No. 3 Economic Reforms, Democracy and Growth in Eastern Europe and Eurasia


Abstract:  This research analyses the interaction between economic reforms, democratic 
reforms, and economic growth.  One of the salient characteristics of the transition region 
has been two very distinct patterns between economic and democratic reforms: 
convergence of the two reform dimensions in the CEE countries and divergence in 
Eurasia.  Nevertheless, results from econometric tests (which attempt to control for 
possible intervening influences) suggest that economic and democratic reforms are 
mutually reinforcing throughout the region, even in Eurasia.  We also found evidence 
that: (1) economic reforms have a stronger impact on democratic reforms than the 
reverse; (2) economic reforms favorably affect economic growth; (3) democratic reforms 
favorably affect economic growth indirectly (via economic reforms) if not directly; and 
(4) while the feedback effects from economic growth to reforms are more ambiguous, 
there is some evidence that economic growth may actually stifle democratic reforms, 
and/or economic contraction may facilitate democratization. 
Wednesday, September 4, 2013 - 3:00pm

Last updated: September 04, 2013