State expenditures and varieties of capitalism in East Central Europe

Abstract

The paper contributes to the debate on how capitalist varieties have changed in East Central Europe (ECE) after the 2008 crisis by applying cluster analysis to government expenditure in 10 ECE countries. The analysis compares the periods 2000–2007 and 2011–2019 and identifies four stable clusters: neoliberal, liberal developmental, embedded and embedded developmental, with most countries showing stability with minor changes. Only two countries, Poland and Hungary switched groups, moving from the embedded developmental cluster to the embedded cluster after the crisis. The paper argues that the changes in Poland and Hungary cannot be seen as stability or a shift towards a post-socialist developmental state. Instead, both countries have experienced an illiberal shift in the redistribution of state resources, showing an internal reallocation of expenditure towards economic affairs, recreation, culture and religion, and family and child benefits. However, the illiberal shift is less pronounced in Poland. These f indings highlight a deviation from the path taken by other ECE countries and underline the unique trajectories of Poland and Hungary.