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The Two Transitions in Central and Eastern Europe and the Relation between Path Dependent and Politically Implemented Institutional Change

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  • Zweynert, Joachim
  • Goldschmidt, Nils
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    Abstract

    The increasing gap between the formerly socialist countries of Central and Eastern Europe (CE & EE) with regard to both their economic and political performance cannot be explained by their different starting conditions after the breakdown of the Soviet Union alone. Rather, it is due to cultural and historical circumstances that shape the particular tradition and societal environment. Taking a cultural approach and referring to the newer literature on the transfer of institutions, we try to improve the understanding of the interrelation between formal and informal institutions. Our central thesis is that the ?reaction rate? of informal institutions depends on their compatibility with imported formal institutions. The transition processes in CE & EE can tell us much about the relation between path dependent and politically implemented institutional change. During the 20th century the countries of CE & EE twice went through rapid institutional change: For centuries they had acculturated to Western Europe, but as a result of the October Revolution ?Eastern? patterns were imposed upon them. Since the breakdown of the SU in the late 1980s they have ?returned to Europe? by (re-)establishing democracy and capitalism. In our opinion, to understand the differences in performance between the transition countries, it is necessary to interpret both transitions as processes of institutional transplantation and ask how the informal institutional settings in the different countries interacted with the imported formal institutions. --

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    Bibliographic Info

    Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 314.

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    Date of creation: 2005
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    Handle: RePEc:zbw:hwwadp:26391

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    Keywords: Cultural Economics; Institutions; Transition; Path Dependence;

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    References

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    1. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez de Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Policy Research Working Paper Series 3054, The World Bank.
    2. Kenneth Arrow, 2000. "Increasing returns: historiographic issues and path dependence," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 7(2), pages 171-180.
    3. Polterovich, Victor, 2007. "Institutional Trap," MPRA Paper 20595, University Library of Munich, Germany.
    4. North, Douglass C., 1993. "Economic Performance through Time," Nobel Prize in Economics documents 1993-2, Nobel Prize Committee.
    5. D. Stark, 1996. "Recombinant Property in East European Capitalism," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    6. Ivan T. Berend, 2000. "The Failure of Economic Nationalism. Central and Eastern Europe Before World War II," Revue Économique, Programme National Persée, vol. 51(2), pages 315-322.
    7. Denzau, Arthur T & North, Douglass C, 1994. "Shared Mental Models: Ideologies and Institutions," Kyklos, Wiley Blackwell, vol. 47(1), pages 3-31.
    8. Laidler, David & Rowe, Nicholas, 1980. "Georg Simmel's Philosophy of Money: A Review Article for Economists," Journal of Economic Literature, American Economic Association, vol. 18(1), pages 97-105, March.
    9. A. Oleynik., 2003. "The Model of Network Capitalism," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
    10. G�rard Roland, 2002. "The Political Economy of Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 29-50, Winter.
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    Cited by:
    1. Zeghni, Sylvain & Fabry, Nathalie, 2008. "Building institutions for growth and human developement : an economic perspective applied to transitional countries of Europe and CIS," MPRA Paper 9235, University Library of Munich, Germany.
    2. Luděk Kouba, 2009. "The Proposal of Original Classification of Contemporary Social-Economic Approaches to the Growth Theory," Politická ekonomie, University of Economics, Prague, vol. 2009(5), pages 696-713.
    3. Zeghni, Sylvain & Fabry, Nathalie, 2008. "Building institutions for growth and human development: an economic perspective applied to the transitional countries of Europe and CIS," MPRA Paper 9171, University Library of Munich, Germany.
    4. Nikolay Nenovsky, 2006. "New View of Contemporary Europe," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 107-110.

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