domain. This paper suggests that economic openness and the empowerment of market actors is provoking a new regionalisation of Mexico's core economic activities that will play a crucial role in the coming century. For Mexico, the core of NAFTA, so to speak, encompasses a cross-border territoriality covering two key southern American states: Texas and California, and key Mexican states located from the border to the Central plateau of the country. I also argue in this paper that Mexico's changing economic territoriality, triggered by the dominance of the outward-looking economic model, is exacerbating regional inequalities that prevailed in the country even before the outset of economic reforms. This is mainly the case of Mexico's southern region, still very agriculture-orientated, and with a deficit of those export-orientated industries currently fuelling economic growth. This region is the least endowed with mobile assets-such as technology, capital, knowledge-in order to exploit the opportunities of market-orientated policies. Consequently, social cohesion is at stake, not necessarily provoked by the market, but exacerbated by it, and the market mechanism cannot by itself address this problem.     

Shifting emphasis in the role of the state: Urban housing reform in China 1

Studies on the role of the state and its control over the economy favour a reduction of state involvement in the process. While such efforts were conducive to the political and economic arrangements in the capitalist world, China presented an entirely different challenge. The state played a dominant role in the production and delivery of all public goods and exercised effective control over the economy in China. However, the changing circumstances following China's adoption of liberalisation have set in motion a number of changes including an apparent reduction of state control over the economy. A case in point is the shift in the role of the state in the production and distribution of public housing in the urban areas. There have been efforts to introduce a market system in housing provision through privatisation, commercialisation and socialisation, and these have resulted in increased private home ownership as well as the formulation of new regulations to govern the real estate market. The intention was to gradually transfer the responsibility of production and management of this essential commodity to property development and professional management companies. However, the state has continued to play a prominent role on the pretext of protecting the citizens from negative consequences of the reforms. The state must take into consideration the nature of the society and its tradition of providing public services and adjust policies to derive maximum benefit from the reforms. As a result, the role of the state has shifted, rather than reduced, and the transformation provides a new perspective on the potential pitfalls in liberalising and rolling back the state.     

Impacts of Institutional Rules and Spatial Context on Public Management

Abstract

Public management occurs within institutional and spatial contexts that define constraints and shape opportunities for public action. Importantly, the creation, adaptation, and nurture of institutions are socially valuable results of governmental action. Similarly, all human action occurs in and has effects in spatial contexts. The quality of life available to humans is dramatically affected by location and making places more valuable is an important goal of much public policy. Analyses at the nation state level find government creation and maintenance of institutional rules supporting democratic polities and market‐based economies are the most important factors in the long‐term economic performance of nations. When considering institutional context at the regional and local levels, or in specific policy arenas, at least three measures—(1) existing capacity for collective action; (2) complexity; and (3) volatility—need to be considered. Spatial contexts can be usefully analyzed along several dimensions, including structure of the economy, distribution of assets/liabilities and public, business, nonprofit and household activities, geography and population dynamics, among others. Estimating transaction costs of collective action can be a common entry point into analyses of institutional and spatial contexts. Both analysis and practice of public management will be advantaged by systematic attention to institutional and spatial context.     

Slovakia's Neoliberal Turn

Slovakia distinguished itself in the first half of this decade by launching a coherent set of economic reforms that limited government and transferred social and economic risk to individuals. We examine reforms in fiscal policy, pensions, the labour code, health care, investment, education and justice. While the surprise formation of a centre – right governing coalition in 2002 enabled Slovakia's ‘neoliberal’ turn, a close network of neoliberal policy makers and advisors from civil society organisations used the opportunity to push forward a compelling explanation of Slovak economic problems and promote a clear institutional design for fixing them.     

NEW MODES OF GOVERNANCE IN ITALY AND THE NETHERLANDS: THE CASE OF ACTIVATION POLICIES

This article discusses the growing importance of operational reforms in the context of welfare state transformation processes, and the role that principles of new governance play in shaping these reforms. It focuses specifically on one social policy area considered crucial in reforming welfare states: the provision of activation services that aim at increasing the employability and labour‐market participation of people dependent on benefits or social assistance. The article argues that besides the reforms of the programmatic aspects of social policies and social services (formal policy reforms), reforms of the way in which policies and services are organized, administered and delivered (operational policy reforms) have received increasing attention as a ’second strand’ of welfare state reforms. It illustrates this by analysing and comparing reforms of the provision of activation services in two European countries: Italy and The Netherlands. The article not only reveals the growing emphasis in both countries on operational policy reforms which are to an important degree inspired by principles of new governance, but also shows significant similarities and differences in their concrete manifestations, which could be interpreted as pointing out processes of ‘path‐dependent convergence’.     

Federalism and low-maintenance constituencies: Territorial dimensions of economic reform in Argentina

How does the territorial distribution of political and economic resources within national polities influence politics and policy making? This article examines the electoral dynamics of market reform in Argentina between 1989 and 1995. It provides insights into the way that the distribution of economic and institutional resources in federal systems shapes policy making and coalition building options for reformist governments. The electoral viability of the governing Peronist Party during the economic reform period was facilitated by the regional phasing of the costs of market reform. Structural reforms were concentrated primarily on economically developed regions of the country, while public spending and patronage in economically marginal but politically overrepresented regions sustained support for the governing party. Statistical analyses contrast patterns of spending and public sector employment in “metropolitan” and “peripheral” regions of the country during the reform period, as well as the social bases of electoral support in those regions. A conceptual distinction between “high-maintenance” and “low-maintenance” constituencies is also introduced to shed light on the dynamics of patronage spending in contexts of market reform.     

Crucial relationship between the privatized sector and the generic private sector in post-communist privatization: Determinants of economic performance

This article looks at the issue — largely neglected in the transition literature — of the relative weights of the privatized sector and the generic private sector (of de novo private firms) in the emerging private sector of post-communist economies in transition. The present writer posits that the relative weight of each in the aggregate share of a private sector (generally expanding over time as transition progresses) strongly influences economic performance, both during correctional recession and during recovery and expansion period. Another, interrelated issue considered here is the interaction between the evolving institutional framework and the expansion of the generic private sector, that is the most dynamic one in the transition economy. It is true that the interaction between institutions and performance has been a staple of a very large number of books, articles, and papers.However, this article concentrates on one component of a private sector only, that is the generic private sector. But at the same time it looks beyond the ‘Holy Trinity’ of transition (stabilization, liberalization, and privatization) towards a wider institutional framework of political liberty, law and order. The foregoing wider framework, and the emerging general trust, matters as much — if not more — for the present writer as the standard transition program.It is the relative dynamics of both components of the private sector, affected by both standard transition programs and the above-mentioned wider institutional framework, that is of primary importance for the economic performance in post-communist transition. In the last part of the article I will try also to answer, tentatively, the question under which circumstances the wider institutional framework may emerge in the transition process.     

The Evolution of the Market of the Hungarian Printing Industry after 1989: The End of a Success Story?

This article examines a case study of one industry in order to explore the factors influencing changing performance levels in the industries of post-socialist economies. It explores the influence on industrial performance of a number of once-only non-repetitive factors of market development that were typical of the transition period and compares them with longer term aspects of the market economy. The case that we discuss here is the development of the market for products of the Hungarian printing industry since the late 1980s. During the transition phase, privatisation, deregulation, the abolition of administrative distribution, and radical cuts in subsidies were all among the factors affecting this industry. Its supply chains also changed radically. However, these lost their importance after the transition had been completed and the long term processes of technical development and consumer behaviour became the main determinants of the behaviour of the printing companies.     

Africa's prospects and South Africa's leadership potential in the emerging markets century

This article examines Africa's role in an evolving international system where powerful emerging markets, such as bric, together with established powers are shaping economic trajectories. The specific focus is on South Africa as an aspiring leader on the African continent, and on its potential for becoming an emerging market shaping the global order together with bric and the West. It is unclear whether a changing global economy in which the postcolonial world plays a greater role will result in improved developmental prospects for Africans as African countries gradually reorient themselves from the West to the South, or whether relations with emerging markets will resemble neo-colonial ties with the West. South Africa's structural weakness, stemming from serious domestic problems of a social, political and economic nature, threatens to undermine its standing in Africa and its emerging market status.     

Neo-liberal Reforms and Illiberal Consolidations: The Indonesian Paradox

Market-oriented policy agendas have enjoyed a remarkable influence in Indonesia for almost four decades. Yet, attempts to impose these agendas in any systematic fashion have proven uncertain and inconclusive. This is not simply a case of successful resistance to reform by entrenched interests. Rather, the deepening of market capitalism and global integration has, in many instances, appeared to consolidate authoritarian politics and predatory economic relationships. Even in the wake of economic crisis and dramatic political change, these basic frameworks of power remain largely intact. Such paradoxes raise important questions about the relationships between markets, institutions and political and social power. We examine how market reforms have been resisted and even hijacked to consolidate predatory state and private oligarchies. We look at the way such entrenched interests have been reorganised in the face of fundamental institutional changes, including the collapse of authoritarian rule and the decentralisation of political authority.