How does populism reinforce authoritarian tendencies? In what ways does it contribute to the erosion of political and economic institutions, and what are the implications for long-term economic development? These were the central questions explored in a lecture delivered by Academician Pavle Petrović. He approached the subject from a comparative perspective, focusing in particular on the cases of Hungary and Serbia.
Academician Petrović first pointed out that societies in which populist political parties come to power are characterised by a gradual but continuous weakening of the rule of law, media freedom, as well as the independence of the judiciary and institutional controls on the executive branch, emphasising that not only a correlation, but also a causal link can be observed among these phenomena. Consequently, the coming to power of populist regimes not only poses a challenge to the democratic order but also has immediate economic consequences, thereby undermining the foundations of long-term and sustainable economic prosperity of the given society.
The central part of the lecture provided an analysis of the accelerated economic growth in Hungary and Serbia during the rule of the regimes of Viktor Orbán (2010-2026) and Aleksandar Vučić (2012-2026) respectively. In both cases, an erosion of political institutions is observed on the one hand, and economic growth on the other. The latter however, began to stagnate after a certain period of time. As academician Petrović pointed out, this can be explained by the fact that populist regimes primarily base economic growth on increasing capital through public investments, as well as on cheap labour, rather than on technological progress and productivity growth, opting this way for a development model with limited scope. In Hungary, the shortcomings of this model have manifested themselves in a noticeable slowdown and stagnation of economic activity since 2022.
Similar trends are observed in Serbia. It was shown that the growth rate, achieved in the period 2018–2024, was largely driven by state investments and foreign direct investment attracted by state subsidies, while the contribution of the domestic private sector remained limited. Furthermore, a decomposition of the growth indicator shows that the share of technical progress, which is crucial for long-term and sustainable economic progress, has remained significantly smaller than the shares of capital and labour, much like in Hungary. The subsequent slowdown in economic growth can therefore be explained as the exhaustion of the possibilities of the existing development model.
Conclduginly, supported by the relevant schools of thought, academician Petrović emphasised that sustainable economic growth requires stable, democratic and inclusive institutions. Legal certainty, the protection of property rights and a level playing field for all, as well as the limitation of executive arbitrariness, are important prerequisites for the development of the domestic private sector, investments and innovation, above all technical. The examples of Hungary and Serbia have shown that long-term prosperity cannot be based on state interventions and short-term investment cycles, but need to build on productivity, technological progress, education and innovation.
The lecture was moderated by Dr Irena Ristić.