Turning to the next stage of the transition, democratization is here defined with Przeworski as the process of devolving “power from a group of people to a set of rules” (Przeworski 1991, p. 14). Such sets of rules — or institutions — may be considered democratic if they provide for the procedural minimum defined by Dahl (1971). The government system that emerges in the process of democratization is thus one based on competition and popular participation (O'Donnell and Schmitter 1986, pp. 6–9; Bos 1996, p. 85; Merkel 1999, p. 135). Democratization begins with the collapse of the old authoritarian order and constitutes the process in which the new rules of the political game are drafted and enacted.

If democratization is the process of institution-building in a transition, one of the key questions to be addressed in this chapter is how and whether parliaments facilitate or impede democratization. Do they participate in the drafting and enactment of the new democratic constitution and, if so, how do they participate? Or is this crucial task delegated to other bodies? After examining these questions, we discuss in greater detail the role assigned by the drafters of the constitution to parliaments as embodiments of people's sovereignty and their role in the political process. This includes an examination of the position of the legislatures vis-à-vis other branches of government as laid down in the constitution, before we turn to their structure and, finally, the powers vested in them by the constitution.

Foremost in the process of democratization is the drafting and enactment of a new democratic constitution. The constitution defines the institutional framework under which political competition takes place. The way institutions are designed decides who is going to govern, how political power and economic resources are distributed between political parties and social groups, how political conflicts are resolved, and to what extent the losers of elections can credibly expect a reversal of the results in a subsequent election.

Ironically, the democratically most impeccable procedure of drafting a new constitution would accord only a marginal role or even no role at all to parliament. Ideally, a popularly elected constitutional convention would devise a draft constitution which it approves and finally submits to the people for ratification in a referendum.