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Should Market Liberalization Precede Democracy? Causal Relations between Political Preferences and Development

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  • Grosjean, Pauline

    (University of San Francisco)

  • Senik, Claudia

    (Paris School of Economics)

Abstract

This paper is dedicated to the relation between market development and democracy. We distinguish 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, democratization is likely to be an obstacle to the acceptation of market liberalization. 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 and the World Bank, in 28 post-Transition countries. Our identification strategy consists in 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.

Suggested Citation

  • Grosjean, Pauline & Senik, Claudia, 2007. "Should Market Liberalization Precede Democracy? Causal Relations between Political Preferences and Development," IZA Discussion Papers 2889, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2889
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    Cited by:

    1. 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.
    2. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," PSE Working Papers halshs-00586284, HAL.
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    4. Christian-Lambert Nguena, 2022. "On a comparative analysis of the impact of democracy on regulatory reform," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 19(2), pages 195-225, December.
    5. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," Working Papers halshs-00586284, HAL.

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    More about this item

    Keywords

    attitudinal variables; transition economies; sequencing of development; market and democracy; cross-country survey;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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