This study compares transition processes in countries of Central and Eastern Europe, the former Soviet Union (FSU) and sub-Saharan Africa. By widening the scope from most- to least-developed transition economies, the study establishes the importance of a strong state with evolved institutional capacity to protect citizens, enforce property rights and generate social capital. The evidence presented further argues that enforceable, credible property rights with associated market discipline are among the best antidotes to corruption, shadow economies, criminal injustice and poverty. The presence of accountable institutions also influences economic growth and the ability of a country to attract trade and foreign direct investment. Consequently, when institutions of FSU and sub-Saharan countries develop to the point they become attractive to traders and investors from rich countries, their governments need to focus on abolition of barriers to trade, investment and capital. The author commends the recent reorientation of the international donor community towards encouraging recipient governments to commit credibly to increasing capacities of their state institutions with a view to supporting property-based rule of law and social order.
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Paper provided by EconWPA in its series Macroeconomics with number
0209005.
Find related papers by JEL classification: F0 - International Economics - - General I3 - Health, Education, and Welfare - - Welfare and Poverty K1 - Law and Economics - - Basic Areas of Law O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements P2 - Economic Systems - - Socialist Systems and Transition Economies
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Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert Vishny, 1998.
"The Quality of Goverment,"
NBER Working Papers
6727, National Bureau of Economic Research, Inc.
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