Corruption is a word synonymous with much of Eastern Europe. It was rampant in the communist era; political elites spent their time stifling innovation and promoting elitist policies to keep themselves in power at the expense of public welfare. With the fall of communism in the late 80s and early 90s, there was newfound hope that the resulting ‘revolution’ would bring in an era of freedom, prosperity, and security. Unfortunately for many countries in Eastern Europe, this hope would not be fulfilled. Few Eastern European governments have successfully transformed themselves into strong democratic states. Many, including Hungary and Bulgaria whom I will focus on, find themselves meddling somewhere between the cracks, failing as democratic states. Hungary and Bulgaria have struggled to improve the welfare of the mass public since their transition to democracy; they remain countries that are run by corrupt rulers who are intent on widening the schism between the prosperous elite and the rest of the country.

Prior to the fall of communism, Bulgaria’s government, led by head of state Todor Zhivkov, was widely known for its horrific treatment to the minority Turks in the country. However before Zhivkov’s attack against the Bulgarian Turks, he was somewhat popular among his people. Mortality rate, education, life expectancy, and other key statistics were all increased during Zhivkov’s regime. Zhivkov also gained strides in the Bulgarian intellectual community by promoting the writers’ union heavily, which granted members high stature and privileges. While it cannot be said that the quality of life for Bulgarians was the very best, Bulgarian’s had a stable ruler who provided decent care to the public (until the later part of his regime).

Unfortunately for Bulgarians, the aftermath of the communist collapse has turned Sofia into a political battleground as ex-communists, who remained in power after the first parliamentary vote in June 1990, battled against modern reformers to shape the country. It was obvious that things had not changed despite the government’s pronouncements of freedom and democracy. In fact, the Socialist party that won the first democratic election in 1990 was the previous ruling communist party who had just changed its party name.[1] Pursuing political reform has been nonexistent in Bulgaria since there has been no incentive to do so. The country received plenty of monetary aid from foreign investors and the European Union, but much of it went to the private bank accounts of the political elite rather spread out to the public. An example of this is the Special Accession Programme for Agriculture and Rural Development, or SAPARD, a national initiative where the EU provided monetary funds to Bulgaria’s agricultural sector. Although field equipment in Bulgaria was poor and hardly functional, vast amounts of money instead went to Bulgarian farmers and their families to buy SUVs and other luxuries. When asked how to recognize somebody who has gotten a SAPARD grant a local simply said, “Just look for the people driving the most expensive SUVs.”[2] [3] Another issue for the Bulgarian government is its blatantly corrupt judiciary. Judges were viewed as actors from the old communist regime and were accused of failing to prosecute cases of high corruption.[4] A political tactic called telephone justice, “party functionaries let judges know their desires for particular case outcomes, and the judges comply with their wishes,” was commonly used, further evidence of unequivocal corruption. Judicial officials even confirmed that acts of unfairness did occur but attempted to excuse them by saying that they view themselves as bureaucrats just as much as any other political officer.[5] This in itself is an issue that most would view as problematic, working completely against the popularly embraced concept of separation of powers. How can the Bulgarian public expect to live in security and freedom with such powers stacked against them? I think its more than obvious that things were not equal between the political elite and the public, and as we’ll see later, things could even be getting worse.

In the case of Hungary, corruption has been equally bad. A severe lack of effective political institutions and accountability has hampered Hungary severely, allowing the political elite to completely run over the public by cheating and scheming their way to the top. A new law was implemented in 2011 that allowed for unprecedented expedited law making.[6] This new law allowed proposed bills to be pushed through parliament without any debate and can be adopted as quickly as the following day. Such a severe lack of accountability is a detriment to the Hungarian political system, and the public is left with an unstable political environment and thus is placed firmly at the mercy of the political elite. Further proof can be seen when the political elite cheats their way to the top, “cheating taxes is also part of the culture. Nobody likes to pay, taxes and everybody tries to live by one’s wits. One of the biggest political scandals last year involved a member of the government who rented a restaurant for an afternoon event. His assistant allegedly paid the fee in an envelope, without including the Áfa (value-added tax), directly to the owner. When the scandal became public, everybody denied everything, and there were no repercussions.”[7] It is painfully obvious that a gulf remains between the rulers and the ruled in post-socialist Eastern Europe. In a poll conducted of businessmen in Hungary, nearly 20% thought that he or she had already lost business opportunities due to the corruption of his or her rivals.[8]

Such corruption and problems in democracy has been hard for the people of Hungary who took part in one of the most peaceful and stable transitions into democracy among many other Eastern European countries. The Hungarian activists had such a successful revolution that they were able to ceremonially ‘rebury’ former Prime Minister Imre Nagy, the man who led the 1956 Hungarian uprising.[9] Since then however, corruption has catapulted. Transparency International, a global civil society organization against corruption, uses statistics to give numerical scores to countries based on their corruption level. Their statistics say that nearly 80% of the public in Hungary believes that corruption has increased from 2007 – 2010. 6 That is a terrifying number for the public to hear and proves just how poorly the public feels about their situation. Furthermore, over 50% of the Hungary public feels that government efforts to curb corruption are ineffective. Bulgaria is not immune to these disastrous statistics either. A 2007 poll by the Eurobarometer revealed a public who was still wary of their government; the people’s trust in political parties was 7%, 11% in national parliament, and 16% in the government. Furthermore, 38% of Bulgarians were satisfied with the life they live, 17% happy with the economic environment, and more than 45% said that the country isn’t going in the right direction.[10] In a public survey, Bulgarian university students provided numerous examples of professorial abuse that they had witnessed. In one such example a student was “able to procure a place in a prestigious university for $7000.”[11] Similarly, the public’s level of trust in the government was very low.

The statistics paint an ugly picture about the situations in Bulgaria and Hungary, but not all is bad. In 2012 Hungary published it’s anti corruption program aiming to target corruption by creating new lobbying laws.[12] The new program also provides protection for whistleblowers, a very important thing for anyone in the public who doesn’t have connections to the political elite that can bail them out of trouble when needed. The State Audit Office of Hungary has also made progression towards curbing corruption by enacting a national strategy to control corruption. [13] Bulgaria has also made some strides, albeit slowly and arguably unproductively, towards success. The Copenhagen European Council’s conclusion in its 2004 report on Bulgaria’s progress towards accession: “Since the Opinion, Bulgaria has made steady progress and has achieved a high degree of legislative alignment. The administrative and operational capacity of the National Customs Agency improve considerably, although at a slower pace, especially as regards implementation and enforcement.”[14] This statement alongside with their previous statement in 2002 that described Bulgaria as having a “functioning market economy” eventually led to Bulgaria’s successful entrance into the European Union in 2007. These positives can promote the idea that the divide between the political elite and the public is not so bad, and even that corruption in general is not the issue that it’s been made out to be. This theory can be supported by multiple statistics and polls done in the early 2000s. However, they do not, and cannot, account for the negative progress made since Bulgaria and Hungary have ascended to European Union status, the double dip syndrome.

The largest problem for Bulgaria, Hungary, and other Eastern European countries, is preventing the double dip effect. After struggling with democracy initially, many countries have bounced back. This can often be attributed to these countries attempting to fit the European Union’s strict accession requirements. However, once entrance to the EU has been accomplished, Hungary in 2004 and Bulgaria in 2007, countries can fall back into their previous habits of corruption and political destabilization. Venelin Ganev discusses this syndrome in his paper Post-Accession Hooliganism: Democratic Governance in Bulgaria and Romania after 2007.[15] He notes that Bulgaria has reached a turning point after their accession to the EU and is currently falling back into their political trappings of the early democratic period. Bulgaria has had predictable electoral rules since 1991, a healthy sign of democracy and stable government, until the rules were changed suddenly in 2009. This has allowed the political elite to take advantage of the political system and has put the public at a disadvantage and at their mercy. Furthermore, there has been an abandonment of informal rules used throughout the government. While this may not seem so detrimental, the breaking up of political stability creates massive waves of issues that reverberate throughout the entire country, all because of selfish, corrupt political leaders.

In conclusion, both Bulgaria and Hungary have serious work to do before they can say that they have eliminated the culture of political elites cashing in at the expense of the public. Multiple examples have proven that corruption still presents a serious problem for both countries, especially in Bulgaria, and a change in political culture is needed to solve the problem. Furthermore, a double dip effect has already happened following these countries admission to the EU, and it is of the highest importance that these countries stabilize again and begin to make progress forward.

[1] Nichols, Philip, George Siedel, and Matthew Kasdin. “Corruption as a Pan-Cultural Phenomenon: An Empirical Study in Countries at Opposite Ends of the Former Soviet Empire.” Texas International Law Journal 39.215 (2004): 215-256. Print.

[2] Freeman, Colin. “Inside Europe’s corruption capital: how Bulgaria’s crime mafia plunders EU grant money – Telegraph.” – Telegraph online, Daily Telegraph, Sunday Telegraph – Telegraph. N.p., 15 Nov. 2008. Web. 8 Nov. 2012.

[4] Fish, M. S. and R. S. Brooks. Bulgarian democracy’s organizational weapon. East European Constitutional Review 9: 69–77.

[5] Melone, Albert. “The Struggle for Judicial Independence and the Transition Toward Democracy in Bulgaria.” Communist and Post-communist Studies 29.2 (1996): 231-243. Print.

[6] Transparency International. (2010). Transparency International, Transparency International Country Overview Hungary. Retrieved at November 1st, 2013

[7] Vajda, Éva. “Hungary.” Global Integrity Report . N.p., n.d. Web. 1 Nov. 2013.


[8] “Corruption Still a Fact of Business Life.” Budapest Sun 25 Sept. 2008: 1. Print.

[9] “1989: Hungary reburies fallen hero Imre Nagy.” BBC News. BBC, 16 June 1989. Web. 14 Nov. 2013. <;.

[11] Nichols, Philip, George Siedel, and Matthew Kasdin. “Corruption as a Pan-Cultural Phenomenon: An Empirical Study in Countries at Opposite Ends of the Former Soviet Empire.” Texas International Law Journal 39.215 (2004): 215-256. Print.

[12] “Official Journal of Hungary.” Hungarian Gazatte 6 Apr. 2012: 1 – 80. Print.

[13] “In the international arena, the SAO activity against Corruption .” (accessed November 14, 2013).

[14] Copenhagen European Council Report on Bulgaria’s Accession Progress (

[15] Ganev, Venelin. “Post-Accession Hooliganism: Democratic Governance in Bulgaria and Romania after 2007.” East European Politics and Societies and Cultures 27, no. 1 (2012): 26-44.



Why does one nation fail while another nation progresses? This is the question Harvard University economics professor James Robinson and MIT economics professor Daron Acemoglu attempt to answer in their recent book Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Robinson and Acemoglu’s primary argument deals with a country’s political and economic institutions, and how those countries’ inclusivity or exclusiveness decides their path into the future. Despite its rich historical detail and strong writing, Why Nations Fail suffers severely from a lack of detail in its political theory. The explanation of why a nation fails or succeeds based on the inclusiveness of its politics is too ambiguous and imprecise. Vagueness and simplicity are used to cover glaring omissions to Robinson and Acemoglu’s theory.

An inclusive political institution is one that is centralized and pluralistic, one that is typically democratic or similarly structured. Public services are available to all citizens, especially those at the bottom of the socio-economic ladder, and the government represents the views of all citizens, not just the political elite.  An inclusive economic institution is one that allows and encourages mass participation in the country’s economic activities and enables individual citizens to make the choices they wish. In an inclusive economic state, citizens can pursue entrepreneurship without the fear of the government creating monopolies and running them out of business.

An extractive political institution occurs when the political elite provide for themselves at the expense of the rest of the public.  Regular citizens have little say in leadership of the country. Public services are nonexistent or minimal, and economic activity is discouraged and disallowed. Extractive political and economic institutions promote infighting and public unrest. Absolutist states, like the former Soviet Union and North Korea, are good examples of extractive institutions, both led by an elite with disregard for its public. In spite of its negatives, extractive institutions are common because they make sense to power hungry elite; they generate limited prosperity while providing the elite in charge the ability to do anything they want. According to Acemoglu and Robinson, extractive institutions are bound to fail. One reason why is due to these countries’ inability to progress and innovate technologically. The authors attribute this to the idea of creative destruction. In creative destruction, a technological innovation makes a job easier, or a worker more efficient. This leads to more being produced and a greater surplus in the state, causing higher public demand from the central government. To combat this, political elites do not allow technological innovation to affect their states in order to continue to rule with an iron fist.

The central thesis in the book revolves around the idea that, “economic growth and prosperity are associated with inclusive economic and political institutions, while extractive institutions typically lead to stagnation and poverty.” (Chapter 3, page 91) Acemoglu and Robinson use an exhaustive amount of case studies to further support their theory. One of their defining examples in how the modern world has been developed is the Industrial Revolution in Britain. Simply put, the Industrial Revolution happened because the Glorious Revolution occurring 60 years before led Britain to establish more inclusive economic and political institutions. The British parliament represented all of Britain and its regulations on the Crown allowed a new merchant class to emerge instead of the continuation of trade monopolies. In the mid-18th century, states around the world faced the decision to industrialize or not. Inclusive institutions, realizing the obvious benefits and increase in production, industrialized and became even more wealthy and inclusive. Political elites in extractive political institutions did not industrialize in fear of creative destruction. There were no incentives for political elites to innovate because their current situation was ideal, and they feared a wealthier lower class would begin to question the authority of their leadership and gain power. Acemoglu and Robinson use the Black Plague in Europe as a lifelike example of a critical juncture. A critical juncture “is a major event or confluence of factors disrupting the existing economic or political balance in society.” (Chapter 4, page 101) A critical juncture can change the trajectory of a nation, opening the way for inclusive political institutions to emerge or reinforcing and strengthening existing extractive institutions. In England after the Black Plague, labor became scarce after much of the peasant class was wiped out. The massive demand for labor encouraged peasants to demand higher wages, eventually leading to the end of the feudal state in England. Around Europe, feudal states faced the same decision that England did, many however did not improve and in fact regressed as feudal lords saw the rising of the peasants as a challenge to their authority and further decentralized and polarized to quell a possible collaboration of peasants to revolt.

While Why Nations Fail is a wonderful book that can be highly praised, it also has many problems; most of all, its simplicity and vagueness concerning its primary theory that inclusion is good, extractiveness is bad. Mancur Olson talked about the details of economics in democratic systems and how they compete at the expense of others to redistribute income in his book Power and Prosperity. [i] Robert Bates in his paper “State Failure” goes over various economic particulars such as fiscal dearth and resource wealth. [ii] Robinson and Acemoglu hardly focus on particular economic institutions, maintaining that economic institutions are the result of political institution’s policies, not the other way around. This rather simplistic view doesn’t portray economic and political institutions interchanging and mixing, as many others seem to. Bates, among many others, references ethnicity, geography, cultural circumstances, and religion to further enhance and validate his theory on state failure. Robinson and Acemoglu mention some of these theories, but immediately disclaim them. In particular, they make short work of the geography hypothesis, culture hypothesis, and ignorance hypothesis, all theories that have been merited by academics in the past. To further augment this theory, Jared Diamond’s Pulitzer Prize winning Guns, Germs, and Steel argues that the environment and local geography were important in shaping the world, not political and economic institutions.[iii] While institutions are certainly a significant part of the equation, Why Nations Fail inexplicably discredits and disparages other theories. Acemoglu and Robinson use examples such as North and South Korea and the United States and Mexico to discredit the geography hypothesis, but a few examples cannot completely eliminate a hypothesis when other factors are in play.

Possibly most egregious of all, Robinson and Acemoglu’s exceptions and misconceptions of India and China, two of the biggest and most important countries today, discredit their findings. China, a communist and extractive state, is on a path of economic dominance, not economic decline. Acemoglu and Robinson attempt to argue that eventually China will begin to decline due to its current state of unsustainability. But what measures time and when some states will begin to decline? Acemoglu and Robinson use the Mayan civilization as evidence that extractive institutions eventually fail, but the Mayan civilization lasted centuries, not 40 or 50 years. India, on the other hand, is at the opposite end of the spectrum. India has inclusive political institutions, but is extremely poor and in a massive state of polarization between the political elites and the poor. Technological innovation leads a bolstering economy, key factors of Acemoglu and Robinson’s argument for success, yet the country is poor overall.

Finally, Why Nations Fail misses one important, and worrisome example. The United States, touted as a pinnacle of success using inclusive institutions, is becoming more and more extractive. Market inequality, wealthy elites hoarding money and resources, a growing divide between the rich and poor – according to Robinson and Acemoglu, all of these are stereotypic factors of an extractive state. But isn’t the United States culpable for all these and becoming even worse? In his book The Price of Inequality, Columbia professor and Nobel Prize winner in Economics Joseph Stiglitz argues that America is becoming increasingly more financially unequal. He even goes so far as to say that, “America is the most unequal advanced industrial country,” in the world. [iv] America’s lack of sustainability is obvious: it is in a deep recession, if not depression, because of radical spending by the political elites and the banks. This negates another keystone of Robinson and Acemoglu’s argument about inclusive institutions.

In conclusion, Why Nations Fail is an entertaining narrative on a difficult yet intriguing topic that many will find extremely attractive reading. It is rich in historical content which makes it a pleasure to read, but it suffers in several crucial areas. Robinson and Acemoglu spend much of their book discussing inclusive and extractive institutions and how they shape the success or failure of a state. Citing many historical sources including the Industrial Revolution in Britain, the Mayan civilization in the Americas, the slave trade in Africa, and the communist governments in China and the former Soviet Union, Why Nations Fail makes a compelling argument. However, oversimplification has led to a conclusion that is not nearly as well rounded or cohesive as it ought to be. Jared Diamond’s popular book Guns, Germs, and Steel establishes that geography and the environment as the most important factors in determining the failures and successes of nations. Acemoglu and Robinson refute those thoughts early on in their book and barely discuss them. Furthermore, dominant states in the world today; China, India, and the United States, all refute the theory presented by Robinson and Acemoglu weakening its legitimacy and longevity. Finally, while Why Nations Fail will, and should, be one of the leading books on the topic of state failure, it cannot be the prevailing theory without a more detailed and expansive reexamination.

[i] Olson, Mancur. Power and prosperity: outgrowing communist and capitalist dictatorships. New York: Basic Books, 2000. Print.

[ii] Bates, Robert. “State Failure.” Annual Review of Political Science 2008 (2007): 1-12. Print.

[iii] Diamond, Jared M.. Guns, germs, and steel: the fates of human societies. New York: W.W. Norton & Co., 1998. Print.

[iv] Stiglitz, Joseph E.. The price of inequality: how today’s divided society endangers our future. New York: W.W. Norton & Co., 2012. Print.