Network Dynamics in an Emerging Democracy

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Ses-0616802PI:David Stark Co PI: Balazs Vedres Institution: Columbia UniversityThis project analyzes the interactions of firms and parties across an entire epoch of economic and political transformation from 1987 to 2006 in a case where market-oriented enterprises and competitive political parties emerged in tandem. The case involves the simultaneous transformation of political and economic fields, the separation of state from economy and a possible re-politicization of the economic field. In examining newly market-oriented firms and newly competitive political parties, a key question arises: What is the relationship between business networks and political ties? By collecting data on political business groups from the first moment of network formation, the project will test rival hypotheses from political sociology and political science about the causal relations and timing of business ties and political affiliations. The case provides an opportunity to study how the dynamics of network evolution at the national level are shaped additionally by transnational processes, both economic and political. From a relatively closed economy, Hungary is now integrated into the European Union and has one of the most open economies in the world, with unprecedented levels of foreign direct investment. Does massive foreign investment lead to the break up of business groups? Does a shift in the locus of regulatory policy lead to a shift away from national parties? To study the formation and dynamics of political business groups, the investigators will construct an unprecedented dataset that includes: every senior manager and all of the members of the boards of directors of the largest 2,200 enterprises in the country for the entire twenty-year and every elected politician, with party affiliations of each officeholder. For the years prior to free elections, the political dataset will include members of the Communist Party's Politburo and Central Committee, as well as government ministers and deputies. The PIs will merge the lists of economic and political officeholders, for any given enterprise in any given month, and identify whether that company had an economic officeholder who was also a current or former political officeholder affiliated with a particular political party. To identify processes of the co-evolution of business networks and political affiliations, the investigators develop innovative methods of social sequence analysis and dynamic cohesion analysis. Intellectual Merit. This is the first comprehensive study of modern political business groups that examines network dynamics from the first moments of network formation while encompassing an entire epoch of economic transformation and political regime change. This unprecedented dataset makes it possible to test rival hypotheses about the dynamics of political business groups using innovative methods of quantitative historical sociology. Broad Impact. This study of the relationship between newly market-oriented firms and newly competitive political parties will yield insights about democratization and economic development. The analysis of the dynamics of political business groups in a context of massive foreign investment and supranational integration into the EU will be of interest to policy analysts in emerging democracies, in U.S. government agencies, and international institutions such as the World Bank.