The dynamics of economic and political power in the former Soviet Union countries

Abstract

After the collapse of Soviet Union, the former Soviet Union countries entered the ‘transitional period.’ However, the former Soviet Union reality in terms of political and economic power interactions is something which can be discussed and explored via some models and estimations although some differences of the countries’ path. This research takes a dynamic model developed by Daron Acemoglu and discusses it for the former Soviet Union countries taking the assumption that it is relevant for them as well as a hypothesis. Hence, according to this model political institutions and the distribution of resources are the state variables which determine economic and political institutions that, in their turn, determine economic performance and the further distribution of resources. Besides, it makes fixed effect panel estimation in order to find out whether the given framework is appropriate for the former Soviet Union. The estimation seeks correlation among Freedom house democracy index as the measure for the political institution; Gini coefficient index as the measure of distribution of resources and GDP level as the measure of economic performance. The following six FSU countries are examined: Armenia, Belarus, Kirgizstan, Russia, Ukraine, and Moldova. The research comes up with some findings which render that although democracy level is decreasing, but the inequality is still decreasing as well. Thus, using the given framework the research concludes that the further decrease in inequality will lead to democratization either through revolutionary or evolutionary developments. So, as a recommendation, the research calls the government of Republic of Armenia for further decrease in inequality by using both the means of International organizations and internal policies and providing consistent GPD growth.