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styczeń – marzec 2018 / nr 1(55)/2018

Przyjęcie euro Przez Polskę.

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sustainable tourism services as an excePtional Product for the mice

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institutions matter for satisfaction With democracy in eastern euroPe

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SpiS treści

Institutions Matter for Satisfaction With Democracy in Eastern Europe

– Adam Okulicz-Kozaryn ... 5 Feudal Internationalism? Foreign Policy of the People’s Republic of China:

See China Change From Back Then to Now to What Next? – Hanzhen Liu,

David A. Jones ... 21 Turkey: a Bridge between East and West and its Catalyst Role in Alliance of

Civilizations Initiative – Davut Han Aslan ... 41 Przyjęcie euro przez Polskę. Potencjalne korzyści i koszty – Justyna Sikora ... 49 Unijna polityka ochrony konsumentów – Zenon Ślusarczyk ... 57 Development of Export Potential of Agrarian Sector in the Process of

Transformational Change – Tetiana Zinchuk, Pavlo Poplavskyi, Tetiana Usiuk ... 70 The Use of Futures Contracts as a Collateral for Operational Risk Activities

– Anna Maria Kamińska, Agnieszka Parkitna, Arkadiusz Górski, Kamila Urbańska .. 82 Wykorzystanie analizatora TCPDUMP w symulatorze NS-3 do analizy ruchu w sieciach Wi-Fi – Antoni Masiukiewicz ... 99 Znaczenie Maratonu na Biegunie Północnym dla uczestników i rejonu

recepcyjnego – Berbeka Jadwiga ... 112 Wydarzenia biznesowe jako atrakcyjne produkty współczesnych stadionów

sportowych – Krzysztof Cieślikowski ... 123 Istota i motywy zawierania aliansów strategicznych przez miasta na

międzynarodowym rynku spotkań – Monika Dembińska ... 136 Rola convention bureau w procesie pozyskiwania spotkań – Natalia Latuszek ... 152 Sustainable Tourism Services as an Exceptional Product for the Mice Destination.

Case Study Reykjavik – Anna Ostrowska-Tryzno, Agnieszka Muszyńska ... 164 Rola zaufania w relacjach publiczno-prywatnych na rynku spotkań

– Piotr Zmyślony, Marek Zieliński, Grzegorz Leszczyński ... 175

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institutions Matter for satisfaction With Democracy in eaStern europe

summary

Good governance and institutional quality are key concepts that can be used to distinguish between successful and unsuccessful societies. These concepts have special meaning in Eastern Europe. East European countries transitioned from communism to democracy in the early 1990s. Common wisdom has it that East Europeans, devastated with decades of communism, would be thrilled with the new political system, but are they? The short answer is no. One explanation is that political system support depends on institutional quality, which has not improved in about half of the Eastern Europe. This study investigates the effect of institutional quality on political system support in a panel of East European countries from 1990 to 2007. Good institutions increase political system support more than economic growth, inflation or unemployment.

Key words: Satisfaction With Democracy (SWD), Political System Support, Institutional Quality, Governance, Eastern Europe, Transition.

JEL codes: F5

introduction

Are East Europeans satisfied with their political system as it works in practice?

They should be satisfied, because as a result of transition they attained freedom, justice, democracy, and market economy. Yet, satisfaction is lower than in Western Europe, and the gap is not closing. A recent poll by Pew (2009) shows that fewer people approve of the transition in 2009 than in 1991. East Europeans were asked a following question: “Starting in late 1989, we changed from a country where there was just one party to a country with a multiparty system. Overall, do you strongly approve, approve, disapprove or strongly disapprove of this change in (survey country)? ” From 1991 to 2009 the approval decreased for all countries except Poland (increase by 4%), Slovakia (increase by 1%) and Czech Republic (no change) by as much as 20% in Lithuania, 24% in Bulgaria and 42% in Ukraine.

This is a surprising result. It would not have been surprising if East Europeans were resurveyed in late 1990s because as a result of the transition all countries fell into deep recessions, but by 2007 they recovered and were doing well economically.

KNUV 2018; 1(55): 5-20

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6 Adam Okulicz-Kozaryn

Yet, as this study documents, governance and institutional quality remained poor and arguably affected system support. This study proceeds as follows. First, a brief overview of the transition is provided. Second, political system support (satisfaction with democracy) is defined, its determinants are discussed, and a simple quantitative analysis is provided.

Never before in the history of modern times have so many countries conducted such a radical but peaceful transformation of the political and economic institutions in such short span of time (World Bank 2000). The East European countries experienced a major shock between 1989 and 1991. People revolted against authoritarian regimes, demanding liberty and personal freedom. Centrally planned economy and communism were replaced with market economy and democracy. All East Europeans countries experienced deep recessions on the eve of transition, and then more or less recovered (see figure 3 in appendix).

Social organization of the society under the communism was peculiar. The

“hour-glass society” has its regular citizens well-connected, and elites are also well-connected, but the two groups are disconnected from each other (Rose et al. 1997). Citizens did not trust the communist government, and the government did not trust the citizens. In early 1990s the Soviet block and the national communist governments collapsed abruptly, but trust between government and citizens could not be built overnight. To be sure, citizens should be critical of the government, but in Eastern Europe criticism turns into mistrust and even malaise, and hence the democratic process suffers.

Strikingly, East Europeans trust their governments least among all countries, even less than in Africa. In 2005 dissatisfaction with the government was found to be 65% in Western Europe, 73% in Eastern and Central Europe, 60% in North America, 61% in Africa, 65% in Asia/Pacific, and 69% in Latin America (Blind 2007).

Trust requires time, and so does institutional change. Institutions do not change quickly. They are path dependent (Pierson 2000). Mishler and Rose (1996, p. 554) propose that East European countries are “democratizing” rather than having become democracies. Some countries “democratized” or reestablished better institutions than others. For instance, Central and North- Central European countries have better institutions than East European countries.

Welzel et al. (2003) make a clear distinction between formal democracy and effective democracy. It is an important distinction to make in Eastern Europe:

while all countries became formal democracies, they did not became at the same time effective democracies:

Yet formal rights are not sufficient to make democracy effective. Formal rights are effective to the extent that the elites respect these rights in their actual

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7 Institutions Matter for Satisfaction With Democracy in Eastern Europe

behavior. Law-abiding elite behavior, or what we call ’elite integrity’, is an expression of the ’rule of law’ that, [...], distinguishes effective democracy from formal democracy. Welzel et al. (2003, p. 350)

There is much discussion about Satisfaction With Democracy (SWD) in Western Europe (Anderson, Guillory 1997; Wagner et al. 2009; Lagos 2003)¹. There is, however, much less comparative research in Eastern Europe.

Researchers tend to focus on separate countries and/or cross-section of countries at one time period. Waldron-Moore (1999) investigated SWD in separate countries in 1991 and 1992. Anderson (1998) pooled countries together but conducted a cross-sectional study of the mean scores in 1993-1995. Mishler and Rose (1996) studied East European countries in 1991. There is clearly a lack of longitudinal research in Eastern Europe that would take into account more countries in the region and study them over time. Mishler and Rose (1996, p.

553) in their analysis of the support for democracy in post-communist Europe in early 1990s conclude that “Prospects for the successful consolidation of democracy in post-Communist Europe hinge substantially on the trajectory and determinants of popular support”. Are East Europeans satisfied with the new system? Is democracy working for people? Are institutions improving?

This descriptive study aims to answer these questions. I present new evidence on satisfaction with democracy in Eastern Europe using panel data from 1990 to 2007².

Following Wagner et al. (2009) I will test a broad hypothesis that the better the institutional quality the higher the support for the political system as it works in practice. To test this broad hypothesis I will use an index of the overall institutional quality as explained in the next section. This study responds to the call to focus on institutional problems in Eastern Europe such as corruption, administrative inefficiency, and weak rule of law (Ellison 2007). I am especially interested in one indicator, control of corruption. We know that corruption is a pervasive problem in many East European countries (Solnick 1999), and hence, I expect this indicator to be a strong predictor of citizens’ satisfaction.

Data Description

Empirical part of this study follows Wagner et al. (2009) who recently analyzed SWD in a panel of West European democracies. This study uses the same variables and model but for East European democracies (Table 1). Most research to date about SWD has been done with Eurobarometers in Western Europe (Anderson, Guillory 1997; Wagner et al. 2009; Lagos 2003). Some

1 See also Pippa Norris blog: http://pippanorris.typepad.com/pippa_norris_weblog/2009/01/trust-in- -democr.html [access: 15.09.2017].

2 Years 1998-2001 and 2004 are missing.

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authors use the Comparative Study of Electoral Systems (Aarts, Thomassen 2008; McAllister 2005), which covers Eastern Europe but provides only cross sectional snapshots. This study uses Eurobarometer, a large scale survey administered in European countries at least once a year since 1974. Data for East European countries that include a measure of Satisfaction With Democracy are available for 1990-2007 (1998-2001 and 2004 are missing) and is drawn from the multiple Eurobarometers listed in Appendix.

Table 1. Transition countries

Country Country Code Country Country Code

Albania ALB Bulgaria BGR

Czech Republic CZE Estonia EST

Hungary HUN Lithuania LTU

Latvia LVA Poland POL

Romania ROM Russia RUS

Slovakia SVK

Note: The following East European countries also experienced transition but are omitted from this study due to missing data: Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Georgia, Kyrgyzstan Macedonia, Montenegro, Moldova, Serbia, Slovenia, and Ukraine.

Source: own preparation.

Political system support is measured with a following question: On the whole, are you very satisfied, fairly satisfied, not very satisfied or not at all satisfied with the way democracy is developing in your country? Answers to this question are a measure of system support, and have been labeled in the literature as Satisfaction with Democracy (SWD) (Canache et al. 2001; Rose et al. 1997;

Aarts and Thomassen 2008; McAllister 2005). The concept of political support, like good governance/institutional quality, is broad and multidimensional.

SWD measures support for the way the democratic regime works in practice, as opposed to the support for principles of democracy. SWD is a summary indicator of political support (Ekman 2003; Canache et al. 2001). While this is a limitation in studies seeking to find who supports democracy principles, it is a good measure for this study, because it captures whether East Europeans support the new economic and political system as it works in practice.

Furthermore, SWD continues to be used as a standard indicator in recent studies (Kumlin, Esaiasson 2012; Halla 2013; Ezrow and Xezonakis 2016;

Orviska et al. 2014).

Good governance and institutional quality are defined here as consisting of six dimensions: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. Measures of these dimensions come from the World Bank (Kaufmann et al. 2006).

Following (Wagner et al. 2009), few macroeconomic controls are used as well.

Detailed coding of all variables is shown in Table 2.

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Table 2. Description of variables

Variable Survey Question Measurement

(After Recoding) eb http://ec.europa.eu/public_opinion/index_en.htm

SWD [eb90-97] On the whole, are you very satisfied, fairly satisfied, not very satisfied or not at all satisfied with the way democracy is developing in (your country)?

1-4 (Very satisfied)

SWD [eb02-07] On the whole, are you very satisfied, fairly satisfied, not very satisfied, not at all satisfied with the way democracy works in (OUR COUNTRY)?

1-4 (Very satisfied)

wdi http://go.worldbank.org/SI5SSGAVZ0 GDP growth GDP growth (annual %)

log inflation Inflation, consumer prices (annual %) Log unemployment rate Unemployment, total (% of total labor force

PCGDP 1990 GDP per capita (constant 2000 US$) kkz http://go.worldbank.org/KUDGZ5E6P0 voice and

accountability Measures political process, civil liberties, political rights.

These indicators measure the extent to which citizens of a country are able to participate in selection of governments.

This category also includes : independence of media that monitor that selection and governance responsiveness and responsibilities.

-2.5(bad) to 2.5(good)

political stability Measures perceptions of the likelihood that the government in power will be destabilized or overthrown be possibly unconstitutional means, including terrorism.

government

effectiveness Measures perceptions of the quality of public service provision, the quality of a bureaucracy, the competence of civil servants, the independence of a civil service from political pressures, and the credibility of governments commitment to policy.

regulatory quality Measures the incidence of market unfriendly policies, such as price controls or inadequate bank supervision, as well as perceptions of the burdens imposed by excessive regulations in areas such as foreign trade and business development.

rule of law Measures the extent to which agents have confidence in and abide by the rules of society. These include perceptions of the incidence of both violent and non-violent crime, the effectiveness and predictability of the judiciary, and the enforceability of contracts.

control of corruption Measures perceptions of corruption, conventionally defined as the exercise of public power for private gain. The presence of corruption is often a manifestation of a lack of respect on the part of both, the corrupter (typically a private citizen or a firm) and the corrupted ( typically a public official) for the rules that govern their interactions. It thus represents a failure of governance

average governance Average of the above indicators. -2.5(bad) to 2.5(good) Source: as in Table 1.

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results and Discussion

There is a substantial gap in SWD between Eastern and Western Europe.

In 2007 mean SWD for Eastern Europe was 2.25 and for Western Europe was 2.70, which is a big difference on 1 to 4 scale. Figure 1 plots SWD scores for East European nations over time³. Only Albanians and to lesser extent Hungarians are more satisfied with democracy than they used to be at the outset of the transition. Bulgaria, Czech Republic, Poland and Slovakia were surveyed in 1990, one year before the Soviet block collapse, and all of them became less satisfied with the government in the subsequent years. This is surprising, because one would expect East Europeans to be thrilled with democracy and free market once they gained them after a long struggle. On the other hand, there are good reasons for East Europeans not to be satisfied with the new system. One reason is that people became disillusioned after the Soviet block collapse with what democracy and free market brought upon them. Wedel (1998) calls this paradox triumphalism and disillusionment: East Europeans felt euphoric at the outset of the transition only to realize very soon that their expectations were too high. Wellbeing is influenced by expectations (Rayo, Becker 2007; Aslam, Corrado 2007), and the higher the expectations, the lower the satisfaction. Many outcomes were not as expected: rampant corruption, privatization abuse (Solnick 1999), and economic collapse (negative growth, hyperinflation and double digit unemployment) (World Bank 2000).

Figure 1. Satisfaction With Democracy (SWD) in East European countries from 1990 to 2007. Horizontal dashed lines in 1990 denote approximate transition time. Line fitted to data points shows linear trend

Source: own preparation.

3 Standard deviation of SWD is shown in figure in appendix.

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Figure 2. SWD against rule of law (a) and control of corruption (b). Dashed line represents linear fit and solid lines show 95% confidence interval

Source: as in Table 1.

Citizens in countries with good governance should be satisfied with the system. There is evidence of such positive association in Western Europe (Wagner et al. 2009).

Figure 2 plots SWD against rule of law and control of corruption. There is not much horizontal variation in rule of law (panel a) within countries over time. There is more vertical variation within countries–for a similar rule of law there are different SWD scores, but still countries cluster together. Estonia, Hungary, Czech Republic and Poland have the best rule of law, while Bulgaria,

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Romania, Albania, and especially Russia have the worst rule of law. Citizens of countries with better rule of law are more satisfied with democracy.

Likewise, in panel (b) there is positive relationship and countries form similar clusters. Countries that have strong rule of law tend to be successful at control of corruption. In fact, all institutional quality indicators highly correlate.

Correlation coefficient ranges from .73 to .9 Figure 4 in appendix plots SWD against the average of all six governance indicators and, as expected, there is a positive relationship. The better the general governance, the more citizens are satisfied with the system.

These, however, are only bivariate relationships. Is governance quality a significant predictor of SWD controlling for other factors? Regression results follow. Estimated model is a standard random effects specification.

First set of regression results is shown in Table 3. All models control for Per Capita Gross Domestic Product in 1990 (PCDP 1990), GDP growth, and institutional index. Institutional index is the average of all six governance indicators. In addition, specification (2) adds inflation, and (3) adds unemployment as controls. This setup is repeated in subsequent tables, which replace institutional index with each of six dimensions. The effect of the average governance quality is stable across specifications and is the only significant predictor of SWD. Average governance coefficient is also substantively significant. There is a substantial variation for this sample: average governance ranges from -.64 for Russia in 1996 to 1 for Estonia in 2006⁴.

Table 3. Satisfaction With Democracy (SWD) and institutional quality

Specification Average governance

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PCGDP 1990 0.00 0.00 0.00

(0.00) (0.00) (0.00)

GDP growth 0.01 0.01 0.01

(0.01) (0.01) (0.01)

log inflation 0.01 0.02

(0.03) (0.03)

unemployment rate 0.01

(0.01)

institutional index 0.42** 0.43*** 0.46**

(0.17) (0.16) (0.18)

constant 1.87*** 1.84*** 1.68***

(0.23) (0.24) (0.31)

observations 57 56 55

Robust standard errors in parentheses

*** p<0.01, ** p<0.05, * p<0.1 Source: as in Table 1.

4 Over-time changes are graphed in Figure 6 in Appendix.

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Table 4 shows results for specific dimensions of governance. Control of corruption and government effectiveness predict higher SWD. Again, coefficients are stable regardless of inflation and unemployment. On the other hand, political stability does not predict higher SWD. The reason may be that, in general, the young East Europeans democracies are not politically stable.

Coefficients in all specifications are both statistically and substantively significant. Rule of law is the strongest predictor of SWD. And this is not surprising–safety is a basic human need, especially during uncertain times such as post-transition years in Eastern Europe. Furthermore, Welzel et al. (2003) links rule of law to the elite integrity, and elite corruption is a key problem in Eastern Europe (Solnick 1999).

Table 4. Satisfaction With Democracy (SWD) and institutional quality dimensions Specification Control of corruption Government effectiveness Political stability

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PCGDP 1990 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

GDP growth 0.01 0.01 0.01 0.01 0.01 0.01 0.02 0.02 0.02*

(0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01)

log inflation 0.00 0.02 0.01 0.02 -0.00 0.01

(0.03) (0.03) (0.03) (0.03) (0.03) (0.03)

unemployment

rate 0.01 0.01 0.01

(0.01) (0.01) (0.01)

institutional

index 0.30** 0.28** 0.33** 0.25* 0.27** 0.32** 0.11 0.12 0.14

(0.14) (0.13) (0.15) (0.14) (0.13) (0.16) (0.13) (0.13) (0.14) constant 1.89*** 1.88*** 1.66*** 1.88*** 1.88*** 1.66*** 1.77*** 1.80*** 1.65***

(0.26) (0.25) (0.30) (0.24) (0.25) (0.31) (0.23) (0.25) (0.33)

observations 57 56 55 57 56 55 57 56 55

Specification Rule of law Regulatory quality Voice and accountability

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PCGDP 1990 -0.00 -0.00 -0.00 0.00 0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

GDP growth 0.02* 0.02* 0.02** 0.01 0.01 0.02 0.01 0.01 0.01

(0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01)

log inflation -0.01 -0.00 0.00 0.02 -0.00 0.00

(0.03) (0.03) (0.03) (0.03) (0.03) (0.03)

unemployment

rate 0.01 0.00 -0.00

(0.01) (0.01) (0.01)

institutional

index 0.55*** 0.54*** 0.55*** 0.31** 0.28* 0.32** 0.36** 0.37** 0.37**

(0.17) (0.16) (0.17) (0.15) (0.14) (0.15) (0.16) (0.15) (0.15) constant 2.05*** 2.07*** 1.93*** 1.72*** 1.71*** 1.59*** 1.68*** 1.68*** 1.70***

(0.21) (0.25) (0.29) (0.24) (0.24) (0.32) (0.16) (0.20) (0.31)

Observations 57 56 55 57 56 55 57 56 55

Robust standard errors in parentheses

*** p<0.01, ** p<0.05, * p<0.1 Source: as in Table 1.

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Wagner et al. (2009) note that their study is the first panel study of SWD.

This study appears to be the second, but equally important. It not only confirms the results of the first study but also test the hypotheses that institutions matter for the SWD in a unique setting. Again, all East European countries became democracies only recently. The conclusion is that institutions matter in young democracies, and increase SWD more than economic growth. Still, in the region there is no clear trend in either SWD (Figure 1) or institutional quality (Figure 6 in Appendix). One intriguing difference between Western and Eastern Europe is correlation of SWD and its standard deviation. Wagner et al. (2009) found negative relationship (-.43), while this study finds positive correlation (.11) suggesting that there are more disadvantaged (and advantaged) people in countries with higher SWD. The higher the standard deviation, the more inequality in SWD. This fact requires further research using person-level data to identify people with very low and high SWD.

East European countries as quite different from each other. Are the results reported here robust? The strength of the inference comes from the use of panel data. Random effects take into account the unobserved heterogeneity, that is, differences across countries are controlled for.

Limitations of this study are similar to those in Wagner et al. (2009): SWD scores were aggregated to country level and much information was lost. There is a need for future research to resolve this problem using disaggregated data.

However, person-level predictors of SWD are inconsistently coded in Eurobarometers and particularly personal income is incomparable across countries and over time.

What have we learned? The overall institutional quality matters for citizens’

satisfaction in Eastern Europe. Furthermore, while control of corruption is a consistently significant predictor of SWD, it is not the strongest predictor as hypothesized. The strongest predictor is rule of law, indicating that citizens’

confidence in and acceptance/adoption of the rules matters most for SWD. This is not entirely surprising result. Again, all indicators of institutional quality highly correlate and influence each other, and all of them (except political stability) consistently and with high significance predict SWD. In practice, it is arguably difficult to improve (worsen) one indicator and worsen (improve) another. Recommendation, therefore, is to work on improving overall institutional quality to improve citizens’ satisfaction with the political system as it works in practice.

Last but not least, both governance and SWD are important for the overall wellbeing. The literature mentiones governance/democracy as a dimension of quality of life (e.g. Cummins, 1996). More recently SWD has been found to increase happiness (Orviska et al. 2014). Results from present study confirm the importance of institutional quality. Even though, institutional quality may be considered by some to be a “soft” measure of development as compared to Gross

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Domestic Product (GDP), results suggest that it may be more significant than

“hard” measures such as GDP. Likewise, good governance was recently found to improve happiness more than economic growth (Helliwell 2014). Present study finds evidence for a strong connection between governance and SWD in Eastern Europe.

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Data Sources

eb90-97 [person-level data] ICPSR 4153 Central and Eastern Eurobarometer 1990- 1997: Trends CEEB 1-8

eb2002 [person-level data] ICPSR 4062 Candidate Countries Eurobarometer 2002.2, September-October 2002

eb2003 [person-level data] ICPSR 4107 Candidate Countries Eurobarometer 2003.2, May 2003

eb2004 [person-level data] ICPSR 4668 Eurobarometer 62.2: Agricultural Policy, De- velopment Aid, Social Capital, and Information and Communication Technology, November-December 2004

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eb2005 [person-level data] ICPSR 4564 Eurobarometer 63.4: European Union Enlar- gement, the European Constitution, Economic Challenges, Innovative Products and Services, May-June 2005

eb2006 [person-level data] 20322 Eurobarometer 65.2: The European Constitution, Social and Economic Quality of Life, Avian Influenza, and Energy Issues, March- -May 2006

eb2007 [person-level data] ICPSR 23368 Eurobarometer 68.1: The European Parliament and Media Usage, September-November 2007

wdi [country-level data], World Development Indicators, http://www.worldbank.org/

data

kkz⁵ [country-level data], The Worldwide Governance Indicators, http://info.worldbank.org/governance/wgi/index.asp

Wpływ instytucji na zadowolenie z demokracji w europie Wschodniej

Streszczenie

Kompetentne rządy i jakość instytucji to kluczowe koncepcje, pomagające odróżniać dobrze prosperujące społeczeństwa od tych, które radzą sobie gorzej. Koncepcje te mają wyjątkowe znaczenie w Europie Wschodniej, której kraje na początku lat dziewięćdziesiątych zmieniły ustrój z komunistycz- nego na demokratyczny. Rozsądek podpowiada, że europejczycy z bloku wschodniego, wykończeni dekadami komunizmu, powinni być zachwyceni nowym ustrojem politycznym, ale czy tak jest naprawdę? W skrócie – nie.

Jednym z wyjaśnień jest to, że poparcie dla ustroju politycznego zależy od jakości instytucji, która w blisko połowie krajów Europy Wschodniej nie uległa poprawie. Autor pracy bada wpływ jakości instytucji na poparcie ustroju politycznego w grupie państw wschodnioeuropejskich w latach 1990-2007.

Dobre instytucje zwiększają poziom poparcia ustroju politycznego bardziej niż wzrost gospodarczy, spadek inflacji czy niska stopa bezrobocia.

Słowa kluczowe: zadowolenie z demokracji, poparcie ustroju polityczne- go, jakość instytucji, rządy, europa wschodnia, zmiana ustroju.

Kody JEL: F5

5 kkz data is available annually for 2002-2008 and for 1996-2002 biannually and were imputed with the mean for between years and with a previous year for 1996. There is not much over time difference, the main variation is in cross-section.

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appendix

Figure 3. Annual Gross Domestic Product (GDP) growth in East European countries from 1970 to 2005. Horizontal dashed lines in 1990 denote approximate transition time that resulted in GDP decline

Source: as in Figure 1.

Figure 4. SWD and average governance quality and in East European countries. Dashed line represents linear fit and solid lines show 95% confidence interval

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Figure 5. Standard deviation of SWD in East European countries over 1990-2006.

Horizontal dashed lines in 1990 denote approximate transition time

Figure 6. Average governance quality in East European countries, 1996-2008

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Artykuł nadesłany do redakcji w październiku 2017 roku.

Afiliacja:

dr Adam Okulicz-Kozaryn

Akademia Finansów i Biznesu Vistula

Wydział Biznesu i Stosunków Międzynarodowych ul. Stokłosy 3

02-787 Warszawa

e-mail: adam.okulicz.kozaryn@gmail.com

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Hanzhen Liu

Akademia Finansów i Biznesu Vistula - Warszawa David A. Jones

Uniwersytet Warszawski

FeuDal internationaliSm? Foreign policy of the PeoPle’s rePublic of china:

See china change From Back then to noW to What next?

summary

Sovereign territory that is called the People’s Republic of China at present has existed for some 5,000 years or longer across several dozen dynasties, several periods ruled by “warlords,” at least two Republics including the current People’s Republic of China. Over such a long time period, “China”

has changed remarkably, evidenced by revisions in its language, arrival then departure of various forms of governance and leaders, prosperity during the Ming Dynasty, poverty from the “Great Leap Forward” of the 1950s through the “Cultural Revolution” of the 1960s and 1970s, to the present period the authors have termed “feudal internationalism.” This article will focus on China’s changing foreign policies: from the dynastic periods, across the post-dynastic Ming Guo period (1911-1927), to the Republic of China period controlled by the Chinese Nationalist Party (Guomingtang), (1927- 1949), to the People’s Republic of China controlled by the Chinese Communist Party (Gongchantang) that has changed its own foreign policies several times since taking power in 1949, mostly during or since China’s “opening” to the West during the administration of Deng Xiaoping as China’s “paramount leader” (1978-1989) that ushered in “four modernizations”, the third of which upgraded China’s national defense. Changes in China’s foreign policy have continued under its current president, Xi Jinping, most noticeably with China’s

“One Belt, One Road” initiative that involves building infrastructure across Eurasia and Africa at the cost of billions of dollars estimated to turn into trillions of dollars as China endeavors to resurrect then put to new uses the ancient “Silk Road” overland plus the maritime “Silk Route” with cutting edge airports, highways, railways, seaports needed to connect China with raw materials including energy sources from Africa and consumer markets in Europe.

Key words: China, “feudal internationalism”, foreign policy, OBOR, Silk Road, Silk Route.

JEL codes: F5 KNUV 2018; 1(55): 21-40

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22 Hanzhen Liu, David A. Jones

introduction

Chinese foreign policy exhibits many characteristics of what each author of this article has called “Feudal Internationalism” (Jones 2015a, p. 344; Liu 2016, pp. 173-175). In recent years, China seems to have collected a series of vassal states across parts of Africa and Eurasia, binding them together economically instead of (or in addition to) militarily, at least at the present time.¹ When states receive mega-investment, whether that be by gift or loan, an obligation for their allegiance arises therefrom. Some neighboring states will resent both the investments and the allegiance they expect to follow, unless of course they receive a similar largesse, and from China usually they do. China’s foreign policy is not necessarily good or bad in itself, although United States and other Western officials have decried much of it as being neo-colonialism (Lederman 2018). This is more feudal internationalism, because China’s objectives are to continue the flow of raw materials and to maintain consistency in political support such as within the United Nations, rather than to provide additional colonial citizens.

If China or the recipients of its investments, loans especially, over extend themselves, the risk is that a regional or global economic recession may follow.

As with most policies, the devil lies in the details. In 2015, an author of this article wrote a proposal calling for China to relocate its USD 50 Billion deep water port, intended as an entry point for Chinese goods being shipped into the European Community, from Ukraine’s Crimean Peninsula occupied by the Russian Federation since 2014 to Piraeus, near Athens Greece (Jones 2015b). In August 2017, China announced its plan to go forward with a deep water port at Piraeus, Greece, much to the chagrin of Western European leaders (Horowitz, Alderman 2017). This plan makes sense and should be risk free because it will transfigure Greece from rags to riches by making Piraeus a gateway into Europe for goods made or assembled in Asia. This facet of OBOR should inaugurate a new Golden Age of Greece.

What will be next as China embarks upon reconstruction of the ancient Silk Road into its One Belt, One Road or “OBOR” initiative, overland across Eurasia and by sea across the Indian Ocean to Africa? Does China or should China launch parallel initiatives in the Western Hemisphere? Is “Feudal Internationalism” as an economic paradigm likely to evolve into a military paradigm and, if so, will that provoke resistance from China’s competitors such as the United States, European Community, Russian Federation, China’s Asian neighbours such as India, Japan, Korea, the ASEAN block of countries? Or, will

1 At the present moment, China is endeavouring to operationalise an African military base in Djibouti, a country located in Africa’s Northeastern “horn” not so far away from the United States African command base at Camp Lemonnier, also located in Djibouti, very close to its border with Somalia.

French and Japanese military bases are nearby, just across from the Arabian Peninsula and at the entrance to the waterway that leads to the Suez Canal (Woody 2017).

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23 Feudal Internationalism? Foreign Policy of the People’s Republic of China…

Chinese “Feudal Internationalism” merely inspire competitor nations to follow the same example, collecting fiefdoms, exploiting resources, contriving a pattern of neo-colonial influence across Eurasia as it did across Africa?

John T. Fairbank, highly regarded Harvard University sinologist of the 20^th century, raised then attempted to answer recurring questions concerning Chinese historical foreign policy across 2,000 years of different dynasties and post-dynastic governments:

If we ask the long- term question-What is China’s tradition in foreign policy?-our query may provoke two counter-questions: Did the Chinese empire ever have a conscious foreign policy? Even if it did, hasn’t Mao’s revolution wiped out any surviving tradition?

To answer these questions is easy in theory, difficult in practice.

Theoretically, since China has had two millennia of foreign relations (the longest record of any organized state), her behavior must have shown uniformities -- attitudes, customs and, in effect, policies. In fact, however, the Chinese empire had no foreign office, and the dynastic record of “foreign policy” is fragmented under topics like border control, frontier trade, punitive expeditions, tribute embassies, imperial benevolence to foreign rulers and the like, so that it has seldom been pulled together and studied as an intelligible whole (Fairbank 1969, p. 449).

Hopefully, China’s 21^st century OBOR initiative will not become

“benevolence to foreign rulers” across Africa or Eurasia in a 21^st century form.

That would be a waste of the Chinese people’s assets accumulated from hard work across very many generations.

imperial chinese Foreign policy

Across all dynasties in the history of imperial dynasties that ended on 12 February 1912 upon the coerced abdication in childhood² of His Late Imperial Majesty the Xuantong Emperor (afterwards known as Aisin-Gioro Puyi),

2 Interestingly, The Xuantong Emperor (Puyi) coined the phrases “Republic of China” and “People’s Army” although he was eight years old and probably his abdication document was written by the Dowager Empress Longyu, formerly Empress Xiaodingjing, in Chinese traditional, who signed it on Puyi’s behalf:

The Whole Country is tending towards a republican form of government. It is the Will of Heaven, and it is certain that we could not reject the people’s desire for the sake of one family’s honour and glory.

We, the Emperor, hand over the sovereignty to the people. We decide the form of government to be a constitutional republic.

In this time of transition, in order to unite the South and the North, We appoint Yuan Shikai to organize a provisional government, consulting the people’s army regarding the union of the five peoples: Manchus, Han Chinese, Mongolians, Mohammedans and Tibetans. These peoples jointly constitute the great State of Chung Hwa Ming-Kus [a republic of China].

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Chinese emperors maintained only tributary relations with foreign states because they deemed foreigners to be “barbarians”, receiving envoys at the imperial court in whatever happened to be China’s capital city at the time, but without reciprocating by sending Chinese envoys abroad, because China believed its emperor was the center of the universe (Worden, Savada, Dolan 1987). This is in accordance with Fairbank’s observation (1969, p. 449).

Notwithstanding the criticisms by Fairbank and others that imperial China lacked an exchange of envoys that we consider to be fundamental to foreign policy nowadays, we do know that many foreign nationals came to study in China, evidenced by the statues of 61 foreigners at the Qianling Mausoleum of the Tang Dynasty near Chang’an [Xi’an]. Most ethnic features have disappeared, but on two statues the heads remain and reflect features of Central Asians instead of East Asians (“Qianling Museum”, n.d.). In the Ming Dynasty, bilateral exchanges of diplomats occurred, very notably Chen Cheng to Samarkand, currently a city in Uzbekistan, and to Herat, currently a city in Afghanistan, both then Persian, with Ghiyath al-din Naqqash dispatched to China (Rossabi 1976), an early example of China’s concern for securing its periphery, whatever territory that included at any given time.

Nevertheless, China came to develop what one might consider to be sequential missions from foreign states, and foreign envoys sent to China seem to have been concerned primarily with educational exchanges in addition to commercial exchange of products. Between 630 and 894, as an example, Japan dispatched 19 missions to China, 14 of which completed the arduous round-trip journey, following the consolidation of China into a single nation in 589 with formation of the Sui Dynasty (Fuqua 2017). Little evidence exists to document that Chinese envoys were sent to Japan or elsewhere during the Tang Dynasty, besides their accompanying “punitive” expeditions such as the second Tang emperor, Taizong, launched to quell warring states in Korea (D’Haeseleer 2016), as Fairbank reported (1969, p. 449). Arguably Chinese foreign relations were one-sided not bilateral across its imperial period until the Qing Dynasty commenced to decline following the death of Emperor Qianlong in 1799, with limited exceptions during the Ming Dynasty when “China also dispatched diplomatic missions east to Japan and Korea, west to the Persian Gulf and the Red Sea, north to the great Mongolian Desert, and south to Southeast Asia, Indonesia, and Malaysia” (Sino-Foreign Relations During the Ming Dynasty 2005), as the map in Figure 1 above confirms. Part of the reason for the Ming interest in forging diplomatic relations in general undoubtedly was because, during the Ming Dynasty, China was the richest country on earth and as now required markets within which to sell products.

“We now retire to a peaceful life and will enjoy the respectful treatment of the nation” (Alpha Hi- story. n.d. “The Abdication Decree of Emperor Puyi (1912)”. http://alphahistory.com/chineserevolution/

abdication-emperor-puyi-1912/ [access: 15.09.2017].

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Figure 1. Expeditions of the Ming Dynasty

Chen Cheng’s voyages in the context of military and diplomatic activities in the Yongle era of the Ming dynasty. Chen Cheng’s approximate overland route (as based on the list of destinations in Goodrich & Tay 1976) is in green, along with the maritime route of Zheng He (in black) and the riverine route of Yishiha (in blue).

Source: https://infogalactic.com/w/images/e/e3/Ming-Expeditions.svg [access: 15.09.2017].

Another reason, explaining its diplomatic relations with Muslim states of Eurasia is likely because in the Ming Dynasty China was constantly threatened by invaders from across its northern borders, as pointed out by Crossley in her book on the succeeding Qing Dynasty (1999, p. 57), itself an invading force.

Ming diplomatic relations with the early Muslim world attest to its historical concern for securing what has been articulated as China’s “strategic periphery”

as that frontier has expanded (Mitchell, McGiffert 2007). Examples such as this contradict accounts by some 20^th century and contemporary scholars that China never was concerned with diplomatic exchanges (Fairbank 1969, p. 449).

In the 19^th century in the Qing Dynasty ruled by occupying Manchurians, China came to develop what one might consider to be rudimentary foreign relations with key powers, most notably with Great Britain and the United States following the First and Second Opium Wars followed by the signing of

“Unequal Treaties” between China and Western nations including Great Britain and the United States that prompted the rise of Chinese nationalism that had

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not occurred before, according to Suisheng Zhao, executive director of the University of Denver Center for China-US Cooperation and a research associate at the Fairbank Center for East Asian Research at Harvard University, who forecasts the rise of a similar Chinese “pragmatic nationalism” in the early 21^st century that Zhao contends “is fundamentally interest-driven, reactive and flexible” (Li 2007). In studying China since 1750, meaning since the 15^th year of the reign of Emperor Qianlong, Westad concludes that a fundamental difference between Qing and previous Chinese dynasties is that the Qing Dynasty was a “trading empire” (2012, p. 35). Other scholars have noted that because the Qing rulers and their entourage were Manchus, thus not of Han ethnicity, they felt burdened to over-glorify the Han culture although at the same time obligated to court favor with China’s ethnic minorities ranging from Mongols to Muslims to the Tibetans in order to legitimize Manchu rule and to render China stable from within, from without, as a form of both domestic security and protection within the tributary states including Korea, Ryukyu Islands, Burma, Vietnam, that were not colonies in the European mold (Jian 2013, pp. 8-9).

Unequal Treaties necessitated by China’s wartime losses became additional Qing burdens. They included the Treaties of Nanking (1842, revised 1843) with Britain, Wangxia (1844) with the United States, Guangzhou Convention (1846) with Britain, followed by the Treaty of Tianjing (1858), Beijing Convention (1860), Alcock Convention (1869), Zhifu Agreement (1876), Convention Related to Burma and Thibet [Tibet] (1886), and the Chungking [Chongqing]

Agreement (1890), all with Great Britain. In 1844, the United States sent its first ambassador, Caleb Cushing, to sign the “Treaty of peace, amity, and commerce, between the United States of America and the Chinese Empire,” known as the Treaty of Wanghia [Chinese traditional] or Wangxia [Chinese simplified]

because it was signed on 03 July 1844 inside the Kunlam Temple in the village of Wang in the north of Macao Island. Both authors visited the Kunlam Temple, noticing that the room where the treaty was signed is conspicuously tiny, lacking the opulence of the imperial palace, reflecting China’s disdain for the West at that time. It was signed for Chna by Qiying (Kiyeng in Manchurian), viceroy of Liangguang [of the two Guangs, Guangdong (East) and Guangxi (West)], then newly appointed to that post, holding his position as a member of the ruling Aisin-Gioro family. United States President John Tyler then ratified the Treaty of Wangxia on 17 January 1845, and Prince Gong ratified it as regent of China (Westad 2012).

Chinese rank and file citizens rose up against the Qing Dynasty late on the 18^th century as part of what became labeled the “Boxer Rebellion,” the objective of this insurrection being to drive all foreigners out of China. Predictably, the response by the foreign powers was to close ranks and help the tottering Qing monarchy repel the revolutionaries. Once victorious, European and Japanese

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authorities came close to carving up China into colonies. To preclude that from happening, the Qing government agreed to an “Open Door” policy proposed by United States secretary of state John Hay with his “Open Door Notes” sent to the European powers dated 06 September 1899, to which the European powers except Imperial Russia acquiesced sub silentio, with Great Britain and Imperial Germany signing the Yangtze Agreement on 06 October 1900,on which Germany subsequently reneged. In principle, the “Open Door” policy gave the European powers and the United States an equal access to China’s lucrative trade, dividing parts of China’s Pacific coastline into “spheres of influence” that would become headquarters of trading companies from different foreign countries. Said differently and from a Chinese viewpoint more negatively, those “spheres of influence” contributed heavily to hastening the Qing Dynasty’s fall, casting the territory of China into chaos for decades.

china’s “accumulative” Foreign policy During the cold War period

During the “Cold War” period, 1945 to 1989 or 1991, China viewed itself caught up between both the United States and the Soviet Union in foreign policy and other international respects. Chinese leaders concluded they had to keep the United States and the Soviet Union divided not only from each other but in the perceptions of developing country leaders, especially in Africa (Chen 2001). Its over-arching foreign policy during that time frame was to accumulate enough votes in the United Nations General Assembly to transfer the “China Seat” on the United Nations Security Council to Beijing and away from Taipei.

This strategy worked when, by 1971, China had accumulated enough partner states in the developing community of nations to gain that seatas a permanent member of the Security Council, with unilateral veto powers (Tanner 1971).

Accumulation of Tangible “Hard” Interests became China’s next foreign policy goal once it had gained the “China Seat.” Experts have identified four

“hard interests” China harbored in Africa:

1. Maintaining or increasing access to energy, minerals, timber, and agricultural products.

2. Developing good relations with all African countries so that China can count on their support in regional and international forums.

3. Increasing significantly China’s exports to Africa, especially as the eco- nomies of African states become more robust and Africans increase their disposable income.

4. Ending Taiwan’s official diplomatic presence in Africa and replacing it with recognition of Beijing (Shinn 2011, p. 1).

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28 Hanzhen Liu, David A. Jones Figure 2. Distribution of Chinese Outward FDI Across Africa

Source: Zhou, Leung (2015).

China’s efforts to gain and then retain “hard” interests on the African continent have brought it into competition with other state actors: the United States and the Soviet Union [from 1991 the Russian Federation] that already were in Africa, then India, China’s next principal competitor, followed by smaller competitors that have gained strength collectively and sometimes separately including Iran, Saudi Arabia and Turkey from the Islamic Middle East, Indonesia, Malaysia, Singapore and Thailand from the ASEAN Block, and Cuba (Shinn 2011, pp. 8-9). Undoubtedly, it is this fierce competition for resources that motivated China to launch its “New Maritime Silk Route”

initiative in the Xi Jinping presidency since 2012, and to increase its velocity thereafter. Even before that initiative, Chinese Foreign Direct Investment (FDI) into the top 15 recipient African nations increased by factor six between 2004 and 2010, according to the World Bank (Foreign Direct Investment Flows 2014).

That FDI was distributed across sub-Saharan Africa as Figure 2 below reflects, with the largest share to “core” countries of the continent’s center, many landlocked, with vast mineral resources that have been called China’s “Bamboo Corridor” across Africa from Ethiopia to Angola (Jones 2011, p. 62).

Theoretically, FDI should increase each recipient country’s access to education and healthcare, but many recipients of Chinese FDI in the 21^st century have fallen below the 25^th percentile on the Human Development Index (HDI),

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meaning their access to education and healthcare has declined instead of increased, with a World Bank report contending this trend could have been averted if Chinese FDI had been “more broad-based and not confined to resource enclaves” (Foreign Direct Investment Flows, 2014, p. 3). That said, of course, China has used significant portions of the mineral resources it has harvested from Africa to manufacture products the West consumes. Making China the scapegoat is unfair in part when Western countries have become the beneficiaries of its production capacity and, consequently, may be said to have acted in complicity with its feudal internationalism.

Some scholars question whether “foreign aid” actually benefits recipient nations at all, or at lease sustainably, whether this be in cash or loans or infrastructure construction, arguing that “Like the US, China gives aid for three reasons: strategic diplomacy, commercial benefit, and as a reflection of society’s ideologies and values. The broad brush-strokes of foreign aid policy are set by political leaders, who shape aid as one of many instruments of foreign policy”

(Brautigam 2011, p. 15). Clearly, she seems to feel that these three reasons explain The Real Story of China in Africa, the subtitle to her 2011 book, The Dragon’s Gift. From this perspective, Chinese aid to Africa must be witnessed skeptically to determine if it is any “gift” at all in the ultimate analysis. This position is in accordance also with the book Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa (Moyo 2009). That “better way”

includes weaning countries off aid dependency that actually has yielded negative economic growth and between 1970-1998 witnessed poverty in aid- dependent countries of Africa rising from 11 percent to 66 percent (Moyo 2009, p. x). Alternatively, Moyo advances four recommendations: African countries should take advantage of international bond markets, attract Chinese Foreign Direct Investment (FDI), utilise microfinancing, and developed countries should end their practice of subsidising domestic farmers (Moyo 2009, pp. x-11).

This ignores the fact that much of China’s FDI in Africa is really a form of foreign aid in disguise because it maintains autocratic political leaders in power, and it ignores the reality that China is the world’s leader in providing domestic subsidies, across most economic sectors, not merely for agriculture. This does not mean that foreign aid is good. It means that FDI in the African environment becomes a form of foreign aid and becomes as bad as other forms of international subsidies. Foreign subsidies of one kind or another do maintain some benefits to donor and recipient countries alike. They converge to form what the authors term China’s feudal internationalism, that system of economic dependency that expects recipient nations to repay China’s financial largesse with raw materials in an endless steady stream, and unquestioned political allegiance within international organisations such as the United Nations. As a given, China expects vassal states to engage in diplomatic recognition of and relations only with Beijing and not with Taipei, Republic of China, that

KwartalniK nauKowy uczelni Vistula

Przyjęcie euro Przez Polskę.

Potencjalne korzyści i koszty

the use of futures contracts

as a collateral for oPerational risk activities

sustainable tourism services as an excePtional Product for the mice

destination. case study reykjavik

institutions matter for satisfaction With democracy in eastern euroPe

KwartalniK nauKowy uczelni Vistula

VISTULA SCIENTIFIC

QUARTERLY

SpiS treści

table of contents

institutions Matter for satisfaction With Democracy in eaStern europe

introduction

Data Description

results and Discussion

Bibliography

Wpływ instytucji na zadowolenie z demokracji w europie Wschodniej

appendix

FeuDal internationaliSm? Foreign policy of the PeoPle’s rePublic of china:

See china change From Back then to noW to What next?

introduction

imperial chinese Foreign policy

china’s “accumulative” Foreign policy During the cold War period