Putin's Russia: Is It a Doable Project?

Demokratizatsiya, Winter 2004 by Beliaev, Mikhail

There are some indications that the positive effect of political liberalization is not unconditional in the post-communist setting. For instance, until recently, authoritarian Belarus and Uzbekistan considerably outperformed the more democratized countries of the CIS. The GDP decline between 1990 and 2000 was 12 percent and 5 percent in Belarus and Uzbekistan, respectively, while Russia experienced 36 percent of the GDP fall (World Bank 2002, 5). Castanheira and Popov (2000) point out another example. They compare Chinese and Russian economic performance in the 1990s and explain the well-known difference by arguing that, in comparison with weak democracies, strong authoritarian regimes have better chances to secure the rule of law.

Some studies relate the positive effects of political liberalization to cultural factors and changes in the elite composition. According to Hillman (1999) as well as Hillman and Ursprung (1999), liberalization has a deteriorative effect on economic performance until a cultural adaptation takes place. Thus, the contraction should be longer in the societies where the socialist behavioral patterns have taken deeper roots, such as in the CIS. Shleifer (1998) makes a similar point concerning the elite change. He explains the better performance of Poland in comparison with the Russian demise by the higher turnover rate in the personal composition of political leadership in Poland.

Opposite views on the shape of the relationship between political liberalization and performance are presented by Barro and Fidrmuc. Barro writes: "democracy enhances growth at low levels of political freedom but depresses growth when a moderate level of freedom has already been attained" (1996, 1). His opponent claims that little political liberalization is associated with output decline, while further progress in democratization brings about positive results (Fidrmuc 2000). Fidrmuc explains that the link between democracy and growth is indirect: political liberalization is conducive to economic reforms, while the latter have a strong positive impact on growth; but the marginal effect of political liberalization on growth is weak and rather negative. Thus, the ability of political reforms to propel or impede economic ones is the key.

The Link between Economic and Political Liberalization

Empirical studies demonstrate that the association between economic and political liberalization in the post-communist societies is even stronger than their associations with the desirable transformation outcomes. Dethier et al. (1999) claim that the propensity to implement economic liberalization depends on the level of political freedoms. Findings by de Melo et al. (1996) and Fidrmuc (2000) are similar. In respect to constitutional design of new post-communist democracies, Hellman (1997) infers that presidential governments, which are associated with higher power concentration, are less prone to undertake rapid economic reforms. All empirical studies on post-communist democratization agree that economic liberalization is more likely to be implemented in a more liberalized political environment; but it is unclear whether this relationship is a matter of endogeneity or merely a causal link.