VYTAUTO DIDŽIOJO UNIVERSITETAS
POLITIKOS MOKSLŲ IR DIPLOMATIJOS FAKULTETAS
POLITOLOGIJOS KATEDRA
Pijus Krūminas
INDUSTRIJOS KONCENTRACIJA IR DIKTATORIŲ ŽLUGIMAS PIETŲ BEI VIDURIO IR RYTŲ EUROPOJE, 1950-2000 M.
Magistro baigiamasis darbas
Šiuolaikinės Europos politikos studijų programa, valstybinis kodas 621L20005 Politikos mokslų studijų kryptis
Vadovas dr. Vincentas Vobolevičius ______(Moksl. Laipsnis, vardas, pavardė) (Parašas) (Data)
Apginta______(Fakulteto/studijų instituto dekanas/direktorius) (Parašas) (Data)
Kaunas, 2013
VYTAUTAS MAGNUS UNIVERSITY
FACULTY OF POLITICAL SCIENCE AND DIPLOMACY
DEPARTMENT OF POLITICAL SCIENCE
Pijus Krūminas
INDUSTRIAL CONCENTRATION AND THE FALL OF DICTATORS IN SOUTHERN AND CENTRAL AND EASTERN EUROPE, 1950-2000
Final master’s thesis
Contemporary European Politics study programme, state code 621L20005 Political science study field
Supervisor dr. Vincentas Vobolevičius ______(Research degree, name, surname) (Signature) (Date)
Defended ______(PMDF dean) (Signature) (Date)
Kaunas, 2013
Table of Contents
SANTRAUKA...... 1 ABSTRACT ...... 7 List of tables and diagrams...... 8 INTRODUCTION ...... 9 1.1 Defining Democracy and Democratization...... 13 1.2 Regime Change and Economic Development...... 15 1.3 Modeling Causality...... 18 2. METHODOLOGICAL FRAMEWORK...... 28 2.1 Survival Analysis...... 28 2.2 Process-Tracing Method ...... 30 2.3 Case Selection ...... 33 3. ECONOMIC GROWTH AND DEMOCRATIZATION: SPAIN, SERBIA AND BELARUS...... 41 3.1 Democratization in Spain...... 41 3.1.1 Historical Background...... 41 3.1.2 Spanish Economy under Dictatorship 1939-1977 ...... 42 3.1.3 The Selectorate and Economic Growth...... 45 3.2 Democratization in Serbia...... 52 3.2.1 Historical Background...... 52 3.2.2 Serbian Economy after the War: 1992-2000...... 53 3.2.3 Economics and the Selectorate ...... 55 3.3 Authoritarianism in Belarus ...... 61 3.3.1 Historical Background...... 61 3.3.2 Economic Development under Lukashenko...... 62 3.3.3 Economic Development and the Selectorate...... 64 3.4 Overview of the Results of the Qualitative Analysis...... 68 4. ECONOMIC GROWTH, SELECTORATE AND DEMOCRATIZATION: A SURVIVAL ANALYSIS ...... 71 4.1 Basic Survival Data ...... 71 4.2 Proportional Hazard Rate and Economic Time-Dependent Covariates ...... 73 4.3 Proportional Hazard Rate and Non-Economic Covariates ...... 80 CONCLUSIONS ...... 83 LIST OF LITERATURE AND SOURCES...... 86 Annexes...... 93
Krūminas, P. Industrijos koncentracija ir diktatorių žlugimas Pietų bei Vidurio ir Rytų Europoje, 1950-2000 m.: Politikos mokslų magistro baigiamasis darbas / vadovas dr. V. Vobolevičius; Vytauto Didžiojo universitetas, Politikos mokslų ir diplomatijos fakultetas, Politologijos katedra. Kaunas, 2013. p. 99.
SANTRAUKA
Režimų dinamikos problema yra vienas aktualiausių šiandieninės politikos klausimų, tai puikiai iliustruoja ir Artimuosiuose Rytuose bei Šiaurės Afrikoje vykstantys procesai. Nors politinės santvarkos transformacijos ir buvo tyrinėtos, prie bendros nuomonės dėl jų priežasčių ir veiksnių, lemiančių jų sėkmingumą, nėra prieita. Egzistuoja sąsaja tarp ekonominio šalies išsivystymo ir sėkmingos demokratizacijos tikimybės. Reikia pasakyti, kad būta bandymų paaiškinti, kokiais mechanizmais ekonominiai veiksniai gali lemti politinių režimų kaitą, tačiau iki galo, kokie keliai galėtų būti, nėra išsiaiškinta. Režimų kaitos priežasčių analizė yra aktuali tiek dėl mokslinės, tiek dėl praktinės naudos: per tyrimus padarytos išvados leidžia praplėsti ir atnaujinti mokslinius duomenis bei suteikia naujų teorinių žinių apie politinių institucijų veikimą bei ekonominių ir politinių sistemų sąsajas; įgytos mokslinės žinios leidžia politikos formuotojams realiau vertinti politinius procesus, o tai ypač svarbu vykstant režimų transformacijoms iš autoritarinių į demokratinius. Atsižvelgus į patikrintas teorijas, galima atitinkamai koreguoti vykdomą politiką, tiksliau prognozuoti būsimus įvykius, nustatyti, kokių pokyčių valstybėje reikia, kad diktatūrinės vyriausybės nuvertimas užtikrintų demokratijos įvedimą. Šiame magistro baigiamajame darbe yra nagrinėjamas būtent šis ekonomikos ir režimų dinamikos klausimo aspektas. Kaip ekonominiai faktoriai turi veikti politinę valstybės sistemą, kad autoritarinės institucijos būtų pakeistos į demokratines? Taigi šio darbo tikslas yra pateikti modelį, galintį paaiškinti priežastinius ryšius, jungiančius ekonominį augimą su demokratizacija, ir jį patikrinti empiriškai. Iškeliami šie uždaviniai: išanalizuoti mokslinę literatūrą, nagrinėjančią ekonomikos ir demokratizacijos santykį bei nustatyti, kuri prieiga yra geriausiai pagrįsta tiek teoriškai, tiek empiriškai; sukonstruoti teorinį modelį, kuris atskleistų priežastinius ryšius, jungiančius ekonominius kintamuosius ir režimų dinamiką; remiantis sukurtu modeliu pateikti empiriškai patikrinamą hipotezę, kuri paaiškintų, kaip ekonominis augimas skatina demokratizaciją; patikrinti pasiūlytą hipotezę, remiantis kokybiniu procesų sekimo metodu, pritaikant jį mažiausiai tarpusavyje panašioms, į tyrimo imtį patekusioms, valstybėms tirti;
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patikrinti pasiūlytą hipotezę, remiantis kiekybiniu statistiniu išlikimo analizės metodu, pritaikant jį visai tyrimo imčiai, į kurią patenka visos po 1950-ųjų įvykusios demokratinės transformacijos bei išanalizuoti ar su modeliu susiję kintamieji diktatorių žlugimą paaiškina geriau nei su ekonomika nesusiję faktoriai. Įvykdžius šiuos uždavinius, bus pasiektas ir pagrindinis tyrimo tikslas. Darbas suskirstytas į keturias dalis. Pirmojoje aptariamos pagrindinės vartojamos sąvokos bei pristatomos svarbiausios teorijos, analizuojančios ekonomikos ir demokratijos santykius. Taip pat apžvelgiami ir bandymai paaiškinti, koks priežastinis mechanizmas jungia ekonomikos augimą ir režimų kaitą. Kaip alternatyva pasiūlomas atskiras modelis, pagrįstas selektorato teorija, bei suformuluojama tyrimo hipotezė. Antrojoje darbo dalyje pristatomos pasirinktos metodinės prieigos: kiekybinė statistinė išlikimo analizė ir kokybinis procesų sekimo metodas. Taip pat aprašoma tyrimo imtis ir pateikiamos tokio pasirinkimo priežastys. Trečioji dalis skirta hipotezei testuoti, remiantis kiekybiniu procesų sekimo metodu, kuris taikomas Ispanijos, Serbijos bei Baltarusijos, kaip mažiausiai tarpusavyje panašių valstybių, atvejams tirti. Ketvirtojoje darbo dalyje hipotezei tikrinti naudojama statistinė išlikimo analizė, kuria analizuojama visa tyrimo imtis. Galiausiai pateikiamos apibendrinamosios išvados. Prieš smulkiau pristatant šį magistro baigiamąjį darbą yra būtina apsibrėžti demokratijos ir demokratizacijos sąvokas, t.y. paaiškinti, kaip jos suprantamos šiame darbe. Remiantis Adamo Przeworskio išsamiai aptarta ir pagrįsta minimalistine demokratijos samprata, galima teigti, kad valstybė laikoma demokratiška, jei ji atitinka du kriterijus: valstybė turi užtikrinti, kad rinkimai būtų laisvi ir leisti valdžiai, jiems įvykus, pasikeisti be kliūčių. Nors dėl tokio koncentruotumo į režimo apibrėžtį per rinkimus, minimalistinė demokratijos samprata gali būti netinkama kai kuriems tyrimams, tačiau, kai kalbama apie režimų transformaciją ir ją sąlygojančius veiksnius, toks pasirinkimas yra pagrįstas. Taigi pagal pateiktąją apibrėžtį, demokratizacija čia suprantama kaip teisinio politinių lyderio mechanizmo įvedimas ir nustatytų taisyklių laikymasis. Siekiant paaiškinti, koks priežastinis mechanizmas galėtų lemti ekonominio vystymosi teigiamą įtaką demokratizacijoms procesams, visų pirma reikia aptarti, kokios teorijos apskritai analizuoja ekonomikos ir režimų dinamikos ryšį. Čia galima išskirti tris pagrindines prieigas: endogeninė ekonomikos poveikio režimo tipui teorija teigia, kad ekonominis augimas turi įtakos demokratizacijos tikimybei; egzogeninė ekonomikos poveikio režimo tipui teorija teigia, kad ekonominis augimas turi įtakos demokratinio režimo sėkmingo išlikimo tikimybei, tačiau pačios transformacijos nenulemia; kritinių sankirtų teorija teigia, kad nors egzistuoja ryšys tarp ekonominių ir politinių sistemų, ekonomikos augimą ir demokratinių institucijų įsitvirtinimą lemia trečias
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kintamasis (įvairūs kritiniai istoriniai lūžiai), o politiniai ir ekonominiai pokyčiai yra siejami labiau koreliaciniu, nei priežastiniu ryšiu. Apžvelgus šias teorijas nustatyta, kad endogeninė teorija šiuo metu yra priimtiniausia, kadangi net ir mokslininkų, akcentuojančių egzogeninio efekto svarbą, darbuose aptinkamas statistiškai reikšmingas ryšys tarp ekonominio augimo ir demokratizacijos kaip vienkartinio įvykio (remiantis aptarta minimalistine demokratijos samprata). Tiek egzogeninė, tiek kritinių sankirtų teorija susiduria su sunkumais, kai reikia aptarti kritiškus empirinius tyrimus, todėl šiame darbe remiamasi pirmąja aptarta teorija, teigiančia, kad ekonominis augimas daro teigiamą įtaką režimų transformacijai. Deja, nei viena iš aptartųjų prieigų nesiūlo aiškaus paaiškinimo, kaip konkrečiai demokratizacija galėtų būti lemiama ekonominio augimo. Nors yra suformuluota keletas galimų teorijų, joms trūksta empirinio pagrindimo, jos viena kitai prieštarauja. Pavyzdžiui, skirtingi mokslininkai nevienodai vertina pokyčių socialinėje valstybės struktūroje įtaką politinio režimo pasirinkimui. Vieni teigia, kad demokratijos atsiradimą lemia tolygus pajamų pasiskirstymas, kitų nuomone, tai yra nulemta didelės nelygybės. Taigi, paaiškinimai vienas kitam tiesiogiai prieštarauja. Siekiant pateikti galimą problemos sprendimą pasirinkta selektorato teorija. Šios prieigos pagrindinis privalumas yra tas, kad, analizuojant problemą, ji leidžia atsižvelgti ir į politinių, ir į ekonominių žaidėjų interesus. Vadinasi, į modelį, sukonstruotą remiantis selektorato teorija, galima įtraukti ir ekonominius, ir politinius veiksnius. Pagrindinė šios prieigos prielaida yra ta, kad kiekvienas politikas, norėdamas įgyvendinti savo užsibrėžtus tikslus valdžioje, pirmiausia turi maksimizuoti savo galimybes patekti į postą ir jame išsilaikyti. Tam, kad tai pavyktų, jis turi užsitikrinti laiminčiosios koalicijos (t. y. aktorių, galinčių užtikrinti lyderio išlikimą poste) paramą. Šios grupės nariai, savo ruožtu, taip pat priklauso ir didesnei grupei, t. y. selektoratui. Jį sudaro visi žmonės, kurie turi įtaką sprendžiant, kas taps politiniu lyderiu. Priklausomai nuo politinio režimo tipo šių grupių dydžiai ir tarpusavio santykiai keisis. Demokratijose selektoratai ir laiminčiosios koalicijos, lyginant su populiacija, būna dideli, o diktatūrose – maži. Vadinasi, galima daryti išvadą, kad demokratizacija vyksta tada, kai atsiranda reikšmingų pokyčių šiose dviejose politiškai svarbiose grupėse. Be to, svarbus ir jų tarpusavioo dydžių santykis. Selektorato ir laiminčiosios koalicijos dalis taip pat gali būti ir ekonominiai aktoriai. Remiantis šiuo faktu, galima sukonstruoti modelį, kokioms sąlygoms esant ir kaip šie veikėjai gali lemti selektoratą ir laiminčiosios koalicijos pokyčius, kad sukeltų režimo pasikeitimą. Augant ekonomikai kinta įvairių ekonominių aktorių svarba. Vienos pramonės sritys tampa reikšmingesnės, o kitų įtaka šalyje sumenksta. Dėl to selektoratas ir laiminčioji koalicija būna nestabilūs. Vystymuisi skatinant vis daugiau pokyčių, politinis lyderis ir galimi jo konkurentai susiduria su vis didesniu neaiškumu, ką reikėtų įtraukti į laiminčiąją koaliciją, kad būtų galima sėkmingai išsilaikyti
3 valdančiojo poziciją. Esant didelei nežinomybei demokratija tampa priimtinesne santvarka nei diktatūra, nes užtikrina galimybę sugrįžti į politinį postą, sykį jį praradus. Bandymai išlaikyti autoritarinį režimą, kai nėra aišku, kas artimiausiu metu sudarys selektoratą ir kas turi būti laiminčiosios koalicijos nariai, tampa per daug rizikingi. Norint pagrįsti tokį priežastinį mechanizmą darbe pateikiamas sukonstruotas žaidimų teorijos modelis, atskleidžiantis tokio modelio tinkamumą. Remiantis juo formuluojama darbo hipotezė: H.1. Ekonominis augimas nulems struktūrinius pokyčius tam tikros politijos selektorate ir laiminčiojoje koalicijoje, kurie per nežinomumo didinimą sąlygos demokratinio režimo atsiradimą. Tikrinant šią hipotezę pasitelkiama maišytų metodų prieiga, kadangi kokybiniai metodai leidžia aiškiau atskleisti mechanizmo veiklą, o kiekybiniai metodai – patikrinti jo svarbą esant didesnei imčiai. Iš kiekybinių metodų pasirinktas procesų sekimas, nes jis yra grįstas dedukcine logika ir, remiantis labai įvairiais duomenimis, leidžia patikrinti priežastinį ryšį tarp nepriklausomo ir priklausomo kintamųjų. Iš kiekybinių metodų pasirinkta statistinė išlikimo analizė, kadangi ji leidžia nustatyti, kokie laiko požiūriu nepastovūs kintamieji daro įtaką stebėjimo objekto transformacijai iš 0 būsenos (šio darbo atveju – diktatūros) į 1 būseną (šio darbo atveju – demokratiją). Metodai taikomi naudojantis laike ir erdvėje apsibrėžta imtimi, į kurią patenka Europoje įvykę režimų pasikeitimai po 1950 m. bei išlikusios autoritarinės santvarkos. Į imtį nepateko tik tos valstybės, kurios demokratiškomis tapo atskilusios nuo didesnio politinio vieneto (Sovietų Sąjungos, Jugoslavijos), Rusija (dėl aukšto ekonomikos priklausymo nuo gamtinių išteklių lygio) ir buvusi Rytų Vokietija (dėl Vakarų Vokietijos įtakos). Dėl imties dydžio kokybinės analizės visiems atvejams pritaikyti nebuvo galima, todėl buvo pasirinkti trys skirtingi atvejai, atspindintys skirtingą valstybių raidą, pagal ekonominio augimo ir demokratizacijos įvykio vertes. Norint užtikrinti, kad būtų tiriami mažiausiai tarpusavyje panašūs atvejai, taip padidinant hipotezės sufalsifikavimo tikimybę, atlikta klasterių analizė, kurioje atsižvelgiama į šalies BVP vienam gyventojui transformacijos metu, BVP vienam gyventojui kaitą penkerių metų ikidemokratiniu laikotarpiu bei dabartinį politinio režimo tipą, o tai leidžia įvertinti, ar šalis patyrė režimų kaitą. Remiantis šiuo metodu nustatyta, kad mažiausiai tarpusavyje panašūs atvejai yra Ispanijos (ekonominis augimas ir demokratizacija), Serbijos (ekonominis nuosmukis ir demokratizacija) bei Baltarusijos (ekonominis augimas ir išlikęs autoritarizmas). Išanalizavus Ispanijos ekonominę raidą ir šalies demokratizaciją buvo nustatyta, kad prieš režimo kaitą įvyko reikšmingų pokyčių šalies ekonominėje aplinkoje: pramonė pagal svarbą pakeitė žemės ūkį, kurtą autarkiją išstūmė valstybės įvedimas į globalią prekybos erdvę, griežta ekonominė valstybės vykdoma kontrolė buvo sušvelninta, įvyko liberalizacija. Kaip pavyko nustatyti, visa tai lėmė didelius selektorato bei laiminčiosios koalicijos pokyčius. Dėl to demokratija valdančiajam
4 elitui tapo priimtinesnis pasirinkimas nei diktatūra ir buvo imtasi demokratinių reformų. Taigi galima daryti išvadą, kad Ispanijos atvejis atitinka hipotezę. Iš pirmo žvilgsnio gali atrodyti, kad Serbijos atvejis hipotezę paneigia, kadangi demokratizacija įvyko ekonominei padėčiai blogėjant. Vis dėlto, kaip rodo atlikta analizė, tokia išvada būtų klaidinga. Po 1992 m. sekusį ekonominį nuosmukį pakeitė augimas, kuris smarkiai pakeitė selektorato sudėtį: atsirado nauja vidurinioji klasė, valstybės parama, skirta didžiosioms pramonės šakoms sumažėjo, suklestėjo šešėlinė ekonomika. Tokia ekonominės aplinkos restruktūrizacija turėjo įtakos ir nežinomybės didėjimui, kuri tik dar labiau sustiprėjo, kai 1999 m. NATO šioje šalyje įvykdė karinę operaciją, lėmusią nemažus ekonominius nuostolius. Taigi, galima teigti, kad išorinis įvykis, užsienio karinių pajėgų smūgiai, tik sustiprino šalies viduje prasidėjusių ir vykusių procesų išraišką, dėl kurios demokratizacija paspartėjo. Tai rodo, kad Serbijos atvejis taip pat patvirtina pateiktą hipotezę. Trečiasis procesų sekimo analizei pasirinktas atvejis, Baltarusija, taip pat rodo priešingus rodiklius, nei teigia pasiūlytas modelis. Vis dėlto, čia svarbu pabrėžti du dalykus. Visų pirma, pateikta hipotezė nesako, kad demokratizacija įvyks vos prasidėjus ekonominiam augimui. Savaime suprantama, kad politinėje situacijoje atsirastų neaiškumas reikia daugiau laiko. Antra, Baltarusijos ekonomika yra labai stipriai priklausoma nuo kaimyninės Rusijos vykdomos politikos, dėl to šalies vystymasis remiasi ne ekonomikos augimu iš vidaus, o saitais su Rusija. Tokie šių dviejų valstybių santykiai daro Baltarusiją panašesne į rentines valstybes, dėl to ekonominis augimas nepakeitė selektorato ir laiminčiosios koalicijos taip, kad įsivyrautų nežinomybė ir demokratija taptų patrauklesne už autoritarizmą. Dėl šios valstybės atvejo savitumo galima teigti, kad hipotezės jis nepaneigia. Apibendrinant kiekybinės analizės rezultatus galima konstatuoti, kad nei vienas iš trijų, tarpusavyje mažiausiai panašių, atvejų hipotezės nefalsifikavo. Vadinasi, galima padaryti išvadą, kad modelis yra pakankamai gerai pagrįstas ir dėl to, vadovaujantis juo, verta daryti tolesnius tyrimus. Kiekybinis tyrimas, atliktas remiantis statistiniu išlikimo analizės metodu, rodo, kad statistiškai reikšmingas ryšys tarp pokyčių valstybės ekonomikos struktūroje ir demokratizacijos egzistuoja. Siekiant jį nustatyti, buvo pasirinkti kintamieji, kurie nurodė absoliutų metinį pokytį atskirose ekonomikos šakose, atsižvelgiant į jų sudaromą BVP dalį. Nustatyta, kad didelę teigiamą statistiškai reikšmingą įtaką režimų kaitai turi pramonės pokyčiai. Pasikeitimai žemės ūkyje turi statistiškai reikšmingai neigiamą įtaką, tačiau ši yra nedidelė, o atsižvelgiant į tai, kad tiriamos šalys jau buvo industrializavusiosis, galima manyti, kad tokia tendencija nėra svarbi ir galėjo atsirasti ir išsikreipti dėl sąlyginai nedidelio imties dydžio. Taip pat įvertintas laiminčiosios koalicijos ir selektorato santykio poveikis demokratizacijai, kuris yra statistiškai silpnai reikšmingas. Vis dėlto,
5 vadovaujantis modeliu ir į išlikimo analizę įtraukiant šį kintamąjį bei industrijos pokyčių kintamąjį, kaip tarpusavyje sąveikaujančius, gaunamas statistinis reikšmingumas p = 0.007, o tai stipriai pagrindžia suformuluotą hipotezę, kadangi rodo, jog kintant industrijos sektoriui kinta ir selektoratas bei laiminčioji koalicija, kartu sukurdami prielaidais demokratizacijai. Taip pat reikia pabrėžti, kad dėl sąlygiškai nedidelio imties dydžio ir duomenų stokos, ypač kalbant apie ankstyvesnius į imtį įtrauktus metus, bendri, išlikimo modelio reikšmingumą vertinantys, testai rodė nevienareikšmius rezultatus. Siekiant didesnio tikslumo, tokius tyrimus verta plėsti. Juolab, kad proporcingumo, įtakingų atvejų bei linijiškumo testai patvirtino, kad modelis atitinka keliamus reikalavimus. Taigi, galima daryti išvadą, kad statistinė išlikimo analizė hipotezės nefalsifikuoja ir, nepaisant nedidelio rezultatų prieštaringumo, ją stipriai patvirtina. Apibendrinant darbą padarytos tokios išvados: išanalizavus ekonomikos ir režimų kaitos santykį tiriančias teorijas nustatyta, kad endogeninis ekonominio augimo poveikis demokratizacijai yra gerai teoriškai ir empiriškai pagrįstas, todėl remiantis šia prieiga galima plėtoti tolesnes teorijas; nepaisant neišsamių bandymų paaiškinti, koks priežastinis mechanizmas galėtų sieti ekonomikos augimą ir režimų kaitą, visuotinai priimtini ir empiriškai gerai pagrįsti modeliai nebuvo sukurti; remiantis selektorato teorija ir atsižvelgiant į ekonominio vystymosi endogeninį poveikį, galima sukonstruoti modelį, kuris suponuoja hipotezę, jog ekonomikos augimas skatina selektorato ir laiminčiosios koalicijos restruktūrizaciją, o tai lemia nežinomybės didėjimą ir didina demokratizacijos patrauklumą tiek politiniam lyderiui, tiek galimiems jo konkurentams; hipotezę patikrinus kiekybiniu procesų sekimo metodu, pritaikius jį tarpusavyje mažiausiai panašiems Ispanijos, Serbijos ir Baltarusijos atvejams, galima daryti išvadą, kad ji liko nesufalsifikuota, o minėtieji atvejai ją parėmė, nepaisant dviem atvejais pastebėtų tam tikrų anomalijų; kiekybinė analizė taip pat smarkiai parėmė iškeltą hipotezę, kadangi ją atliekant buvo nustatytas statistiškai reikšmingas ryšys tarp pramonės pokyčių ir režimų kaitos bei pramonės pokyčių, laiminčiosios koalicijos ir selektorato dydžių santykio ir režimų kaitos, kai pirmi du kintamieji traktuojami kaip tarpusavyje sąveikaujantys, tai suponuoja ir pasiūlytas modelis. Nors dėl mažos imties ir duomenų stokos negalima visai užtikrintai teigti, kad sukonstruotas išlikimo ir proporcinės rizikos modelis yra itin reikšmingas, pirminiai rezultatai nuteikia optimistiškai ir skatina tęsti tyrimus, remiantis darbe pasiūlyta prieiga. Krūminas, P. Industrial Concentration and the Fall of Dictators in Southern and Central and Eastern Europe, 1950-2000:
6
Master Thesis in Political Science / supervisor dr. V. Vobolevičius; Vytautas Magnus University, Faculty of Political Science and Diplomacy, Department of Political Science. Kaunas, 2013. p. 99.
ABSTRACT
The issue of regime change is extremely important in today's politics, as illustrated by recent events in the Middle East and North Africa. One of the most promising fields in regime studies is the interaction between economic growth and democratization, which is the object of the thesis. Its goal is to propose and test a model that could explain the precise causal mechanism that operates when economic development leads to democratization. The following tasks were set: to analyse the scientific literature debating this issue and see what approaches are best supported theoretically and empirically; to create a model that connects economic and political variables which lead to democratization; to propose a testable hypothesis based on the model; to test the hypothesis by adopting the qualitative process-tracing method and the quantitative survival analysis. The Selectorate theory was used to construct a model, due to the fact that it may embrace the behaviour of both the economic and political actors. On the basis of this theory a game-theoretic model was constructed and a hypothesis proposed, which states that economic growth leads to restructuring of the selectorate and the winning coalition that creates uncertainty and motivates political leaders and their challengers to favour democratic institutions. The hypothesis was tested by applying process-tracing and survival analysis methods. In the former case, three cases (Spanish, Serbian and Belarusian) were analysed, as they were found to be least similar to each other from the entire studied sample. It may be concluded that the proposed model may explain all of these cases with only minor adjustments. In the latter case, the whole European post-1950 sample was analysed. It was found out that alterations in the structure of the economy and the interaction between changes in the industrial sector and the winning coalition/selectorate have statistically significant influence on the survival of dictators. The more there are changes, the more likely is democratization to take place, just as the model predicts. The following conclusions were arrived at: endogenous effect of economic growth on democratization is well grounded; the Selectorate theory is useful in explaining how economic growth impacts democratization; the proposed model is supported by both the qualitative and quantitative analyses. Further research is needed in order to further test the hypothesis and the model. However, for now there both of them are supported empirically.
7
List of tables and diagrams
List of tables:
Table No. 1: Changes in the selectorate in relation to economic growth…………………………...23 Table No. 2: Possible scenarios for combining independent and dependent variables…...………..34 Table No. 3: Absolute GDP per capita and changes in GDP per capita before transition…..……..35 Table No. 4: Economic growth and type of regime…………………………………………………37 Table No. 5: Survival data for European transitions to democracy (1950-2000)………...……...…71
Table No. 6: The outcome of the Cox proportional hazards model for different sectors of the economy…………………………………………………………………………………………….73 Table No. 7: Proportionality test of the model for different sectors of the economy……………….75 Table No. 8: The outcome of the Cox proportional hazards model for different sectors of the economy…………………………………………………………………………………………….76 Table No. 9: Linear regression model for WoverS (dependent variable) and IND_ABS (independent variable)……...……………………………………………………………………………………. 77 Table No. 10: The outcome of the Cox proportional hazards model for WoverS and IND_ABS when they are multiplicative variables…...……………………………………………………………… 78 Table No. 11: Proportionality test of the Cox model with multiplicative variables WoverS and IND_ABS…………………………………………………………………………………………...79 List of diagrams:
Diagram No. 1: Size of S and W in dictatorships…………………….……………………………..21 Diagram No. 2: Range of institutional outcomes of confrontation between the leader and challengers…………………………………………………...……………………………………..22 Diagram No. 3: Extensive form game, solved by backwards induction, showing two possible situations that involve the uncertainty about the strength of W…………………………………….25 Diagram No. 4: Hierarchical clustering of the countries included in the sample according to the type of regime and the GDP variables……………………...……………………………………... 38 Diagram No. 5: Bivariate cluster plot the representing countries included in the sample: 2 stands for Belarus, 12 stands for Spain and 11 stands for Serbia……………………………….………... 39 Diagram No. 6: Economic growth and changes in the selectorate in Spain 1950-1977…………... 51 Diagram No. 7: Economic development and external factors in relation changes in the selectorate in Serbia……………………………………………………………………………………………..61 Diagram No: 8: Economic development and the selectorate in Belarus……………………………68 Diagram No. 9: Plotted survival function of dictatorships included in the sample………...………73
8
INTRODUCTION
As revealed by current political events in the Middle East, regime dynamics remains a hot issue in politics. Having never lost its importance in actual world politics, regime change is also very attractive to political scientists due to the fact that it has not only a scholarly, but applied value as well. By studying both successful and unsuccessful transitions to democracy, it is possible theoretically model certain conditions required for democratic processes to unfold or at least distinguish the factors facilitating their course. Even though there are many different aspects of regime dynamics, the role of economics seems to be one of the most important. The question how economics might influence transitions to democracy has been extensively explored, nevertheless, no single definite answer has been provided so far. The research is focused on this particular problem of the interaction between political democratization and economics To be more precise, the carried out investigation analyzes the impact of economic growth on regime dynamics. It has been established that in the countries that have reached a certain level of income transitions are always successful, despite the fact that transformations may also occur in the countries that have achieved very different levels of economic development. Therefore, evidence may be provided for the claim that the interrelation between income and democratization does exist. Consequently, the causal effect of economic development on the chances of successful democratization has been chosen as the object of this MA thesis. It should be noted that, problems occur when an attempt is made to construct a theory that could explain why this phenomenon emerges. Therefore, the goal of this paper is to provide a coherent theoretical model which would clearly outline what democracy-stimulating mechanisms operate during the growth of the country's economy. The study is divided into four main sections. These include the theoretical part in which theoretical framework used in the analysis is proposed; the methodological part in which methods used in the empirical part of the thesis are employed; the section on the qualitative analysis of the selected cases; and the section on the quantitative analysis that was carried out in the research. Finally, conclusions and recommendation for further studies follow. In the theoretical part of the thesis, the existing theories that attempt at explaining the interaction between income growth and regime dynamics are overviewed. Special attention is given to the discussion of the endogeneity and the exogeneity of the impact that economic factors have on democratization. Both advantages and shortcomings of different theoretical approaches to the problem are specified. Noting that the major economic theories of democratization tend to focus on more abstract aspects of the interaction between economic development and regime dynamics, and
9 discuss the particular mechanism through which the economic factors operate in transforming the regime less rigorously, an attempt has been made at constructing such a causal model, that reveals the exact causality and interaction between political and economic variables. The model is based on the Selectorate theory put forward by Bruce Bueno de Mesquita, Alastair Smith, James D. Morrow and Robert M. Siverson.1 The basic premise of this approach states that politicians tend to rationally pursue the policies that would maximize the length of their stay in office. This framework allows seeing how economic factors restructure the environment in which a political leader (and his potential challengers) acts. This permits to make a statement that due to economic growth the powers of politically important players change which leads to uncertainty and makes democratic institutions preferable to authoritarian ones. Section 2 is devoted to the description of the methodology of research carried out in the paper. Despite the fact that the same mechanism should operate in all the cases, different historical paths might lead to different manifestations of the same process. Therefore, it is necessary to adopt a mixed-method approach by combining both quantitative and qualitative research methods. The outline of statistical survival analysis performed in the empirical part of the paper and the arguments for the justification of the chosen process-tracing method are provided in it. The two empirical parts of the thesis (sections 3 and 4) aim at empirical testing of the hypothesis. Section 3 is devoted to the qualitative analysis of the interaction between economics and democratization, which is based on the aforementioned process-tracing method. Three countries – Spain, Serbia and Belarus – have been chosen for examination as they have been found to be least similar in the context of economics-political regime. The dissimilarity was revealed by employing both inductive reasoning and hierarchical cluster analysis. Section 4 is devoted to statistical survival analysis, which embraces the whole post-1950 European sample. In these two sections attempt to falsify the hypothesis based on the previously described model of causality between economic and political variables insofar as they are related to regime dynamics. Finally, after the empirical testing of the hypothesis the conclusions of the research are presented, extending the obtained results and the possible routes for elaboration on this study are outlined. Literature employed in this paper covers both the theoretical works and empirical studies. When discussing the possible theoretical explanations of the interaction between economic growth and democratization, three main schools of thought (pro-endogenous, pro-exogenous and path- dependence theories) are distinguished and, consequently, the works of their most prominent proponents are analyzed and discussed. They include Adam Przeworski, Daron Acemoglu, James Robinson, Charles Boix, Susan Stokes and others. The model constructed for this research is based
1 Bueno de Mesquita, B.; Smith, A.; Siverson, R.M. and Morrow, J.D. The Logic of Political Survival. Cambridge: Massachusetts Institute of Technology Press, 2008. 10 on the Selectorate theory first and foremost developed by Bruce Bueno de Mesquita, Alastair Smith, James D. Morrow and Robert Siverson. For the empirical part of the paper, the most relevant literature has been chosen as well: the works of the scientists representing the three discussed countries, who have better knowledge and experience about their countries, and of the prominent scholars as “cosmopolitan” experts in the field. It should be also stated that the literature on both the single cases and cross-country investigations has been employed. Where possible and beneficial, the scientific literature in original languages has been used. The empirical data used has been collected from various highly trusted sources, including datasets of the United Nations Statistics Division data on GDP, the World Bank Development Indicators, Democracy and Dictatorship measure developed by José Cheibub et al. and data used be Bueno de Mesquita et al. in The Logic of Political Survival. In most cases combinations of data from various sources is used. However, it is never the same variable that is taken from different sources at the same time; rather different variables are merged in panel data to see how the coevolved in time. The main aim of this MA thesis is to propose a theory that could explain what causal mechanisms relate economic growth with the process of democratization, construct a model based on this theory and describe how economic growth may affect regime dynamics, and then to test it against the empirical data. Thus, the research carried out in the paper might be greatly beneficial in the field of democracy studies as it would shed light on the previously underexplored aspect of causality between economic growth and regime alteration. The set out tasks of the theses are as follow: to analyze the existing scientific literature that presents theories relating economic development and democratization and find out which approach is best supported theoretically and empirically; to construct a coherent model that reveals causal relationship between economic variables and regime dynamics; to propose a hypothesis based on the model which might explain how economic growth affects democratization; to test the proposed model and the hypothesis by applying the qualitative process- tracing method to the least similar cases from the sample; to test the proposed model and the hypothesis by applying the quantitative statistical survival analysis to the entire European post-1950 sample; to analyse if certain cultural or historical covariates could have played their role in democratization by applying the quantitative survival analysis to the same sample. Evidently, the research carried out in this MA thesis will make some aspects of economics
11 and democratization interaction clearer than it has been before. Furthermore, should the model be unfalsified, it could be used for samples including cases from other periods of time and/or different polities. The results might also prove beneficial to the students and scholars of political science, as well as to political reviewers.
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1. THE FRAMEWORK FOR THE ANALYSIS OF THE
INTERACTION BETWEEN ECONOMIC DEVELOPMENT AND
DEMOCRATIZATION
In this section the main theoretical definitions of the concepts employed in the paper are provided and the theories describing the interaction between economic development and democratization are discussed. Their strengths and weaknesses are overviewed, and the approach currently best supported by empirical data and theoretical research is accepted for a further construction of the model which might causally link economic growth with democratization. Hence for structuring such a model, the Selectorate Theory is applied, as it may relate the behaviour of both economic and political actors within a rational choice paradigm. Due to it, in considering the actions of discrete actors, it is rather easy to associate the different aspects of a state – economics and politics. Finally, the hypothesis based on the worked out model is proposed as a guideline for empirical tests discussed in the empirical part of the section.
1.1 Defining Democracy and Democratization
Regime dynamics describes the regime vacillation between authoritarianism and democracy of particular polity. The first thing to do, therefore, is to discuss, what meaning the terms authoritarianism and democracy represent in this paper so that no ambiguity about these conceptions would remain. It should be noted, that the country's level of democracy is often delineated on a certain scale that encompasses many different aspects of democratic consolidation. Here as excellent examples might serve the rankings developed by Freedom House2 and The Economist Intelligence Unit3. Such broad understanding of democracy, which takes into account many different variables, including freedom of press, civil rights etc. is beneficial when the analysis considers the quality of democracy and political/social freedoms in a particular polity. For this paper, however, such broad assessment of the country's level of democracy would not be useful. It is so because the proposed model deals with the rules of change in political government and rather than with the degree of freedom of expression. Therefore, following in the footsteps of Joseph Schumpeter4 and Adam Przeworski5 the author of the thesis employs the minimalist conception of
2 Freedom House. Freedom in the World. All reports found at: http://www.freedomhouse.org/reports; Last accessed: 15/03/2013. 3 An example of Democracy Index published by The Economist Intelligence Unit may be found here: https://www.eiu.com/public/topical_report.aspx?campaignid=DemocracyIndex2011; Last accessed: 25/03/2013. 4 Schumpeter, J. Capitalism, Socialism, and Democracy. New York: Harper Perennial, 1950. 13 democracy as beneficial for the purposes of this particular research. Such a definition of democracy lists two major conditions which a country should satisfy in order to be considered as democratic: elections should be regarded free, i.e., there should be no significant distortions of the will of the people; after the election the governmental change should be peaceful and reflect the results of the elections. Therefore, in this thesis, a state that satisfies these two conditions will be treated as democratic. If any or both of these conditions are not satisfied, then a country will be considered authoritarian. Although at a first glance such a definition may appear rather superficial, it nevertheless allows to find out an exact point in time when a particular country became democratic and thereby overcome the lack of accuracy in more elaborate classifications, that have such rankings as partly free or mostly free.6 Another reason for accepting the minimalist conception of democracy is that its focus on particular political institutions and precise conditions may be very easily combined with the Selectorate Theory, applied for the construction of a explanatory model in this paper. Such narrower focus also makes democratization easier to track analitically. Even though these are the major reasons for employing this definition of the term, more reasons exist, yet the discussion of them would not directly consider the carried out research.7 From this it follows that a binary distinction between the democratic and authoritarian countries may best satisfy the goals of the thesis. The logic of the minimalist conception of democracy reveals that democratization turns out to be a sole event rather than a continuous lasting process. Therefore, such events as acceptance of human rights, lifting restrictions from the media and other processes that might be interpreted as crucial to the formation of liberal democracy will not be discussed. The author will consider that the only meaning which the term democratization holds in this research is the signification of the country's transition to a state when the country satisfies both preconditions of democracy mentioned in the minimalist conception. However, this is not to say that such aspects of a liberal democracy as freedom of press or human rights in general do not play important role in regime dynamics. They may be symptoms or even catalysts of democratization, but they themselves might be caused by the underlying economic reasons which are the object of analysis carried out in this thesis.
5 Przeworski, A. Minimalist Conception of Democracy: A Defense. // (ed.) Shapiro, I. Democracy's Values. Cambridge: Cambridge University Press, 1999. p. 12-17. 6 Freedom House, Op. cit. 7 A more elaborate argumentation may be found in Przeworski's paper. Przeworski, 1999, Op. cit. 14
1.2 Regime Change and Economic Development
An existing link between economic growth and democratization has been already observed for a long time. Perhaps one of the first important attempts at discussing the issue was the study Political Man. The Social Biases of Politics by Martin Seymour Lipset.8 In fact, the book was an expansion to a shorter paper, explaining the prerequisites for democracy.9 In it, the prominent political scientist distinguished the possible variables that are preconditions for a successfully functioning democracy. Even though some of them were not directly related to economics, there were the ones firmly related with the analysed field. For this reason, it is important to shortly overview Lipset's scholarly argument. The prerequisites that are significantly related to economics are industrialization and wealth. It should be stressed that they do not 'create' democracy by themselves but rather operate as mitigating factors. According to Lipset's theory of modernization, higher levels of wealth ensure higher equality (in other words, wealth becomes distributed more evenly), thus strengthening the middle class, which is the main social actor vital for ensuring a successful functioning of democracy. Even though his theory does not concentrate on the exact details of economic causality and in its essence remains a cultural explanation,10 it has opened up a new analytical perspective for political scientists to examine. Today it is possible to distinguish three approaches to uncovering the interaction between economic growth and regime dynamics. However, before a more detailed overview of them, a brief description of the major concepts to be employed will be provided. The terms are 'endogeneity' and 'exogeneity' used in the context of the impact of economic factors on democracy, due to the fact that many studies focus on the difference between these two aspects revealing the particular nature of the impact of income growth on democratization. As distinguished by Adam Przeworski and Fernando Limongi, the economic factors may have either an endogenous or an exogenous impact.11 In the first case, the emergence of democratization is a direct (or at least partly dependent) result of economic growth. That is, the beginning of the regime change is dependent on economic development. In the case of an exogenous impact of economics on democratization, the mentioned factor of growth plays its role solely in maintaining the regime change does not create it. Two of the three aforementioned approaches focus on exactly this division and while the scholars favouring the second one claim that economics is a strictly exogenous factor, those scientists that favour the first one state that it is
8 Lipset, M.S. Political Man. The Social Biases of Politics. New York: Free Press, 1960. 9 Lipset, M.S. Some Social Requisites for Democracy: Economic Development and Political Legitimacy. The American Political Science Review, 1959, 53(1), p. 69-105. 10 Wucherpfennig, J. and Deutsch, F. Modernization and Democracy: Theories and Evidence Revisited. Living Reviews in Democracy, 2009, 1(1). p.1-9. 11 Przeworski, A. and Limongi, F. Modernization: Theories and Facts. World Politics, 1997, 49(2), p. 155-183. 15 possible to find evidence for the endogeneity of income growth as well, with respect to democratization. The third perspective deals with the so called path-dependence theory.12 This concept defines the external (i.e. neither purely political, nor purely economical) nature of factors that shape both political institutions and economic development. Such economico-political path is drawn by the so-called critical junctures, which may include various events such as, for instance, the Black Death or the discovery of the Americas. These three different approaches will be more widely discussed in the following paragraphs. As Przeworski notes, if a country has experienced democratization at the income level of 6055 USD, it has never reverted back to authoritarianism.13 According to him, the question then then is why democracy in poor countries is less stable than in richer ones. Przeworski and Limongi have conducted a cross-country study,14 which, as they claimed, seemed to show that only the exogenous theory of economic impact on democratization is correct, whereas the endogenous appeared to be false. Therefore, according to these scholars, economic growth helped consolidating the democracy, but the transformation took place due to non-economic reasons. However, their study has some problems which were noted by other political scientists, most prominently, Carles Boix and Susan Stokes15 who argue that the attempt of their colleagues has taken into account a very specific time period, during which processes of democratization were distorted by unsuccessful post-colonial transitions. Indeed, their own research16 which considered both the post- 1950 and previous regime transitions, shows that both the exogenous and the endogenous effects are noticeable. It is interesting to maintain, is that actually, even in Prezworski and Limongi's study the endogenous effect, despite of being lower of intensity than the exogenous one, was found as both positive with respect to democratization and statistically significant.17 It is hard to explain why the authors decided not to stress it, because their inaccurate conclusions have cast ungrounded doubts about the veracity of the endogenous theory. Thus, it appears that current evidence, when considering the exogeneity and endogeneity of the economic factors, supports both of them. That is, the economic growth has positively affects on the probability of successful democratization. It also opens up the chances of maintaining a new form of regime after the moment transition. According to Acemoglu and Robinson, the driving force behind both the economic development and the political changes is a historical path that different states are taking. From this
12 Acemoglu, D. and Robinson, J.A. Why Nations Fail: The Origins of Power, Prosperity and Poverty. Crown Business, 2012. 13 Przeworski, A. Why Democracy Survives in Affluent Societies? Found at: http://politics.as.nyu.edu/docs/IO/4760/whydemt.pdf; Last accessed: 03/04/2013. 14 Przeworski, Limongi, Op. cit. 15 Boix, C. and Stokes, S. Endogenous Democratization. World Politics, 2003, 55(4), p. 517-549. 16 Ibid. 17 Wucherpfennig, Deutsch. Op. cit. 16 point of view, the correlation between the two mentioned variables emerges not due to any direct causality between them, but due to a third unobserved variable. The crucial moments experienced during a country's historical development are called critical junctures. These are such occurrences during which the power division between elites and other groups of a society is renegotiated. An illustration for such concept could be the Black Death, which devastated Western Europe in the 14th century. Since the peasant class had suffered from very high rates of mortality, the landlords had to provide the surviving peasants with better work conditions, which were rather flexible, in order to keep them working for a particular landlord and not in the neighbouring manors. This provided more power to the people outside the landlord class.18 Another example could be found with the Glorious Revolution of 1688 that took place in England, during which the parliamentary parties, the Tories and the Whigs, successfully managed to put constraints on the power of the British monarchs.19 Such cooperation was previously unsustainable, but due to the changes in the merchant class determined by the discovery of Americas and the flourishing Atlantic trade,20 the challengers of the king gained enough power to pose a serious threat on any monarch cherishing the absolutist ideas. Once again, the renegotiation of the division of power was possible only due to the factor (i.e. the conquest of new continents and expansion of trade) that was exogenous to both economics and politics. Tests on such a theory, have been performed by the applying quantitative analysis to various countries formerly colonized by the great powers of the time.21 If the critical juncture theory comes out to be true, then such countries should show similarities depending on what states were their metropolises and what institutions they could impose. According to such an approach, colonizers must have brought their specific historical experiences and reestablished their original institutions in the newly conquered lands. Although initially some support for this theory has been found,22 later studies with updated data have shown that such relationship is dubious theoretically and cannot be verified by currently available empirical data.23 Thus, this theory should be taken with a grain of salt, as evidently historical-institutional paths do not make the only important factor guiding country's evolution. Evidently, it is safe to assume that the phenomenon of endogenous effect of economics does
18 Acemoglu, Robinson, 2012, Op. cit. 19 Weingast, B. The Political Foundations of Democracy and the Rule of Law. American Political Science Review, 1997, 91, p. 245-263. 20 Acemoglu, Robinson, 2012, Op. cit. 21 Acemoglu, D. and Robinson S.? Unbundling Institutions. Working Paper Series, Working Paper 9934. Cambridge: National Bureau of Economic Research, 2003. 22 Acemoglu, D., Johnson, S., Robinson, J.A., and Yared, P. Income and Democracy. American Economic Review, 2008, 98 (3), p. 808-842. 23 Glaeser, E.L.; La Porta, R.; Lopez-de-Silane, F. and Shleifer, A. Do Institutions Cause Growth? Working Paper 10568; Cambridge: National Bureau of Economic Research 2004. See also: Benhabib, J.; Corvalan, A. and Spiegel M.M. Reestablishing the Income-Democracy Nexus. Working Paper, Cambridge: National Bureau of Economic Research, 16832, 2011. 17 exist. While it is true that certain once-in-a-life-time historical conditions might have had influence on the evolution of both political and economic institutions, the economic development has a positive effect on the chances for democratization. In other words, economic growth has both an endogenous and an exogenous impact on regime dynamics.
1.3 Modeling Causality
After discussing different theoretical approaches it may be concluded that even though only one of them stresses the endogeneity of the effect of economic factors on democratization, it is supported by the empirical evidence better than the other overviewed approaches. As results from such research appear to falsify the solely exogenous and path-dependence studies, this approach is accepted as an assumption in this thesis. In the light of such tendencies it is worth discovering what exact causal mechanisms could provide the economic growth with the endogenous power to change the type of political regime. Despite the fact that a lot of ink has been spilled while debating about the exact relationship between economic growth and regime dynamics, the mechanisms which income growth changes the political landscape remain rather obscure. Therefore, in this section, the model illuminating the precise causal relationships (i.e. what and how the economic factors influence the behaviour of political actors so that they would favour democratization) is constructed for further use in the hypothesis and theory testing. Although no single theory has been more widely accepted, Julian Wucherpfennig and Franziska Deutsch distinguish two different proposed approaches to the problem.24 The first one deals with inequality. Such theory has been outlined by Boix and Stokes.25 They suggest that economic growth changes the level of equality in a society. Since the wealth in a state is spread more equally, the median voter becomes wealthier and less prone to redistribution, and the rich are deprived of fewer resources by taxation than in a society with higher inequality. Consequently, due to the fact that under such conditions there would be less redistribution, democracy becomes more acceptable and less risky to rich dictators. Therefore, elites in a more equal society tend to favour the democratic rules of the political game. Another point to make is that such an approach also explains why the countries whose economies are based on non-tax revenue remain authoritarian.26 Such states might be considered as a non-typical set of countries. Daron Acemoglu and James Robinson approach the same question of the role of inequality but from a different perspective.27 According to them, when inequality is higher, the elites are more eager to democratize due to the
24 Wucherpfennig; Deutsch. Op. cit. 25 Boix; Stokes. Op. cit. 26 Wucherpfennig; Deutsch. Op. cit. 27 Acemoglu, D. and Robinson, J.A. Economic Origins of Dictatorship and Democracy. New York: Cambridge University Press, 2005. 18 fear of revolutions from the lower classes. Thus, the problem of the role that inequality plays in regime dynamics is still unsolved, and radically varying theories are proposed by different scientists in the field. One of the proposed solutions to the problem of causality deals with values and has been outlined by Ronald Inglehart and Christian Welzel.28 These scientists analyze the role of values which are dominating in a particular society. However, they do step out of the boundaries of the minimalist conception of democracy and, therefore, their theoretical attempts will not be considered as important for the argument provided in this thesis. The more so that their study was criticized due to the ambiguity of their approach to employing the qualitative data and due to confusion between causation and correlation.29 Therefore, it is possible to claim that the causal mechanisms through which the economic impact translates itself into democratic institutions still remains a mystery to be cleared out, and hence the model that might explain the causality should be worked out. The first thing to be stressed here is that the model should consider both economics and politics. The theory that satisfies this criterion is the Selectorate Theory, formulated by Bueno de Mesquita and Alastair Smith, which was later on expanded by the same authors together with Robert M. Siverson and James D. Morrow in their seminal work The Logic of Political Survival.30 In it the researchers argue that politics (or at least certain aspects of it) may be best analyzed by ascribing a similar utility function to all politicians. According to them, every political leader is trying to maximize the length of his stay in the office for as long as possible. The logic here is rather simple: those politicians who do not adopt the policies that would allow them to hold power play a significant role in politics for a short time at best, as their strategic moves do not satisfy their most important supporters. If, on the other hand, they steer their policies towards maximization of the chances of their survival in the office (i.e., satisfying the needs of their most important supporters), such politicians do get selected to important offices and remain there for longer periods of time. Staying in office allows politicians to implement diverse other objectives. Therefore, it is a necessary condition of success for all politicians. Even though at a first glance such logic might appear self-evident and straightforward, nevertheless it may unveil new aspects of political processes, among which regime dynamics is no exception. The mentioned authors distinguish several important groups of people that exist in every polity. They include the population (P) that consists of all the people living in a state. Yet, not all of them are important for political decision making. Suppose a smaller subset of P is the selectorate (S), hence the name of the theory. S includes the people who have a voice in deciding who is
28 Inglehart, R. and Welzel, C. Modernization, Cultural Change and Democracy: The Human Development Sequence. Cambridge: Cambridge University Press, 2005. 29 Wucherpfennig, Deutsch. Op. cit. 30 Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. 19 going to be the political leader. In the democratic countries, the selectorate is the same as the electorate. In other types of regime the composition of S might vary strongly – from cardinals of the Roman Catholic Church in Vatican to military leaders and industrial magnates. Still, even though all the members of S play a role in deciding on who will be the holder of the office, not all of them have to support a politician in gaining him power. For instance, in a democracy, to become the president of a country the candidate must get only half of the votes of the people who come to the ballot box, which is less than a half of the selectorate. In some countries, as, for instance, in the USA, one might not even need to get support from half of the people, who come to vote and receive a political position with less voices than that. Such a situation occurred in one of the recent elections, when George W. Bush won against Albert Gore Jr. despite the fact that he got less popular votes than his rival from the Democratic Party.31 Therefore, a third group, a subset of S, called the winning coalition (W) should be distinguished. This group consists of the people whose support is crucial for a politician to gain and keep power. Therefore, a political leader should adopt the policies that would be beneficial to his most important supporters, W.32 If W is small, a country will be authoritarian, whereas if W is large, it will be democratic. This is so because the leader has access to resources and must distribute them. If W is small, it can be done by providing private goods to its members. Contrariwise, if W is large, the leader has to provide public goods in order to ensure support from this group of people. The size of W dictates how many supporters must be kept loyal and when their number is growing with time it becomes cheaper and more beneficial to provide public goods instead of private ones. Because provision of public goods does not allow favouring solely particular interest groups, but bear effect on the whole P, it is consistent with democratic requirements of getting support of the major part of S. By providing solely private goods a leader may support just a small (relatively to S) group of supporters and such policy would not work to his advantage. The people whose support is needed in democratic elections would not find reasons to vote for a person that does not provide public goods. Therefore, the Selectorate Theory and its focus on the relationship between the leader, S and W have implications to many fields of enquiry in political science. These include institutional change in general33 and regime change in particular, as it would be natural to expect that just before and during the transition the changes would unavoidably occur in size and composition of S and W. As noted above, in authoritarian countries, S and W are small, whereas in the democratic ones they are large (consider Diagram 1, p. 21). Hence, the analysis of democratization may be based on the Selectorate Theory,
31 U.S. Electoral College. Frequently Asked Questions. Found at: http://www.archives.gov/federal-register/electoral- college/faq.html#ecpopulardiffer; Last accessed: 03/04/2013. 32 Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. 33 Bueno de Mesquita, B.; Smith, A. Political Survival and Endogenous Institutional Change. Comparative Political Studies, 2009, 42 (2), p. 167-197. Also see: Bueno de Mesquita, B.; Smith, A. Leader Survival, Revolutions, and the Nature of Government Finance. American Journal of Political Science, 2010, 54 (4), p. 936-950. 20 and it is important to take into account its implications for studying political regime dynamics.
Diagram 1. Size of S and W in dictatorships (left) and democracies (right) (consider populations being of equal size)
Source: Compiled based on Bueno de Mesquita, B.; Smith, A.; Siverson, R.M. and Morrow, J.D. The Logic of Political Survival. Cambridge: Massachusetts Institute of Technology Press, 2008.
Another interplay between different actors described by the Selectorate Theory that is important in democratization research, is the relationship between the leader and the (potential) challenger(s). When the leader has support from a strong enough W, the challengers cannot successfully threaten a current government. However, if W is weak, they may successfully overthrow the leader. Thus, his security directly depends on the ability to ensure (or buy) the loyalty of enough important groups which could form a stable and successful W. Regime transformation involves an institutional change, yet the political changes do not always imply the changes in the institutional structure of a state. First of all, when there is a threat to current political leadership, four different outcomes are possible: the political leader defeats a challenger and thus there are no changes in an institutional structure of the regime; the political leader defeats a challenger, but due to a threat of other potential opponents the institutional changes are initiated; the political leader is defeated by a challenger, and the new leadership keeps the old authoritarian institutions intact; the political leader is defeated by a challenger, and the new leadership replaces the old institutions with the new democratic ones. Nonetheless even though these are distinct outcomes, it should be stressed that the scale is continuous and not fragmented: it is conceivable that the changes in institutions might not
21 necessarily lead from dictatorship to democracy or vice versa, but rather make institutions somewhat more inclusive to other elite groups, without ensuring democracy and mass participation in politics (see Diagram 2 below).
Diagram 2. Range of institutional outcomes of confrontation between the leader and challengers
Source: Author's own research.
Despite such continuity of the scale, it is analytically more convenient to follow the logic of the minimalist conception of democracy and not consider the degree of inclusiveness of authoritarian institutions, leaving the binary distinction between the types of regimes. Such simplified taxonomy helps to construct an explanatory model of regime vacillation. A single aspect, which is common to all of these outcomes, is a confrontation between the leader and a challenger. Why is this significant? Here the main issue is that the emergence of challenger(s) creates uncertainty in the political environment of a particular polity. With the growth and restructuring of the economy the answer to the question of who must be included into W becomes less clear. As the situation becomes less certain, the situation becomes more suitable for the potential challengers to emerge. Consequently, the more there are potential challengers and the more S (and, therefore, in W) is restructured, the higher the uncertainty of who is going to be selected as the next leader. At the same time, keeping of the small W is becoming more risky, and safe-play with enlarging W by providing private goods becomes more and more expensive. Parallelly, the probability of both political and physical survival becomes lower, as it is not uncommon in authoritarian regimes to execute or imprison the former leaders, as plenty of examples show.34 When the confrontation takes place under such conditions neither the leader (if he has survived), nor a successful challenger (if he has successfully overthrown former government) are inclined to keep authoritarian institutions. The democratic rules of a political game would guarantee a fair play, greater certainty and greater safety, thereby becoming a much more attractive option than dictatorship. Where does economics come into play here? As argued above, in the case of small W, S consists neither of the whole P, nor of the citizens above 18 years old, but rather of the specific
34 Examples may include such geographically and temporarily diverse cases as the execution of the President of Liberia Samuel Doe in 1990 or execution of Charles I of England in 1649. 22 groups of people, such as the clergy, the military leaders or the heads of the sectors of industry. In order to ensure their support the leader should provide them with private goods, plundered from other members of S, or P, or gained by other means. At the same time, the members of W perform certain functions that would otherwise be performed by the government. For instance, the police and/or the military may use the monopoly of violence in the state in a such way that is beneficial to the leader, i.e. repress opposition, disperse protests etc. Industrial leaders may ensure that workers from large industries would repress those who are not satisfied with regime policies or their employees to help rig elections. As workers account for a large part of P, it is crucial to keep them controlled. For such reasons leaders need to keep industrial leaders close to themselves in addition to keeping control over the economy of the country. Yet, when the country's economy grows, the inner structure of the economic system of a polity also changes.35 First of all, some sectors of economy may lose their dominance, while others may gain it. For example, the country's economy may be refocused from agriculture to heavy industries. Secondly, particular actors may stop being (or, vice versa, become) the crucial members of S. Liberalized trade may ease the way for foreign capital and, consequently, foreign economic actors to a polity may also provide them with the possibilities of becoming members of Sor even the W. To illustrate this imaginary sample model might be beneficial as provided in Table 1. Table 1. Changes in the selectorate in relation to economic growth Case 1 Case 2
Military 20% Military 20%
Police 15% Police 15%
Industry A 18% Industry E 10%
Industry B 14% Industry B 10%
Industry C 14% Industry C 10%
Industry D 10%
Industry A 8%
Other industries 19% Other industries 17%
Source: Author's own research.
35 An exception here would be those countries that have their economies based on non-tax revenue. For the argument see, for example, Ross, M.L. Does Oil Hinder Democracy? World Politics, 2001, 53(3), p. 325-361. Still, non-tax revenue might come in different ways. In the case of foreign aid, which is also a non-tax revenue, it does not necessarily hinders democracy. In the post-Cold War era it depends on the intention and type of regime in the donor country. See: Bermeo, S.B. The Curse of Aid? Re-Examining the Impact of Aid on Regime Change. APSA 2009 Toronto Meeting Paper, 2009. Found at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1449285; Last accessed: 03/04/2013. 23
The table presents two hypothetical cases. Both of them represent the same country during different time periods. Case 1 is the older state and Case 2 represents a time period that has been entered by the country after a period of economic growth. The first two rows consider the influence (or relative importance) of the military and the police respectively. Other rows demonstrate a relative importance of various industries. The differences between Case 1 and Case 2 reveal the theoretical changes that might take place because of economic growth. From this exemplary model it might seem clear, which industries should be kept by W, yet in reality it is much harder to predict which particular members of the S are important, especially, if the situation is not stable but rather changes in time and if the relative importance of economic groups varies. As seen in the table, the support of the members of the S that are marked by applying bold attribute is important for the W to remain strong enough. The members that are signified by italics are potential members W (i.e., they may replace others, and then the W would remain intact and capable of helping the leader to remain in office). The changes in the S strap the leader of the ability to be sure what exact groups a W should include. No doubt, such an unstable situation brings uncertainty. It is also important to stress that even without restructuring the S, the economy is also susceptible to cycles, external shocks, changes in the global market etc. These events also affect S and W, which means that they have to be predicted and accounted for. Yet, as overviews of economic forecasting show, making predictions in advance is far from being easy to make.36 Thus, there constantly emerge even more factors strengthening uncertainty. It becomes more and more difficult to correctly determine which members of S are crucial for maintaining W. In such a situation, democratization may become a more attractive option for the leader than keeping the authoritarian regime intact. If due to the changing political landscape the leader happens to considerably lose power under, authoritarian conditions (i.e., his W had insufficient resources to successfully stop a challenger) he would face imprisonment or even death, not to mention abandoning the hope of further participation in politics. On the other hand, democratization would not only save him from the worst possible consequences, but would probably allow him to compete in the coming democratic elections. Therefore, in some cases, power would be lost only for a defined number of political cycles and not for all time. Thus, the higher the uncertainty, the stronger are the incentives to democratize. The theory concerning uncertainty might be illustrated with an extensive form game (see Diagram 3, p. 2537), where the dictator and his likely challenger(s) make their moves. Firstly the
36 See: Silver, N.: The Signal and the Noise: Why So Many Predictions Fail – but Some Don't. Penguin Press HC, 2012. 37 Here numbers represent only the order and not the value, thus, they may only be compared with respect to one being favoured over another. Yet, it cannot be claimed that, for instance. outcome 4 is twice as good as outcome 2. 24 game tree is split into two parts by the move of Nature. Nature decides if W is powerful enough to keep the current leader in power or not. The probability of such an event is p and may be any number between (and including) 0 and 1. Consequently, the second game when W is not powerful enough and is more difficult to be formed and maintained successfully, comes with the probability of 1-p.
Diagram 3. Extensive form game, solved by backwards induction, showing two possible situations that involve the uncertainty about the strength of W
Source: Author's own research.
The first game (i.e., the one, in which the leader can keep his W, or a successful W may be formed) begins with the move of the leader (dictator) who can either keep the authoritarian regime intact or introduce democratic reforms. In return, the possible challengers may act
It is only true that outcome 4 is preferred to outcomes 3, 2 and 1. 25 accordingly. If the dictator tries to keep the regime, the challenger may either acquiesce or challenge. If the dictator decides to democratize, the challenger also has two possible response actions – to accept the new democratic rules or challenge the leader and try to take his place under dictatorial rules. The outcomes ordered from the best to the worst with respect to the leader's preferences are as follows: keeps authoritarian regime, challenger acquiesces; keeps authoritarian regime; challenger challenges (but fails, as the W is strong enough); democratizes, challenger accepts; democratizes, challenger challenges (the outcome is worse than the previous one due to the fact that the challenger can gather W that is strong enough to revert the newly introduced democratic rules). For the challenger, the outcomes may be ordered in the following way: challenges, when leader democratizes; accepts, when leader democratizes; acquiesces, when leader decides to keep authoritarianism; challenges (but loses due to leader's W being too powerful), when leader keeps authoritarianism. When the extensive form game is solved by using backwards induction method, it is clear that the sub-game perfect Nash equilibrium is AUTH; ACQ, CH. In the second game, when the composition of S and the relative power of its members is highly variable and unstable, it is hard to form a stable W. Therefore, although the moves remain the same, the ordering of outcomes changes. For the leader, they are as follow: keeps dictatorship, challenger acquiesces; democratizes, challenger accepts; democratizes, challenger challenges (unsuccessfully, as it is not possible to form and keep a stable W); keeps authoritarian regime, challenger challenges (the outcome of such a situation could be a civil war due to the split in S). For the challenger, the order of outcomes is the following: accepts, when leader democratizes; challenges, when leader tries to keep authoritarian regime intact; challenges, when democratic reforms are introduced; acquiesces, when authoritarian regime is kept. When the extensive form game is solved by using backwards induction method, it is clear that the sub-game perfect Nash equilibrium is DEMO; CH, ACC. Now it is clear, that the actions of both the dictator and the challenger(s) depend on the game in which the players find themselves. Neither of them knows it for sure, they can only make estimates. If the situation remains fixed, there will be no uncertainty and it would be clear, which game of the two described ones, is being played. However, if the economy grows, which brings changes to the content of S, the certainty about the nature of the game being clear disappears. The less clear the game is, the more likely it is that the leader will initiate democratization and the challengers will accept the new rules of a political game. It shows that economic growth and the changes in S dictated by it do, at least on the theoretical level, create conditions favourable to successful democratization. The model outlined above allows to put forward the following hypothesis:
26
H.1. Economic growth will introduce dynamics that create instability in the structure of the selectorate and the winning coalition of a certain polity which will lead to democratization.
According to the described reasons, with economic growth industries will become less concentrated. Such an instability will make a leader uncertain about the composition of an optimal W. Due to dangers of uncertainty, democracy will become a more attractive option for a leader than maintaining a non-democratic regime. Likewise, due to uncertainty, potential challengers will also be more inclined to accept democratic rules. Therefore, economic growth will lead to democratization by restructuring S and W and rearranging the power between industrial actors. In the following section the methods that may be used to test the hypothesis testing are described. These are the qualitative process-tracing and quantitative statistical survival analysis methods. The next section also describes the cases analysed in the empirical investigation.
27
2. METHODOLOGICAL FRAMEWORK
This section is devoted to establishment of the methodological framework, which might be employed to test the proposed hypothesis. As has been mentioned, a mixed-method approach proves to be most beneficial, as neither purely quantitative nor purely qualitative methods are sufficient. In the former case, due to the lack of data and variables that come out to be only derivatives rather than direct measures of the size and structure of S, analysis may not reveal the actual picture of the situation. In the latter case, purely qualitative analysis would make the comparative cross-country analysis complicated since it would require describing many different cases. Therefore, interactive coupling of quantitative and quantitative approaches would add up advantage and reduce the disadvantage of both. Accordingly, the two combined methods used in this research are separately discussed in this section. Finally, the sample taken for the research is described and the reasons for such a choice are specified.
2.1 Survival Analysis
The issue analysed in the paper clearly shows that due to the perspective of the minimalist conception of democracy the distinction between the democratic and non-democratic states is binary. I.e. the regime change is regarded as a single event, when the situation in a polity moves from state 0 (authoritarian regime) to state 1 (democratic regime). When analysing the process which involves a singular one-time change of a certain attribute in an observational unit, it is worth employing the method of statistical survival analysis. It is clear that in research democratization is viewed as such a one-time event is democratization. Therefore, theoretical insights discussed in the previous section and the designed model determined the choice of the statistical survival analysis. The purpose of survival analysis is to “describe, explain or predict the occurrence of events”.38 The explanatory aspect of this method is most beneficial for the purposes of research carried out in this thesis. On the other hand, forecasting might compliment in expansion of the given analysis. It might be applied with regard to the countries that are still under authoritarian leadership. Basically, the chosen statistical method shows the degree of the probability for certain entities to alter (or not) their condition (i.e., to survive as they are) and how such prospect changes in time. It may also take into account variables that influence this probability. Although, originally, survival analysis was (and it still is) is most often emplyed in medical and biological research (e.g. in the field of biostatistics),39 which is no surprise, since the
38 Allison, P. Event History Analysis. // (eds.) Hardy, M. A. and Alan, B. Handbook of Data Analysis. London: Sage Publications Ltd., 2004. p. 369-386. 39 Matter, U. A Short Introduction to Survival Analysis. Found at: 28 exploration of life expectancy (e.g. survival of patients with a particular disease) was performed even before the method appeared. It was invented partly because of the need of more advanced statistical approaches to the study of the mentioned issue. Later on the method has been successfully adopted by the scientists from separate field such as, sociology as event history analysis; in engineering, as failure time analysis; in economics, as transition/duration analysis.40 Political science is no exception, however, in this social science the method is adopted rather rarely.41 In the author's conviction, an attempt at performing the statistical survival analysis in this thesis will not only allow to test the hypothesis with a larger sample of cases, but will also be innovative in democratization research from the the methodological point of view.42 It should be stressed that the term 'survival analysis' is preferred to other mentioned alternatives, as it both is the original name of this statistical method and also perfectly conforms to the topic of the thesis, i.e., the survival and fall of dictatorial regimes. In survival analysis there are two basic types of sampling: stock sampling and flow sampling. In the first case, the timing at the beginning of an observation and the end of it is the same for all the analysed objects. In the second case, the beginning of an observation for each analysed object may vary, as they may enter the sample (acquire the 0 condition) after the date at which the observation begins.43 Obviously, not all of the observed cases reach the traced outcome (e.g., a patient does not die before the end of the study; a country does not become democratic until the final point of research and the like). To overcome such an obstacle censoring is used. Censoring means cutting the data even if the observed condition has not changed from 0 to 1 (e.g., a country has not got democratized during the analyzed period) without waiting specifically for this to happen. Such censoring is called right-censoring. Left-censoring, in its turn, occurs when the exact beginning of 0 condition is not known.44 Therefore, for instance, in the case of Belarus, survival analysis could be performed despite the fact that the country gas not yet undergone a transition towards democracy. Such a possibility to censor data also makes the statistical survival analysis method beneficial for the given study. To put it otherwise, incomplete observations may be successfully incorporated into research even when if exact survival time is not known.45 As noticed above, censoring might sometimes be important not just because some of the observational units
http://wwz.unibas.ch/fileadmin/wwz/redaktion/wipo/Ulrich_Matter/Matter_Intro_SurvivalAnalysis_20062012.pdf; Last accessed 03/04/2013. The mathematical methods associated with survival analysis have been first developed in the field on insurance. See: Machin, D.; Bun Cheung, Y. and Parmar, M.K.B. Survival Analysis: A Practical Approach. Chichester: John Wiley & Sons, Ltd, 2006. 40 Ibid. 41 The analysis of the European Union decision making might serve as an example. See: Golub, J. Survival Analysis and European Union. European Union Politics, 2007, 8(2), p. 155-179. 42 A single found out example is: Gurses, M. Elites, Oil, and Democratization: A Survival Analysis. Social Science Quarterly, 2011, 92(1), p. 164-184. 43 Matter, Op. cit. 44 Miller, R.G., Jr. Survival Analysis. Wiley-Interscience, 2011. 45 Kleinbaum, D. G. and Klein, M. Survival Analysis: A Self-Learning Text. Springer, 2005. 29 have not reached the 1 condition, but rather because the timing of the beginning of the observed 0 condition may not be clear or the sufficient data might be unavailable for the initial period of this condition. Indeed, such might be the case with some of the authoritarian regimes discussed in this study – the economic data for the initial stages of dictatorships might be difficult or impossible to come across. Therefore, survival analysis which allows for both left- and right-censoring is perfectly meeting the task, due to it allowing cutting both the left and the right time periods without sacrificing statistical validity. Survival analysis also allows using the different types of explanatory variables. These can be split into two different ways. Firstly, these explanatory variables might be both the attributes of the observational unit (i.e., the economic situation in a country) and the attributes of the environment, in which the observational unit functions (i.e., a military situation in the surrounding countries).46 For this analysis, the external factors are not taken into consideration and only the attributes of the observational units are selected as the possible explanatory variables. Another division may be made with regard to the variation of variables in time – they may be either fixed or time-varying.47 This allows approaching the same problem from a different angle and incorporating testing of different possible explanations within the frame of the mentioned survival analysis. For instance, in the case of economic determinants of democratization, if the endogenous theory is taken as a premise, the rate of economic growth might be regarded as an explanatory variable. To sum up, the statistical method of survival analysis seems to perfectly suit the needs of the given research. The very fact that it incorporates censoring and analysis of the binary change in the condition of the observational units makes survival analysis a better option than other statistical or econometric methods that might be employed for this study.
2.2 Process-Tracing Method
With regard to the above discussed theory and the constructed model, it is clear that in order to carry out a fully non-biased and scientific analysis, a theory-driven qualitative method should be chosen. If the approach is focused entirely on description, it would not help in uncovering causality between condition X and outcome Y. Thus, it is important to keep the theory even in the case of qualitative research. Since for the testing of the hypothesis the observations of the relationship between economic and political variables (especially, the impact of the former on the content of the political S) are required, the process-tracing is the best method to use. It helps to precisely track the alterations in S and discover the causality between different variables by applying a broad spectrum of sources and
46 Jenkins, S.P. Survival Analysis. Unpublished manuscript, Institute for Social and Economic Research, University of Essex, 2005. Found at: http://michau.nazwa.pl/aska/uploads/Studenci/mag7_1.pdf; Last accessed: 03/04/2013. 47 Ibid. 30 evidence, that in one way or another reveal the causal connection. In other words, this method makes it possible to reveal the causality between variables X and outcomes Y. A political scientist David Collier describes the process-tracing as “the systematic examination of diagnostic evidence selected and analyzed in light of research questions and hypotheses posed by the investigator”.48 What such a definition makes clear is that despite the method being qualitative, the deductive element crucial for a Popperian scientific analysis is maintained here as well, even if it might be employed for raising an inductive hypothesis. Due to the deductive nature of such inquiry, the analysis does not become a just-so story allowing for the possibility to falsify or verify the hypothesis. On the other hand, inductive reasoning may also prove useful in revealing previously unexpected or unpredicted processes that might happen to be of great importance concerning the analyzed issue. Collier also distinguishes four major aims of process-tracing. Consider: to identify and describe previously unknown political phenomena; to evaluate and create testable hypotheses (here the twofold inductive-deductive nature of the process-tracing method may be clearly seen); to analyze causal relationships that exist in politics; to provide a novel perspective towards various already known problems that are not yet solved in political science.49 Even though no attempt at uncovering new political processes is made in this paper, the other three goals listed above undoubtedly fit the analytical purposes for employing this model to describe the relationship between economic growth and regime dynamics. The given thesis seeks to shed light on the yet unknown causality between economic development and democratization, by testing the proposed hypothesis and analysing the causal relationships that exist in politics. Ideed, the fact that this research fits three of the four aims associated with process-tracing shows that the adopted method is indeed an appropriate choice. In its simplest, the form analysis based on process-tracing might uncover a linear relationship as follows: X1 → X2 → X3 → … → Xn → Y It is obvious that the chosen method allows to connect a chain of causality by including the connecting elements (i.e., the ones that link the original independent variable with the dependent variable), that would otherwise might not have been considered important for the given research. Yet, it is not necessary to focus on the solely linear causality. On the contrary, due to process-tracing
48 Collier, D. Understanding Process Tracing. Political Science and Politics, 2011, 44(4), p. 823-830. 49 Ibid. 31 that accepts very diverse types of data,50 it is possible to reconstruct more sophisticated mechanisms that might work indirectly, influence (or be influenced by) many other processes etc. Here non- linear and circuitous models are possible as well.51 Such explanations might have more explanatory power than purely descriptive, linear ones. Another element important for process-tracing method is its time dimension. As the observed processes unfold in time, it is important to introduce a narrative element into the analysis. In such a case, it will not produce not generic timeless theoretical simplifications, but rather very specific empirical representations that are valuable in the field of history and social science research. In addition, process-tracing allows the researcher to embrace variables that are not directly comparable to one another,52 or in other words, the variables which could not be included in quantitative research. This also allows to compare different countries, when quantified data is not available for all of them. Therefore, process-tracing allows to make more in-depth comparisons, in the cases marked with the lack of data, or having many unknowns. The narrative style and time dimension also makes it easier to connect various factors and variables that are important for the final outcome Y. Without analyzing them from a temporal perspective, the direction of causality would be impossible to determine. In the analysis carried out in this paper, the process-tracing method is applied to three separate cases, the choice of which is described in the following sub-section. For revealing how economic growth might create the conditions favourable to democratization, this method seems to be beneficial due to the following reasons: economic development in different countries has taken different paths which involve variables that are not necessarily directly comparable; economic growth might have an impact on the content of S in different ways that are not necessarily direct and do not necessarily resemble each other in different countries; it allows to take into account the historical aspects of the development of different states and thus construct context-based narratives and simplified schemes that could explain the causality between observed variables. At the very basic level it is only important to distinguish what is X and Y in the carried out analysis. In this particular case, the independent variable X embraces economic growth and the changes it induces, e.g., industry diversification. The dependent variable Y stands for
50 It is possible to use such diverse evidence as data on migration, agricultural output, public speeches, topical data of newspapers, etc. in the same research, studying the same phenomenon. 51 Gerring, J. Case Study Research: Principles and Practice. Cambridge: Cambridge University Press, 2007. 52 Ibid. 32 democratization or its absence. What intercedes between the two or maybe even happens to be a prequel has to be included in the research. If the hypothesis is correct, the chain linking various relevant economic and political variables should be discovered. However, if such a chain is not found, the hypothesis might be considered falsified and incorrect, or wanting a refinement. Taking into consideration the theory discussed above and the chosen process-tracing method, it is possible to simplify and systematize the expected relationship in the following way:
Low level of economic development → Economic growth → Diversification and growth of the selectorate → Democratization
Now it is worth discussing what particular cases should be chosen for the proposed analysis and if all the countries that either have experienced transition or are still authoritarian should be included in the sample both for the qualitative and quantitative parts of the research.
2.3 Case Selection
The sample selected for the study consists of all European post-1950 transitions to democracy and the cases of preserved authoritarianism. They will be discussed later, as first of all the choice of such timespan and geographical boundaries should be argued for. Such a decision has been made on a couple of grounds. Time-wise the post-1950 period parallels the one used by Przeworski and Limongi53 and, judging by their exogenous-only conclusions, should pose a greater challenge to the hypothesis than a temporarily more inclusive sample, which shows a stronger endogenous effect. Therefore, if the hypothesis will pass the European post-1950 test, then, knowing that the pre-1950 cases show an endogenous effect of economic growth even more strongly, it will be good reason to believe that the hypothesis will not be falsified. The geographical limitations for the sample were put on to include only the European continent.54 On the one hand, such a choice has been made due to the fact that the European sample includes diverse cases of democratization, which may be analysed qualitatively. Diversity also provides a sample, where the least similar transitions are distinct enough to pose a challenge to the proposed hypothesis. On the other hand, the sample is not too large, hence, allowing one to distinguish what makes various cases different, and also makes it easier to find the uniform data embracing a higher proportion of cases and years. In such a way, the data will be more similar and of higher quality. As the latter may be crucial for the reliability of conclusions, it is reasonable to choose only the post-1950 European
53 Przeworski, Limongi. Op. cit. 54 The concept of Europe used in this paper is geographico-cultural, i.e., it includes Belarus and Russia as the countries furthest to the East. Turkey is not considered in the sample as only a very small part of it is found on the European continent and is historically and culturally more related to the Middle East and Central Asia than Europe. 33 cases of democratization. The data used to determine when a particular regime has become democratic is taken from Cheibub's Democracy and Dictatorship dataset.55 This provides a more uniform approach to democratization, while at the same time satisfying the minimalist conception of democracy. While it could be argued that, in some cases, transitions have begun earlier than Cheibub indicates (e.g. in 1975 and not in 1977, as is the case with the Spanish transition), it is the first democratic elections which allow one to objectively affirm that a particular country has undergone successful democratization. Other requirements for the countries to be included in the sample should be listed as well. First of all, it should be noted that the countries that formed a part of other countries and have split from a larger state are not taken into account, since they were incorporated into another political entity and thus faced different conditions for democratization, also including the issue of independence. Therefore, unless the countries that have emerged after the split from a larger political entity were themselves authoritarian while being independent polities, they were not considered. Thus, Lithuania, Latvia, Estonia, Ukraine, Croatia and Slovenia are not included in the sample, while Belarus, Bosnia and Herzegovina and Serbia have been taken into account – Belarus and Bosnia as authoritarian regimes in 2000 and still remaining dictatorships to this day,56 and Serbia for being authoritarian in the period between 1992 and 2000. There are two more distinct cases that will be not included into the analyzed sample. The first state worth to consider is Russia. As has already been mentioned, the countries that base their economies on non-tax revenue are not representative and may distort findings, due to the fact that they are able to successfully maintain authoritarian regimes even with high economic growth and high level of GDP per capita. Such is the case with Russia, the budget of which highly depends on the world prices of oil and gas. That is why this state is excluded from the sample. Another non- considered case is that of the former East Germany. This is so, because the pressures from the neighbouring West Germany might have played the role, too important to disregard. Moreover, this particular case may be considered as an opposite example of the states which have split from a larger political entity. In the case of East Germany, it has merged into a bigger polity. Due to such anomaly, this particular country was found unsuitable for the sample. In order to fully test a proposed hypothesis with the qualitative process-tracing analysis, it is worth choosing the least similar cases. This would show if the hypothesis is supported by the cases when the analysed variables differ in as extreme ways as possible. As noted above, in this research, both independent and dependent variables have been distinguished. The former are economic
55 Cheibub, J.A.; Gandhi, J. and Vreeland. J.R. Democracy and Dictatorship Revisited. Public Choice, 2010, 143(2-1). p. 67-101. 56 Ibid. 34
(economic growth-decline), whereas the latter are political (democratization-no democratization). By following such distinction and binary nature of both variables, it is possible construct the following matrix of different possible scenarios. Consider:
Table 2. Possible scenarios for combining independent and dependent variables
Authoritarian regime / high economic results Democratic regime / high economic results
Authoritarian regime / low economic results Democratic regime / low economic results
Source: Author's own research.
Even though it may be assumed that in the chosen sample no authoritarian regime has shown high levels of economic growth and no democratized regime has had low levels of economic growth just before transition took place, it is still possible to distinguish least similar cases, by using the previously described matrix and the cases from the sample that show highest-lowest change in the economic performance. In order to do this, it is necessary to choose the criteria for such a decision. In the case of political variable, it is rather clear that a binary variable of democracy- dictatorship must be chosen due to the minimalist conception of democracy used in this research. Thus, if a country undergoes a successful transition it gets a 1, and if not, it gets a 0. In the case of economic variable, things get a bit more complicated. The variable chosen is the GDP per capita as one of the most popular measures of economic development of a country. Pure GDP would not correct for the size and population of the country, hence, measuring it in per capita units would make different countries easier to compare. Such comparison would also be more reliable as the speed of growth of the economy of the country and not its absolute size is of greater importance for the carried out analysis. Therefore, the first used variable is the GDP per capita in the final pre- transition year. The second one is the average rate of annual change in the GDP per capita during the final five years before democratization takes place (the year of transition not is counted due to the fact that it might be distorted by the transition and its outcomes). Such time period has been dictated both by the logic of the model constructed for this research and available data. In order not to distort the trends, only the years before transition and not the whole period of dictatorship should be chosen. Otherwise such measurement would embrace different stages of regime dynamics, parts of them including the entrenchment of regime, which should not display the same trends as pre- transition years. Regarding the available data, it should be stressed that for some countries the data accounting for more than five years before democratization is simply not accessible. It is important to consider both of these factors, as the argument formulated above stresses 35 the importance of alterations in S brought by economic growth. On the other hand, as Przeworski claims,57 there is a certain level of the GDP per capita which 'guarantees' success of transition. Therefore, it is important to compare the absolute values of the GDP as well. Table 3 lists the GDP per capita levels and the average changes per year in the GDP per capita in the selected countries.58 Consider: Table 3. Absolute GDP per capita and changes in GDP per capita before transition Country Year of transition59 Transitional GDP Average Annual Change (%)
Albania 1991 503 -2.5
Belarus 2011+60 4807 9.59
Bosnia and Herzegovina 2011+ 5768 15
Bulgaria 1990 2350 7.52
Czechoslovakia 1989 3771 3.57
Greece 1974 2694 13.6961
Hungary 1990 3518 7.34
Poland 1989 2190 -2.34
Portugal 1976 2150 17.92
Romania 1990 1747 6.98
Serbia 2000 1161 -5.4
Spain 1977 3185 19.61
Source: Compiled based on the United Nations Statistics Division's data on the GDP per capita. Found at: http://data.un.org/Data.aspx?d=SNAAMA&f=grID%3A101%3BcurrID%3AUSD%3BpcFlag%3A1
57 58 In this case the data provided by the United Nations but not by the World Bank has been employed, as it accounts for the former Czechoslovakia, thus making it possible to use a uniform dataset for the whole dataset. United Nations Statistics Division. GDP Per Capita Data Found at: http://data.un.org/Data.aspx?d=SNAAMA&f=grID%3A101%3BcurrID%3AUSD%3BpcFlag%3A1; Last accessed 01/05/2013. 59 Cheibub, Op. cit. 60 Even though the research deals with the fall of dictators, the last of which took place in 2000 in Serbia, it is worth taking into consideration the dictatorships that did not experience transitions by setting their time value further than 2000, to grasp the newest developments in such regimes. Therefore, an exception has been made and the latest data from the used dataset has been included to calculate the GDP and the annual changes in the GDP values for Belarus and Bosnia and Herzegovina. 61 The data for Greece is only available for five years before transition, thus accounting only for four values of annual growth during the years of dictatorship. 36
The data from the table might be used for constructing a new matrix based on the previously provided one (see Table 2, p. 35), that shows all the possible cases of the relationship between economic and political variables.
Table 4. Economic growth and type of regime
Regime type Economic growth Economic decline
Dictatorship Belarus, Bosnia and Herzegovina ---
Democracy Bulgaria, Czechoslovakia, Greece, Hungary, Albania, Poland, Serbia Poland, Portugal, Romania, Spain
Source: Compiled based on the data from Table 2 and Table 3.
From Table 3 it is obvious that among the countries that have democratized successfully (i.e., not considering Belarus and Bosnia and Herzegovina), Spain had both the highest growth rate and the highest absolute value of the GDP per capita in the pre-transition period. Two countries from the sample seem to be the most opposite to Spain with respect to economic variables. The first one is Albania, which had the lowest GDP per capita just before transition (6 times lower than that of Spain) and showed negative average annual growth. Yet, such negative changes in the GDP levels were even more expressed in Serbia, which also had the second lower level of the GDP per capita (3 times lower than that of Spain). As the change in the GDP plays a more significant role in the causal model put forward in the previous section, Serbia seems to be a better choice for analysis than Albania. It should also be stressed that even though the country was bombed by the NATO, the purpose of those bombings was not to overthrow the regime, but rather to solve the issue of Kosovo. Thus, even though it must have played a certain role in the changing of political landscape of Serbia in 1999, its impact was not radically significant and did not itself initiate transition. Based on the data provided above, it is possible to cluster the countries into different groups with the use of the hierarchical clustering method62 by taking into account the GDP per capita during the transitional year, the annual change in the GDP per capita before transition and the very fact whether democratization occurred or not. Consider:
62 All statistical calculations and plots were made using the R environment with additional Survival library. 37
Diagram 4. Hierarchical clustering of the countries included in the sample according to the type of regime and the GDP variables
Source: Compiled based on the United Nations Statistics Division's data on the GDP per capita. Found at: http://data.un.org/Data.aspx?d=SNAAMA&f=grID%3A101%3BcurrID%3AUSD%3BpcFlag%3A1 and on Cheibub, Gandhi, Vreeland, Op. cit.
From the cluster dendrogram it is clear that three different groups of the countries may be distinguished, just as shown in Table 4 (p. 37). The first cluster includes Belarus and Bosnia and Herzegovina. The second one embraces Poland, Albania and Serbia, whereas the third cluster accounts for all the other cases. The latter cluster may also be divided into two larger groups (Southern European and Central European). In order to distinguish what countries are furthest away between the different clusters, a bivariate cluster plot may be drawn, by creating three cluster centres (using k-means clustering) and, consequently, three groups of the countries. Consider Diagram 5 (p. 37). Here one may clearly see that the cases that are furthest away from each other when plotted on a two-dimensional space are Belarus, Spain and Serbia. This fits perfectly with the information provided in Table 4 and justifies the selection of these three cases for the process-tracing analysis.
38
Diagram 5. Bivariate cluster plot the representing countries included in the sample: 2 stands for Belarus, 12 stands for Spain and 11 stands for Serbia.
Source: Compiled based on the United Nations Statistics Division's data on the GDP per capita. Found at: http://data.un.org/Data.aspx?d=SNAAMA&f=grID%3A101%3BcurrID%3AUSD%3BpcFlag%3A1 and on and on Cheibub, Gandhi, Vreeland, Op. cit.
In the next section all the selected cases will be analyzed by applying the process-tracing method. The first is Spain, which seems to be the case that fits the outlined theory best of all, i.e., it had a high value of the GDP per capita, experienced fast economic growth and democratized successfully, exactly as the endogenous theory of the economic impact on regime dynamics would predict. The second case to be analyzed is that of Serbia, which seems to go diverse from the proposed theory. As it is the case least similar to Spain, it should pose a challenge to the hypothesis. Yet this also means that the carried out analysis will not be biased and one-sided. Finally, a case of surviving authoritarianism in Belarus will be considered. Although the last case of the fall of dictator took place in 2000 in Serbia, it is worth considering for what reasons at that time Belarus still remained an autocracy and at present is defined as such. Therefore, events that allowed Alexander Lukashenko to survive as a dictatorial leader to this day will also be analysed in the qualitative part of the research. This is why special attention will be given to the country's relationship with Russia, to reveal how much the regime is dependent on its Eastern neighbour. If such relationship is found to be intense, it might be possible to remove Belarus from the pool of the set of the states suitable for the analysis. It is so due to a high level of involvement of an external actor, meanwhile in the paper only internal variables should be considered. The whole described
39 sample will be used in the final section where survival analysis will be carried out.
40
3. ECONOMIC GROWTH AND DEMOCRATIZATION: SPAIN,
SERBIA AND BELARUS
This section is describes the qualitative analysis of the three selected least similar cases in the sample. The process-tracing method is applied to all of the discussed countries – Spain, Serbia and Belarus. The structure of each sub-section is organized in the following manner. First of all, attention is focused on the historical development of the country, with the main emphasis on its economics and politics. This allows to better understand how selectorates and winning coalitions,63 which were (or still are, as is the case in Belarus) dominant in these countries during the authoritarian period, were formed. Secondly, a short general overview of the economic development during the years of dictatorship is provided. It helps to find out what aspects of economics had a crucial impact on the political power of economic actors. Afterwards, the process-tracing based analysis of the relationship between economic growth and restructuring of political selectorate is performed and illustrated by a scheme that helps to visualize the research on a historical timeline.
3.1 Democratization in Spain
3.1.1 Historical Background
After the discovery of Americas the Spanish Empire became one of the richest states in the world. Yet, the lack of economic knowledge resulting concentration in the monarchy's concentration on the natural resources rather than industrial development led to several defaults during a short period of time. It was the Netherlands (which at the time belonged to Spain) that profited from the Spanish colonies most of all, due to received investments. After such collapse Spain had never regained its previous glory.64 Actually, the case of the Spanish Empire illustrates the definition of a rentier state, i.e., deriving its main revenues from non-tax resources. Once their value had dropped significantly, the macroeconomic situation of the state worsened and finally resulted in an inevitable collapse. In the 19th century, after the Napoleonic Wars and the War of Independence, the state had once again become sovereign. From this point in time until the second half of the 20th century agriculture has played the most significant role in the Spanish economy. It is also worth stressing that at the same time the signs of industrialization appeared in some regions of the country (e.g.,
63 In order to enhance readability and due to the narrative-based structure of the process-tracing analysis, full terms 'selectorate' and 'winning coalition' will be used in this section instead of abbreviations. 64 Fergusson, N. The Ascent of Money: A Financial History of the World. London: Penguin Books, 2009. 41
Catalonia) and this is one of the reasons determining the existence of the strong regional awareness in Spain.65 Since industrial development, however, has managed to reach only very low levels, and manufacturing did not become an important sector of the economy until well into the 20th century. Spain entered the 20th century with low economic indexes, if compared to other Western states of the time. The government made the decision to control the state without the interference of the parliament. Yet, the protectionist policies were adopted and despite the initial growth, they eventually worsened the economic situation. Finally, during the years of republic, both politics and economics of the state were radically pushed to the left part of the ideological spectrum. Yet, since the leftist government of the time included various parties and movements, it was difficult to adopt coherent reforms due to inner quarreling.66 In fact, it plagued the Republican side during the Civil War.67 The war of 1936-1939 brought heavy damages to the Spanish economy. Firstly, the economies of both fighting sides were reorientated towards satisfying the needs of war.68 Secondly, many industrial facilities were destroyed. What is even more important, Spanish gold reserves were given to the Soviet Union by the Republican government, that hoped that when the war was over the capital would be given back. Unfortunately, after the war the gold reserves were not returned to the country,69 as the USSR did not consider Franco's regime as legitimate heir to the Republican Spain. From this, it is clear that before the years of dictatorship Spanish economy, despite the economically impressive achievements of the past, was severely underdeveloped and devastated by the war. Thus, the new regime had to restore it and also adopt reforms in order to stimulate economic growth.
3.1.2 Spanish Economy under Dictatorship 1939-1977
The first years of Franco's rule coincided with World War II and, due to certain ideological similarities, resulted in the cooperation between the Francoist Spain and the Nazi Germany. It was so because the Germans supported the rebel side during the Spanish Civil War. It is also worth noting that even before World War II the Germans have established Raw Materials and Good Purchasing Company in Spain and then tried to expand their influence. However, Franco did not wish to get allied with Hitler too closely70 and made deals in wolfram trade with the Ally side.71
65 Rosés, J.R. Why Isn't the Whole Spain Industrialized? New Economic Geography and Early Industrialization, 1797-1910. The Journal of Economic History, 2003, 63 (4), p. 995-1022. 66 Payne, S.G. A History of Spain and Portugal. Madison: University of Wisconsin Press, 1973. 67 Lannon, F. The Spanish Civil War. Oxford: Osprey Publishing, 2002. 68 Payne, 1974, Op. cit. 69 Brias, P.; Angeles, M. Hacienda y Finanzas Durante la Guerra Civil. Paper from: Congreso de la Guerra Civil Española 1936-1939, 2009. 70 As an anecdotal evidence of this (but consistent with the process-tracing method) it is worth reminding the claim that Hitler suggested Mussolini that he would rather have some of his teeth pulled out without gas than parley with Franco once again. 42
This shows that even during the war the Francoist ideology was meant to keep balance between the different fighting sides. It created economic autarky, so that Spain could become a self-sustaining country. It also meant that the defeat of Axis powers did not deliver a mortal blow to Spain neither politically nor economically. After the war the same ideal of autarkian system remained strongly entrenched in Franco's policies. Yet, it had also led to significant stagnation – the economy remained mostly based on agriculture, whereas industries were not developing significantly.72 The ideology of the time was heavily influenced by falangists, who were the most nationalist group in Franco's winning coalition. Thus, even though restrictions on foreign trade were a little bit relieved and some foreign aid from the United States accepted, such changes were not radical enough to make a long-lasting positive impact on the overall economic situation of the country. It led to mass popular dissatisfaction and people went on strikes. Such a situation could not be tolerated for a long time. Especially so, because strikes became a form of political dissent and were used to express the popular dissatisfaction with the regime,73 despite some amendments to the economic policy. In order to successfully overcome this challenging situation, the alreations in the government were introduced. In 1928 a Catholic priest Saint Josemaría Escrivá founded a lay organization of believers called Opus Dei which later on became the personal prelature of the popes. Among its members were the prominent members of the Spanish society, including academicians and experts in various fields of sciences. Due to close ties between the Catholic Church and Franco's regime,74 the organization was treated positively by the government. Since some of its members were rather technocratically-minded, they became responsible for the country's economy and quickly decided what measures should be taken. They were chosen not only because of their loyalty to the regime, but for their expert knowledge as well.75 It led to the drafting of the National Stabilization Plan in 1959. At the same time, the International Monetary Fund granted Spain a 546 million USD loan.76 All of these things radically changed the route that the Spanish economy was taking. The Plan was the turning point in the history of modern Spanish economy. As Lieberman distinguishes, its main goals were to balance economic growth and integrate Spanish economy into
71 Leitz, C. Economic Relations between Nazi Germany and Franco's Spain 1936-1945. Oxford: Oxford University Press, 1996. 72 Lieberman, S. Growth and Crisis in the Spanish Economy 1940-1993. London: Routledge, 1995. 73 Encarnación, O.G. Labor and Pacted Democracy: Post-Franco Spain in Comparative Perspective. Comparative Politics, 2001, p. 337-355. 74 Indeed, the relationship between the Spanish government and the Roman Catholic Church led to the birth of a term National Catholicisim (sp. Nacionalcatolicismo). See: Payne, S.G. Spanish Catholicism: An Historical Overview. Madison: University of Wisconsin Press, 1984. 75 Mangen, S.P. Spanish Society after Franco: Regime Transition and the Welfare State. New York: Palgrave, 2001. 76 Lieberman, Op. cit. 43 the global world network of economics.77 The Plan presumed that price stability and hence strictly controlled inflation were to be ensured by the government. This meant significant reductions in both public and private spending, as austerity measures had to be adopted to achieve the proposed goals. In order to incorporate Spanish economy into the global system, a new exchange rate for peseta was necessary. The changes in the tariff system and alterations in foreign capital flow regulations had to be adopted. Another interesting decision that was made at around the same time was to allow the expatriates, who had pro-republican sentiments and lived in exile, to invest in Spain without restrictions.78 Of course, the measures were not extremely radical, and it is impossible to argue that Spanish economy was not regulated at all. The positive impact of new economic policies was felt at once. No doubt, it is one of the cases that are used in favour of the argument that extremely quick economic growth is possible under authoritarian conditions, which also suggests that democratic transitions might occur precisely due to the economic growth.79 The period between the years 1960 and 1975 witnessed an extremely quick growth of the GDP per capita in Spain. In fact, no other European state could compete with the rates of economic growth demonstrated by Spain. Of course, due to integration into the international economical system, the external events, such as the energy crisis of 1973 had an impact on the situation in the country. It is possible to claim that this event accompanied by the death of the unifying leader, Franco, played the most significant role during the beginning of the democratic transition. Thus, from the evolution of the Spanish economy during the years of dictatorship described above it becomes clear that certain economic changes, which might have played considerable part in regime change, did occur. After Franco's death Juan Carlos I openly began advocating reshaping of the Spanish political system. In 1976 Adolfo Suárez has been appointed as the prime minister and proposed several reforms that paved the way for the first free election after the years of dictatorship. Although relationships of Suárez's government with different political groups, ranging from the far left to radical supporters of the Franco's regime, pro-democratic reforms proved to be fruitful and the elections took place in the summer of 1977. In the next section the outcomes of economic policies are overviewed and their possible impact on the content of the selectorate and the winning coalition is analyzed. For now, the temporal relationship between the political and economic events in Spain during the Francoist years has been established as follows: Economic isolation → Minor changes in economic policy → Globalization of a larger scale → Transition to democracy
77 Ibid. 78 Ibid. 79 Glaeser, La Porta, Lopez-de-Silane, Shleifer, Op. cit. 44
Even though causality has not yet been explicitly discussed, it is worthwhile remembering the importance of the time dimension in the analysis based on the process-tracing method, analysed above. Therefore, the next section is dedicated to the analysis of causal relationship between economic development and the size and structure of political selectorate in Franco's Spain.
3.1.3 The Selectorate and Economic Growth
Franco's death is often treated80 as a triggering event due to which democratization could be developed. In fact, it was the catalyst and the most important reason for the regime change, as Przeworski argues. However, this would mean, however, that the death of the leader could bring democracy at any other time in the past. Whatever convincing such a theory may appear at a first glance, some Spanish economists are apt to stress that the processes resembling the first steps of democratization did indeed appear before the death of Franco.81 Some have courage to claim that the transition began in 1973.82 This, then, only gives credit to the aforementioned event of accelerating regime change rather than its conditioning. In this section (as in other corresponding sections describing the changes in the selectorate in the other two analysed cases), the effects of changes in the economy on the structure of the selectorate are considered. Following the requirements of the process-tracing method, various types of evidence are provided and discussed in order to create a more elaborate representation of transition. Since the evidences are of different types, the narrative-style used in the previous section will be abandoned. Here the puzzle technique will be involved by discussing different segments separately to put together later on in order to form a coherent picture (see Diagram 6, p. 51). First of all, it is important to list the original members of Franco's winning coalition. From the political-institutional perspective, they include the following groups (with no attempt at any particular order of importance)83: the falangists as governmental party, whose many leaders played significant roles during the Civil War; the monarchists who were alienated by the Republican policies and therefore supported Franco's side; the Roman Catholic Church, which supported Franco both during the Civil War and
80 See: Przeworski, A. Democracy and Development: Political Institutions and Well-Being in the World. 1950-1990. Cambridge: Cambridge University Press, 2000. 81 Lieberman, Op. cit. 82 García Delgado, J.L. Estancamiento Industrial e Intervencionismo Económico Durante el Primer Franquismo. // Fontana, J. (ed.). España Bajo el Franquismo, Barcelona: Editorial Crítica, 1986. p. 170–91, as quoted in Lieberman, Op. cit. 83 Helpman, E. Institutions and Economic Performance. Cambridge: Harvard University Press, 2008. Even though, the author uses term 'selectorate', from the listing of its members it is clear that the following definitions used in this paper that would mean 'winning coalition'. 45
after it. The main reason was the strongly anti-religious position held by the Republicans; the armed power structures that were kept to control of violence in the country; large-scale landowners, as another important group of regime supporters, to add economic dimension.84 Since Spanish economy at the beginning of the dictatorial regime was mostly rural, the las of the distinguished groups formed a significant class. Left-wing reforms that were implemented on the eve of the Civil War were not beneficial to them, and the victory of the rebel side ensured that such policies were reversed and the agriculture-based on the large-scale rural units would be reestablished.85 It means that the economy of Spain was dependent on the class, which, in its turn, was dependent on the government and its policies. It might also be illustrated by the fact that during the first years of dictatorship, proportion of the size of the population involved in an industrial sector had diminished to one fifth, and the people involved in agricultural activities made more than a half of the population.86 Therefore, it is safe to assume that from the economic perspective, large- scale landowners made the most important group of Franco's supporters. Such mutual-dependence existed as long as agriculture remained the major sector of the economy. In order to keep the support of rural elite the government had to maintain unrealistically inflated prices for agricultural production, which also helped to lead the country to stagnation. Due to the new reforms which instigated the growth of the industrial sector, the proportion of the people involved in rural economy fell significantly. It accounted for only 35.7% in 1964 and 16.3% just two years later, in 1966.87 Thus, the National Stabilization Plan helped reorientate the Spanish economy from agriculture to industries. This also meant that the changes in the economic environment and growth induced by it shifted focus from large-scale landowners, formerly being crucial to keep in the winning coalition, to the new players in the economic game. Here it is noticeable that the changes in the economic policy allowed for the economic to grow but did not threaten the political regime directly. The development of the economy, which was given impetus by the aforementioned economic policies outlined in the Plan, did influence the content and the size of the selectorate. In other words, economic modernization and changed the relative power of different economic actors in Spain. This is consistent with the hypothesis put forward in the thesis. It also suggests that it was the internal rather than external events that played the crucial role in initiating transition. Another important aspect of the Plan was the measures taken to incorporate Spain into the
84 Cabana, A.; Díaz, A. Agricultural Techniques and Modernization in Franco's Spain. Paper from a seminar on Fascism and Agriculture. Santiago de Comopstela: Centro de Estudios Avanzados, 2011. 85 Ibid. 86 Merigó, E. Spain. // Boltho, A. (ed.). The European Economy: Growth and Crisis. Oxford: Oxford University Press, 1982. p. 544-580. 87 Lieberman, Op. cit. 46 global economic system. Such openness to external economies led to increased flows of foreign capital into the country. It had distorted the former system of economic power in Spain that existed during the years of closed economy. It might best be illustrated by analyzing the alteration in the amount of imports that came into the Spanish market during the period of 1970-1978.88 Indeed, such growth demonstrates that foreign capital and goods did infiltrate the Spanish economy much more intensely than previously. For instance, liberalized import which had to satisfy only the eased tariff restrictions grew from 9% in 1959 to 80% 1973.89 Thus, the economic boom brought by the Plan was partly driven by its openness to foreign economic actors. This has also made Spain more lenient to exports which had also grown dramatically during the late stages of dictatorship.90 Which, in turn, led to the growth of state's income. It should be remembered here that the part of the money flow into the country consisted of the capital belonging to the Spanish expatriates who had to leave Spain due to their ideological views opposing the Francoist regime. It should be also stressed that such money could have been used to support those entities that opposed the regime and were pro- democratic, as it was assured that investments would not be nationalized as had been done before.91 Another sector that benefited heavily from the open economy was tourism. In fact, it was still during the last years of Franco's regime that tourism became an important part of the country's economy and its growth stagnated for some time after the transition.92 Therefore, once again the change in the economic environment is observed that goes hand in hand with economic growth. When considering the sources of income, which in the last dictatorial year, 1974, accounted for 28% of all the GDP of the state, it is clear that Spain was supported by more than a single country. Such guess could be theoretically advocated by pointing out the factor of dictatorial Spain's NATO membership and hence the potential influence of the USA. However, the truth is that the USA was only one source of income among many. The financial flows from Switzerland, Germany and other countries also formed a significant part of all foreign capital penetration.93 It means that no dependence on a particular single state existed. This also raises an important issue of foreign aid. Although foreign investments and foreign aid do not mean the same thing, the very fact that Spain took a loan from the International Monetary Fund provokes the discussion of what effects this source of money could have had. The
88 United Nations Statistics Division. GDP Per Capita Data. Found at: http://data.un.org/Data.aspx?d=SNAAMA&f=grID%3A101%3BcurrID%3AUSD%3BpcFlag%3A1; Last accessed 01/05/2013. 89 Prados de la Escosura, L.; Roses, J.R.; Sanz-Villarroya, I. Economic Reforms and Growth in Franco's Spain. 78. Working Papers in Economic History,11-07. Madrid: Universidad Carlos III, Departamento de Historia Económica e Instituciones, 2011. 90 Lieberman, Op. cit. 91 Ibid. 92 Martínez Serrano, J.A.; Myro Sánche, R. La Penetración del Capital Extranjero en la Industria Española. Moneda y crédito, 1992, 194, p.149-198. 93 Tascón , J. Las Inversiones Extranjeras en España Durante el Franquismo: Para un Estado de la Cuestión. Pasado Memoria: Revistade Historia Contemporánea, 2002, 1(1) p. 277-289. 47 negative consequences of foreign aid are often discussed,94 regime entrenchment being among the most important ones. It might be explained in the following way: if an authoritarian regime gets funding (which is a non-tax source of revenue), it strengthens its position and, thus, democratization becomes less likely. Recent studies demonstrate that while such distinction is valid for the Cold War period,95 the trends after 1990 show that the type of regime of the donor state is also important.96 This factor could be reconcilable with the selectorate theory, as it would mean that governments are either more likely to buy policy concessions from those countries which have higher likelihood of democratization or such policies that should create a favourable environment for democratization. Even though the authors of the selectorate theory did not make many assumptions about the distinction between democratic and authoritarian aid,97 the hypothesis discussed previously seems logically coherent and consistent with the data. In the Spanish case, it seems very probable that foreign aid was first and foremost used to give impetus to economic growth and, consequently, was not used to entrench the regime, which at the time was quite stable. The largest problem for the government was the deteriorating economic situation rather than well organized political opposition. Therefore, the taken loan had to be used to stimulate economic growth, which, according to the proposed theory, paradoxically led to democratization and rather than regime entrenchment. The National Stabilization Plan and the economic landmarks that it indicated made another type of impact on the content of Franco's selectorate. As has been maintained, one of the groups that important for the winning coalition during and right after the Civil War, the falangists, was strongly pro-autarkian. This means that the new economic policy did not take their views into account. Moreover, it should be stated that Franco tried to homogenize the country and design a single- culture, whereas the regionalist tendencies were strictly discouraged. Nonetheless,, regional consciousness has grown, especially in the Basque country and Catalonia, as a sort of resistance against the government.98 Obviously, it was not the thing that the Spanish government stood for. Therefore, it may be logically supposed that regional actors also had their reasons to oppose a forced unification of identities.
94 For examples see: Kuziemko, I., Werker, E. How Much is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations. Journal of Political Economy, 2006, 114(5), p. 905-930. Also see: Rief, D. Did Live Aid Do More Harm than Good? The Guardian. Found at: http://www.guardian.co.uk/world/2005/jun/24/g8.debtrelief; Last accessed 12/01/2013. 95 Dunning, T. Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa. International Organization, 2004, 58(2), p. 409-423. 96 Bearce, D. H.; Tirone, D.C. Foreign Aid Effectiveness and the Strategic Goals of Donor Governments. Journal of Politics, 2010, 72 (3), p. 837-851. 97 Bueno de Mesquita, B., Smith, A. Foreign Aid and Policy Concessions. The Journal of Conflict Resolution, April 2007, 51(2), p. 251-284. 98 Tortella, G.; Houpt, S. From Autarky to the European Union: Nationalist Economic Policies in Twentieth-Century Spain. // (eds.) Teichova, A.; Matis, H.; Pátek, J. Economic Change and the National Question in Twentieth-Century Europe. Cambridge: Cambridge University Press, 2001. p. 127-149. 48
The economic policies of the first half of Franco's period were also targeting the issue of a homogenous, economically self-sustaining nation and they paralleled the nationalist ideology perfectly. The first important state-wide economic institution was established during the first years of dictatorship. It was the Servicio Nacional del Trigo (National Service of Wheat) whose main goal was to assure that Spanish agriculture would produce enough wheat to satisfy the needs of the population. In such a way, at least on the theoretical level, even the lack of trade relations with foreign countries would have made Spain would be safe from famines. Unfortunately, the rates of production were lower than originally excepted. Due to the fact that such policies and the system itself were very much welcomed by large-scale landowners whose support was important to Franco and well fitted the ideal of autarky adopted by the nationalists, no significant steps were taken to improve the situation. Nevertheless, due to deterioration of the economic system, at least some slow reforms had to be adopted. Yet, they did not change the situation radically enough and more technocratic reforms, proposed by the members of Opus Dei, had to be introduced.99 It should be stressed that the purpose of these changes was not the change in the type of regime, i.e., democratization, but rather the stimulation of the country's economy, which would allow to keep the dictatorship intact. With the de-autarkianization policies both the corporations and individuals gained more freedom to act.100 It made them the potential members of the selectorate and, consequently, the winning coalition. The certainty about political powers had diminished as the selectorate became restructured and, therefore, the situation had been favouring the democratic reforms. As mentioned in the list of the original members of Franco's coalition provided above, an important part within the regime was performed by the Roman Catholic Church in Spain. It was predestined by the anti-religious measures introduced by the Republican government just before the Civil War. The Constitution of the time is sometimes considered as antagonistic towards the Church.101 Such animosity established a hostile State-Church relationship that is quite uncommon in Western democracies.102 Therefore, it is not surprising that the Church did support the rebel side during the war. Yet, soon thereafter the tensions between the clergy and the falangists began to grow, mostly concerning the issues of education and worker's organizations. The Second Vatican Council with its emphasis on social welfare and the new liberal economic policies introduced with the National Stabilization Plan have distanced the Church from the regime still further. On the one
99 Mangen, S.P. Op. cit. 100 Aceña , P.M.; Martínez Ruiz , E. The Golden Age of Spanish Capitalism: Economic Growth without Political Freedom. // (ed.) Townson, N. Spain Transformed: The Late Franco Dictatorship, 1959-75. London: Palgrave Macmillan, 2007. p. 30-47. 101 Martinez-Torron, J. Freedom of Religion in the Case of the Spanish Constitutional Court. Brigham Young University Law Review, 2011. 102 Fox, J. A World Survey of Religion and State. Cambridge: Cambridge University Press, 2008. 49 hand, due to the newly liberalized market the Spanish economy started developing. On the other hand, social benefits did not become significant part of the Spanish social policy. What is even more important, with the new outlines of social justice provided by Vatican in the 1960s, the Spanish Church, having to remain in line with its head in Rome, had to oppose Franco who, in return, could do nothing, as the Catholic Church is an extra-state entity. Such status makes it more resistant to various political threats. And, of course, such policies would have been very unpopular with the population at large. All in all, the relationship got strained, and the Church began to turn away from the regime. To conclude, the new economic policies adopted by Franco's government after having introduced the Plan distanced away another member of the winning coalition. Such are the most important alterations in the content of Franco's winning coalition. It is worth noting that in one way or another they were related to the economic development of the country. To make the description clearer, a visual scheme has been drawn (see Diagram 6, p. 51). Its clearly demonstrates the impact which the changes in economic policy and economic development brought on the content of the selectorate. The attempts to save and strengthen the nearly-failing regime in the end of the 1950s by stimulating the economy also resulted in weakening and dispersion of Franco's winning coalition. Such changes in the selectorate determined the rising uncertainty. Although Franco died as an authoritarian leader of the country, both his successors and opponents preferred democratic reforms. Thus, the economic development that followed the period of autarkian stagnation has moved Spain towards democracy.
50
Diagram 6. Economic growth and changes in the selectorate in Spain 1950-1977
Source: Author's own research.
51
3.2 Democratization in Serbia
3.2.1 Historical Background
Serbian territory was occupied by the Ottoman Empire from 1459 to 1878. Yet, its status during this period was not constant. In 1804 and 1815 revolutions took place and although they did not guarantee the de jure independence for the country, these uprisings resulted in the authorities granting the Serbs autonomy inside the Ottoman Empire. De facto, Serbia had even more freedom than such a status could presuppose. In 1878 the war between Russia and the Turks has broke out. Serbs used the situation to their advantage and proclaimed independence de jure, which was recognized by other political entities of the time. In 1882 the country became an independent kingdom.103 Thus, by the end of the 19th century Serbia regained independence after a long period of foreign rule. With the end of World War I Serbia which fought on the Triple Entente's side (and was the first country on which the war was declared by the Austro-Hungarian Empire), became the Kingdom of Serbs, Croats and Slovenes, or, as it came to be known, the Kingdom of Yugoslavia. Attempts were made to create a single national identity within the state and all separatist or minority movements were restricted. During World War II the country was occupied by the Nazi Germany, the army of which was pushed out of the territory only in 1944. Until that time it was still rural and non-industrialized. At the end of World War II, the Socialist Federal Republic of Yugoslavia led by Josip Broz Tito was established. During this period, the previously agriculture-based economy was transformed into an industrial one, with the cadres of the party establishing close ties with the economic elite. Yet with time more and more powers were given to enterprises themselves.104 It is also important to stress that Yugoslavia distanced itself from the Soviet Union and managed to keep a certain balance between the West and the East, as well as between planned economy and a certain form of free market. The reforms stressing decentralization were implemented rather early, their roots reaching the 1950s.105 They made the Yugoslavian production both more competitive and open to foreign markets. The economy of the time was also marked by the involvement of workers in running various enterprises, but, nonetheless, the party still had a profound influence on the appointment of officials. The more liberal reforms and opening of foreign trade led to the revaluation of currency.106 Yet, with such pro-free-market reforms gaining impetus, such reforms became threatening to the
103 Cox, J.K. The History of Serbia. Greenwood Publishing Group, 2002. 104 Chittle, Ch.R. The Industrialization of Yugoslavia under the Workers' Self-Management System: Institutional Change and Rapid Growth. Working Paper 26. Kiel: Kiel Institute for the World Economy, 1975. 105 Ibid. 106 Ibid. 52 political establishment and therefore they were abandoned.107 Contrary to the USSR, the emigration abroad was permitted. Foreign trade with other states allowed Yugoslavia both to sell and buy goods, as even a still large agricultural sector could not satisfy the needs of the Yugoslavian people. Yet, in the 1970s and 1980s the economy of the country began to stagnate. Certainly, here an important role was played by the oil crisis, and the government had to borrow money in the international market. At the end of the 1980s inflation skyrocketed, and the Yugoslavian economy began to crumble. Once again, the monetary reforms, as well as fiscal ones, were introduced. At the beginning of the 1990s a civil war in the Socialist Republic of Yugoslavia broke out, which resulted in Slovenia, Croatia and Bosnia and Herzegovina becoming independent countries, the Yugoslavian state then consisting only of Serbia and Montenegro. To summarize, during the period of the Socialist Federal Republic of Yugoslavia the country was involved in the process of industrialization, and a very specific type of economic system called 'self-management' was created. Its main attributes were the higher levels of decentralization than in the Soviet bloc, with its social property playing an important role.108 Yugoslavian economy was also a 'contractual economy', in which prices were not driven by the demand and supply, but rather by the contracts specifically negotiated by enterprises.109 Thus, the former Yugoslavia shows an interesting case of a hybrid economy combining the aspects of planned and free market economy.
3.2.2 Serbian Economy after the War: 1992-2000
Just like other ex-socialist Yugoslavian countries, the newly established Federal Republic of Yugoslavia (which includes Serbia and Montenegro and henceforth will be refereed to as Serbia to avoidl confusion between the Socialist Republic of Yugoslavia and the Federal Republic of Yugoslavia110) suffered a huge decline in the GDP. What made economic matters even worse was the fact that the former market was now split into several independent ones and some former enterprises and economic plans were simply outdated due to the fact that these other parts of a previously unified market became more difficult to penetrate and impossible to control from one center. The era of Milošević is described as “characterized by a war economy, large grey economic sector, the black market, an oligarchy of tycoons controlling the large state-owned and private business enterprises, state-driven hyperinflation, state-sponsored smuggling, client-patron relationships, state-backed pyramidal schemes, inefficient fiscal system, and lack of investments”.111
107 Crnobrnja, M. and Savić, N. Economic Developments during Transition in Serbia. 84. Economic Developments during Transition in Serbia. Belgrade: Faculty of Economics, Finance and Administration Institute, 2006. 108 Ibid. 109 Ibid. 110 This has also been done by other political scientists. See: Cheibub, Op. cit. 111 Ibid. 53
In other words, the state used the economy for its political purposes and, therefore, the system was far from being efficient. It was also constructed as a pyramid, with Milošević and his clique being on the top. The measures to overcome the recession were taken and the decline was stopped and reversed, until in 1999, at least partly due to the NATO attacks, the GDP growth once again became negative, although it the rate of growth was reduced already in 1998. Estimations show that due to recession, for some time in the 1990s 50% to 70% of the population lived below the poverty line.112 Therefore, there were reasons to think that the new Yugoslavia might become a failed state. Indeed, such concerns were voiced,113 even if they have never come to be well grounded. During the Milošević foreign trade period did not become very important for the country's economy. Overall, the exported goods made just 15% of the GDP, whereas imports made 27% of the GDP.114 It should also be noted that the United Nations imposed sanctions on Serbia from 1992 to 1995. It both isolated the country and hurt it economically. For instance, no new loans could be taken and already during the first three months after the imposition of the UN sanctions industrial output fell by two fifths from its previous level.115 Another outcome of the sanctions was the development of a criminalized economy.116 The latter may further be split into the 'gray' economy (untaxed and unregistered but otherwise legal activities) and 'black' economy (illegal activities), both of which have grown during the Milošević era. More attention to this issue will be devoted in the next section. It is worth simplifying the development of Serbian economy in 1992-2000 into the following scheme:
Collapse of the economy → Gradual growth of the GDP → Formation of the 'grey' economy → NATO bombings and recession → Protests and transition to democracy
To conclude, the politico-economic system of the country in the 1990s might be classified as kleptocracy.117 Such authoritarian systems typically exist in the countries that have large selectorate and small winning coalitions.118 Serbian economy had many actors that were included into the
112 Stilhoff Sörensen, J. The Shadow Economy, War and State Building: Social Transformation and Re-stratification in an Illiberal Economy (Serbia and Kosovo). Journal of Contemporary European Studies, 2006, 14(3), p. 317-351. 113 Call, C.T. The Fallacy of the Failed State. Third World Quarterly, 2008, 29(8), p. 1491-1507. 114 Crnobrnja, Savić, Op. cit.. 115 Delevic, M. Economic Sanctions as a Foreign Policy Tool: The Case of Yugoslavia. International Journal of Peace Studies, 1998, 3(1), p. 67-89. 116 Stilhoff Sörensen, Op. cit. 117 Ibid. 118 Bueno de Mesquita, B.; Smith, A.; Siverson, R.; Morrow, J.D. Op. cit. 54 selectorate but only a few of them became the members of the winning coalition which led to the formation of kleptocratic regime.
3.2.3 Economics and the Selectorate
As in the analysis of the Spanish case, before an attentive research based on process-tracing is introduced, it is worth listing all the member-groups of the winning coalition in Serbia under the rule of Milošević's after 1992. According to Robert Thomas,119 these include: the media which was controlled by the political elite. It was widely known, and for some time Milorad Vučelić who was close to Milošević was both the head of the state television and the head of the parliamentary group of the ruling party; the police which was loyal to the ruling elite and preferred to the army which was less heavily funded. Its function was securing the monopoly of violence and, thus, discouraging the possible challengers from any more extreme and threatening actions; the economic and financial elite which had close ties with the former League of Communists and kept them after the party's transformation to the Socialist Part of Serbia. Therefore, in principal, the open part of the economy was partly controlled by the loyalists; although it is not a strictly separate part of the governing elite, it is worth mentioning that the diplomatic service and the judiciary power were also strongly tied to the governing elite.120 From the outline provided above it is clear that Milošević and his handymen controlled the apparatus of violence, the country's economic system and the most important units of information spreading. All of them allowed him to keep power for eight years, yet afterwards the leader was overthrown and the democratic regime was established. This section aims at answering the question whether economic development could change the Serbian selectorate in such a way that uncertainty about the nature of the political game being played (see Diagram 3, page 25) might grow high enough for democracy to triumph. Firstly it is worth discussing the structure of Serbian economy of the time. As has been noted, 'gray' and 'black' economies accounted for a large part of the total GDP of the country. Measures vary, but some researchers argue that during the beginning of Milošević rule the grey economy made around 10% of the state's GDP. Yet, during the final years of the authoritarian period the grey part of the GDP had already accounted for about 80% of total economical output of the
119 Thomas, R. Serbia under Milošević: Politics in the 1990s. London: C. Hurst & Co, 1998. 120 Ibid. 55 country.121 This shows that it became increasingly more difficult for the state to control the economic system of the country. Of course, judging by the pyramidal structure of the politico- economic system, it is possible to claim that some part of it had to be controlled by the government (the more so that the regime might be considered kleptocratic, hence the employment of 'gray' and 'black' markets to finance it is a conceivable and rational option). On the other hand, the loss of open control over the major share of the market and diminishing output accounted for by legal activities meant that routes were opened for the uncontrolled business activities. To say more, inside the legal framework, many newly registered enterprises are observed (around 270 000122, a third of which were shops. It should also be mentioned here that the sale of unauthorized goods had also formed a significant part of 'grey' economy),123 and as a consequence, a class of new entrepreneurs had emerged. According to Stilhoff Sorensen, it led to the formation of a new middle class that might includ about 700 000 people (i.e., about one tenth of the whole population of the time). At the same time, the previous group that might be called the middle class of the socialist times had shrunk,124 and, hence was replaced by other Serbian citizens. It confirms that a change in the selectorate took place as well. The former middle class was replaced by a new social layer, which was less connected with the regime, despite the fact that such links were still to be unofficially required. As has been stressed when discussing the reforms adopted during the socialist period in the Serbian history, this country was deliberately moved from the agriculture-based to the industry- based state. And even though the agricultural sector still accounted for about a third of the economy, heavy industries started playing a much more important part. During the rule of Milošević, in 1992- 2000 the former loyal supporters of the political elite and industrial tycoons were neglected by the government. For example, during the whole period of 1992-2000 the electrical utilities received only as much funding as was provided to it annually before the breakup of the Socialist Federal Republic of Yugoslavia.125 Therefore, it is not at all surprising that the industrial leaders became disappointed with the new policies adopted by the political leadership and felt neither dependent on nor loyal to it anymore. To put it all in terms of the selectorate theory, the former members of the winning coalition were not provided private goods they used to receive, as resources were either insufficient or used for other purposes (e.g., financial capital was put to personal bank accounts of the members of the winning coalition, as is typical in kleptocracies). Indeed, it is worth remembering here that the final stage of protests against Milošević's government began with the
121 Stilhoff Sörensen, Op. cit. 122 More than a third of them was still functioning in 2002, so the number of successful enterprises that survived until transition made at least 37%, but, most probably, the ratio was larger. See: Stilhoff Sörensen, Op. cit. 123 Ibid. 124 Stilhoff Sörensen, Op. cit. 125 Crnobrnja, Savić, Op. cit. 56 strikes at Kolubara mines126 where the great part of the electricity of the country is produced. This resonates well with the fact that the industry of electricity had suffered a dramatic decline in the financial flows coming from the government under Milošević. Other examples of the formerly important but now failing industrial enterprises may also be provided: steel mill, car factory and electronics and machinery enterprises.127 It demosntrates that with time the Milošević regime became less and less acceptable to a number of formerly influential members of the winning coalition and the selectorate. The carried out analysis reveals that the changes in the selectorate did indeed occur. Yet the question arises where economic growth comes into play. It is worth noting that even though the average trend of the GDP growth was negative both during the first years of the regime in Serbia and during its five final years, after the initial recession, the economy experienced growth. And this is exactly the point where the factors that were favourable to regime change emerged. The initial collapse of the economy resulted in the government's disability to satisfy the demands of the industrial (and, quite probably, other) members of the winning coalition. The whole system shattered, and, as has already been claimed, the forecasts appeared that the country might become a failed state. It is fully conceivable that, if the economy did not grow after its initial decline (be it 'white', 'grey' or 'black'), the state would indeed collapse. As such an anarchical outcome, the regime might have exerted control over as certain territory if not in the entire Serbia. Nevertheless it had not happened, and the country remained centralized despite the fact that many illegal economic and criminal activities were held in its territory. Another important turn in the given analysis is considering the exact change in the GDP during the years 1992-2000. Due to the Balkan wars, the initial decline of the economy continued until 1994, when the country first registered growth in the GDP per capita. Yet, this growth was rather slow, and, consequently in the years 1997-1998 the economy slowed down as well, while the NATO bombings in the following year, 1999, dealt a heavy blow to Serbian economy, which fell by nearly one fifth that year. Afterwards, just a year later, the economy began showing the signs of recovery once again.128 Although at a first glance such a fluctuating economic situation of the country seems to contradict the statement claiming the endogenous importance of the economic growth on democratization, when considering it more carefully, two things come into focus. Firstly, during Milošević reign the economy was mostly 'grey' and 'black', which means that it is more difficult to account for the actual rate of the GDP per capita during the period of 1992-2000. In fact a more rapid actual (i.e., not nominal-official) growth of economy might be expected. Secondly, the
126 Marinković, D. Strike at Kolubara – A Case Study. South-East Europe Review for Labor and Social Affairs, 2003, 3, p. 41-71. 127 Crnobrnja, Savić, Op. cit. 128 Ibid. 57 country's economy had fallen down to about a half of its initial worth, which means that many former members of the selectorate lost their economic (and, consequently, political) importance. When the economic growth began, many new entrepreneurs appeared, while the former important industries, as discussed above, were neglected. In other words, after the crumbling of the economic system in 1989-1994, the content of the selectorate did experience restructuring. No doubt, the new members of the selectorate still had to keep their connections with the political elite, since they were not powerful enough under Milošević who had a tight grip on the police institutions, but they were less intertwined with the governmental structures. During the following phase of economic growth they gained more power, and, consequently, felt more secure. It was so at least until the NATO bombings in 1999, when various industrially important objects in Serbia were destroyed by air-strikes. It served as a message to then current selectorate that their leader was not strong enough and could no manoeuvre the country out of international conflicts. Moreover, it is worth remembering that the political elite did not trust the army's loyalty,129 so it was difficult to expect that their assets would be successfully defended against the international military threats. This had a considerable impact on both 'white' and 'grey' economy, as their material capital came to be threatened. The military bombings in Kosovo have also damaged the country's industries directly and they also had long-term impacts.130 Hence, the question of who could have managed to secure the interests of economic actors arose. Remembering the extensive form game presented in the theoretical part of the thesis (see Diagram 3, page 25), it is possible to state that neither political nor economic actors knew which game of the two they were involved in. That was the reason for, democracy to be regarded as a safer option for many of them. It would make the rules of the game would be clearer and dealing with external threats easier, or, in other words, it would help to defend their economic interests. To sum up, it appears that despite the fact that it is more difficult to relate economic growth and democratization in Yugoslavia/Serbia than in Spain, nonetheless there are clear indicators that growth in economy had an important impact on the contents of the selectorate and the winning coalition. Similarly to the case of Spain, where democratization was accelerated by the death of the political leader, a factor external to economics, i.e. the NATO's military intervention, definitely accelerated the democratic processes by casting doubt on the strength and reliability of the regime and current leadership. Other reasons were low economic development, struggling heavy industries, huge negative impact of the criminalized economy, which evoked uncertainty not only about the strength of the current winning coalition, but also about the potentially strong-enough alternative
129 Thomas, Op. cit. 130 Vukmirović, Z.B.; Unkašević, M.; Lazić, L. and Tošić, I. Regional Air Pollution Caused by a Simultaneous Destruction of Major Industrial Sources in War Zone. The Case of April Serbia in 1999. Atmospheric Environment, 35(15), 2001, p. 2773-2782. 58 winning coalitions. Even more so, when having in mind the problems in Kosovo and consideration of Serbia's problems by the international community. How well does the proposed hypothesis stand against these events in authoritarian Serbia? Even though the economy of Serbia during the period of 1992-2000 and during the last five years before the transition showed decline, these were only two short periods of strong recession in its economy. During the first years after the collapse of the Socialist Federal Republic of Yugoslavia, the regime became entrenched and was able to keep control over the most important institutions. However, the economic decline robbed it from the ability to exert full control over the country's economy which resulted in the lack of resources to satisfy the needs of the winning coalition. With the economic growth, the class of new entrepreneurs appeared, while the former industrial leaders were left on their own and strapped of the private goods previously provided to them. Thus, the economic growth which followed the collapse gave birth to a new selectorate. Yet, due to the same factor of economic growth, although relatively small, its members became uncertain of the leader's ability to the confront opposition or external threats and of the potentiality to form a successful and stable winning coalition in Serbia at all. The NATO bombings that took place in 1999 showed that Milošević could not guarantee a successful functioning of the country. As the former supporters of his regime had already been distanced away, democratization appeared to be the best option and so, accelerated by an external event, the protests grew, the opposition overthrew the government and adopted the democratic rules for a newly created regime (see Diagram 7, p. 60).
59
Diagram 7. Economic development and external factors in relation changes in the selectorate in Serbia
Source: Author's own research.
60
3.3 Authoritarianism in Belarus
3.3.1 Historical Background
Once a part of the Grand Duchy of Lithuania and, later, of the Polish-Lithuanian Commonwealth, by the end of the 18th century Belarus was incorporated into the Russian Empire. Its territory was split between different guberniyas of the state, those Minsk, Smolensk, Vitebsk and others. Just like in the other parts of the Russian Empire, the national identity began to emerge in the second half of the 19th century. Here, the importance of the Belarusian language which was forbidden in state use until 1905 together with the romantic and socialist ideas played a significant role in the development of national consciousness. It is also worth noting that elections to the Duma in 1906 showed that national identity had already been strong enough to have some impact on politics.131 Nonetheless, in those times Belorusian current Belarusian territories still remained a part of the Russian tzar's empire. Like many other countries in Central and Eastern Europe, with the end of World War I, Belarus declared its independence in March, 1918 and became a separate polity. Yet, already the next year, in 1919 it was occupied by the Soviet forces and by 1920 its current territory was divided between Poland and Soviet Russia. During a rather short period of World War II, in 1941-1944, Belarus was occupied by the Nazi Germany. Later on the state was once again incorporated into the Soviet Union. Having had no significant period of independence, Belarus had to adopt the institutions imposed on it by its occupier-states different periods of time. Therefore, for most of the 20th century it was ruled like other Socialist Republics of the Soviet Empire. It means that, the Communist Party had all the political power in the country, its economy was centrally planned and in agriculture the emphasis was put on collectivism.132 It should be stressed that after the war the country's economy was heavily damaged: if measured in per capita variables, this Soviet Republic was devastated more than others.133 In fact, the country's economy had to be rebuilt nearly from scratch (it also worth bearing in mind that even before the war Belarus was less developed than its neighbours). Rebuilding of the country in many respects made Belarus an industrial state. Factories for automobiles and other industrial products were erected, and this Soviet Republic became important, even though its agriculture still accounted for about one fourth of the country's economy.134 It is also worth noting that the output of light industry, if measured in per capita units, was among the
131 Savchenko, A. Belarus – A Perpetual Borderland. Leiden: Brill, 2009. 132 Ibid. 133 Ioffe, G. Understanding Belarus: Economy and Political Landscape. Europe-Asia Studies, 2004, 56(1), p. 85-118. 134 Wilson, A. Belarus: The Last Dictatorship in Europe. New Haven: Yale University Press, 2011. 61 highest in the entire Soviet Union.135 As compared to the levels before World War I, the speed of growth, both industrial and agricultural, was the highest among all other European parts of the Soviet Union. But a blow to Belarus was dealt in April 1986, when a catastrophe in the Ukrainian nuclear plant of Chernobyl took place. This power-plant is located less than fifty kilometers away from Belarus and due to prevailing winds the radioactive fallout did heavy damage to the country. Some estimates show that about 70% of it fell on the territory of Belarus. It had devastating consequences on agriculture and human lives in general (thousands of people had to be relocated). From the financial perspective, during the years 1991-2003 Belarus spent about 13 billion USD to repair the damage inflicted by the disaster.136 Thus, in addition to the expected economic recession that followed the collapse of the Soviet Union, the state had to spent additional significant sums of money to repair the damage inflicted by the nuclear disaster. During the period of 1989-1995 the shadow economy was growing. Before the collapse of the Soviet Union it accounted for about 28.6% of the GDP; in 1995 the same indicator was already at 34.5% level.137 It is not surprising, as with the economic collapse other countries showed similar trends in the growth of 'grey' economy (one may also remember the Yugoslavian/Serbian case here, which shows an even greater expansion of illegal activities in the economic sector). It should also be stressed that the first years of independence from the Soviet Union regained in 1991 were marked by a deep economic crisis. Thus, despite relatively highly developed industries and agriculture in the Soviet Union, the 1990s brought a collapse of the system to a certain extent. In 1994 a new constitution was adopted and the first presidential election took place, which was won by a then officially not so important political figure of Alexander Lukashenko. This year may also be considered as the mark of the beginning of the new authoritarian regime in Belarus,138 since the then elected President is still ruling the country.
3.3.2 Economic Development under Lukashenko
After being elected the President of the Republic of Belarus, Lukashenko did not choose to pursue a shock-therapy approach139 that was used in some other post-communist countries.140 Contrariwise, he chose to keep the state-planned economy which was dominant during the Cold
135 Ioffe, Op. cit. 136 International Atomic Energy Agency. The Chernobyl Forum. Chernobyl's Legacy: Health, Environmental and Socio-Economic Impacts and Recommendations to the Governments of Belarus, the Russian Federation and Ukraine, 2005. Found at: http://www.iaea.orgrg/Publications/Booklets/Chernobyl/chernobyl.pdf; Last accessed: 02/05/2013. 137 Alexeev, M.; Pyle, W. A Note on Measuring the Unofficial Economy in the Former Soviet Republics. Working Paper Number 436. Ann Arbor: William Davidson Institute at the University of Michigan, 2001. 138 It should be mentioned that some scholars do not make this year exceptional and give a dictatorship ranking to the whole time period since 1991. See: Cheibub, Op. cit. 139 Ioffe, Op. cit. 140 Aslund, A. The Advantages of Radical Reforms. Journal of Democracy, 2001, 12(4), p. 42-48. 62
War years, even though some, albeit small, steps towards liberalization were taken in 1992-1994, i.e., before Lukashenko's ascent to power.141 In other words, the political elite strengthened its grip on the economy and no official free-market was allowed to be developed (nevertheless, 'grey' market, as illegal might show many attributes of the free-market). Like other countries undergoing transformation, Belarus was still struggling to make its economy grow, and even as late as in 1995, the GDP dropped by around 10%. Only in 1996 did the government manage to reverse the process. The reversal might have played a certain role in strengthening Lukashenko's reputation, as it was still only the first half of his first term as the President of the country. In addition to that, in 1996 a successful referendum was held that gave more powers to the president.142 It allowed Lukashenko to legally strengthen his position and stay in power for a longer period. Since then the economy of Belarus had been steadily growing and by the end of the 1990s it reached the level of 83.6%, if compared to the level of 1991.143 Just as during the Soviet times, the country remained focused on industrial economy. Public employment accounted for about two- thirds of the whole work force currently employed, which is fully consistent with the non- liberalization approach favoured by Lukashenko. Of course, no privatization was sought, and the economy was left as it was. This was made easier by the fact that a significant part of the country's output in goods was sold to Russia, hence, there were less reasons to stimulate competitiveness within the internal economy. In other words, the Belarusian economic system was “subsidized by a friendly and richer neighbour”.144 This shows, that the growth, which Belarus was experiencing, in large part was a result of Russia's foreign policy towards its neighbour. Yet, the two-country relationship did not go as smoothly as Lukashenko might have expected. From 2006 on,145 the prices of natural resources bought from Russia have grown significantly, i.e., to the level of about 4.5 times higher than previously.146 This, of course, had a strong negative impact on the economic situation of the country. The effects of the global economic crisis that began in 2008 were felt in Belarus as well. More than that, in 2011 the financial crisis struck, and the Belarusian rouble was devalued by more than a half in May of the same year.147 It most probably occured due to a politically motivated move to increase the wages before the presidential election of 2010, when economy became unable to satisfy the demands of the political
141 Mario Nutti, D. Belarus: A Command Economy without Central Planning. Russian and East European Finance and Trade, 2000, 36(4), p. 45-49. 142 Mario Nutti, Op. cit. 143 Ioffe, Op. cit. 144 Marples, D.R. Elections and Nation-Building in Belarus: A Comment of Ioffe. Eurasian Geography and Economics, 2007, 48(1), p. 59-67. p. 61. 145 As noted above, due to the fact that Lukashenko’s regime did not collapse until 2000 and still exists, the date in the qualitative analysis will not be censored. 146 Ioffe, G.; Yarashevich, V. Debating Belarus: An Economy in Comparative Perspective. Eurasian Geography and Economics, 2011, 52(6), p. 750-779. 147 Zaretsky, A.; Kruk, Dz. and Kirchner, R. Estimating the Equilibrium Exchange Rate in Belarus. Policy Paper Series, PP/01/2011, Minsk/Berlin: German Economic Team Belarus, IPM Research Centre, 2011. 63 authority. As the country still provided a great share of wages (in the beginning of 2011, more than a half of the country's GDP consisted of wage component148), it shows that Belarus has been trying to keep the salaries and social spending above the sustainable level. To conclude, even though for the most part of the Lukashenko's period Belarus has shown positive economic results, such growth has mostly been associated with the policies of Russia being very connive. This allowed the Belarusian authorities to keep the old economic structure without altering it in any significant way. Yet, such policies made the country vulnerable to external (i.e., Russian) actors as reflected by the financial crisis of 2011.
3.3.3 Economic Development and the Selectorate
The question concerning the proposed hypothesis that should be asked in testing it against the case of Belarus is the following one: why did the country not democratize (yet), with the economic growth tendencies demonstrated from 1996 on? The hypothesis states that economic growth is positively linked to democratization. Clearly, it is important to stress here that the economic development may not necessarily lead to democracy right away. According to the theory outlined above, it does so only eventually, by reshaping the content of the selectorate within the country. For instance, in Spain it took 15 years until the transition started after the semi- liberalization of the economy was introduced, and it still required an external to economics event, Franco's death, to accelerate the process (though, it as noted, democratization would have taken place anyway). Thus, the very fact that Belarusian economy has been growing since 1996 does not by itself lead to a conclusion that the hypothesis is wrong. It is, therefore, worth analyzing why the country has not democratized yet and, for what reasons the economic growth did not lead to significant enough restructuring of the selectorate and did not evoke enough uncertainty for the regime (and its challengers) to collapse or to favour transition towards democracy. Lukashenko ascended to power in 1994 and has been ruling ever since, without any visible threats to his regime. Even mass protests do not prove to be fruitful and threatening enough for the leader to force him to step down. Up to now the winning coalition of the dictator consists of the following members149: the political elite and security forces, which are led by Viktor Lukashenko, the elder son of the President. This, of course, helps controlling the opposition by using a threat of violence or direct force, if a potential challenge is seen; state controlled and censored media, which spreads the pro-government propaganda
148 Ioffe, Yarashevich, Op. cit. 149 Although the selectorate was not explicitly distinguished in the paper, the listing provided here is based on: Suzdaltsev, A. Belarusian Political Class in Crisis. Security Index: A Russian Journal on International Security, 2012, 18(2), p. 87-95. 64
and keeps away alternative perspectives from being sufficiently represented;150 it also makes the solving of free-riding and coordination problems more difficult for the opposition; the administrative and bureaucratic apparatus, which owes the regime for provided private goods and repays with keeping the regime intact by carrying out various administration-related activities; tycoons, whose oil reselling actions could generate between four and eight billion USD annually, and other state-related economic actors who depend on the current structure of the economic system. In addition to that, Lukashenko has ties with the oligarchs outside Belarus, which makes him dependent on external actors.151 When it comes to the issue economics in relation to the selectorate in Belarus, the most important aspect seems to be a very low level of privatization. Belarus fares as the second worst of all the former Soviet republics in regard to large-scale liberalization and enterprise restructuring, as the third worst country in regard to price liberalization and the trade and FX system, the fourth worst one in regard to banking reform and interest rate liberalization, and the fifth worst state in regard to competition policy.152 As seen in the case of Spain, privatization and liberalization may play an important role both in stimulating economic growth and selectorate restructuring. In Belarus, the economic growth was not based on the introduction of the policies of liberalization, as the public sector still accounts for the two-thirds of the Belarusian economy. This means that it was impossible for the selectorate part consisting of economic actors to change. With the state authorities still being by far the most important players in the market, other players simply cannot take their share of power and, therefore, have too little importance for being included into the winning coalition of the current government or to pose a credible threat and challenge to current authorities. It is also important to stress that even some of the private businesses are controlled by the presidential winning coalition.153 Therefore, the absence of privatization might explain why, even with the economic growth, Belarus has not yet democratized. Actually, the countries, which have their economies based on non-tax revenue, are considered, it is possible to see that in the most important economic sectors privatization did not occur and the independent part of the economically important members of the selectorate has did develop sufficiently to play an important part in politics.
150 Manayeva, N.; Aniskevich, A. and Dinerstein, A. Mass Media Under the Eye of Big Brother: Governmental Control Over Mass Media in Belarus. Otázky žurnalistiky, 2011, 3-4, p. 3-19. 151 Wilson, Op. cit. 152 88. International Monetary Fund. Republic of Belarus: Selected Issues, 2012. Found at: http://www.imf.org/external/pubs/ft/scr/2012/cr12114.pdf; Last accessed 06/04/2013. 153 Suzdaltsev, A. Belarusian Political Class in Crisis. Security Index: A Russian Journal on International Security, 2012, 18(2), p. 87-95. 65
Another problem that has to be tackled is the relationship between the supposedly quite successful economic development of Belarus and the standard of living. The economic growth did not spill-over from elites to common people. The statistics provided by the government should be taken with a grain of salt, as the regime is authoritarian and, consequently, less reliable. The official accounts show that the level of poverty seems to be in decline. However, the independent researchers claim that the variables which are not taken into account in the official data, in some cases reveal decrease in the standard of living in Belarus.154 It shows that the capital generated during the years of economic growth has been concentrated within the elite groups and does not spill-over easily, even if it is undeniable that there has been some improvements in the conditions of life of common people.155 Thus it is clear that the selectorate has not expanded significantly and did not become large enough to impose democratization due to the lack of dispersion of economic and political powers. There is also the issue of natural resources that should be addressed additionally. The prices at which Belarus buys natural gas and oil from Russia are a lot lower than in the cases of other countries. What is even more important, the international entities that are inside Belarus have to pay a higher price for it. In such a way, the national budget of Belarus also receives a significant part of the income.156 As mentioned above, tycoons reselling cheap natural gas and oill provide huge amounts of financial inflow to the country.157 In other words, not only Belarus is able to use cheap oil for internal consumption, but it also resells it and uses such revenue for its own needs. Here, once again, certain similarities with resource-rich countries may be distinguished, despite the fact that Belarus itself is not a country which has significant amounts of its own natural resources. Judging by all the factors provided above, it is crucially important to analyse the relationship between the economy of Belarus and Russian policies. Although it might not be easy to relate it to the entrenchment of regime, it is urgent to discuss what role Russia played in keeping Lukashenko's regime in power and in building obstacles for the country's democratization. Indeed, Russia's will to gain and keep influence in the former territories of the Soviet Union is no secret. For this purpose, even the very concept of the 'near abroad' has been created.158 Therefore, it is not surprising that Russia gives special attention to the countries, such as Ukraine and Belarus, especially after the Baltic states have successfully joined the European Union and the NATO and became less suggestible. The prices of natural resources, markets open to Belarusian goods etc. show that Russia has indeed been adopting the policies heavily influencing the development of the economic system
154 Grigorieva, O. and Grigoriev, P. Living Conditions and Poverty in Belarus: Concepts and Measures. Research paper at Population Association of America meeting. Detroit: Marriot Renaissance Centre, 2009. 155 Wilson, Op. cit. 156 Ioffe, Op. cit. 157 Suzdaltsev Op. cit. 158 Leppingwell, J.W.R. The Russian Military and Security Policy in the 'Near Abroad'. Survival, 1994, 36(3), p. 70-92. 66 in Belarus and favouring its current regime. Yet, observing Lukashenko's attempts at playing a double game with the European Union, Russia has decided to adopt stricter policies towards Belarus,159 which might be treated as punishment. As has already been mentioned, the crisis of 2011 followed a gradual change in Russia's policy towards Belarus. No doubt, the rise of the natural gas price was a blow to Lukashenko's government. It is estimated that by 2011 Russian subsidies have fallen from 15% of the GDP to around 7%.160 While during the years 1994-2011 Belarus managed to extract some 58 billion USD from its neighbour in various forms – from free entrance for Belarusian products to the Russian market to lower prices for raw materials,161 it seems that any Lukashenko's attempts at steering the country between the EU and Russia will be controlled by a tighter regulation of the economic ties with the Belarusian political leader. Due to high dependence on Russia, any changes in Russian policies, could be fatal to Belarusian economics. All in all, the economic growth in Belarus did not come either from liberalization or pro- free-market reforms. The state is still dominating its economy, therefore, the growth that has been registered and that in large part has been dependent on Russian politics did not lead to the restructuring of the selectorate (see Diagram 8, p. 68). Such development could be described as economy subsidized by the neighbour of Belarus. Therefore, there has been no pressure on the political leader to step down or introduce democratizing reforms. Nor have there been incentives (or capabilities) for potential challengers to make credible threats that would not be limited to mass protests, underground literature or other similar not directly challenging activities. The absence of the proper means to make credible threats secures the authoritarian regime of Lukashenko for the time being. Had the liberalizing reforms been adopted, the positive changes might have been expected. It is also worth noting that many researchers stress the need for serious structural economic reforms if the regime wants to keep the economy functioning. This is phenomenon might be viewed as a devil's wager. The same researchers note that such structural reforms might be threatening the entire system itself.162 Thus, it seems that Belarus balances on the tipping point, and either the local government will have to change or Russia will further heavily subsidize the regime or the reforms that will be fatal to the current elite will have to be adopted if attempts at avoiding the collapse of the state will be made. Consider Diagram 8:
159 Korosteleva, E. Belarusian Foreign Policy in a Time of Crisis. Journal of Communist Studies and Transition Politics, 2011, 27(3-4), p. 566-586. 160 Frye, T. Belarus and Its Implications for the Study of Transition Economies: An Introduction. Eurasian Geography and Economics, 2011, 52(6), p. 747-749. 161 Suzdaltsev, A. Op. cit. 162 See for example: Korosteleva, J. The Global Recession and the Belarussian Economy: Revealing Cracks in the Model. Journal of Communist Studies and Transition Politics, 2011, 27(3-4), p. 632-653. See also: Suzdaltsev, Op. cit. 67
Diagram 8. Economic development and the selectorate in Belarus
Source: Author's own research.
3.4 Overview of the Results of the Qualitative Analysis
The three selected cases, the Spanish, the Serbian and the Belarusian, showed different tendencies. The reasons for analyzing these particular countries are obvious enough and have been extensively discussed above. Yet, even though the chosen cases represent the least similar polities from the whole sample, the hypothesis, which proposes that economic growth leads to restructuring of the selectorate and the winning coalition and, due to arising uncertainty, to democratization, fairs well enough, when the nature of economic development and regime dynamics in all of these three countries are considered. In the first analysed example, gradual and fast economic growth resulted in alterations in the selectorate, which, in its turn, led to democratization. Hence the Spanish case does verifies the proposed hypothesis in a most straightforward manner. The regime found the economic development vital ant therefore both internal liberalization and opening to an external global market were introduced. Despite the fact that these changes were adopted to save the regime, paradoxically, steady and fast economic growth restructured the selectorate so much that, finally, after Franco's
68 death, transition to democracy was accepted as the most favourable route of the country's political development. In consistence with the held hypothesis, there economic growth evoked political uncertainty, due to which, the democratic rules were accepted. The case of Serbia looks a bit different. The country was democratized, but at a rather low level of the GDP per capita. The economic growth was not steady. Its rate was low and interrupted by the years of fast decline. In fact, the growth of the GDP during the final five years of Serbian dictatorship was found out to be strongly negative. This seems to go against the hypothesis – the economic downfalls were steep, whereas the growth of economy was slow. Nevertheless, as has been discussed, the first downfall led to the collapse of the former economic elites. The growth that followed created the class of new entrepreneurs who still had to keep ties with the political elite, but were less dependent on them. On the other hand, the most important heavy industries have stagnated. In 1999 the newly formed elite experienced economic recession although it did not turn the tide backwards, but rather strengthened this new elite. Similarly to the political leader's death in Spain, here the NATO bombings operated as a catalyst for democratization to be started. Otherwise, economic growth after the initial decline of economy followed the way the hypothesis predicts. In other words, the economic growth initiated the changes in the selectorate, which evoked uncertainty (enhanced by the NATO involvement) and resulted in choosing democracy as a more desirable type of political regime. Thus, even though Serbia demonstrated successful democratization without experiencing stable economic growth, with the use of a careful process-tracing analysis it was possible to find out that this case did not contradict the proposed hypothesis just but suggested an addition. It could be stated that while economic growth leads to the restructuring of the selectorate and the winning coalition which, in turn, due to arising uncertainty, leads to democratization, shocks that are external to the country's economy may play a role in enhancing the uncertainty and accelerating the transitional processes. In other words, it is possible to expect that the external factors could make the state more apt to democratize even if they would cause some decline in the country's GDP. Finally, the case of Belarus demonstrated that the country's economic growth could preserve an authoritarian regime that lasts to this day. Of course, the proposed hypothesis does not support that democratization will occur immediately after the country's economy begins to grow, but it is also important to account for the countries which have not yet experienced democratic transition. It seems that Belarus has more in common with the countries living on non-tax revenue than with other states from the chosen sample. It is so because, as has been observed, the economic growth of this state has been based chiefly on its economic relations with Russia. Its subsidies for natural gas and oil make Belarus able to maintain a high level of state-domination in the field of economy without introducing privatization or liberalization of trade to stimulate its economic growth.
69
Therefore, the economic growth that takes place in Belarus under Lukashenko did not manage to introduce any significant changes in the selectorate (here it is worth remembering the stagnation in the Belarusian standard of living). The question then is whether this case falsifies the hypothesis. Although it may appear that it is so, in fact it does not. The closer analysis showed that the economic performance would have been poorer but for external interference of Russia. Therefore, it still remains to be seen what may happen if this external political actor would loose its influence in Belarus. Then, most probably, the hypothesis would be fully applicable. At the moment it is impossible to claim that the hypothesis was falsified, because an external actor (it should not be forgotten that the hypothesis deals only with the situations, when the political leader and potential challengers are independent from direct external rule) plays a vital a role in the Belarusian economy. To conclude with the qualitative analysis, a few things must be mentioned. First of all, the process-tracing method has proved to be beneficial and applicable for the purposes of the carried out analysis. Secondly, none of the three cases, even though they were least similar to each other, has falsified the hypothesis. The Spanish case was most illustrative. The Serbian case has also validated the hypothesis and, what is more, has revealed that the short and fast economic downfall after the period of economic growth, which changed the contents of the selectorate and the winning coalition, may enhance the uncertainty that had already been evoked and, thus, make democracy a more attractive political projection. Finally, the case of Belarus has shown that if the country's economy is stimulated by a non-democratic foreign government, the structural changes in the selectorate and the winning coalition cannot be expected and, therefore, the country will not move towards democracy. Nevertheless, it does not invalidate the extended hypothesis, as such a country is closer to the resource-rich countries than the countries considered as applicable in testing the proposed theory. The theory, in its turn, deals only with the internal factors and the impact of an external actor, such as Russia, distorts the evidence and cannot falsify the hypothesis. Actually, it is clear that the qualitative part of the carried out research does not falsify the hypothesis, but rather vindicates it to a certain extent.
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4. ECONOMIC GROWTH, SELECTORATE AND
DEMOCRATIZATION: A SURVIVAL ANALYSIS
In this chapter the description of survival analysis as used in this paper is provided and the analysis is carried out. In order to test the hypothesis, variables revealing alterations in the structure of a country's economy are selected and used for calculating the impact of the changes in the economy on survival of dictators by applying Cox proportional hazards modelling. Finally, results of such survival analysis are discussed and conclusions about the results and how well the proposed hypothesis stands against them are provided.
4.1 Basic Survival Data
In order to carry out a survival analysis the probability of survival at a particular time t should be calculated. The most widely accepted way to do this is by using Kaplan-Meyer (K-M) estimates.163 K-M function involves calculating probability of survival from the beginning of observation to a particular point in time. The simple probability of survival at a particular point in time may be calculated by taking a total number of observational units n entering time period t, subtracting number of observed events dt from it and dividing this number by nt. Hence, after simplifying the following formula is obtained:
d p = 1− t t n t To calculate the K-M survival proportion S(t), probabilities of all points in time before and including the one that is analysed have to be multiplied. Hence:
d S (t)= ∏ 1− t ( n ) t
The following table represents both pt and S(t) values for the observed sample:
163 Machin, Bun Cheung, Parmar, Op. cit. 71
Table 5. Survival data for European transitions to democracy (1950-2000)
Number Corresponding Survival Number Observed pt = 1 – dt/nt Survival country time t at risk nt transitions dt proportion (years) S(t) … --- 0 12 0 1 1 1 Greece 8 12 1 0.917 0.917 2 Serbia164 10 11 1 0.909 0.834 3 Belarus 10+ 10 0 4 Bosnia and Herzegovina 5 Portugal 27 8 1 0.875 0.73 6 Spain 28 7 1 0.857 0.626 7 Czechoslovakia 40 6 2 0.667 0.418 8 Poland 9 Bulgaria 41 4 3 0.25 0.105 10 Hungary 11 Romania 12 Albania 42 1 1 0 0
Source: Compiled based on Cheibub, Gandhi, Vreeland. Op. cit.
Consequently, it is possible to present the information from Table 5 on a survival plot as a step function, that reveals the proportion of dictatorships that survive to a particular point in time (with regard to the beginning of the study and not to the former time period, t-1, and taking into account censored units). Consider Diagram 9 (p. 72) in which the middle line represents the real survival rate of the twelve observed dictatorships included in the sample and the two dotted lines represent the 95% confidence interval. Two observations (Belarus and Bosnia and Herzegovina) are not accounted for after year ten. Due to right-censoring, they leave the graph at that point in time without their exits being counted as events
164 Although Dictatorship and Democracy measure indicates that Serbia democratized in the year 2000, year 1999 has been chosen as an event year for this survival analysis, so as to make usable data provided by Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. In this data set data for authoritarian Serbia is provided up till the year 1999. 72
Diagram 9. Plotted survival function of dictatorships included in the sample
Source: Compiled based on Compiled based on Cheibub, Gandhi, Vreeland. Op. cit.
4.2 Proportional Hazard Rate and Economic Time-Dependent Covariates After the initial survival rates have been established, it is worth considering what variables could be used to test the proposed hypothesis. As it has been argued in the theoretical part of the paper, economic growth introduces alterations to the structure of S. These changes lead to democratization through uncertainty. One way to account for such restructuring of the S is to see how the importance of different sectors of the economy with respect to their ratio to the country's GDP changed in time. Therefore, variables representing the proportion of the GDP attributed to industrial, agricultural and service sectors of the economy have been chosen to test the hypothesis. Due to them having different values at the beginning of observation, a proportional change in each sector has been calculated, i.e. the absolute value of rate at which it grew or diminished with respect to the total country's GDP. Absolute values have been calculated because the proposed model stresses the importance of the value of change rather than its direction (i.e., whether the relative importance of the sector grew or declined). In order to test how these three variables impact the survival function, a Cox proportional hazards model that takes into account time-dependent co- variates should be created. This model allows to run a multiple regression analysis and isolate covariates that might have impact on the survival rate of the observational unit. The formula goes as follows:
hi (t)=h0 (t )exp (β1 xi1 +β2 xik +... +βik xik )
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Here hi(t) represents the final value of the hazard rate. h0(t) is the baseline hazard function that depends only on time rather than on the covariates. The last part of the formula, exp(β1xil+β2xik+...+βikxik) stands for the hazard function that depends only on the covariates rather than on time. When the previously described variables are used, the formula may be written as:
hi (t)=h0 (t )exp (β1 IND_ABS+β2 SER_ABS+β 3 AGR_ABS )
Here IND_ABS stands for the absolute value of annual change in the output of the industrial sector relative to the GDP. SER_ABS stands for similar alterations in the services sector and
AGR_ABS represents such changes in the agricultural sector. The output of this formula, when hi(t) was calculated with time-dependent data, is as follows165:
Table 6. The outcome of the Cox proportional hazards model for different sectors of the economy
Number of observations Number of events 81 (256 observations deleted due to missingness) 5 Variable Coefficient exp(Coefficient) SE(Coefficient) p-value166 IND_ABS 3.20298 24.60571 1.07041 0.00277 ** SER_ABS 0.42855 1.53503 0.23712 0.07071 . AGR_ABS -0.17767 0.83722 0.06258 0.00452 ** Test Value Degrees of freedom p-value Likelihood ratio 3.95 3 0.2674 test Wald test 13.55 3 0.003587 Score (logrank) 3.23 3 0.3577 test
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and Cheibub, Gandhi, Vreeland. Op. cit.
One obvious problem with the model is the relatively small size of the sample. Even though when measured in country-years the number of total observations reaches 337, only 81 of them
165 Tables 6, 8, 9 and 10 represent the summary of the outcomes of the calculations. Full results may be found in Annex 9. 166 Significance codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1. 74 have data on each variable, which makes results indicative rather than conclusive. Furthermore, only five events (i.e., transitions to democracy) are represented. However, despite the small size of the final sample two of the variables show statistically significant impact on survival function and variable representing services sector is significant at p=0.07 level which may also be due only to the relatively small number of observations. All in all, it appears that changes within the structure of the country's economy are correlated with the likelihood of democratic transition. It must be noted, however, that changes in agriculture seem to bear negative impact on democratic processes. I.e. the more stable the agricultural sector is, the more likely is a country to undergo a transition. All other variables being constant, a change of 1 in the absolute value of change in the agricultural sector diminishes the final hazard rate by 16.3%. This seems to go against the hypothesis, but such seeming anomaly may be explained easily. Although at the beginning of the 1950s some of the countries (e.g. Spain, see Section 3) had their economies based on agriculture, the data in the sample covers later time period, when industrialization was already well under way in the observed states. This means that agriculture only played trivial role in the years covered by the survival analysis. This means that changes in this sector were not so important for democratization once the authoritarian countries had industrialized. Another reason for such tendency may be the dispersal of agricultural actors throughout a country, while the industrial sector tends to be more concentrated. Dispersal makes communication between actors more difficult which leads to the coordination problems for the potential opposition. Therefore, it is not surprising that alterations in the agricultural sector play a less important role (exp(coef)(AGR_ABS)=0.84) than changes in industrial (exp(coef)(IND_ABS)=24.61) or service sectors ((exp(coef)(SER_ABS)=1.54)). Therefore, it is conceivable that the negative impact of agriculture might appear due to a small size of the sample and be statistically spurious. Further research with larger datasets and bigger samples is required to fully solve this issue. As predicted by the model, the absolute value of change in the industrial output relative to the GDP increases hazard rate 24 times with an increase of 1 in IND_ABS variable. Therefore, it is evident that restructuring of the economy leads to democratization. The lower part of the 95% confidence interval is above 1, thus, even though the real impact may be less than the indicated coefficient, in the worst case it would still have the power to change the hazard rate by 300% with change of 1 in IND_ABS. Evidently, this result strongly supports the proposed hypothesis. Finally, even though, it is not significant ant p < 0.05 level, SER_ABS also shows a positive impact on transitions to democracy at 153.5% rate. The three tests that measure the entire model against the null hypothesis are not in agreement. While the Wald test indicates that the model explains data significantly better than the null hypothesis (p-value = 0.0036), the likelihood ratio and the score (logrank) tests show that
75 differences between the model and the null hypothesis are not significant enough (p-values = 0.27 and 0.36 respectively) to be considered proving the model. The difference may be explained by the fact that Wald test is more accurate when the number of observations is large, which is not the case with this study. Being asymptomatic, all of these three measures tend to converge when the numbers of observations and events get larger. Differences in their p-values indicate that a larger dataset should be used in further studies. However, this does not invalidate the entire model. Results are ambiguous but not definitely negative, as Wald test and p-values of individual variables indicate. In order to ensure the validity of the entire mode further tests that measure if the model satisfies other requirements (i.e., if the hazards are proportional, if there are no too influential observations and if the model is linear). The first test is based on scaled Schoenfeld residuals and shows if each of the covariates used in the model has proportional impact. The results of the test are as follows:
Table 7. Proportionality test of the model for different sectors of the economy
Variable Rho Chisq p IND_ABS -0.8066 0.0799 0.777 SER_ABS -0.5007 0.1120 0.738 AGR_ABS 0.0895 0.0176 0.894 GLOBAL NA 0.1139 0.990
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and Cheibub, Gandhi, Vreeland. Op. cit.
In this case, the p-value reveals the significance of the null hypothesis, which proposes that covariates have non-proportional impact on the hazard function. Test results provided above reveal that all of the variables do indeed show proportional influence on the survival rate of dictatorial regime, because the p-values are very large. The global test also shows a very large p-value, which further proves that non-proportional hazard hypothesis should be considered false. It is also possible to plot Schoenfeld residuals, based on this method (see Annex 1). The plots clearly show that there are no time dependent trends and the hazard remains proportional throughout the whole period of study, without any significant time-dependent shifts upwards or downwards. Another issue that has to be analysed when testing the validity of the model, is the existence of influential observations that might distort the results of the analysis. DFBETA method, which is standard for such diagnostic calculations, has been used. It shows how much a coefficient would 76 change if a particular case were removed from the sample. Resulting plots are presented in Annex 2. Plotted results indicate that compared to regression coefficients of these variables, none of them are overly influential and thus distorting the results. Because Cox proportional hazards models deal solely with linear data, Martingale residuals and Martingale partial-residuals may be used to test the linearity of the model which is a standard procedure in assessing the validity of the survival models. Non-linearity could show that the parametric part of the model has been specified incorrectly and the suggested model is obsolete. The results of these tests are provided in Annex 3 and Annex 4. The plots clearly show that the model for all the variables is almost perfectly linear, thus, satisfying the requirement of linearity in Cox proportional hazards model. In addition to testing how the structure of the economy influences the hazard rate, one may test how changes in size of the W with respect to the S influence the probability of survival.167 Let this value be WoverS. Then: h (t)=h (t )exp (β WoverS ) i 0 1
With the data provided in The Logic of Political Survival168 the following results were obtained: Table 8. The outcome of the Cox proportional hazards model for different sectors of the economy Number of observations Number of events
335 (2 observations deleted due to missingness) 10 Variable Coefficient exp(Coefficient) SE(Coefficient) p-value169 WoverS 3.990 54.076 2.199 0.0696 . Test Value Degrees of freedom p-value Likelihood ratio test 3.19 1 0.07401 Wald test 3.29 1 0.06961 Score (logrank) test 3.59 1 0.05796
Source: Calculated based on Cheibub, Gandhi, and Vreeland. Op. cit. and Bueno de Mesquita, Smith,
167 W over S variable is chosen because it reflects changes both in S and in W and, what is more, accounts for their mutual interaction. The variable also represent the loyalty norm, which shows how loyal to the leader W is. The larger the value of WoverS, the more acceptable it is for the leader to distribute public goods instead of private goods, thus, moving him closer to the adoption of democratic institutions. As argued in the theoretical part of the paper, economic growth restructures both S and W. Due to the fact that WoverS variable considers both of these groups, it suits the needs of testing the hypothesis better than other variables. 168 Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. Data found at: http://www.nyu.edu/gsas/dept/politics/data/bdm2s2/Logic.htm 169 Significance codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1. 77
Siverson, Morrow, Op. cit. Data found at: http://www.nyu.edu/gsas/dept/politics/data/bdm2s2/Logic.htm.
Here all tests show that WoverS variable is slightly significant and all three tests weighing the validity of the model are in agreement. Therefore, the conclusion is that the ratio between the W and the S is important for the survival of dictators. The question that must be answered now is whether the WoverS variable is interacting with the economic covariate IND_ABS, which has shown the least disputable impact in the previously described survival analysis.170 To test this, a simple linear regression model has been constructed.
WoverS=a+β IND_ABS 1
Its outcome is as follows:
Table 9. Linear regression model for WoverS (dependent variable) and IND_ABS (independent variable)
Variable Estimate SE p-value171 IND_ABS 0.006730 0.004064 0.102
Source: Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. Data found at: http://www.nyu.edu/gsas/dept/politics/data/bdm2s2/Logic.htm and The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip
Although the relationship is not statistically significant, the fact that the p-value=0.1 is a sign that expansion of the relatively small sample could show more significant results. The relationship between the variables is positive, meaning that an increase in IND_ABS variable leads to increasing value of WoverS. Therefore, it may be useful to see how WoverS and IND_ABS variables influence the hazard rate if they are considered as being interactive:
hi (t)=h0 (t )exp (β1 WoverS+β2 INDABS+β12 WoverS INDABS)
The outcome follows:
170 Multiplicative analysis with SER_ABS and AGR_ABS gave no statistically significant results. 171 Signifance codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1 78
Table 10. The outcome of the Cox proportional hazards model for WoverS and IND_ABS when they are multiplicative variables
Number of observations Number of events 79 (258 observations deleted due to missingness) 5 Variable Coefficient exp(Coefficient) SE(Coefficient) p-value172 WoverS -4.831644 0.007973 10.987180 0.66012 IND_ABS -0.800899 0.448925 0.988719 0.41792 WoverS:IND_ABS 6.064401 430.264710 2.249477 0.00702 ** Test Value Degrees of freedom p-value Likelihood ratio 5.43 3 0.143 test Wald test 16.01 3 0.001128 Score (logrank) 2.92 3 0.4041 test
Source: Calculated based Cheibub, Gandhi, and Vreeland. Op. cit. and Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. Data found at: http://www.nyu.edu/gsas/dept/politics/data/bdm2s2/Logic.htm and The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip
Here we see that separately WoverS and IND_ABS variables do not play significant roles, yet if they are considered as multiplicative (WoverS:ind_abs line), the result is very significant, p=0.007. This means that variables representing alterations in the industrial sector of the economy and the ratio of W over S are interacting with one another and through this interaction extend significant impact on the hazard rate of the survival function of authoritarian regimes. This is exactly what the proposed hypothesis predicts – alterations in industries leads to restructuring of S and W, which, in its turn, makes democracy more attractive than dictatorship. While the results from the three tests are still contradictory, as mentioned previously, an expanded sample could help solve this problem and show whether the results of the entire model are significant or not. It is vital to stress that current results do not falsify the proposed hypothesis and show important signs of supporting it. This new model may also be tested for proportionality and influential observations (only the statistically significant case of WoverS and IND_ABS being multiplicative variables is tested in Annex 6 and Annex 7). Consider:
172 Significance codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1. 79
Table 11. Proportionality test of the Cox model with multiplicative variables WoverS and IND_ABS
Variable Rho Chisq p-value WoverS -0.249 0.02943 0.864 IND_ABS -0.134 0.03001 0.862 WoverS:IND_ABS 0.103 0.00706 0.933 GLOBAL NA 0.04621 0.997
Source: Calculated based Cheibub, Gandhi, and Vreeland. Op. cit. and Bueno de Mesquita, Smith, Siverson, Morrow, Op. cit. Data found at: http://www.nyu.edu/gsas/dept/politics/data/bdm2s2/Logic.htm and The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip
The tests provided above clearly show that the model fits the requirement of proportionality, as high p-values in Table 11 show. There are no too influential observations, as demonstrated in Annex 7, therefore, it might be claimed that the model was constructed correctly. Likewise, it might be stated that the Cox proportional hazards model, with WoverS and IND_ABS treated as mupltiplicative variables, provides support to the proposed hypothesis.
4.3 Proportional Hazard Rate and Non-Economic Covariates Other explanations of democratization might be provided and appear valid. Therefore, it is worth analysing if there is an impact of cultural or ideological factors on the proportional hazard rate that might explain the survival function of dictatorships better than changes in the economy and W and S. In order to carry out an analysis with non-economic covariates, four time-independent variables have been chosen:173 the region (these are: Central and Eastern Europe, Balkans, Southern Europe), the ideology of the authoritarian regime (these are: left, right), prior democratic experience and the religion that the majority of the country's population practices (these are: Islam, Orthodox Christianity and Catholicism).
Cox proportional hazard model for these variables goes as follows:
173 Religion was chosen due to its importance in shaping cultural identities. The region variable was chosen, because it might be claimed that countries which belong to the same region have had similar historical experiences. Such reasoning that resembles the path-dependence theory. The choice of prior democratic experience variable is somewhat similar to the region variable in the sense that it also reflects historical path which the country had taken. Ideology was chosen in order to see if orientation of the regime towards different political utopias played an important role. 80
hi (t)=h0 (t )exp(β1 REG+β2 IDEO+β3 DEMO+β4 REL)
When data was inserted into the formula for calculation of proportional hazards, the results (full outcome may be found in Annex 9) reveal very clearly that factor variables of region, ideology, religion and prior democratic experience have no significant influence on the hazard rate. As the p- value > 0.9 in all the cases and likelihood ratio and score (logrank) tests show that the result is statistically significant (Wald test stands again in contrast to the two other tests, but this may be due to a small sample, n = 12). Therefore, it may be concluded that the four tested non-economic variables have no significant influence on the survival function of authoritarian regimes. It would still be worthwhile to rerun the analysis with an expanded dataset, yet, in the case of the research carried out in this thesis, it is clear that the economic variables together with variable measuring S and W explain democratization better than the non-economic covariates do. It provides further support for the proposed hypothesis.
To sum up, the performed survival analysis indicates that alterations in the importance of the industrial sector of a country's economy have strong impact on the survival rate of authoritarian regimes. Even though changes in agriculture appear to be significant and have negative impact on the probability of democratization, such relationship might be spurious due to small dataset used in the study, especially when having in mind that the studied sample includes more industrialized countries. What is more, due to the absence of data, time periods when agriculture played a more important role in countries such as Spain could not be covered in the survival analysis. Tests of the entire model are contradictory. While the Wald test suggests that such a model is significant, results obtained from likelihood ratio and score (logrank) tests are much more reserved. Such a discrepancy might be a result of a small number of observations. When the model was tested for proportionality and linearity tests based on Schoenfeld and Martingale residuals have shown no tendencies that would make the model obsolete. Neither were there any overly influential observations that would distort the results. The ratio of the size of W over S has also been found partly significant. Moreover, when WoverS variable is considered as interacting with IND_ABS variable, the result is statistically significant at p-value = 0.007 and shows that the interaction between the sizes of W and S, and the changes in industrial sector of a country's economy have important positive impact on democratization. When non-economic covariates have been taken into account, all of them appeared to have no statistically significant impact on the survival rate of dictatorships. Therefore, it may be concluded that these non-economic covariates did not play
81 important role in the studied sample. Evidently, a larger scale survival analysis is required to further test the hypothesis, yet results obtained in the carried out research provide reasons to be optimistic despite the fact that there is some ambiguity in the results which arises due to the relatively small size of the analysed sample.
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CONCLUSIONS
The following conclusions were arrived at:
1. It has been found out that among the three major theories explaining the relationship between economic development and democratization there exist: the path- dependence/critical-junctures theory stating that since economic and political systems develop in parallel, thus, a third variable, i.e., critical-junctures which occurred in the course of history, affects both of them independently; the exogenous theory of economic impact on democratization claiming that economic growth plays a significant role in stabilizing democracy, so that a newly formed democratic country would not revert back to dictatorship; the endogenous theory of economic impact on democratization stating that economic growth both stabilizes the democratic regimes and provides impetus for democratization to occur. Current research in the analysed field of enquiry and empirical data provide best support to the third theory revealing the relationship between economic growth and regime dynamics.
2. Although in scientific literature equality and culture based approaches, equality and culture based are typically proposed to explain the causal mechanics, by which economic growth exerts a positive impact on regime change, neither of them proves to be satisfactory or at least commonly accepted.
3. The chosen Selectorate theory proved to be beneficial in explaining how the relationship between economic growth and democratization operates, as it considers both economic and political variables and, on the basis of the rational choice paradigm, allows to analyse the behaviour of the actors whose part is significant both in economy and political system. It discloses the exact causality between economic development and democratization.
4. On the basis of the Selectorate theory a model revealing exact causal mechanism that relates economic development economic and democratization has been constructed. The model shows that economic growth first leads to the restructuring of the selectorate and the winning coalition, which, in its turn, evokes uncertainty about who exactly should be included into the winning coalition and whether the formation a stable winning coalition is possible at all in the given situation. When such uncertainty becomes too high, both leaders and potential challengers should favour democratization since, according to the expected utility, it would motivate to lead a safer game and reap greater benefits than attempted dictatorship might offer. On the basis of such reasoning a testable hypothesis has been
83
proposed.
5. For the qualitative analysis, the three cases demonstrating three different interactions between economic development and regime proved to be reasonably selected– Spain (economic growth and democratization), Serbia (economic decline and democratization) and Belarus (economic growth, no democratization).Despite the fact that at a first glance only Spain appeared to support the hypothesis, the process-tracing analysis of all three countries showed that none of these cases falsified it. To a certain extent, the processes described by the model were evident in all of the analysed polities.
6. On the other hand, the qualitative analysis suggested that a more sophisticated model might be proposed which would take into account the fact that if a started and continuing economic growth had already restructured the selectorate to a certain extent, it might be interrupted by singular external events bringing some economic damage to the country. In such a case, the new selectorate would tend to get mobilized to oppose the current leadership and either force it to adopt the democratic rules or overthrow it altogether.
7. The quantitative analysis of the whole sample showed the good reasons to be optimistic about the validity of the proposed hypothesis. The rate of change in the industrial sector of the economy was found to positively influence the likelihood of democratization and the result was statistically significant. The impact of the ratio between the winning coalition and the size of the selectorate on the hazard rate had also been found suggestive even if not highly significant statistically. Finally, when the two above mentioned variables were put into the model as interacting with one another, the outcome of the analysis demonstrated that they had a large impact on the hazard rate and that it was highly significant statistically. Although the tests of the entire model contradict each other, there are good reasons to believe that enlarging the currently small sample would help solve the issue. Therefore, it may be argued that the carried out survival analysis supports the proposed hypothesis and does not falsify it.
8. The survival analysis of time-independent non-economic factors has shown that they had no statistically significant impact on the survival rate of dictatorships. Therefore, it may be concluded that the analysed sample shows that economic factors were more important than the cultural ones in analysed cases.
It is highly recommended that the model and the hypothesis are further tested by applying both qualitative and quantitative methods to the analysis of new cases. In the former case, other countries may show different institutional arrangements and falsify the hypothesis. It would also be useful tee analyse non-European countries to see whether it is only economic factors that are important or 84 cultural variables also play important role and, consequently, may falsify the hypothesis. In the latter case, research with more observations is needed. Due to the absence of data it is crucial to expand the sample geographically and see if more data clears away the ambiguities which were found in this thesis. It would also show if the initial support for the proposed hypothesis is well grounded. However, for now, results indicate that the model and the hypothesis are supported by empirical data.
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Annexes
Annex 1. Plotted proportionality test for Cox proportional hazards model with time- dependent economic covariates
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and Cheibub, Gandhi, Vreeland. Op. cit.
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Annex 2. Influential observations test for Cox proportional hazards model with time- dependent economic covariates
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and and Cheibub, Gandhi, Vreeland. Op. cit.
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Annex 3. Linearity test based on Martingale residuals for Cox proportional hazards model with time-dependent economic covariates
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and and Cheibub, Gandhi, Vreeland. Op. cit.
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Annex 4. Linearity test based on Martingale partial-residuals for Cox proportional hazards model with time-dependent economic covariates
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and and Cheibub, Gandhi, Vreeland. Op. cit.
Annex 5. Plotted linear regression model for WoverS (dependent variable) and IND_ABS (independent variable)
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and and Cheibub, Gandhi, Vreeland. Op. cit. 96
Anneex 6. Plotted proportionality test for Cox proportional hazards model with time- independent non-economic covariates
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and and Cheibub, Gandhi, Vreeland. Op. cit.
Annex 7. Influential observations test for Cox proportional hazards model with time- independent non-economic covariates
Source: Calculated based on The World Bank data. World Bank Development Indicators 2013. Found at: http://databank.worldbank.org/databank/download/WDI_excel.zip and and Cheibub, Gandhi, Vreeland. Op. cit.
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Annex 8. Outcomes of analyses as printed in R environment.
The outcome of the Cox proportional hazards model for different sectors of the economy coxph(formula = Surv(start, stop, transition.time) ~ ser_abs + ind_abs + agr_abs, data = data)
n= 81, number of events= 5 (256 observations deleted due to missingness)
coef exp (coef) se(coef) z Pr(>|z|) ser_abs 0.42855 1.53503 0.23712 1.807 0.07071 . ind_abs 3.20298 24.60571 1.07041 2.992 0.00277 ** agr_abs -0.17767 0.83722 0.06258 -2.839 0.00452 ** --- Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1
exp(coef) exp(-coef) lower .95 upper .95 ser_abs 1.5350 0.65145 0.9645 2.4432 ind_abs 24.6057 0.04064 3.0193 200.5254 agr_abs 0.8372 1.19443 0.7406 0.9465
Concordance= 1 (se = 0.3 ) Rsquare= 0.048 (max possible= 0.085 ) Likelihood ratio test= 3.95 on 3 df, p=0.2674 Wald test = 13.55 on 3 df, p=0.003587 Score (logrank) test = 3.23 on 3 df, p=0.3577
The outcome of the Cox proportional hazards model for WoverS coxph(formula = Surv(start, stop, transition.time) ~ WoverS, data = data)
n= 335, number of events= 10 (2 observations deleted due to missingness)
coef exp(coef) se(coef) z Pr(>|z|) WoverS 3.990 54.076 2.199 1.814 0.0696 . --- Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1
exp(coef) exp(-coef) lower .95 upper .95 WoverS 54.08 0.01849 0.7261 4027
Concordance= 0.589 (se = 0.114 ) Rsquare= 0.009 (max possible= 0.088 ) Likelihood ratio test= 3.19 on 1 df, p=0.07401 Wald test = 3.29 on 1 df, p=0.06961 Score (logrank) test = 3.59 on 1 df, p=0.05796
Linear regression model for WoverS (dependent variable) and IND_ABS (independent variable) Coefficients: Estimate Std. Error t value Pr(>|t|) (Intercept) 0.471669 0.023272 20.268 <2e-16 *** data$ind_abs 0.006730 0.004064 1.656 0.102 ---
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Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1
Residual standard error: 0.1542 on 77 degrees of freedom (258 observations deleted due to missingness) Multiple R-squared: 0.03439, Adjusted R-squared: 0.02185 F-statistic: 2.743 on 1 and 77 DF, p-value: 0.1018
The outcome of the Cox proportional hazards model for WoverS and IND_ABS when they are multiplicative variables coxph(formula = Surv(start, stop, transition.time) ~ WoverS * ind_abs, data = data)
n= 79, number of events= 5 (258 observations deleted due to missingness)
coef exp(coef) se(coef) z Pr(>|z|) WoverS -4.831644 0.007973 10.987180 -0.440 0.66012 ind_abs -0.800899 0.448925 0.988719 -0.810 0.41792 WoverS:ind_abs 6.064401 430.264710 2.249477 2.696 0.00702 ** --- Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1 exp(coef) exp(-coef) lower .95 upper .95 WoverS 7.973e-03 1.254e+02 3.543e-12 1.795e+07 ind_abs 4.489e-01 2.228e+00 6.465e-02 3.117e+00 WoverS:ind_abs 4.303e+02 2.324e-03 5.236e+00 3.536e+04 Concordance= 1 (se = 0.3 ) Rsquare= 0.066 (max possible= 0.087 ) Likelihood ratio test= 5.43 on 3 df, p=0.143 Wald test = 16.01 on 3 df, p=0.001128 Score (logrank) test = 2.92 on 3 df, p=0.4041
The outcome of the Cox proportional hazards model with non-economic variables coxph(formula = Surv(Survival_time, Status) ~ factor(Region) + factor(Ideology) + factor(Democratic_experience) + factor(Religion), data = data) n= 12, number of events= 10 coef exp(coef) se(coef) z Pr(>|z|) factor(Region)2 2.700e+01 5.306e+11 4.955e+02 0.054 0.957 factor(Region)3 -9.358e+00 8.627e-05 4.129e+03 -0.002 0.998 factor(Ideology)2 2.267e+01 7.034e+09 4.149e+03 0.005 0.996 factor(Democratic_experience)2 1.371e+01 8.967e+05 2.784e+02 0.049 0.961 factor(Religion)2 3.932e+01 1.191e+17 5.311e+02 0.074 0.941 factor(Religion)3 3.811e+01 3.548e+16 5.311e+02 0.072 0.943
exp(coef) exp(-coef) lower .95 upper .95 factor(Region)2 5.306e+11 1.885e-12 0.000e+00 Inf factor(Region)3 8.627e-05 1.159e+04 0.000e+00 Inf factor(Ideology)2 7.034e+09 1.422e-10 0.000e+00 Inf factor(Democratic_experience)2 8.967e+05 1.115e-06 9.473e-232 8.488e+242 factor(Religion)2 1.191e+17 8.396e-18 0.000e+00 Inf factor(Religion)3 3.548e+16 2.818e-17 0.000e+00 Inf Concordance= 0.989 (se = 0.139 ) Rsquare= 0.826 (max possible= 0.924 ) Likelihood ratio test= 20.95 on 6 df, p=0.00187 Wald test = 1.09 on 6 df, p=0.982 Score (logrank) test = 16.76 on 6 df, p=0.0102
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