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Transition in FSU and sub-Saharan countries: The role of institutions

Author

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  • Juhani Laurila

    (Bank of Finland)

Abstract

This study compares transition processes in countries of Central and Eastern Europe, the former Soviet Union (FSU) and sub-Saharan Africa. By widening the scope from most- to least-developed transition economies, the study establishes the importance of a strong state with evolved institutional capacity to protect citizens, enforce property rights and generate social capital. The evidence presented further argues that enforceable, credible property rights with associated market discipline are among the best antidotes to corruption, shadow economies, criminal injustice and poverty. The presence of accountable institutions also influences economic growth and the ability of a country to attract trade and foreign direct investment. Consequently, when institutions of FSU and sub-Saharan countries develop to the point they become attractive to traders and investors from rich countries, their governments need to focus on abolition of barriers to trade, investment and capital. The author commends the recent reorientation of the international donor community towards encouraging recipient governments to commit credibly to increasing capacities of their state institutions with a view to supporting property-based rule of law and social order.

Suggested Citation

  • Juhani Laurila, 2002. "Transition in FSU and sub-Saharan countries: The role of institutions," Macroeconomics 0209005, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpma:0209005
    Note: Type of Document - pdf; prepared on PC; pages: 66; figures: included
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0209/0209005.pdf
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    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    2. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    sub-Saharan Africa; former Soviet Union; property rights; institutions; growth; international trade; development assistance;

    JEL classification:

    • F0 - International Economics - - General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • K1 - Law and Economics - - Basic Areas of Law
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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