Building States and Markets after Communism
The Perils of Polarized Democracy

This book examines how democracy influences state-building and market-building in 25 post-communist countries from 1990 to 2004.

Timothy Frye (Author)

9780521767736, Cambridge University Press

Hardback, published 7 June 2010

312 pages, 6 b/w illus. 44 tables
24.2 x 16.2 x 2.2 cm, 0.57 kg

“Drawing on his deep knowledge of the post-communist experience, Tim Frye demonstrates that history can overwhelm attempts to get the institutions right. Conceptually bold and meticulously researched, Building States and Markets after Communism should be read by anybody who wants to understand the political economy of economic reform.”
– Scott Gehlbach, University of Wisconsin, Madison

Does democracy promote the creation of market economies and robust state institutions? Do state-building and market-building go hand in hand? Or do they work at cross-purposes? This book examines the relationship between state-building and market-building in 25 post-communist countries from 1990 to 2004. Based on cross-national statistical analyses, surveys of business managers, and case studies from Russia, Bulgaria, Poland, and Uzbekistan, Timothy Frye demonstrates that democracy is associated with more economic reform, stronger state institutions, and higher social transfers when political polarization is low. But he also finds that increases in political polarization dampen the positive impact of democracy by making policy less predictable. He traces the roots of political polarization to high levels of income inequality and the institutional legacy of communist rule. By identifying when and how democracy fosters markets and states, this work contributes to long-standing debates in comparative politics, public policy, and post-communist studies.

Introduction
1. The political logic of economic and institutional reform
2. Political polarization and economic inequality
3. The pace and consistency of reform
4. Political polarization and economic growth
5. Polarization and policy instability: the view from the firm
6. Nationalism and endogenous polarization
7. Russia: polarization, autocracy and inconsistent reform
8. Bulgaria: polarization, democracy and inconsistent reform
9. Poland: robust democracy and rapid reform
10. Uzbekistan: autocracy and inconsistent gradualism
11. Conclusion.

Subject Areas: Economic systems & structures [KCS], Political economy [KCP], Comparative politics [JPB], Politics & government [JP]