Deficit and debt in transition: the political economy of public finances in Central and Eastern Europe

2015 ◽  
Vol 52 (10) ◽  
pp. 52-5433-52-5433
Keyword(s):  
Political Economy ◽  
Eastern Europe ◽  
Central And Eastern Europe ◽  
The Political ◽  
Public Finances

scholarly journals Political Economy of Fiscal Reform in Central and Eastern Europe

Competitio ◽  
2009 ◽  
Vol 8 (1) ◽  
pp. 66-75
Author(s):  
George Kopits
Keyword(s):  
Political Economy ◽  
Soviet Union ◽  
Eastern Europe ◽  
Central And Eastern Europe ◽  
Transition Period ◽  
Reform Process ◽  
The European Union ◽  
Fiscal Reform ◽  
Public Finances ◽  
National Budget

The reform of public finances has been at the centre of the post-socialist transition of Central and Eastern Europe since the early 1990s. At various stages of the transition, the reform process encompassed the entire gamut of public finances: the national budget, sub-national finances, extrabudgetary operations, and state-owned financial and non-financial enterprises. For the most part, fiscal reform was a non-linear stop-and-go process – often characterised by backtracking as well – and was uneven across countries. Moreover, unlike most reform experience in the rest of the world, fiscal reform in this region took place against the backdrop of a radical break, as sovereign countries emerged from a colonial past following the collapse of the Soviet Union. An important milestone was reached in 2004–2007, when all ten countries covered in this article became members of the European Union. The purpose of this article is to discuss fiscal reform in Central and Eastern Europe from the perspective of political economy. Following an overview of basic reform trends, the article focuses on the principal drivers and impediments to reform in the region. To conclude, the ingredients of successful reform are examined. The article does not provide an exhaustive inventory of reform measures, nor does it offer a survey of broad political economy issues prior to or during the transition period. Country references are intended to serve as stylised illustrations of main points, rather than as a comprehensive documentation of reform episodes. Journal of Economic Literature (JEL) classifications: H1, H3, P2, P52.

Does politics matter? Partisan FDI in Central and Eastern Europe

2016 ◽  
Vol 24 (4) ◽  
pp. 375-398 ◽  
Author(s):  
Viatcheslav Avioutskii ◽  
Mouloud Tensaout
Keyword(s):  
Political Economy ◽  
Eastern Europe ◽  
Central And Eastern Europe ◽  
National Level ◽  
The Political ◽  
Theoretical Argument ◽  
Fdi Inflows ◽  
Content Type ◽  
The Impact ◽  
Determinants Of Fdi

Purpose While many studies have investigated the impact of institutional factors (i.e. financial risk factors) in the host country on inward foreign direct investment (FDI), fewer studies have researched on the locational aspects of FDI in relation to the political economy. This paper aims to fill this gap by examining the effects of the political economy on inward FDI in Poland’s regions and in other CEE (Central and Eastern Europe) countries. Design/methodology/approach The paper develops a theoretical argument postulating that political economy affects locational determinants of FDI inflow. To test this hypothesis empirically, several analyses were performed at the national level (Poland, Bulgaria, Romania, Slovakia and the Czech Republic) and at the subnational level (Poland’s provinces). First, the “footloose” nature of FDI inflows using the time series analysis was examined. Then a fixed-effect panel data regression model and a dynamic adjustment model to quantify the impact of political ideology and agglomeration effects were performed. Findings After controlling for economic and institutional determinants of FDI, the findings indicate that, in transitional economies, ideology affects the locational choice of multinational corporations (MNCs). At the national level, the results show that political risk, liberalization and economic reforms are important drivers of FDI inflows. At the subnational level, the vote for a liberal party positively affects the distribution of FDI in the provinces. Another finding is that electoral cycles also affect FDI inflows at regional levels in Poland. Finally, this study provides some supporting evidence for the “footloose” nature of FDI in case of external shocks. Originality/value This study contributes to the literature on the locational determinants of FDI by showing that ideology constitutes an important factor for locational choices by MNCs. The findings have important implications for public policy decision-makers who are seeking to improve the attractiveness of their country or region as an FDI destination.

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