Institutional underdevelopment, anarchy, crime and poverty trap of in transition economies

When eastern countries, at the beginning of the nineties, launched reforms to implement a market economy (price liberalization, privatization etc ... ), economic advisers and policy makers believed that these reforms would create the rule of the law and property rights enforcement. That did not happen. Today, in some transition economies, the rule of the law and market institutions are inefficient or do not exist. This article presents some explanations of this situation. Particularly, it emphasizes coordination problems in law enforcement that can trap the economy in an equilibrium where predatory activities undermine productive activities.