The Emergence of Patronage and Changing Forms of Rent Seeking in East Central Europe

Abstract

ABSTRACT The foreign direct investment (FDI)-led development path of the East-Central European (ECE) countries has been queried most recently. Using mainly the evidence of Hungary and Poland the paper analyses one of the potential reasons of this strategic turn: the struggle between political elites. One elite was bound to the strong presence of multinational business and the institutions of the ‘competition state’. Their positions were challenged by another political elite that allied mainly with local bourgeoisie. One main arena of conflicts is the economy where political elites try to widen their influence in order to gain financial support. New forms of rent-seeking and corruption became possible after the V4 accession to the European Union (EU) when the flow of financial aid increased. Aid was channelled to partisan firms in public procurement tenders that made legal corruption possible. Political and social control over this practice declined with the demise of classic program parties’ role in politics and the raise of populist ‘business firm’ political parties.