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Study Warns of Deepening Crisis in Post-Communist Societies
The countries of the former Soviet Union and Eastern Europe face the prospect of economic stagnation or steep decline unless measures are taken to reform their political systems and curb official corruption. Countries that have failed to reform their political as well as economic systems are going to be hardest hit by the economic turmoil affecting emerging markets. These are the findings in a major new study, Nations in Transit 1998, which was issued by Freedom House, a research and advocacy organization which monitors the state of political freedom around the world. The study is the most comprehensive such survey undertaken since the collapse of communism in East Central Europe and Central Asia.
"The study conclusively demonstrates that both political and market reforms are preconditions for growth and prosperity," said Adrian Karatnycky, Freedom House president and co-editor of the study. "Half-reforms haven't worked, and aren't likely to work in the future. Indeed, the example of Russia suggests that countries which have failed to embrace both political and economic change may face a period of serious, long-term decline."
The 700-page study, which will be released in book form in mid-December, assesses political and economic change in 28 countries which were formerly under the rule of Communist dictatorships, including all former Communist countries of Central and Eastern Europe, all the countries of the former Soviet Union, Yugoslavia and its breakaway states, and Mongolia.
Among the study's principal findings:
- Former Communist countries which have made the most progress towards political democracy have also enjoyed the most success in economic reform and have experienced the highest rates of economic growth.
- Countries which were most resistant to political and economic change registered a decline in their economic output.
- Countries that pursued inconsistent policies in political and economic reform stagnated or grew at low rates in 1997 and have suffered severe setbacks in the economic turmoil of 1998.
- The seven countries which were judged to be the region's least corrupt enjoyed the highest growth rates. By contrast, countries with a higher degree of corruption stagnated with average growth rates of below two percent, after a prolonged period of economic decline.
- Most countries of formerly Communist Central and Eastern Europe have made important strides towards both political democracy and economic reform. The principal exceptions are Yugoslavia and countries that have seceded from the former Yugoslav Federal Republic.
- Of the countries of the former Soviet Union, only the three Baltic states of Estonia, Latvia, and Lithuania have achieved sustained progress in both democratic and economic reform that would allow them to be considered stable market democracies.
- Economic reform has been seriously stalled in those countries where large Communist or leftist parties remain a major force in political life.
The survey's most important finding was the strong correlation between economic growth and economic and political reform. The research team which conducted the survey found that the seven countries which had already attained a high degree of political and economic reform sustained an average growth rate of 4.7 percent during 1997. By contrast, those countries which are still in transition between authoritarian and democratic systems-a group which includes both Russia and Ukraine-achieved a growth rate of just 1.39 percent. A third group, consisting of countries which remain highly autocratic, showed a negative growth rate of 2.85 percent.
"The study demonstrates a clear link between a high degree of political reform and a high degree of free market reform. It also establishes conclusively the relationship between reform and prosperity," said Karatnycky. "Those countries which have made the most far-reaching progress towards democracy and free markets have reaped the most substantial economic gain. Those countries which have implemented incomplete or half-hearted changes have done less well, and may in some cases be moving in the wrong direction. And those countries which have steadfastly resisted reform and retained authoritarian systems are suffering negative growth and a declining standard-of-living."
The survey found that seven countries in Central and Eastern Europe and the Baltic region had succeeded in forging political systems which were securely democratic and economies with a high degree of market reform. These were the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Slovenia. The survey noted that most other countries in Central and Eastern Europe showed "potential for further economic and political progress" in future years.
The study identified the continuing influence of Communist and leftist parties as a major obstacle to change in several key countries, most notably Russia and Ukraine. The report noted: "In Ukraine, the Communist-led left has successfully and repeatedly delayed the implementation of reforms required by the international financial community as a precondition for credits. In Russia, the Communist left has regularly delayed personnel changes in key ministries and impeded the formation of new government teams."
Both Ukraine and Russia, the report adds, are hampered by a Communist opposition that is opposed to the existence of the two countries as independent states. "In both countries, the Communist Party seeks the restoration of the Soviet Union and consequently an end to the state sovereignty of Russia and Ukraine," the report declared. The research for the comprehensive Nations in Transit 1998 report was undertaken by a group of specialists on the former Communist world and coordinated by the Freedom House staff. The ratings for each country reflect the judgment of a panel of leading academic specialists and senior Freedom House staff. The panel of academics consists of Alexander Motyl, Columbia University; Richard Ericson, Columbia University; Jozef Van Brabant, chief economist, United Nations; Charles Gati, School of Advanced International Studies, Johns Hopkins University; Martha Brill Olcott, Colgate University; and Stephen Handelman, an expert on international corruption.
The study was made possible by a grant from the United States Agency for International Development.
Freedom House is an independent watchdog organization that supports democratic change, monitors the status of freedom around the world, and advocates for democracy and human rights.