East-Central and Southeast Europe

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In most countries across East-Central and Southeast Europe, the trend toward eroding democracy and deteriorating governance is continuing. The negative effects of the coronavirus pandemic on economic development in the region have been less severe than initially feared. There is hope in the fact that civil society actors across the region are pushing back against their governments’ authoritarian tendencies and mismanagement.

Since the BTI 2012, the average level of democracy in the region has been falling steadily, as has the number of democracies in consolidation. The backsliding observed in Serbia and Hungary has been so pronounced that both countries are just on the verge of being classified as “highly defective democracies” in the BTI 2022. Like Poland and Slovenia, both countries are led by governing parties whose authoritarian approach to governance deliberately undermines democratic institutions and norms.

The pandemic has impacted economic transformation in the region less than initially feared and less than was the case in most other BTI regions. Most countries in the region dealt with the first wave of the pandemic relatively well, and GDP across the region is expected to recover quickly. The crisis has not shaken the foundations of market orders in the region. However, strong politicization of institutions and the dismantling of oversight mechanisms can also have negative effects on economic development, as is illustrated by the setbacks observed in the area of competition policy.

Governance has also deteriorated with practically no interruption on a regional average. Only governments in the Baltic states continue to demonstrate “very good” governance in the BTI 2022. One of the largest problems is that many other governments seek to further polarize rather than build consensus among the various societal actors.

There was an increasing mobilization of the public against the government’s autocratic tendencies, corruption, and state capture. While these developments give rise to hope that democratic achievements across the region can be preserved, high levels of mobilization and the public’s willingness to protest cannot always be equated with progress.

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