Networks and Institutions in Europe's Emerging Markets

Do ties between political parties and businesses harm or benefit the development of market institutions? The post-communist transition offers an unparalleled opportunity to explore when and how networks linking the polity and the economy support the development of functional institutions. A quantitative and qualitative analysis covering eleven post-socialist countries combined with detailed case studies of Bulgaria, Poland and Romania documents how the most successful post-communist countries are those in which dense networks link politicians and businesspeople, as long as politicians are constrained by intense political competition. The comparison of original network data sets shows how this combination allowed Poland to emerge with stable institutions. Bulgaria, marred by weak institutions, corruption and violence, cautions us that in developing economies intense political competition alone is harmful in the absence of dense personal and ownership networks. Indeed, as Romania illustrates, networks are so critical that their weakness is not mitigated even by low political competition. Proposes a new understanding of post-communist economic and political development, arguing that the success stories are those countries where networks between parties and business have been allowed to thrive but their use limited by democratic political competition Demonstrates how the structure of property ownership in a country (largely overlooked as a factor that impacts politics) affects political organisation of business Draws on over 150 interviews conducted with top public officials and key actors in the economic transformation during extensive international fieldwork, supporting and enriching the interpretation of data in the book