Why Populism and Captured States are Not Failing (Yet)? The Case of Slovakia

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    • Presentation speakers
      • Zsolt Gál, Comenius University, Bratislava, Slovakia

    Abstract:

    Most Central and Eastern European EU Member States are doing relatively well in economic terms despite the presence of many factors (economic populism, strong signs of state capture and the so-called illiberal turn) which in theory should undermine sustainable growth. Examining the case of Slovakia in international comparison we try to demonstrate that the enduring economic successes could be explained by two main factors: 1. The legacy of previous neoliberal reforms which created a strong export-oriented manufacturing sector (mostly made up by multinational investors). 2. Relatively large net transfers from the EU common budget which fund most public investment projects. Thus, the EU through the access to the single market and providing generous funding from its structural funds is paradoxically (and unintentionally) keeping afloat captured states with corrupt politicians in power and their cronies and oligarchs – this could gradually undermine democracy and the rule of law. However, on short-term, falling demand on EU export markets or substantial cuts in EU funding can immediately disrupt this growth model. On the long-term continuous populism, systemic corruption and the degeneration of democracy is likely to lead to relative fallback in economic growth and convergence (compared to CEE competitors) as some examples (notably Hungary but partially also Slovakia) already demonstrate.

 

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