Why Is "New" Europe More Neoliberal? Pension Privatization and Flat Tax in the Postcommunist EU Member States

This paper examines why the postcommunist countries that joined the European Union (EU) during the 2000s tend to be more neoliberal in their social and economic policies than are the traditional EU members from Western Europe. To this end, the paper looks at two areas of reform in which new Europe has been significantly more neoliberal than old Europe-pension privatization and the flat income tax. Looking at two distinct policies and examining not just their introduction but also their resilience makes the paper's claims more robust and allows for refinement or contradiction of some existing findings in the literature. The paper's conclusion is that a more volatile political system with few veto points and weak interest groups, coupled with a developmental model reliant on foreign direct investment, can account for the difference in policy approach without resorting to cultural or value-based explanations. In addition, the influence of Europeanization and lower state capacity do not appear to be significant explanatory factors.