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The Relative Levels and the Character of Institutional Development in Transition Economies


  • Peter Murrell

    () (Department of Economics, University of Maryland)


At present, there is no generally accepted accounting of the institutional strengths and weaknesses of the transition economies. The first goal of the paper is to fill this gap by assessing current levels of institutional development. The second is to examine which types of institutional mechanisms make relatively strong contributions. Extensive empirical evidence shows that institutional quality in transition countries is roughly as expected given per capita incomes. Institutions are improving continuously. Given prevailing assumptions that the institutional situation is dismal, the developments giving rise to this surprising finding must be investigated more fully. This investigation begins by cataloging the mechanisms that could have improved institutional indexes. Then, evidence is examined on the relative strengths of each of these mechanisms. Formal institutions have contributed more than informal ones. The largest contributions have come from formal institutions separate from the state administrative structure. Political institutions, legal systems, and independent governmental agencies have been important.

Suggested Citation

  • Peter Murrell, 2003. "The Relative Levels and the Character of Institutional Development in Transition Economies," Electronic Working Papers 03-003, University of Maryland, Department of Economics.
  • Handle: RePEc:umd:umdeco:03-003

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    Cited by:

    1. Thorsten Beck & Luc Laeven, 2006. "Institution building and growth in transition economies," Journal of Economic Growth, Springer, vol. 11(2), pages 157-186, June.
    2. Murrell, Peter, 2003. "Firms facing new institutions: transactional governance in Romania," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 695-714, December.

    More about this item


    Institutions; transition; law; legal systems; administration; social capital;

    JEL classification:

    • P5 - Economic Systems - - Comparative Economic Systems
    • K0 - Law and Economics - - General
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries


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