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Economic Effects of Post-Socialist Constitutions 25 Years from the Outset of Transition

The Constitutional Political Economy Approach

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Katarzyna Metelska-Szaniawska

This book focuses on the nexus between constitutions adopted by post-socialist countries of Europe and Asia after 1989 and economic transition in the region. It takes the perspective of Constitutional Political Economy and argues for the role of constitutions as commitment-enhancing mechanisms for political decision makers in the field of post-socialist economic reforms. For the first time in economic studies of constitutions this book employs the synthetic control method – a novel empirical approach allowing to account for endogeneity and causality issues. The blend of theory (including evolutionary insights) and empirical results allows to formulate recommendations for constitution drafters, emphasizing the role of factual constitutional court independence for successful economic reforms.
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Introduction

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During the last ca. 15 years economists provided numerous theoretical and empirical confirmations of a significant role of constitutions for the working of the economy and economic outcomes, in particular with respect to electoral systems, models of government, constitutional rights, and constitutional enforcement mechanisms (see survey by Voigt 2011b). This approach, rooted in Constitutional Economics, views the constitution as a set of “legal-institutional-constitutional rules that constrain the choices and activities of economic and political agents” (Buchanan 1987, p. 585). The state constitutional system serves primarily as a mechanism allowing to counteract time-inconsistency problems connected with drafting and implementing economic policy. Containing rules that impose constraints on activity of state authorities, the constitution acts as a mechanism allowing to turn promises made by representatives of state power into credible commitments.

Post-socialist transition taking place since 1989 in countries of Central and Eastern Europe, as well as later in Central and Southwestern Asia, provided a particularly fruitful ground for Constitutional Economics studies. Since 1990 all post-socialist countries of Europe and Asia1, with the exception of Latvia, adopted new constitutions envisaging varying solutions as regards the structure of government, bill of rights and other issues. This unprecedented time of broad-scale constitutional and, more generally, institutional change has sometimes been called a “gigantic natural experiment” (Elster 1991, p. 449), attracting interest of legal scholars, political scientists, sociologists and other social scientists. The contribution of economists concerns, in particular, linking constitutional change with economic policy pursued in these countries and economic...

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