Conditionality or specificity? Bulgaria and Romania's economic transition performance in comparative perspective

Abstract

The differences in transition performance among the former socialist countries in Central and Eastern Europe have sometimes been traced back to specific historical or cultural legacies without sufficiently taking into account the impact of EU conditionality. In this context the cases of Bulgaria and Romania are particularly interesting, because these countries belonged to the laggard group before they were exposed to EU conditionality from the late 1990s on and since then have improved their transition performance. Thus an empirical analysis of their transition performance before and after EU conditionality set in might improve our understanding of the relative importance of specific historical and cultural traits on the one hand and of EU conditionality on the other for transition performance. This article applies the before/after and with/without approaches well known from economic conditionality research and relates them to Milada Anna Vachudova's politico-economic analysis of the impact of conditionality in Central and Eastern Europe.

Acknowledgements

This study is an outcome of the research network ‘Institution and institutional change in Post-Socialism (KomPost)’ funded by the German Ministry of Education and Science (BMBF). It was presented at the 11th bi-annual EACES conference, ‘Comparing Responses To Global Instability’, Tartu, Estonia, 26–28 August 2010, and at the 12th April Conference of the Higher School of Economics, Moscow, 5–7 April 2011. We would like to thank the participants in both events as well as Dr Stefan Kolev (Hamburg Institute of International Economics) for helpful comments and suggestions. The usual disclaimer applies.

Notes

 1. In particular, of all the Central and Eastern European countries that have become members of the EU so far, Bulgaria and Romania had by far the strongest communist legacy as measured in terms of regime type, pre-authoritarian experiences in democracy and form of regime change (see Jahn and Müller-Rommel 2010, p. 33)

 2. Owing to structural change macroeconomic indicators including GDP and unemployment rates deteriorate in the short term and start to improve only after an adaptation crisis.

 3. The popularity of EU accession, which is largely based on a ‘cultural value’, is thus the all-decisive carrot, and this is one of the main differences from IFI programmes, which are never political goals as such.

 4. The monetary funds accession countries receive from Brussels sustain this process by contributing to softening the worst social hardships, yet in view of the small amounts involved their impact is mainly of a symbolic nature.

 5. In view of rent-seeking opportunities, unclear property rights are attractive, as they often allow the privatisation of profits and socialisation of losses.

 6. Here and in the following we heavily draw on Noutcheva and Bechev's (2008) excellent account of the transition processes in Bulgaria and Romania.

 7. All in all, Bulgaria more closely repeated the experience of the countries of the 2004 group, because a regime change was preceded by a kind of peaceful revolution.

 8. The European Bank for Reconstruction and Development (EBRD) assesses the transition progress of countries using nine indicators and a marking system from 1 to 4+ (i.e. 4.33), where 4+ indicates standards equivalent to industrialised countries. Among the indicators are Large-Scale Privatisation, Small-Scale Privatisation, Price Liberalisation, Competition Policy and Infrastructure Reform.

 9. Although the accession contract included special safeguard clauses, we argue that the main period of conditionality ended when the Treaty of Accession was signed, that is, in April 2005 (see http://www.official-documents.gov.uk/document/cm66/6657/6657.pdf).

10. GDP per capita in current USD; source: World Bank.

11. The government was formed by a coalition of the PDM (Democratic Party of Moldova) and the CDM (Democratic Convention of Moldova).

12. Indeed, the post-communists returned to power with an absolute majority and have remained the strongest fraction. At present the country is marked by a political stalemate between communists and bourgeois forces.

13. GDP per capita in current USD; source: World Bank. The transition crisis was more dramatic in Bulgaria, and Bulgaria did not match the Macedonian GDP per capita until 2001.

14. The worst performer of the CEE countries was Poland with a score of 1.9, while the best was the Czech Republic with 3.5.

15. For possible problems connected with this methodology see Falcetti et al. (2000).

16. Note that the higher EBRD index starting score of FYR Macedonia must be seen against the background of the generally higher starting values of the former Yugoslav republics, which is mainly due to the relatively large private sector in Yugoslavia under socialism (see Zalduendo 2003).