Pride and Prejudice in Prague: Understanding Early Policy Error and Belated Reform in the Czech Economic Transition
Author(s)
Horowitz, Shale; Petras, Martin
Abstract
Discusses the banking policies that were behind the Czech financial crisis in 1997 and the stagnation in the Czech economic transition between 1997 and 1999. Strong, dispersed interest group support for the economic reforms, as well as the trust economic technocrats placed in Václav Klaus’s leadership, enabled Klaus, the finance minister and later prime minister, to maintain a central political position. Thus, Klaus led the Czech market reform even after his banking sector policies and related regulatory policies failed. Stable interest group support and the divides in political institutions made it possible for Klaus to delay correcting the mistakes he had made.
