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How important are Institutions for Growth in Transition Countries?

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  • Luc Moers

    (University of Amsterdam)

Abstract

Growth empirics with institutional measures is performed for 25 transition countries overthe period 1990-95. Estimation results suggest that (particularly state) institutions aresignificant for growth and, especially, foreign direct investment (FDI), the latter in turnbeing important for the former. It is also found that the correlation between institutionsand FDI is more likely to be a (direct) causation. Only inflation and war seem to have beenrelatively more important for growth performance in transition countries than institutionsper se. This suggests that macroeconomic stabilization and peace should be the main policypriorities in transition, closely followed by institution building.

Suggested Citation

  • Luc Moers, 1999. "How important are Institutions for Growth in Transition Countries?," Tinbergen Institute Discussion Papers 99-004/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19990004
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    More about this item

    Keywords

    Transition economics; growth empirics; institutions; policy reform;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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