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The Social Construction of Successful Market Reforms

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  • David Stuckler
  • Lawrence King
  • Greg Patton
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    Abstract

    The transition from socialism to capitalism has spawned a large literature on comparative policy reforms. While many sociologists using qualitative data have concluded that neo-liberal reforms led to negative outcomes, a large body of cross-national literature, mostly from economics and political science, claims that more neo-liberal reforms produced better economic and political outcomes. These latter studies almost all use measures of policy reform constructed by economists at the European Bank for Reconstruction and Development (EBRD). We show, using the EBRD’s own data, that their indices of progress in market reforms are biased in the direction of positive growth. That is, the EBRD’s bureaucracy over-codes the more successful countries. When one accounts for this bias, the relationship between the EBRD’s transition indicators and growth significantly weakens or disappears. These findings have implications for social scientific research using statistics constructed by �international organizations, like the World Bank and the IMF.

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    Bibliographic Info

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp199.

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    Date of creation: 2009
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    Handle: RePEc:uma:periwp:wp199

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    Keywords: sociology of knowledge; transition; bias;

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    1. Bruno Merlevede & Koen Schoors, 2004. "Reform, FDI and Economic Growth: Tale of the Tortoise and the Hare," William Davidson Institute Working Papers Series wp730, William Davidson Institute at the University of Michigan.
    2. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 106(2), pages 407-43, May.
    3. Vladimir Popov, 2007. "Shock Therapy versus Gradualism Reconsidered: Lessons from Transition Economies after 15 Years of Reforms1," Comparative Economic Studies, Palgrave Macmillan, vol. 49(1), pages 1-31, March.
    4. Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan, vol. 42(1), pages 1-57, April.
    5. Sen, Amartya, 1998. "Mortality as an Indicator of Economic Success and Failure," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(446), pages 1-25, January.
    6. de Melo, Martha & Denizer, Cevdet & Gelb, Alan, 1996. "Patterns of Transition from Plan to Market," World Bank Economic Review, World Bank Group, World Bank Group, vol. 10(3), pages 397-424, September.
    7. Falcetti, Elisabetta & Raiser, Martin & Sanfey, Peter, 2002. "Defying the Odds: Initial Conditions, Reforms, and Growth in the First Decade of Transition," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 229-250, June.
    8. Falcetti, Elisabetta & Lysenko, Tatiana & Sanfey, Peter, 2006. "Reforms and growth in transition: Re-examining the evidence," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 421-445, September.
    9. Sergio Godoy & Joseph Stiglitz, 2006. "Growth, Initial Conditions, Law and Speed of Privatization in Transition Countries: 11 Years Later," NBER Working Papers 11992, National Bureau of Economic Research, Inc.
    10. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," IMF Working Papers 00/30, International Monetary Fund.
    11. Aslund,Anders, 2002. "Building Capitalism," Cambridge Books, Cambridge University Press, number 9780521801393, 9.
    12. Sachs, Jeffrey D, 1996. "The Transition at Mid Decade," American Economic Review, American Economic Association, vol. 86(2), pages 128-33, May.
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    Cited by:
    1. Patrick Hamm & David Stuckler & Lawrence King, 2010. "The Governance Grenade: Mass Privatization, State Capacity and Economic Growth in Post-communist Countries," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp222, Political Economy Research Institute, University of Massachusetts at Amherst.

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