British Journal of Political Science http://journals.cambridge.org/JPS Additional services for British

Journal of Political Science:

Email alerts: Click here Subscriptions: Click here Commercial reprints: Click here Terms of use : Click here

Policy Responsiveness in Post-communist Europe: Public Preferences and Economic Reforms Andrew Roberts and Byung-Yeon Kim British Journal of Political Science / Volume 41 / Issue 04 / October 2011, pp 819 - 839 DOI: 10.1017/S0007123411000123, Published online: 25 March 2011

Link to this article: http://journals.cambridge.org/abstract_S0007123411000123 How to cite this article: Andrew Roberts and Byung-Yeon Kim (2011). Policy Responsiveness in Post-communist Europe: Public Preferences and Economic Reforms. British Journal of Political Science, 41, pp 819-839 doi:10.1017/S0007123411000123 Request Permissions : Click here

Downloaded from http://journals.cambridge.org/JPS, IP address: 129.105.215.146 on 03 Feb 2014

B.J.Pol.S. 41, 819–839 Copyright r Cambridge University Press, 2011 doi:10.1017/S0007123411000123 First published online 25 March 2011

Policy Responsiveness in Post-communist Europe: Public Preferences and Economic Reforms ANDREW ROBERTS

AND

BYUNG-YEON KIM*

This article assesses the degree of policy responsiveness in the new democracies of post-communist Europe. Panel data on economic reform and public opinion show that public support for reform has a large and significant effect on reform progress. Where public support for reform is high, reform proceeds more quickly. This effect remains strong even when controlling for the endogeneity of public support and other economic and political causes of reform, though it is strongest in more democratic countries. These results suggest that economic reform may be better promoted by persuading the public of the beneficial consequences of reform than by trying to insulate reformers from the public, and that the quality of democracy in the region may be higher than commonly perceived.

Much dismay has been expressed about the quality of democratic processes in the world’s newer democracies. These new democracies, according to many observers, are not functioning in the way that democracies should. Whether these failings are the result of inexperience with democracy, cultural inheritances or economic circumstances, their existence challenges the significance of the worldwide democratic resurgence. How consequential is a democratic transition if the new democracies do not function very democratically? A good deal of the lamentation about low quality democracies, however, relies on anecdotal evidence. It is certainly not hard to find individual examples of democratic shortcomings in post-communist Europe or Latin America in the form of public officials who repudiate their campaign promises or ignore public opinion.1 But a general assessment of the quality of new democracies must rely on more systematic evidence. This article attempts to provide exactly such evidence for post-communist Europe. It focuses on an aspect of democratic quality that has long been held up as the key indicator of how a democracy is functioning. This is policy responsiveness. Responsiveness refers to the degree to which policy choices follow public preferences. Democracy should produce exactly such responsiveness. By allowing citizens to render verdicts on sitting officials, democracy gives these office-holders a strong incentive to provide policies that the public wants. Yet one can imagine a variety of reasons why responsiveness would not follow from democratic elections, particularly in new democracies. Unused to participating in politics, citizens may not hold clear views to which politicians can respond. For the same reason, they may not be able to hold politicians accountable at elections, reducing the incentives * Department of Political Science, Northwestern University (email: [email protected]); Department of Economics, Seoul University, respectively. B-Y Kim acknowledges that this work was supported by grant R32-2009-000-20055-0 from the World Class University (WCU) project of the Ministry of Education, Science & Technology (MEST) and the National Research Foundation of Korea (NRF) through Seoul National University. Both authors wish to thank several anonymous reviewers for helpful comments. Data for replication and an online appendix with supplementary tables are available at sites.google.com/site/robertspolisci. 1 Arguably, the same is true of more established democracies.

820

ROBERTS AND KIM

for responsive policy making. Politicians, for their part, may ignore citizens – even if it costs them in elections – because they are constrained by a weak economy, international pressures or the need to pay off supporters. They may also be able to win elections without responsiveness by means of fraud or vote buying. All of these phenomena are common in new democracies. This article attempts to provide a systematic assessment of policy responsiveness in post-communist Europe. It tries to determine whether these cultural, social and political legacies of authoritarian rule limit responsiveness or whether newly-instituted democratic elections give politicians a strong enough incentive to follow public preferences. It does this by looking at one of the central issues in these countries, the transition from a centrally planned to a market economy. It asks whether the rate of economic reform is associated with public support for reform. Are politicians responsive to public preferences about the pace of economic reform, or does reform follow different dynamics?

THE THEORY OF RESPONSIVENESS

Responsiveness refers to the relationship between policy choices and citizen preferences. A government is responsive if it adjusts policy in accord with changes in public opinion. As more citizens come to favour lower taxes, for example, responsiveness implies that politicians will subsequently lower taxes. Responsiveness has often been proposed as the most fundamental indicator of how well democracy works. At its most basic, democracy is a system of government where the people rule. If the people are ruling, we would thus expect their policy preferences to determine policy. As Dahl writes at the start of perhaps the most cited work in democratic theory, ‘a key characteristic of a democracy is the continuing responsiveness of the government to the preferences of its citizens, considered as political equals.’2 The same result derives from a consideration of the incentives inherent in modern representative democracy. The institution of free and fair elections gives elected officials a strong incentive to consider citizens’ policy wishes. Ignoring the public is likely to lead to electoral defeat. All else equal, citizens prefer politicians who consider their preferences over ones who do not. Politicians concerned with retaining office are thus likely to pay close attention to public opinion. Responsiveness, however, is not an unimpeachable ideal. There are situations where we would prefer less responsiveness. When citizens are systematically misinformed about the consequences of policies, responsiveness can lead to outcomes detrimental to human welfare.3 This situation is often said to characterize the domains of foreign policy and national security as well as other technical issues. Better policy, however, requires not only politicians who are better informed, but those who are willing to act on their better information. And there are good reasons to believe that politicians might pursue their own interests if freed from links to the public. 2

Robert Dahl, Polyarchy: Participation and Opposition (New Haven, Conn.: Yale University Press, 1971), p. 1. 3 There has been an active debate on whether citizens possess enough information to guide policy. For two opposing perspectives, see Benjamin I. Page and Robert Y. Shapiro, The Rational Public: Fifty Years of Trends in Americans’ Policy Preferences (Chicago: Chicago University Press, 1992); and Michael X. Delli Carpini and Scott Keeter, What Americans Know about Politics and Why It Matters (New Haven, Conn.: Yale University Press, 1996).

Policy Responsiveness in Post-communist Europe

821

There are ways that relatively uninformed citizens could induce better policy. By retrospectively sanctioning poor performance, for example, they may give politicians an incentive to perform well. However, simple monitoring of aggregate performance (say, of the growth rate) means giving up control over individual policy choices and thus comes at a democratic cost. While responsiveness is a double-edged sword, it is hard to imagine conceptions of democracy that do not take it seriously.

EMPIRICAL APPROACHES

Since it has been considered one of the hallmarks of democracy, responsiveness has attracted considerable scholarly attention.4 Most initial work on responsiveness studied the phenomenon in terms of correspondence. It asked whether the beliefs or voting patterns of representatives matched the opinions of their constituents, a phenomenon known as dyadic representation, or whether the ideologies of parties matched the ideologies of their electorates, known as party representation.5 The idea is that if representatives and their constituents have similar preferences, then policy will follow public opinion. Most of these studies have found reasonable levels of correspondence.6 Studies in this tradition, however, suffered from a number of methodological problems.7 One issue is endogeneity – it might be the case that politicians were influencing their districts or electorates rather than the other way around.8 A second is the dependent variable. Most studies focused on legislators’ or parties’ ideologies or voting records rather than policy outputs; but to assess whether the people are actually ruling, actual policy is arguably the more important dependent variable. Even if all politicians vote in line with their electorates, the policies they produce may still be far from the preferences of the national public due to veto points or social choice issues. A final concern is the failure of these studies to include controls for such influences on legislative behaviour as economic conditions and interest group pressure. Recent studies have tried to remedy these problems.9 First, they have turned to timeseries analysis as a way to avoid endogeneity; they ask whether opinion changes lead to policy changes. Responsiveness is an essentially temporal construct – politicians react to 4 We focus only on the quantitative study of responsiveness. There are many qualitative case studies of responsiveness. For a survey, see Jeff Manza and Fay Lomax Cook, ‘A Democratic Polity? Three Views of Policy Responsiveness to Public Opinion in the United States’, American Politics Quarterly, 30 (2002), 630–67. 5 Scholars typically focus on dyadic representation in first-past-the-post electoral systems where politicians represent territorial constituencies and party representation in proportional electoral systems where parties represent national electorates. Powell has also looked at the correspondence between the decisive legislator and the median voter, which might be called collective correspondence. See G. Bingham Powell, Elections as Instruments of Democracy: Majoritarian and Proportional Visions (New Haven, Conn.: Yale University Press, 2000). 6 For representative examples, see Warren E. Miller and Donald E. Stokes, ‘Constituency Influence in Congress’, American Political Science Review, 57 (1963), 45–56; and Warren E. Miller, Roy Pierce, Jacques Thomassen, Richard Herrera, Soren Homberg, Peter Esaiasson and Bernhard Wessels, Policy Representation in Western Democracies (Oxford: Oxford University Press, 1999). 7 Christopher Achen, ‘Measuring Representation: Perils of the Correlation Coefficient’, American Journal of Political Science, 21 (1977), 805–15. 8 Kim Quaile Hill and Patricia Hurley, ‘Dyadic Representation Reappraised’, American Journal of Political Science, 43 (1999), 109–37. 9 For early attempts, see Alan D. Monroe, ‘Consistency between Public Preferences and National Policy Decisions’, American Politics Quarterly, 7 (1979), 3–19; and Benjamin I. Page and Robert Y. Shapiro, ‘Effects of Public Opinion on Policy’, American Political Science Review, 77 (1983), 175–90.

822

ROBERTS AND KIM

citizens’ preferences – and thus demands time-series analysis. The second innovation is the development of quantitative measures of policy outcomes. Pioneered by Mayhew’s counts of landmark legislation, numerous scholars have found ways to quantify government outputs, avoiding the indirect or dichotomous measures of previous studies.10 The seminal study combining these two innovations is Stimson, MacKuen and Erickson’s ‘Dynamic Representation’, which found a high degree of policy responsiveness in the United States.11 Other studies of the United States and Western Europe using similar techniques found reasonable levels of responsiveness.12 A noteworthy fact about this entire literature is its focus on the established democracies. Only a handful of studies have considered responsiveness in less established democracies and all of them have focused on correspondence measures. Kitschelt and collaborators, for example, linked the opinions of party functionaries with the preferences of their parties’ electorates in four post-communist countries and found a high degree of correspondence.13 Luna and Zechmeister followed similar methods in nine countries in Latin America and found variable degrees of correspondence.14 The problem with these analyses is that they do not exclude reverse causality and they do not show that representatives actually enact policies that voters want. This article attempts to do precisely this. DEMOCRACY IN POST-COMMUNIST EUROPE

We focus in this article on the new democracies of post-communist Europe, which present an interesting contrast to the United States and Western Europe. Not only are these countries new democracies without recent democratic traditions, but they also face a daunting array of economic and political challenges in moving away from communism.15 As such, they present a particularly interesting test case of the high degree of responsiveness found in studies of the established democracies. Reading the area studies literature, one finds good reasons to be pessimistic about the degree of responsiveness in post-communist Europe. In the first place, many scholars have 10 David Mayhew, Divided We Govern: Party Control, Lawmaking and Investigations, 1946–1990 (New Haven, Conn.: Yale University Press, 1992). 11 James A. Stimson, Michael B. MacKuen and Robert S. Erikson, ‘Dynamic Representation’, American Political Science Review, 89 (1995), 543–65. See also Robert S. Erikson, Michael MacKuen and James A. Stimson, The Macro Polity (New York: Cambridge University Press, 2002). Page criticizes the high degree of aggregation in their measures of public opinion and policy. The present analysis is sector-specific. See Benjamin I. Page, ‘The Semi-Sovereign Public’, in Jeff Manza, Fay Lomax Cook and Benjamin Page, eds, Navigating Public Opinion: Polls, Policy and the Future of American Democracy (Oxford: Oxford University Press, 2002). 12 Brandice Canes-Wrone and Kenneth W. Shotts, ‘The Conditional Nature of Presidential Responsiveness to Public Opinion’, American Journal of Political Science, 48 (2004), 690–706; Richard Eichenberg and Richard Stoll, ‘Representing Defense: Democratic Control of the Defense Budget in the United States and Western Europe’, Journal of Conflict Resolution, 47 (2003), 399–423; Stuart N. Soroka and Christopher Wlezien, ‘Opinion–Policy Dynamics: Public Preferences and Public Expenditure in the United Kingdom’, British Journal of Political Science, 35 (2005), 665–89; Christopher Wlezien, ‘Patterns of Representation: Dynamics of Public Preferences and Policy’, Journal of Politics, 66 (2004), 1–24. 13 Herbert Kitschelt, Radoslaw Markowski, Zdenka Mansfeldova and Gabor Toka, Post-Communist Party Systems: Competition, Representation, and Inter-Party Cooperation (Cambridge: Cambridge University Press, 1999). 14 Juan P. Luna and Elizabeth J. Zechmeister, ‘Political Representation in Latin America: A Survey of Elite–Mass Congruence in Nine Countries’, Comparative Political Studies, 38 (2005), 388–416. 15 Claus Offe, ‘Capitalism by Democratic Design? Democratic Theory Facing the Triple Transition in East Central Europe’, Social Research, 58 (1991), 865–92.

Policy Responsiveness in Post-communist Europe

823

expressed doubts about whether mass publics in the region hold coherent preferences about policy.16 They have little experience both with democracy and with the sort of issues about which they are called on to have opinions. They were also socialized under communist systems which taught them to be at best apathetic and at worst hostile to politics.17 The flux of the transition exacerbated the problem. These countries have witnessed a massive reconstruction of their political economies as communist-era structures are discarded and free market ones put in their place. This created enormous uncertainty for citizens.18 Finally, even if citizens were able to orient themselves and develop definite preferences, they might still lack the skills, time and energy to monitor politicians and hold them accountable for their actions, all preconditions for responsiveness.19 The policy area that we focus on in this article – economic reform – is believed to put even greater constraints on responsiveness. As Greskovits points out, these countries were under enormous pressure to adopt the standard package of market reforms – liberalizing prices and trade and privatizing state-owned industry.20 Such reforms produce considerable social pain, particularly unemployment and inflation, and are thus unpopular ex ante and likely to lead to a backlash ex post.21 If governments end up adopting reforms, then they will almost by definition be in opposition to public opinion. Luna and Zechmeister in fact found a lower degree of party representation in Latin American countries that undertook drastic liberalization.22 It is this contradiction between the necessity and unpopularity of reform which led many to recommend insulating executives from the public as the sole means of enacting reforms.23 Governments closely tied to public opinion would purportedly either not begin reforms or cut them off as soon as they produced pain and hence opposition. Most democratic post-communist countries did engage in comprehensive reforms, leading to a presumption of non-responsiveness. There are responses to all of these points. A number of studies of public opinion in the region have found voters to possess distinct preferences and, moreover, to be able to link these preferences to political parties.24 Voting studies have further shown citizens to be 16

Piotr Sztompka, ‘The Intangibles and Imponderables of the Transition to Democracy’, Studies in Comparative Communism, 24 (1991), 295–311. 17 Miroslawa Marody, ‘Perceptions of Politics in Polish Society’, Social Research, 57 (1990), 257–74; George Scho¨pflin, ‘Obstacles to Liberalism in Post-Communist Politics’, East European Politics and Societies, 5 (1990), 189–94. 18 Valerie Bunce and Ma´ria Csana´di, ‘Uncertainty in Transition: Postcommunism in Hungary’, East European Politics and Societies, 7 (1993), 240–76. 19 Marc Morje´ Howard, The Weakness of Civil Society in Post-Communist Europe (New York: Cambridge University Press, 2002). 20 Bela Greskovits, The Political Economy of Protest and Patience: East European and Latin American Transitions Compared (Budapest: Central European University Press, 1998). 21 Adam Przeworski, Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America (Cambridge: Cambridge University Press, 1991). 22 Luna and Zechmeister, ‘Political Representation in Latin America’. However, as we mentioned above, Kitschelt found relatively high levels of party representation in four post-communist countries (Kitschelt et al., Post-communist Party Systems). 23 Stephen Haggard and Robert Kaufman, The Political Economy of Democratic Transitions (Princeton, N.J.: Princeton University Press, 1995); John Williamson, ed., The Political Economy of Policy Reform (Washington, D.C.: Institute for International Economics, 1994). 24 Kitschelt et al., Post-communist Party Systems; Hubert Tworzecki, Learning to Choose: Electoral Politics in East-Central Europe (Palo Alto, Calif.: Stanford University Press, 2003).

824

ROBERTS AND KIM

capable of both retrospective economic voting and even more subtle prospective voting.25 Thus, some form of monitoring is possible. Stokes has even suggested and provided some evidence for the hypothesis that voters might not oppose painful reforms; they might instead blame the old regime or understand that short-term pain leads to long-term success.26 Finally, these countries are home to highly educated, urbanized and mostly middle-class citizens, who have the resources necessary to follow and understand politics.27 In contrast to the case in many other new democracies, the majority of postcommunist citizens are well equipped to participate effectively in politics. HYPOTHESES

The main hypothesis we intend to test in this article is whether greater public support for economic reforms leads to faster reform. We focus on economic reforms because these were one of the most salient and consequential policies of the transition period. As such, they provide a particularly important test of whether responsiveness exists. The most basic version of our hypothesis postulates a direct effect of public opinion on reform. This mechanism relies on politicians whose main goal is to stay in office. In order to remain in office, politicians need to maintain the support of voters and this means enacting policies that satisfy the public. Thus, we should see a consistent and strong relation between opinion and policy. HYPOTHESIS

1: Reform pace should change directly with public support for reform.

Since responsiveness is driven by the threat of losing elections, those countries where the threat is higher should have greater responsiveness. We believe that the degree of democracy is a proxy for this threat. In less democratic countries, incumbents have alternative means to remain in office besides gaining the favour of voters – for example, stuffing the ballot box or limiting media access to the opposition. Since non-responsiveness may not hurt their electoral prospects, they are likely to pursue goals other than responding to public opinion such as enriching themselves or their supporters. Since our dataset includes both more and less democratic countries, we can test this possibility by looking separately at these two groups. HYPOTHESIS

2: More democratic countries should exhibit greater responsiveness.

Responsiveness so far has been implicitly defined in terms of the median voter – policy should change only with changes in general public opinion.28 Yet there has been much speculation that politicians in these countries are less responsive to the median voter than to elite groups who have captured the state and use it for their own purposes. 25

Alexander C. Pacek, ‘Macroeconomic Conditions and Electoral Politics in East Central Europe’, American Journal of Political Science, 38 (1994), 723–44; Andrew Roberts, ‘Hyperaccountability: Economic Voting in Eastern Europe’, Electoral Studies, 27 (2008), 533–46; Joshua Tucker, Regional Economic Voting: Russia, Poland, Hungary, Slovakia, and the Czech Republic, 1990–1999 (New York: Cambridge University Press, 2006). 26 Susan Stokes, ed., Public Support for Market Reforms in New Democracies (New York: Cambridge University Press, 2001). 27 Greskovits, The Political Economy of Protest and Patience. 28 There are strong normative reasons for favouring the median voter. If citizens voted directly on policies, the position of the median would win these referendums. See Powell, Elections as Instruments of Democracy, pp. 163–5.

Policy Responsiveness in Post-communist Europe

825

These groups may exercise influence through campaign contributions, lobbying or outright corruption. No matter the cause, such a phenomenon challenges the basic idea of responsiveness to all citizens ‘considered as political equals’. It is important then to consider whether policy is differentially responsive to segments of the public.29 HYPOTHESIS

3: Reform pace will be more responsive to privileged social groups.

While the first hypothesis suggested a direct effect of public opinion on reform, a second mechanism of responsiveness sees changes in reform speed coming only through changes in government. In this view, elections play a decisive role. Governments are elected to pursue a particular mandate – to speed up or slow down reforms – and they pursue this mandate until they are removed from office. When a more reformist parliament is elected, the speed of reforms should increase and vice versa when a less reformist parliament is elected. This mechanism still predicts responsiveness, but is punctuated by elections. To test this idea, we look at whether reform pace changes with the composition of parliament. HYPOTHESIS

4: Reform pace increases with the strength of pro-reform parties in parliament.

We might also expect responsiveness to vary according to the electoral calendar. As elections approach, politicians should become more attentive to public preferences. This result follows from the fact that voters’ memories are short.30 They tend to give greater weight in their vote choices to more recent events. With some qualifications, CanesWrone and Shotts find just such a result for the United States.31 HYPOTHESIS

5: Responsiveness increases as elections approach.

Finally, as Powell points out, political institutions may affect the degree of responsiveness.32 Advocates of majoritarian democracy – characterized by a concentration of power in a single-party executive – claim that it is likely to achieve responsiveness because these governments have the power to enact the policies they wish and can also be held accountable for them. Conversely, division and dispersal of power may allow small groups to veto popular changes and governments to escape sanction. Advocates of consensus or proportional democracy, by contrast, argue that concentration of power can lead governments to stray from the public. They point out instead that division or dispersal of power will lead to more responsiveness by giving more actors a say in policy making. We have phrased our hypothesis here to reflect the majoritarian position, but our expectations are genuinely ambiguous.33 HYPOTHESIS

6: Responsiveness increases with the degree of majoritarian rule.

29 Larry M. Bartels, Unequal Democracy: The Political Economy of the New Gilded Age (Princeton, N.J.: Princeton University Press, 2008); Martin Gilens, ‘Inequality and Democratic Responsiveness’, Public Opinion Quarterly, 69 (2005), 778–96; Stuart N. Soroka and Christopher Wlezien, ‘On the Limits to Inequality in Representation’, PS: Political Science and Politics, 41 (2008), 319–27. 30 Christopher H. Achen and Larry M. Bartels, ‘Musical Chairs: Pocketbook Voting and the Limits of Democratic Accountability’ (paper presented at the Annual Meeting of the American Political Science Association, Chicago, 2004). 31 Their effects are mediated by presidential popularity. There is less responsiveness when a president is very popular or very unpopular. See Canes-Wrone and Shotts, ‘The Conditional Nature of Presidential Responsiveness to Public Opinion’. 32 Powell, Elections as Instruments of Democracy. 33 In fact, Powell finds greater correspondence in consensus democracies.

826

ROBERTS AND KIM

DATA

Finding evidence for responsiveness poses a number of difficulties. In the first place, there is the matter of measuring policy outputs. Government outputs come in a startling variety of types and sizes. Moreover, not all governments work in the same way and therefore comparable cross-national measures are at an even greater premium. For an analysis of post-communist Europe, we would like equivalent measures for several countries because the post-transition period is short. We can gain leverage by supplementing time-series analysis with cross-national analysis. We are fortunate in having two separate cross-national measures of policy outputs in post-communist Europe. Both the World Bank (WB) and the European Bank for Reconstruction and Development (EBRD) have produced measures of progress in economic reform in all post-communist countries.34 These measures track annual changes on such reforms as price liberalization, trade liberalization, privatization of small retail services and privatization of large enterprises from the beginning of the transition.35 These measures are the main dependent variables in our analyses (Reform Progress) and are widely analysed in studies of economic reform. To measure responsiveness, we need to link these policy changes with comparable measures of public opinion on reform over time. The Central and Eastern European Barometer (a companion to the well-known Eurobarometer) fulfils these criteria.36 It was conducted annually in nearly identical formats from approximately 1990 to 1997 in sixteen post-communist countries.37 These countries are Albania, Armenia, Belarus, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Slovakia, Slovenia and Ukraine.38 The scope of this survey delimits the dataset. While most of the survey was devoted to issues related to the European Union, there was one question which captures citizens’ attitudes towards economic reform. 34 Andrew Berg, Eduardo R. Borensztein, Ratna Sahay and Jeromin Zettelmeyer, ‘The Evolution of Output in Transition Outcomes: Explaining the Differences’ (IMF Working Paper, No. 73, 1999); Mathias DeMelo, Calvo Denizer and Alan Gelb, ‘From Plan to Market: Patterns of Transition’ (World Bank Policy Research Working Paper, No. 1564, 1996); Stanley Fischer, Ratna Sahay and Carlos Vegh, ‘Stabilization and Growth in Transition Economies: The Early Experience’, Journal of Economic Perspectives, 10 (1998), 45–66; European Bank for Reconstruction and Development, Transition Report (London: EBRD, 1995 to date). 35 The World Bank index consists of three components: internal liberalization, external liberalization and private sector entry, which are averaged to produce an overall score that ranges from 0 to 1. The EBRD index has eight measures that are averaged to produce a total reform score. These measures are of: small-scale privatization, large-scale privatization, governance and enterprise restructuring, competition policy, banking reform, securities markets and non-bank financial institutions, price liberalization, and trade and foreign exchange liberalization. The scores range from 1, the level of a centrally planned economy, to 4.33, the level of advanced industrial economy, with steps of 0.33 in between. The two measures are highly correlated with each other with r ranging from 0.6 to 0.8 depending on the sample. 36 Karlheinz Reif, George Cunningham and Malgorzata Kuzma, Central and Eastern Eurobarometer Survey Series, www.icpsr.umich.edu/icpsrweb/ICPSR/series/00018. We considered other cross-national surveys such as the World Values Survey, the New Democracies Barometer and the International Social Survey Project, but all of them suffered from either sporadic coverage or failure to include policy-relevant questions. 37 It was suspended after 1997 and resumed in 2001 as the Candidate Countries Eurobarometer. The project surveys approximately 1,000 nationally representative individuals in each country. It uses a multistage random probability sample design and weights responses by education, age and region. 38 The survey occasionally included other countries, but only for short periods.

Policy Responsiveness in Post-communist Europe

827

The question’s wording is as follows: ‘Do you personally feel that the creation of a free market economy, that is, one largely free from state control, is right or wrong for [our country’s] future?’ Taking the difference between the share of respondents who answered ‘Right’ and ‘Wrong’ produces a measure of support for reform (Public Support).39 While this question does not specifically ask about support for each of the policy changes in our output measures, it does gauge general support for the progress of reform. Indeed, all of the components of our policy variable measure the steps to achieving a free market economy.40 Levels of support for the free market varied widely in the region, from a maximum of 174 per cent to a minimum of 255 per cent with an average 113 per cent.41 The positive average is noteworthy. More citizens in the region favoured a free market economy than opposed it. Contrary to expectations, economic reform could achieve popularity in the region.42 Though our focus is on the degree of responsiveness to public opinion, we also need to control for other variables that may affect the pace of reform. Here, we relied on the large existing literature on the political economy of reform.43 Past reform – the lagged dependent variable – should affect current reform. Past reforms may either encourage future reforms – reform is said to create winners who then support reform more enthusiastically – or discourage reform either because it causes social pain or because winners want to protect their privileged positions as Hellman hypothesizes.44 Including a lagged measure of reform also helps to deal with autocorrelation in the data.45 A number of economic variables should also affect reform. Previous work has found that higher unemployment, higher inflation and lower growth reduce the pace of reform indirectly by reducing public support for market reform or directly by creating economic constraints on reform.46 Data on these variables are drawn from the World Bank, the EBRD and the World Income Inequality database.47

39 ‘Don’t know’ and non-responses were excluded from this calculation. We tested whether the percentage of ‘Don’t know’ and non-responses affected our results and found that it had no effect. 40 The survey included an alternative question that might have been a better match. This question read: ‘The way things are going, do you feel that [our country’s] economic reforms are going [too fast/about the right speed/too slow/there are no economic reforms]?’ Unfortunately, this question was only asked from 1991 to 1995 and only in a small number of countries. The correlation between the change in the support for the market question and the change in the assessment of reforms question is 0.45, suggesting that they may be measuring similar feelings. 41 This is an unweighted average of country-years. 42 Similarly, far more respondents answered that reforms were going too slowly than answered that they were going too fast. 43 For a recent summary, see Byung-Yeon Kim and Jukka Pirttila, ‘Political Constraints and Economic Reform: Empirical Evidence from the Post-communist Transition in the 1990s’, Journal of Comparative Economics, 34 (2006), 446–66. 44 Joel Hellman, ‘Winners Take All: The Politics of Partial Reform in Post-communist Transitions’, World Politics, 50 (1996), 203–34. 45 Leaving out the lagged dependent variable does not alter the main results. 46 Elisabetta Falcetti, Martin Raiser and Peter Sanfey, ‘Defying the Odds: Initial Conditions, Reforms, and Growth in the First Decade of Transition’, Journal of Comparative Economics, 30 (2002), 229–51; Jan Fidrmuc, ‘Political Support for Reforms: Economics of Voting in Transition Countries’, European Economic Review, 44 (2000), 1491–513; Berta Heybey and Peter Murrell, ‘The Relationship Between Economic Growth and the Speed of Liberalization During Transition’, Journal of Policy Reform, 3 (1999), 121–37; Kim and Pirttila, ‘Political Constraints and Economic Reform’; Bruno Merlevede, ‘Reform Reversals and Output Growth in Transition Economies’, Economics of Transition, 11 (2003), 597–651. 47 EBRD, Transition Report; UNU-WIDER, World Income Inequality Database V 2.0b, (2007), accessed at www.wider.edu/research/Database/en_GB/database.

828

ROBERTS AND KIM

Lithuania 10 0 -10 -20 -30

0.1

60

0

50

0

0.25 0.2 0.15 0.1 0.05 0

40

-20

0.4 0.3 0.2 0.1 0

60 40 20 0 -20

0.2 0.15 0.1 0.05 0 -0.05

-15 -20 -25 -30 -35

0

-0.2

Latvia 0.2 0.15 0.1 0.05 0 -0.05

20 0

Romania

40

Slovak Republic

0.2 0.15 0.1 0.05 0

Ukraine

Slovenia 0.6 0.4 0.2

90

90 19 92 19 94 19 96

0

40 30 20 10 0 92

30 20 10 0 -10

0.2

20

Poland

19

96

94

19

19

90

0.4 0.3 0.2 0.1 0 92

70

-0.1

Russian Federation

19

0.2

0.4

40

Hungary

Macedonia 0.3 0.2 0.1 0 -0.1

60

0.2 0.1 0 -0.1 90 19 92 19 94 19 96

20

0.15 0.1 0.05 0 -0.05

19

0

20 0 -20 -40 -60

80 60 40 20 0

96

30

0.2

80 60 40 20 0

0.3 0.2 0.1 0 -0.1

Estonia 0.4

Bulgaria

-30

94

40

-10 -20

19

0.6

Czech Republic 60 40 20 0 -20

19

Public support (left)/Reform progress (right)

40

Belarus 0

0.25 0.2 0.15 0.1 0.05 0

19

50

-10 -20 -30 -40 -50

19

60

Armenia 0.4 0.3 0.2 0.1 0 -0.1

19

Albania 70

Year Public support

Reform progress

Fig. 1. Public support and reform progress (World Bank measures)

REFORM AND PUBLIC OPINION

We begin our analysis with simple correlations between the main variables that interest us. Looking at all sixteen countries, we find a reasonably strong and significant correlation between public support and changes in the reform scores.48 For the World Bank data, they are correlated with each other at r 5 0.22 (p , 0.05) and for the EBRD data at r 5 0.14 (p 5 0.16), suggesting that public opinion and reform may move together. Figure 1 shows a simple graph of public support and changes in reform scores for all sixteen countries and the World Bank measure of reform.49 In most cases, an eyeball test shows a fair correspondence between support for reform and actual reforms. The typical case shows high reform support and high progress at the beginning of the transition, with both declining over time. The weakest fits appear to be in less democratic countries like Albania, Armenia, Belarus, Macedonia, Romania and Ukraine. These simple relationships, however, may not reflect a true association after we have controlled for an array of factors that determine support for reforms and reform progress. They may also mask reverse causation – reform may affect public opinion as well as vice versa. In beginning to assess the nature of the association, we estimated fixed effects regressions of our two measures of reform progress on lagged measures of reform progress 48

We define reform progress as the annual change in the levels of the WB and EBRD reform scores. We plot changes in reform rather than cumulative reform because reform tends to increase monotonically. 49

Policy Responsiveness in Post-communist Europe

829

and contemporaneous and lagged public support.50 Public opinion may affect reform instantaneously or only with a lag.51 As controls, we included lagged unemployment, growth and inflation.52 The country fixed effects control for time-invariant heterogeneity across countries. Countries may differ in ways that we cannot observe but which may affect reform rates. Table 1 presents the results. Models 1 and 2 show that public support is a significant predictor of reform for both measures of reform. Greater support for the free market is associated with higher rates of reform.53 Curiously, the effect is through contemporaneous public opinion for the World Bank measure of reform and through lagged opinion for the EBRD measure. We suspect this may be due to timing issues in the measures.54 Among the control variables, only unemployment has a significant effect on reform rates. High unemployment discourages reform. As we mentioned above, endogeneity poses a problem for these results. Contemporaneous public opinion may be jointly determined by reform. Models 3 and 4, therefore, use only lagged measures of public opinion. The results are similar. Public opinion again exerts a positive and significant influence on reform. Simple lags, however, may not be a strong enough control for endogeneity. We thus turn to two-stage least squares (2SLS) estimates. We first estimate the determinants of support for the free market and then use these models to produce an indicator of public support that is exogenous to reform. Following the literature, we modelled support for the market as a function of the economic variables we used above plus the level of income inequality (measured by the Gini coefficient).55 We use inequality as an instrument because it should be exogenous to reform – governments do not introduce reform due to changing levels of inequality – but related to public support for reform.56 As expected, higher inflation, unemployment and greater inequality all reduce support for a free market economy. These variables do a fairly good job of explaining differences in support for reform, with R2s reaching 0.45. This in itself is noteworthy: public opinion in the region is not incoherent, as has been claimed, but can be explained with a small number of economic variables. Using these regressions, we then produce exogenous estimates of public support for the market. We use these estimates in the second phase of estimation.

50

We also conducted estimations where we left out the lagged dependent variable or substituted the cumulative reform score to deal with ceiling effects, but found that the results were substantially the same. 51 Observers frequently commented on the speed with which reforms had to be carried out. 52 We also experimented with controls for negotiations with the European Union (EU) and external debt to capture international effects on reform. The EU variable was never significant and the external debt variable had only sporadically significant effects with higher debt levels leading to more reform. Neither variable altered the importance of public support. 53 We conducted a number of diagnostic tests on these estimations. In particular, we tested for autocorrelation, heteroscedasticity, functional form and normality. All the test results suggested no problems except normality. We used a bootstrapping method to check whether our inferences were affected by the non-normality of the residuals, but found no evidence of it. 54 Kim and Pirttila find similar results. See Kim and Pirttila, ‘Political Constraints and Economic Reform’. 55 Przeworski, Democracy and the Market; Stokes, Public Support for Market Reforms in New Democracies. 56 Indeed, governments are often criticized because of their indifference to levels of inequality. By contrast, post-communist citizens appear to be particularly sensitive to inequality. See Michael Bernhard and Ekrem Karkoc, ‘Moving West or Going South: Economic Transformation and Institutionalization in Post-communist Party Systems’, Comparative Politics, forthcoming.

830 TABLE

ROBERTS AND KIM

1

Effect of Public Support on Reform Progress

Model Estimation method Dependent variable

1

2

Fixed effects WB EBRD

Reform progress (lagged) Public support (contemporaneous) Public support (predicted) Public support (lagged) Inflation (lagged)

20.135 (1.21) 0.204** (2.43)

Unemployment (lagged) Growth (lagged) Sample size Adjusted R2

20.026*** (4.29) 0.002 (0.80) 77 0.56

0.134* (1.89) 0.012 (1.11)

20.229* (1.73) 0.265 (1.46)

0.511*** (3.23) 0.055* (1.77) 20.028** (2.31) 20.001 (0.16) 77 0.49

3

4

Fixed effects WB EBRD 20.077 (0.69)

20.212 (1.57)

5

6

Fixed effects-IV WB EBRD 20.171 (1.32)

0.188** (2.08) 0.010 (0.93)

0.596*** (3.58) 0.053 (1.64)

0.465* (1.92) 0.046 (0.54) 0.012 (1.00)

20.029*** (4.49) 0.002 (1.18) 77 0.52

20.033*** (2.68) 20.000 (0.03) 77 0.47

20.022*** (3.43) 0.001 (0.46) 77 0.53

20.216 (1.60)

0.116 (0.27) 0.556*** (2.75) 0.053 (1.49) 20.031** (2.36) 20.000 (0.07) 77 0.43

Notes: Absolute t-values in parentheses. ***significant at p , 0.01, **significant at p , 0.05, *significant at p , 0.10. Fixed effect robust estimation was obtained by applying a robust option to demeaned variables in each country for all models. In this way, estimation results were corrected for heteroscedasticity. In Models 5 and 6, standard errors bootstrapped with a repetition of 1,000 times to correct for instrumental variable bias. Constants are not reported.

Models 5 and 6 in Table 1 present the results of the second stage. To control for biases in standard errors with the instrumental variable approach, we relied on bootstrapping.57 Again, we see that public support is a significant predictor of reform rates for both measures of reform.58 As before, we see that contemporaneous public support leads to faster reform in the models that used World Bank measures while public support in the previous period is positively correlated with reform progress in the models using EBRD measures. Unemployment again slows reform. The size of these effects is also large. A one standard deviation increase in public support raises reform rates by approximately 0.04 points on a 0 to 1 scale, which is equal to the median reform rate in the sample. Only unemployment has a larger effect on reform rates with a one standard deviation increase in unemployment reducing reform by 0.08 points. At least in the area of economic reform, politicians listen closely to the public. 57

Bootstrapping the standard errors is specifically aimed at correcting for the generated variable bias, that is, the bias arising from using the predicted values as regressors. Bootstrapped standard errors were calculated from the distribution of each of the 1,000 estimated parameters obtained in these replications. 58 We also estimated GMM models developed by Arellano and Bover and Blundell and Bond to correct for biases in dynamic fixed effects. The results are substantially similar to those presented above and are available from the authors upon request. Manuel Arellano and Olympia Bover, ‘Another Look at the Instrumental Variable Estimation of Error-Components Models’, Journal of Econometrics, 68 (1995), 29–51; Richard Blundell and Stephen Bond, ‘Initial Conditions and Moment Conditions in Dynamic Panel Data Models’, Journal of Econometrics, 87 (1998), 115–43.

Policy Responsiveness in Post-communist Europe

831

DEMOCRACY AND RESPONSIVENESS

A surprise in these results was that responsiveness applied across the entire region. While there are strong theoretical reasons for expecting democracies to be responsive, there are fewer for expecting non-democratic governments to follow public opinion. To consider the effect of democratic institutions on responsiveness, we first divided the sample into two groups: democracies and non-democracies, as determined by the Freedom House scores for the country.59 We labelled a country-year as democratic if a country’s Freedom House score was 2.5 or less in that year; that is, it was rated as free. Though we consider continuous distinctions below, this division of post-communist Europe into two groups has been widely noted in the literature.60 Scholars frequently point to the large differences between the consolidated democracies – those who quickly achieved standards of human rights and democratic norms comparable to the West – and those who continue to have less than free elections and insecure protection of human rights. The correlations between public support and reform progress are very different between the two groups. While the correlation coefficients for democracies are higher than previously (r 5 0.40, p , 0.05 for World Bank data and r 5 0.28, p , 0.05 for EBRD data), for non-democracies they are considerably lower and far from significant (r 5 0.09 for World Bank data and r 5 0.06 for EBRD data). Similarly, in the eight countries which entered the European Union (EU) in 2004 and are widely regarded as the most successful reformers, support for a free market economy averaged 126.0 (s.e. 2.9). By contrast, in the remaining eight countries, all of which were slower and less thorough reformers, support for a free market averaged only 22.6 (s.e. 5.5). It appears that the more successful reformers enjoyed greater support for reform. A better test of the responsiveness hypothesis repeats our regression analyses separately for these two groups. Table 2 shows that public support continues to be a strong and significant (though at a slightly lower level of confidence) predictor of reform in democracies, but a weak and insignificant predictor in non-democracies. This result applies whether we use fixed effects with simple lags (presented below) or more complicated 2SLS and Generalized Method of Moments (GMM) models.61 The results were even stronger if we estimated using all years of the ten new members of the European Union rather than only the fully democratic years. This addition, however, reduced the sample size of the nondemocracies. Models 11 and 12 in Table 2 replace this dichotomous distinction with the continuous seven-point Freedom House scores and these scores are interacted with our measure of public support.62 The positive and significant results on the interaction term again indicate that responsiveness increases with democracy. The strong effect of public opinion on reform found in the full sample then appears to be concentrated mainly in the most democratic countries. In less democratic countries, by contrast, the effect of public support on policy is weak. This confirms the idea that it is democracy rather than some other factor that causes responsiveness and comports with democratic theory, which argues that regular elections provide strong incentives to politicians to follow public opinion. 59

Freedom House, Freedom in the World 2005 (Lanham, Md.: Rowan and Littlefield, 2005). Charles King, ‘Post-Postcommunism: Transition, Comparison, and the End of Eastern Europe’, World Politics, 53 (2000), 143–72; Milada Anna Vachudova and Tim Snyder, ‘Are Transitions Transitory? Two Types of Political Change in Eastern Europe since 1989’, East European Politics and Societies, 11 (1997), 1–35. 61 We present the simple lags here because of the limited number of cases. 62 We reversed the Freedom House scores so that higher numbers reflect higher degrees of democracy. 60

832

TABLE

2

Effect of Public Support in Democracies and Non-Democracies

Dependent variable Type of government Reform progress (lagged) Public support (lagged) Public support (contemporaneous) Political freedom Public support* political freedom Inflation (lagged) Unemployment (lagged) Growth (lagged) Sample size Adjusted R2

7 Democracy 20.090 (0.66) 0.297* (1.78)

0.024 (1.21) 20.029*** (3.80) 0.005 (1.31) 55 0.55

8 WB Non-democracy 20.180 (0.81) 0.077 (1.02)

0.006 (0.44) 20.028*** (3.18) 0.002 (0.85) 22 0.46

9 Democracy 20.361** (2.38) 0.637*** (2.96)

0.127** (2.640) 20.023 (1.65) 20.004 (0.54) 55 0.61

10 EBRD Non-democracy 20.145 (0.69) 0.116 (0.68)

20.020 (0.67) 20.059*** (3.51) 0.010** (2.09) 22 0.49

11

12

WB

EBRD

20.049 (0.48)

20.208 (1.44)

0.108 (0.73) 20.042 (1.14) 0.014** (2.15) 0.010 (0.87) 20.027*** (4.22) 0.002 (1.00) 77 0.54

20.142 (0.47) 20.142* (1.82) 0.025** (1.96) 0.055** (2.01) 20.032** (2.28) 20.001 (0.19) 77 0.43

Notes: Absolute t-values in parentheses. ***significant at p , 0.01, **significant at p , 0.05, *significant at p , 0.10. Results corrected for heteroscedasticity. Fixed effect robust estimation was obtained by applying a robust option to demeaned variables in each country for all models. In this way, estimation results were corrected for heteroscedasticity. Constants not reported. In Models 11 and 12, we orthogonalized public support and political freedom in order to purge the part highly correlated with the interaction term between public support and political freedom.

ROBERTS AND KIM

Model

Policy Responsiveness in Post-communist Europe

833

The effect is again substantively large. A 10 per cent rise in predicted reform support in democratic countries increases reform progress by 0.05, which is greater than the median of reform progress per year across countries and larger than the effect for the entire sample. This implies that a country can achieve an increase equal to the median of reform progress with only a 10 per cent increase in reform support without a change in any other factor. As an illustration, Latvia, whose annual average reform speed was 80 per cent of the Czech Republic’s over this period, could have achieved the same speed as the Czech Republic with an increase in public support from 3 per cent to 16 per cent.

RESPONSIVENESS TO WHOM?

Given that most of the effect of public opinion is concentrated in democratic countries, we confine the following analyses to the ten countries that were most consistently democratic and have since entered the European Union.63 Our results above suggest that politicians are responsive to something like median public opinion in a country. We measured public opinion as the average support for a free market. Yet there has been much speculation that politicians in these countries are less responsive to the median voter than to upperclass groups who have captured the state and use it for their own purposes.64 These groups may exercise influence through outright corruption or through more subtle lobbying and campaign contributions. No matter the cause, such a phenomenon challenges the basic idea of responsiveness to all citizens ‘considered as political equals’. To determine whether there is an upper-class bias in post-communist Europe, we recalculated our public opinion variable for several demographic groups. In particular, we looked at education and income. We thus calculated the net support for a free market economy for citizens with less than a secondary education and for those with a university education as well as for the top and bottom income quartiles.65 These are reasonable proxies for the major class divides in these societies. Figure 2 shows the trends in public support for high and low educational attainment in all ten countries. A simple visual inspection suggests that in most cases public support covaries across different demographic groups.66 Simple correlations confirm this. The opinions of university and primary educated respondents are correlated at 0.72 (p , 0.01) as are the opinions of the top and bottom income quartiles. Correlations of these groups with the average are even higher – ranging from 0.84 to 0.92. The fact that there is a common trend for all demographic groups suggests that if policy is responsive to average opinion, then it is responsive to all groups. 63

These countries are Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. 64 For evidence on unequal responsiveness in the United States, see Bartels, Unequal Democracy; and Gilens, ‘Inequality and Democratic Responsiveness’. 65 There were several difficulties with calculating the income quartiles. First of all, the question on income was not asked in all the surveys. Secondly, it was impossible to calculate exact quartiles because respondents had to choose from set categories. We aggregated the categories that best approximated quartiles, which meant that quartiles sometimes come closer to quintiles and sometimes to thirds. Thirdly, we expect that there is greater measurement error in the income variable because incomes were quite uncertain early in the transition as several countries suffered from hyperinflation. For this reason, we put greater faith in the education variable. 66 Soroka and Wlezien find equivalent results in the United States. See Soroka and Wlezien, ‘On the Limits to Inequality in Representation’.

834

ROBERTS AND KIM Bulgaria

Czech Republic

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

100 50

Public support for market economy

0 -50

100 50 0 -50 1990 1992 1994

Slovak Republic

1996 1998 1990 1992

1994 1996 1998

Slovenia

100 50 0 -50 1990

1992

1994

1996 1998 1990

1992

1994

1996

1998

Year University education

Primary education

Fig. 2. Public support by educational groups

To push this conclusion farther, we repeated our regression analysis above substituting our newly created opinion variables for average opinion. The results (not shown) confirmed the correlation analysis. For both the income and education measures, the coefficients and standard errors for the two groups were of nearly the same size and their long-run effects were similar. In fact, the coefficients on the variables for the primary school graduates were slightly larger than for university graduates though the long-run effects were again similar. For all four groups, public support had a positive and significant effect on reform. In short, we found little evidence that policy follows upper-class opinion more than lower-class opinion. It is possible that we have focused on too large an upper-class slice.67 It may be a much smaller group that is controlling policy. Yet the fact that the opinions of voters with only a primary education and in the lower quartile of the income distribution have significant effects on reform progress casts doubt on this view. It is, however, worth noting that upper-class groups were almost uniformly more in favour of the free market than lower-class groups. The average difference between the groups is 35–40 percentage points on a scale of 2100 to 1100. This is a fairly large 67

Adams and Ezrow find similar effects for most subgroups of the population, but they did find that opinion leaders (politically engaged citizens) were more influential. We were unable to test this possibility here; see James Adams and Lawrence Ezrow, ‘Who Do European Parties Represent? How Western European Parties Represent the Policy Preferences of Opinion Leaders’, Journal of Politics, 71 (2009), 206–23. See also Soroka and Wlezien, ‘On the Limits to Inequality in Representation’.

Policy Responsiveness in Post-communist Europe

835

difference. It may be possible that the generally high rate of reform in East Central Europe is a consequence of responsiveness to those in the upper classes who are more favourable to reform, but the changes in reform progress are a consequence of responsiveness to all groups.68 We cannot assess this possibility because we do not know the true desired rate of reform across different groups, but it should not be neglected. A more complete test of this hypothesis might consider opinions on specific policy options across social classes in the manner of Gilens or Bartels.69 PARTY TYPES, ELECTORAL CALENDARS AND INSTITUTIONS

We now begin to probe whether the mechanisms laid out in Hypotheses 4–6 affect responsiveness, again focusing on the ten democracies.70 We first look at Hypothesis 4, which suggests that changes in the rate of reform are related more to changes in the parties represented in parliament than to changes in public opinion. Our main measure of parliamentary composition relies on the ratings of party families compiled by Bugajski.71 We use party family because it is exogenous to reform rates.72 Most alternative measures of ideology are based at least partially on observed behaviour in office and, therefore, are likely to be endogenous to reform.73 Party family, by contrast, is an affiliation chosen at a party’s birth and thus should be exogenous to its subsequent actions. We defined our reform party variable as the percentage of seats held by liberal and Christian democratic parties (who should support reform) minus the percentage of seats held by socialist and communist parties (who should oppose it).74 Table 3 presents the results of these regressions using the two-stage least squares (2SLS) technique and World Bank reform scores. Model 13 shows that the reform party variable was far from significant. Its size was also close to zero, indicating a weak substantive effect as well. In Model 14, we examined an interaction between reform party and public support with similar insignificant results. Public support meanwhile remained a significant predictor of reform in these estimations. The effect of public support on reform appears 68

The generally high rate could also be attributed to international pressure. Bartels, Unequal Democracy; Gilens, ‘Inequality and Democratic Responsiveness’. 70 For a number of reasons, these hypotheses would be more difficult to test on the non-democracies. In the case of parliamentary composition, not only were these countries mostly presidential, but their party systems were often incoherent and their parliaments included large numbers of independents. Pre-election periods were also difficult to determine because of the presence of non-simultaneous presidential and parliamentary elections. Finally, due to presidentialism and unconsolidated party systems, it was difficult to determine which governments were coalitions or had majority support. 71 Janusz Bugajski, Political Parties of Eastern Europe: A Guide to Politics in the Post-Communist Era (Armonk, N.Y.: M. E. Sharpe, 2002). 72 Peter Mair and Cas Mudde, ‘The Party Family and Its Study’, Annual Review of Political Science, 1 (1998), 211–29. 73 Kenneth Benoit and Michael Laver, Party Politics in Modern Democracies (London: Routledge, 2006). 74 We used a number of alternative measures to probe the robustness of this result. For example, we excluded Christian Democratic parties because their policy stance is ambiguous, we used expert assessments of left–right ideology from Benoit and Laver and from Kitschelt et al., and we calculated ratios instead of differences. In all cases, the results were substantively similar. One may object that some social democratic parties – for example, the Hungarian MSZP or the Polish SLD – were actually reformist parties. But in fact this judgement is based on their performance in office and is thus endogenous to the dependent variable. Prior to winning elections, both ran fairly traditional left-wing campaigns. See Benoit and Laver, Party Politics in Modern Democracies; Kitschelt et al., Post-communist Party Systems. 69

3

836

TABLE

Party Families, Electoral Calendar and Government Types

Model

14

15

16

17

18

19

20

Party Families 20.264* (1.67)

Party Families 20.268* (1.62)

Election Years 20.583 (1.62)

Other years

Coalition

Coalition

Majority

Majority

20.262* (1.69)

20.266* (1.66)

Public support (predicted)

0.623** (1.93)

0.566* (1.77)

0.564 (1.02)

0.376** (2.05)

Public support (lagged)

0.039 (0.34)

0.049 (0.39)

0.135 (0.75)

Inflation (lagged)

0.039** (2.01)

0.040** (1.98)

0.025 (0.81)

20.019** (2.29)

20.019** (2.15)

20.030** (2.49)

20.007 (1.08)

0.002 (0.56)

0.002 (0.55)

0.001 (0.28)

0.001 (0.23)

20.000 (0.41)

20.000 (0.30) 0.002 (0.26)

Hypothesis Reform progress (lagged)

Unemployment (lagged) Growth (lagged) Pro-reform parties Pro-reform parties * public support

20.075 (0.53)

20.011 (0.09) 0.042** (2.01)

Coalition

20.270* (1.70)

0.584** (1.99)

0.991*** (2.78)

0.613** (2.13)

0.053 (0.45)

0.018 (0.16)

0.039 (0.37)

0.039** (2.09)

0.036* (1.90)

0.039** (2.08)

0.035* (1.77)

20.020*** (2.62)

20.022*** (2.68)

20.019*** (2.60)

20.021*** (2.69)

0.002 (0.74)

0.002 (0.57)

20.027 (0.66)

20.039 (0.96) 20.448 (1.13)

Coalition * public support Majority

62 0.56

62 0.55

32 0.64

32 0.55

62 0.56

62 0.56

0.874** (1.98) 20.009 (0.09)

0.002 (0.47)

0.002 (0.58)

0.020 (0.70)

0.026 (0.82) 0.513 (1.23) 62 0.57

Majority * public support Sample size R2

20.213 (1.53)

62 0.56

Notes: Dependent variable is World Bank measures of reform. Absolute t-values in parentheses. ***significant at p , 0.01, **significant at p , 0.05, *significant at p , 0.10. Fixed effect robust estimation was obtained by applying a robust option to demeaned variables in each country for all models. In this way, estimation results were corrected for heteroscedasticity. Standard errors bootstrapped with a repetition of 1,000 times to correct for instrumental variable bias for all models. Constants not reported. In Model 20, we orthogonalized the interaction term between majority and public support in order to purge the part highly correlated with each other (correlation coefficient 0.834).

ROBERTS AND KIM

13

Policy Responsiveness in Post-communist Europe

837

to be direct rather than indirect. Governments respond to the public regardless of their ideological proclivities.75 In Models 15 and 16, we tested Hypothesis 5 about the effect of election proximity. We first divided the sample into two parts: pre-election years (election years and the year before elections) and other years. While we expected higher responsiveness in the preelection period, in fact we see in Model 15 that public support is only a weak predictor of reform in that period. By contrast, Model 16 shows that earlier in the term, public support has a significant impact on reform.76 To explain this apparent anomaly, we would point to the fact that reform has a negative effect on output in the present.77 As a result, politicians may be hesitant to introduce reforms in a pre-election period because the positive effects of responsiveness are outweighed by the negative effects of lower growth and higher unemployment. Reform does, however, have positive consequences in the longer run. Politicians may thus be more willing to introduce reform soon after elections in the hopes that growth will resume before the next elections. We considered one other timing issue in reform – whether responsiveness changed over time. Was it simply a product of the period of ‘extraordinary politics’ early in the transition or did it continue into the later period of more ‘normal’ politics.78 We thus isolated the 1993–97 period and found that public support was a significant determinant of reform even in this period (results not shown). We now turn to Hypothesis 6, which suggests that institutional factors may affect reform. To capture the consensus/majoritarian distinction, we focused on whether governments held a majority and whether they featured multiple parties. These were the main institutional differences among these countries. Though other institutions like separation of powers, bicameralism and federalism could potentially affect the opinion–policy link, they were all either weak or non-existent in the region’s democracies.79 In Models 17 and 19, we include dummy variables for whether a coalition or majority government held power for the greater part of a given year.80 Though the signs of the coefficients on these variables favour the majoritarian side – coalition governments enact fewer reforms and majority governments more – their effects are far from significant. In Models 18 and 20, the same applies to an interaction between government type and public support, which is similarly insignificant. Government type does not have a strong effect on reform rates. We should note that public support remains significant in all of these regressions. These results are somewhat surprising, since we expected that majority and single-party governments would be better able to promote reform when public opinion is supportive.

75

This may explain why worries about the election of ex-communists mostly turned out to be groundless. 76 However, there is some ambiguity in the fact that the substantive size of the coefficients is considerably larger in the pre-electoral period. We attribute the generally weak results here to the small sample sizes. 77 Falcetti et al., ‘Defying the Odds’; Kim and Pirttila, ‘Political Constraints and Economic Reform’. 78 Leszek Balcerowicz, Socialism, Capitalism, Transformation (Budapest: Central European University Press, 1995). 79 Andrew Roberts, ‘What Kind of Democracy Is Emerging in Eastern Europe’, Post-Soviet Affairs, 22 (2006), 37–64. 80 Ferdinand Mu¨ller-Rommel, Katja Fettelschoss and Philipp Harfst, ‘Party Government in Central and Eastern European Democracies: A Data Collection (1990–2003)’, European Journal of Political Research, 43 (2004), 869–93.

838

ROBERTS AND KIM

We suspect that parties in opposition may support reform because the government will lose popularity for poor economic performance in the short run, while the opposition can reap the benefits of these reforms in the longer run. Alternatively, opposition parties may listen to the same public opinion signals as the government; opposing reform may carry political costs when reform is popular. CONCLUSION

The main results show a considerable degree of policy responsiveness in the democratic countries of post-communist Europe. Even though we looked at the period directly after the transition when democratic institutions were brand new and at a policy area believed to show limited responsiveness, we found that public officials calibrated the rate of economic reform to public opinion quite well. This responsiveness, moreover, appears to be a direct result of public opinion rather than being mediated by the composition of parliament or the proximity of elections. These results are rather unexpected considering general doubts about the quality of these new democracies. They suggest that some of this pessimism is misplaced and that the incentives of democratic elections can work very quickly. Soon after the transition, we find democratic governments listening closely to the views of their citizens. In short, the quality of these democracies may be considerably higher than is generally believed. These results also have important implications for the political economy of reform. In particular, they lead to two policy recommendations. First, since reform proceeds most quickly when the public is behind it, politicians should view manifestations of public support as their window of opportunity to introduce reforms. If, for exogenous reasons, support for reform rises, politicians would be well advised to strike while the iron is hot. The second, and perhaps more important, implication is that political leaders should do their best to persuade the public of the beneficial consequences of reform. Though we do not have systematic evidence on this point, it is likely that such persuasion did play a role in some of the cases here. Charismatic leaders like Va´clav Klaus may have been able to convince the public that reforms were for the best. More research is needed on this point. We would note that these implications are quite different from standard accounts of the political economy of reform. Those accounts argue that politicians should be insulated from the public, perhaps by curtailing democracy, in order to get reforms passed.81 While our findings support this implication if publics are permanently opposed to reform, they do not if the public may come to support reform, as happened in post-communist Europe. Other theories argue that an ideologically committed government is necessary for reform. We found, however, that it is the public more than the configuration of parties which affects reform. Our results, however, do support studies that see democracy as beneficial for reform.82 Some caution needs to be exercised in extrapolating these results to other new democracies. In some respects, post-communist societies were well positioned to produce responsive politics. Particularly in the more democratic countries in the region, citizens 81 Robert H. Bates and Anne O. Krueger, eds, Political and Economic Interactions in Economic Policy Reform: Evidence from Eight Countries (Oxford: Blackwell, 1993); Haggard and Kaufman, The Political Economy of Democratic Transitions; Williamson, The Political Economy of Policy Reform. 82 Valerie Bunce, ‘Democratization and Economic Reform’, Annual Review of Political Science, 4 (2001), 43–65; M. Steven Fish, ‘The Determinants of Economic Reform in the Post-Communist World’, East European Politics and Societies, 12 (1998), 31–78; Hellman, ‘Winners Take All’.

Policy Responsiveness in Post-communist Europe

839

were quite enthusiastic about rejoining the European Union, which entailed undertaking economic reforms. These countries also all had highly educated citizenries with a reasonably high standard of living. As such, they were capable of holding politicians to account for their actions. However, it is noteworthy that the legacies of a particularly repressive regime, often supposed to be all-powerful, did not eliminate responsiveness. It is also important to consider how much these results can be generalized, even within the post-communist democracies. Does a similar level of responsiveness obtain in other policy areas? Though our evidence is confined to economic reform, our results do shed light on some issues. First, Druckman and Jacobs have asked whether politicians are ‘lumpers’ or ‘splitters’ – whether they respond to a general public mood or to opinions on particular issues.83 In line with their conclusions, our results suggest the latter; it was opinion specifically about the economy that affected economic policy. Secondly, the evidence we presented comes from a difficult issue for the responsiveness thesis. Economic reform is generally considered an area where politicians must ignore the public. That we found responsiveness even here suggests that it may be more widespread in these polities. Yet economic reform was a highly salient issue and responsiveness may be stronger when issues are salient. It is thus important to consider responsiveness in somewhat less salient policy areas. In short, there are a number of avenues along which scholars may extend the study of responsiveness. As perhaps the key standard of democratic functioning, more knowledge of this area is essential to our assessment of the quality of democracy in post-communist Europe and elsewhere. We have produced some of the first evidence that elected politicians in the post-communist region do respond to public opinion. We believe that this is a significant step forward in the study of democratic quality in the region, but it is only the first step. 83 James N. Druckman and Lawrence R. Jacobs, ‘Lumpers and Splitters: The Public Opinion Information that Politicians Collect and Use’, Public Opinion Quarterly, 70 (2006), 453–76.