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Institutional change and human development in transition economies

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  • Pasquale Tridico

Abstract

Transition economies (i.e. Central Eastern Europe Countries and Former Soviet Union Republics) have undergone an enormous transformation since 1989-1991. After the recession of the early 1990’s, some of these economies experienced a GDP recovery, at a different pace, with different outcomes in terms of economic growth and social performance (i.e. human development, employment, poverty, etc). The aim of this paper is to answer the following research question: was human development concurrent with economic growth during transition towards the market economy? I claim that economic growth is not always concurrent with human development: economic growth can contribute to increase the level of human development, but is not “the means” to human development. The income is not the final aim. On the contrary, the final aim is the well-being of individuals and the human development. Human development is considered to be a process which allows for an environment where people enjoy long, healthy and creative lives (as defined by the United Nations Development Programme, UNDP). Using an OLS model, human development variables were correlated with GDP per capita. I found out that, in transition economies, investing in human development is a sufficient, yet not a necessary condition for economic growth. GDP growth, then, requires human development. In this context institutions and institutional policies are crucial for a development process. In fact, for better distribution and access to resources as well as for social cohesion, well-designed institutions are needed.

Suggested Citation

  • Pasquale Tridico, 2006. "Institutional change and human development in transition economies," Departmental Working Papers of Economics - University 'Roma Tre' 0059, Department of Economics - University Roma Tre.
  • Handle: RePEc:rtr:wpaper:0059
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    File URL: http://host.uniroma3.it/dipartimenti/economia/pdf/wp59.pdf
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    References listed on IDEAS

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    1. Alberto Chilosi, 2003. "The Economic System As An End Or As A Means And The Future Of Socialism And Capitalism: An Evolutionary Viewpoint," Development and Comp Systems 0305003, EconWPA, revised 14 Sep 2003.
    2. Ronald H. Coase, 2000. "The new institutional economics," Chapters,in: Institutions, Contracts and Organizations, chapter 1 Edward Elgar Publishing.
    3. Naqvi, Syed Nawab Haider, 1995. "The nature of economic development," World Development, Elsevier, vol. 23(4), pages 543-556, April.
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    Cited by:

    1. repec:jes:wpaper:y:2014:v:6:p:42-54 is not listed on IDEAS
    2. Flavian Clipa & Raluca Irina Clipa, 2014. "Between Frailty And Institutional Reform. The Case Of Romania," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 6(1), pages 42-54, March.
    3. 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.
    4. Pasquale Tridico, 2006. "Institutional Change and Governance Indexes in Transition Economies: the case of Poland," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 3(2), pages 197-238, December.
    5. Ewa Gruszewska, 2014. "Changes In Informal Institutions In Poland And Transition Countries," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 9(1), pages 39-55, March.
    6. 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.

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    Keywords

    Transition; Development; Institutions;

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