Democracy, Market Liberalization and Political Preferences

Pauline Grosjean (1) , Claudia Senik (2, 3, 4)

1 Department of Mathematics [Berkeley]
2 PSE - Paris School of Economics
3 PSE - Paris-Jourdan Sciences Economiques
4 UP4 - Université Paris-Sorbonne

This paper questions the conventional wisdom concerning the sequencing of political and economic reforms in developing countries. We exploit the specific situation of frontier-zones as well as the considerable regional variations in culture and economic development in the countries of Central and Eastern Europe and the former Soviet Union. We estimate the impact of market development and democratization on subjective political preferences. Taking advantage of a new survey conducted in 2006 by the European Bank for Reconstruction and Development and the World Bank in 28 post-transition countries, we find a positive and significant effect of democracy on support for a market economy, but no effect of market liberalization on support for democracy. Our results are robust to the use of various indices of market liberalization and democracy and alternative measures of political preferences.

Mots clés: market and democracy; political preferences; spatial regression discontinuity; transition economies

Domaines: Economies et finances

Pauline Grosjean, Claudia Senik. Democracy, Market Liberalization and Political Preferences. Review of Economics and Statistics, 2011, 93 (1), pp.365-381. ⟨10.1162/REST_a_00062⟩. ⟨halshs-00596078⟩