The Divergent Postcommunist Paths to Democracy and Economic Freedom

Simeon Djankov (PIIE) and Owen Hauck (PIIE)
Working Paper
16-10
July 2016

This paper presents evidence from 29 postcommunist countries that the economic transition has been more successful than the political transformation in the quarter century since the fall of the Berlin Wall. The adoption of strong parliamentarian systems has countered the adverse effects of religious and imperial history on economic evolution. As a result, the divergence in democracy and political rights is 4 to 5 times larger than the divergence in the path toward economic freedom and ease of doing business. Democracy is not harder to predict than economic freedom—history and ethnicity predict it well. But recent authoritarian regressions in Hungary and Poland, countries with successful economic reforms and strong parliamentarian systems, present a new challenge to researchers.

Data Disclosure: 

Data disclosure: The data underlying the figures in this analysis are available below.​