Developments in Poland in January- June 1989 set the stage for the final breakdown of the Soviet hegemony in Europe, whereas the launching of the Balcerowicz stabilisation-cum-transformation program paved the way for establishing foundations for competitive markets in Poland and other postcommunist countries. Three historic events, each overshadowing the earlier one, heralded the change: 1) the decision of the Polish Communist Party in January to start round table negotiations with Solidarity, which amounted to formal recognition of the opposition by the communist government; 2) signing of the round table agreements on 5 April that outlined a series of measures to assure an orderly transition to democracy; and 3) limited free elections held on 4 June. Their combined outcome was the emergence of the first government with a non-communist prime minister in Central Europe since the communist takeovers in 1948-49.
Yet, Poland's lead in political change quickly evaporated as other post-communist countries held free elections and subsequently moved faster to dismantle vestiges of communism in both polity and economy. Twenty years after the demise of communism, Poland lags behind some of its Central European counterparts. The quality of democracy in Poland leaves much to be desired when assessed against states such as the Czech Republic, Estonia and Slovenia, hereafter referred to as the Luxembourg group (which also includes Hungary).1 In the 2000s, various international rankings of the quality of democracy rather consistently placed Poland at the bottom of the Luxembourg group as well as behind Latvia, Lithuania and Slovakia but still above Bulgaria and Romania. In 2009, the ranking of Poland improved to the level of Hungary - above Latvia and Slovakia - but was still below the Czech Republic and Slovenia.2 Simultaneously, Poland's initially rapid economic growth performance ceased to shine; an impressive resistance to the world economic slowdown in 2008-09 appears to be the result of the failure to fully take advantage of the unprecedented world economic boom in 2000-07 rather than the quality of its institutions and policies.
While we do not offer an unambiguous answer as to why Poland ceased to be a leader in political transition, a plausible explanation is likely to be associated with the uniqueness of Poland's mode of dismantling communism leading to a 'pacted' transition of the type described by O'Donnell and Schmitter.3 In contrast with other Central European post-communist countries, in Poland, gradualism - then justified in terms of dealing with uncertainty concerning Soviet reaction as well as in terms of buying the support of communists opposed to negotiations with Solidarity - characterised the political transition.
The arrangements that allowed the communist establishment to stay in power, combined with divisions and fratricidal struggles within Solidarity, have crowded out from the political agenda the much more important issue of designing the constitutional underpinnings for a democratic society and state. Narrow interest groups championed procedural designs that could give them an upper hand in political struggles but had no interest in a serious constitutional debate. Similarly, the pacted transition with safeguards for the communist establishment impeded the emergence of high-quality democratic institutions.
This political gradualism has contrasted rather sharply with Poland's radical approach to the dismantling of central planning and its rapid transition to an open market economy. Thus, as we show in this chapter, Poland's economic performance appears to have been superior to its political one, although it was inferior in the 2000s to most of other new 2004 EU members despite the world economic slowdown in 2008.
Quality of Democracy and Institutional Design in Comparative Perspective
Since the collapse of communism, which has highlighted the importance of institutions and political arrangements for economic growth and prosperity, the 'quality of democracy' has regularly been the subject of international surveys. …