Since early 1990s post-communist countries transformed their welfare states to adjust them to needs of market economies. This process of transition from communist welfare state took place under conditions of austerity imposed by economic restructuring, difficult demographic circumstances and under the influence of international institutions promoting liberalizing policies. Because of this, it could be expected that the influence of political parties would be fairly small in shaping the structure of post-communist welfare states. However, since the transition from communism, social spending exhibited considerable variation between countries of CEE. Some countries like Poland, Hungary and Slovenia maintained relatively high spending, whilst others, notably Baltic countries, created relatively small welfare states. Changes in spending over time have also been considerable and varied in timing across countries and policies. This variation may simply reflect differences in economic conditions across countries at various time points, but it could also be caused by political factors such as partisan composition of governments or historical legacies of communism, where different patterns of modernization and variation in need to accommodate opposition activities caused variations in scope of communist welfare states which shaped preferences for welfare policies even after the fall of communism. This paper seeks to provide a more comprehensive explanation for variations in levels of social spending in CEE by assessing the relative importance of political parties, historical legacies and economic conditions. It will also investigate potential interactions between the two latter factors as right- and left-wing governments may respond differently to the state of the economy and globalization. The paper tests this proposition with a time series analysis of data pertaining to 12 CEE countries between 1992 and 2008 using IMF data on government spending.
