2011 Recipient

The Ed A Hewett Book Prize, established in 1994 and sponsored by the University of Michigan Center for Russian, East European, and Eurasian Studies, is awarded annually for an outstanding monograph on the political economy of Russia, Eurasia and/or Eastern Europe, published in the previous year.

Winner: Timothy Frye
Title: Building States and Markets after Communism: The Perils of Polarized Democracy (Cambridge University Press)

Frye uses both quantitative and narrative data from the former Soviet bloc to throw new light on the pace and consistency of post-communist reforms. He shows that reforms were faster and more consistent when the political system was democratic. He shows, however, that the benign influence of democracy was conditional on low political and socio-economic polarization. In less polarized democracies, governments built state capacity and competitive markets at the same time. With more polarization, governments faced shorter time horizons and responded to strong incentives to weaken the state and undermine competition in order to reward supporters. Polarized democracies pursued reforms at a slower pace, with less perseverance and more wavering, less generous assistance for losers, and worse economic outcomes. The outcomes of polarized democracy were better than those of autocracy, but worse than those of democracies that were less divided.

Building States and Markets works on many levels. Elegant modelling is blended with sophisticated econometrics. Cross-country data are filled out with detailed case studies; micro-level data from business surveys complement the macro-level inferences. It considers explicitly the potential endogeneity of polarization on reforms and makes a compelling argument about the socialist-era roots of reform-era polarization. Building States and Markets is highly original and will undoubtedly influence the literature on economic reform and state building for many years.