Empirical analysis shows that democracy has facilitated economic liberalization in 25 postcommunist countries of Central and Eastern Europe and the former Soviet Union. The existence of a vibrant civil society at the start of the transition has the most explanatory power in this team's regression.

Empirical analysis shows that democracy has facilitated economic liberalization in 25 postcommunist countries of Central and Eastern Europe and the former Soviet Union. The existence of a vibrant civil society at the start of the transition has the most explanatory power in this team's regressions.Dethier, Ghanem, and Zoli analyze whether political freedom and civil liberties help or hinder economic liberalization, using panel data from 25 postcommunist countries of Central and Eastern Europe and the former Soviet Union between 1992 and 1997.Building on arguments and counter-arguments put forth in recent literature, they identify the channels through which political freedom affects economic liberalization during the transition. Then they test the arguments empirically with an econometric framework that takes into account possible problems with simultaneity between the economic and political transitions.Their empirical findings clearly reveal that democracy has facilitated economic liberalization in countries of Central and Eastern Europe and the former Soviet Union.This conclusion is confirmed under various model specifications, for both ordinary and two-stage least squares procedures and using two different measures of liberalization.The econometric results reveal that the existence of a vibrant civil society at the start of the transition has the most explanatory power in the authors' regressions.This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region - was presented at a seminar at the World Bank in April 1999. The authors may be contacted at Internet address [email protected], [email protected], or [email protected].

The popular grievances that have fueled the Arab Spring since 2010 demonstrate that past development paradigms have failed to achieve the inclusive and sustainable growth expected by Arab populations. Countries in the Middle East and North Africa (MENA) region have failed to develop a strong private sector that is linked with global markets, survives without state assistance, and generates productive employment for young people. One key symptom of this maldevelopment is that, with the exception of the petroleum sector, MENA remains the least trade-integrated region in the world. The Deauville Partnership, launched by the Group of Eight (G8) in Deauville, France, in May 2011, is thus strategic and timely. At the request of the G8, this report provides an analytical framework for increasing trade and foreign direct investment (FDI) for Egypt, Jordan, Libya, Morocco, and Tunisia (the Partnership countries ). Increased trade and FDI is a key means by which Partnership countries can achieve a path of sustainable growth that reduces youth unemployment. Moreover, trade and investment can also show short-term results. The G8 countries, Turkey, the Gulf states, and other Deauville partners can help the new Arab democracies achieve their objectives in two main ways: by effectively expanding market opportunities and by supporting domestic regulatory reforms. To start implementing a long-term vision of increased trade and investment integration, based on an integrated economic space in the Mediterranean basin, the Deauville Partnership could focus on five priority areas. These are helping Partnership countries adapt to a fast-changing trade, FDI, and jobs landscape; improving market access opportunities and market regulations; fostering competitiveness, diversification, and employment; facilitating trade and mobilizing trade finance and diaspora resources; and promoting inclusiveness, equity, and sustainability of the structural transformation brought about by the process of integration. The success of the Arab political awakening will greatly depend on the emergence of such an economic awakening that can generate quality employment for the millions of young Arab men and women who seek jobs and a decent life.

During the turbulent years 1976-96, aggregate data for Brazil appear to show only small changes in mean income, inequality, and incidence of poverty -- suggesting little change in the distribution of income. But a small group of urban households -- excluded from formal labor markets and safety nets -- was trapped in indigence. Based on welfare measured in terms of income alone, the poorest part of urban Brazil has experienced two lost decades.

Components have been a dynamic leading sector in East Asian imports and exports. East Asian global exports of parts and components totaled $178 billion in 1996; imports, $12 billion less. Components now account for a fifth of East Asian exports of manufactures.

In China, where collectives own farmland but farmers may hold "use rights" to the land, a case can be made for a property rights system with incomplete security of tenure but with strong transfer rights, which permit "specialization without regret"-- so farmers can recoup the value of an investment even if they exit farming.

An analysis of developing countries' current trade policies and market access problems is used as a basis for recommending positions for these countries in the new round of multilateral negotiations under the World Trade Organization.