Economic reform, markets and legality

Question 1

What is partial reform?

Answer 1

-Free markets exist but without effective governance structures, such as property rights

Question 2

What is political capitalism? (Robinson, 2018)

Answer 2

• Where the profit motive is subordinate to the political logic of the regime
• Preserves interests of the winner groups rather than public goods and growth

Question 3

What sustains partial reform?

Answer 3

• Soviet legacy
• Winner groups
• Political competitiveness
• Global economy

Question 4

Soviet legacy

Answer 4

• Economic development based on forced investment (it is political), not by economic efficiency and value added production e.g. Khrushchev 7 year plan
• Bureaucratic market system, personal ties most valuable resource
• More important as formal system collapses

Question 5

Winner groups

Answer 5

• Beneficiaries of first wave of reform had incentive to freeze it as it was
• Winners rather than losers main barrier to reform (Hellman)
• Criticisms: PF not as profitable as non-reformed economies, what was incentive, political influence of winners declined in Russia when fiscal power of state recovered after 1998 FC
• Losers also opposed to further market reform

Question 6

Political competitiveness

Answer 6

• Level of democracy strongest predictor of speed of reform
• Political hybridity produces well connected elites, also want to preserce economic inequalities
• Elites less constrained electorally by need to redistribute

Question 7

Global economy

Answer 7

• Key supplier of rents e.g. natural resources, energy profits plug rent gaps in economies like Russia and Kazakhstan
• Source of political instability
• Foreign borrowing important for economies like Ukraine and Kyrgyzstan