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Should market liberalisation precede democracy? Causal relations between political preferences and development

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Author Info

  • Pauline Grosjean

    (European Bank for Reconstruction and Development)

  • Claudia Senik

    (Paris School of Economics)

Abstract

This paper is dedicated to the relationship between market development and democracy. We distinguish between contexts and preferences and ask whether it is true that the demand for democracy only emerges after a certain degree of market development is reached, and whether, conversely, democratisation is likely to be an obstacle to the acceptance of market liberalisation. Our study hinges on a new survey rich in attitudinal variables: the Life in Transition Survey (LITS) conducted in 2006 by the European Bank for Reconstruction and Development (EBRD) and the World Bank, in 28 transition countries. Our identification strategy consists of relying on the specific situation of frontier zones. We find that democracy enhances the support for market development whereas the reverse is not true. Hence, the relativist argument according to which the preference for democracy is an endogenous by-product of market development is not supported by our data.

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Bibliographic Info

Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 103.

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Length: 40 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:ebd:wpaper:103

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Related research

Keywords: market and democracy; sequencing of development; transition economies; attitudinal variables; cross-countries survey.;

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References

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  1. Torsten Persson & Guido Tabellini, 2006. "Democracy and Development: The Devil in the Details," Working Papers 302, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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Cited by:
  1. Grosjean, Pauline & Senik, Claudia, 2008. "Why Populist Democracy Promotes Market Liberalization," IZA Discussion Papers 3527, Institute for the Study of Labor (IZA).
  2. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," PSE Working Papers halshs-00586284, HAL.
  3. Brigitte Granville & Judith Shapiro, 2008. "Scratch a Would-Be Planner: Robbins, Neoclassical Economics and the End of Socialism," Working Papers 11, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  4. repec:hal:wpaper:halshs-00586284 is not listed on IDEAS

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