"We investigate the conditions under which state reformers in postcommunist Europe can implement radical policies aimed at boosting investment now that the fundamental institutions of a market economy are in place. Surprisingly, such reforms are now being pioneered by those countries considered laggards of the first-generation, market-making reforms in the 1990s. Party system institutionalization offers the best explanation for who adopts second-generation reforms, to what degree, and when. Such institutionalization, which enhances vertical accountability between governments and voters, puts state reformers at a disadvantage in enacting second-generation reforms. By making it difficult to create a coherent and credible opposition against reform, underinstitutionalization insulates state reformers from social and political pressures, allowing them to undertake economic policies hard to envision in a more developed democracy. We test this hypothesis by comparing recent reform attempts in Slovakia, Estonia, Hungary, the Czech Republic, and Romania."

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