Previous research employs electoral volatility as the key instrument in measuring party system stability. Although volatility scores are useful for macro-comparative purposes they hardly attend relational features of party systems such as ideological distance among political parties and do not possess internal validity with regard to the study of party system institutionalization (See Luna and Altman, 2011). This article argues that inter-party relationship is the most important property of party systems indicating the quality of party system and offers a new way of approaching party system institutionalization which looks at the stability in the quality of party system- the change in the polarization of political parties within a party system. The article first discusses why analyzing the change in polarization levels better demonstrates the dynamics of party system development. Second, previous measurement of party system polarization provided by Dalton (2008) is redeveloped based on the party positions data in the Manifesto Project Dataset which includes more than 25 transitional countries and 83 elections. Looking at the coefficient of variation in polarization scores over elections, the extent of party system institutionalization in 25 countries in transition is found. Third, using Lewis’ Index of Party Stability to measure degree of party institutionalization in each country, the article analyzes the relationship between party and party system institutionalization by dealing with both concepts as separate processes. Finally, the article attempts to statistically test the effect of party and party system institutionalization on the quality of democracy in these 25 transitional countries whose democracy scores are attained from the Transformation Index of the Bertelsmann Stiftung 2012. The findings suggest that the relationship between party institutionalization and party system institutionalization is much more complex than has been discussed before and party system institutionalization is empirically much more critical in explaining the quality of democracy.
