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Geopolitical Ambitions and Domestic Rent-Seeking: A Public Choice Analysis of Post-1989 Economic Transition in Central and Eastern Europe

Author

Listed:
  • Lu Dong

    (School of Slavonic and East European Studies, London, England)

Abstract

This study employs public choice theory to analyze how the interplay of geopolitical aspirations and domestic interest-group competition shaped economic transition policies in Central and Eastern Europe (CEE) following the collapse of socialism. Focusing on Poland and Hungary (1989–2004), the research examines how political elites balanced demands for rapid EU and NATO integration against rent-seeking behaviors by domestic actor, such as former nomenklatura networks, emerging oligarchs, and labor unions, during privatization and market liberalization. The study argues that the urgency to “rejoin Europe†geopolitically created perverse incentives, enabling elites to prioritize symbolic compliance with Western institutions over equitable institutional reforms. Findings reveal that privatization schemes often served as tools for consolidating political patronage rather than fostering competitive markets, while fiscal policies accommodated both EU austerity mandates and localized clientelism. This duality produced hybrid economic systems characterized by formal neoliberal frameworks and informal crony capitalist practices. The research challenges narratives of CEE transitions as purely technocratic successes, instead highlighting how public choice dynamics entrenched inequalities that persist in contemporary debates over democratic backsliding and EU cohesion. By integrating the history of economic thought with international relations theory, this work contributes to interdisciplinary debates on the political economy of post-socialist transitions and offers cautionary insights for states navigating geopolitical pressures amid institutional fragility.

Suggested Citation

  • Lu Dong, 2025. "Geopolitical Ambitions and Domestic Rent-Seeking: A Public Choice Analysis of Post-1989 Economic Transition in Central and Eastern Europe," RAIS Conference Proceedings 2022-2025 0508, Research Association for Interdisciplinary Studies.
    • Handle: RePEc:smo:raiswp:0508
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    References listed on IDEAS

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    1. Vachudova, Milada Anna, 2005. "Europe Undivided: Democracy, Leverage, and Integration After Communism," OUP Catalogue, Oxford University Press, number 9780199241194.
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