EU Conditionality and Bulgaria’s and Romania’s Economic
Transition Performance – an Empirical Analysis
Achim Ahrens & Joachim Zweynert
Over the last years, the issue of institutional change caused or supported by foreign, usually
supranational organisations, has increasingly gained the attention of political scientists and
economists. The vast body of conditionality literature, however, is far from homogenous.
Economists are particularly interested in the impact of external conditionality on economic
development. Political scientists, in contrast, mainly focus on the impact of conditionality on
political institutions. The accession process of the post-socialist countries adapting to the rules
of the EU has provided them with a valuable “natural experiment in history”. The two strands
of literature also differ in their methods. Economists are eager to quantify the impact of
conditionality, and a lot of discussion within the economics literature is on how to statistically
separate the impact of conditionality from other influences. Political scientists usually do not
try to quantify conditionality but tend to verbally illustrate its impact using comparative case
studies. Also, they pay much attention to the question how conditionality interacts with
domestic conditions, a question somewhat neglected by economists.
The present paper tries to contribute to bringing these strands of research closer together.
Analysing EU-conditionality on Bulgaria and Romania in comparative perspective, we try to
theoretically explain why conditionality worked differently in different institutional contexts
and we discuss the problem of measuring the impact of the EU on transition performance in
the post-socialist countries. However, the main reason why we are particularly interested in
these countries is an observation that was originally brought up by social scientists and then
also discussed by economists: Contrary to what most observers had originally expected, the
transition processes in Central and Eastern Europe resulted in rather divergent political and
economic systems in the different countries. Some observers noted that the Eastern border of
the European Union as established after May 1st 2004, conspicuously corresponded to a
century old cultural border between the ‘Latin’ versions of Christianity (= Protestantism and
Catholicism) and Orthodox Christianity. Is it, accordingly, mainly “the culture, stupid”
(Pejovich) that accounts for the difference in economic transition performance between the
two groups of countries?
A major problem with this argument is that only the countries of the ‘Latin’ group were
(partly because of their better economic performance, but also for geopolitical reasons)
invited to join the EU in May 2004, so that simply tracing back the differences to – however
defined – “cultural factors” seems to be highly questionable. This is precisely what makes the
case of Bulgaria and Romania so interesting. These countries – both clearly belonging to the
‘Orthodox’ group – provide a key example of how conditionality “begins at home”. Having
been involved in the accession process from the beginning, the governments in both countries
did not really co-operate with the EU until about 1997. Up to that time, they clearly belonged
to the group of countries with a significantly poorer transition performance than the first
accession group. However, once they had decided to co-operate, their transition performance
(our usage of this term will become clear the next section) rapidly improved and is now
located somewhere between the two groups (see Figure 1).
Figure 1: Unweighted Average of EBRD Transition Indicators
The empirical part of the paper is based on a combined with-without and before-after
approach, methods that are well established in the IFI conditionality research. We will
compare Bulgaria’s and Romania’s transition performance (measured in terms of the EBRD
transition indicators) with that of Macedonia and Moldova that are structural similar but were
not exposed to EU-conditionality. Our basic idea is very simple indeed: If it can be shown that
Bulgaria and Romania were on the same development trajectory as other countries not being
object of EU conditionality but shifted to another trajectory once they had decided to expose
themselves to conditionality, the difference might be interpreted as the result of EU
conditionality.