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Initial Endowments and Economic Reform in 27 Post-Socialist Countries

Listed author(s):
  • Ariel BenYishay

    (School of Economics, Australian School of Business, the University of New South Wales)

  • Pauline Grosjean

    ()

    (School of Economics, Australian School of Business, the University of New South Wales)

This study explores how initial endowments at the start of transition have shaped reform outcomes and reform trajectories in 27 former communist countries in Europe andCentral Asia. Countries of the former Russian Empire that had a large resources sector at the start of transition underperformed other countries in terms of the speed and the depth of economic reforms. The effect is particularly strong for privatization, enterprise restructuring and competition policy. Within country, Ottoman or Russian provinces that had a large natural resources sector in 1989 have a lower share of entrepreneurs and of small and medium sized enterprises today and also experience endemic corruption. Our results indicate that the propensity, or ability, of special interest groups to capture the reform process that would erode their rents were facilitated by the quality of institutions whose foundations go back centuries; and that the effects on the local economy are real.

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File URL: http://research.economics.unsw.edu.au/RePEc/papers/2014-22.pdf
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Paper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2014-22.

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Length: 34 pages
Date of creation: May 2014
Handle: RePEc:swe:wpaper:2014-22
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Web page: http://www.economics.unsw.edu.au/
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