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The Two Transitions in Central and Eastern Europe and the Relation between Path Dependent and Politically Implemented Institutional Change

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  • Zweynert, Joachim
  • Goldschmidt, Nils

Abstract

The increasing gap between the formerly socialist countries of Central and Eastern Europe (CE & EE) with regard to both their economic and political performance cannot be explained by their different starting conditions after the breakdown of the Soviet Union alone. Rather, it is due to cultural and historical circumstances that shape the particular tradition and societal environment. Taking a cultural approach and referring to the newer literature on the transfer of institutions, we try to improve the understanding of the interrelation between formal and informal institutions. Our central thesis is that the ?reaction rate? of informal institutions depends on their compatibility with imported formal institutions. The transition processes in CE & EE can tell us much about the relation between path dependent and politically implemented institutional change. During the 20th century the countries of CE & EE twice went through rapid institutional change: For centuries they had acculturated to Western Europe, but as a result of the October Revolution ?Eastern? patterns were imposed upon them. Since the breakdown of the SU in the late 1980s they have ?returned to Europe? by (re-)establishing democracy and capitalism. In our opinion, to understand the differences in performance between the transition countries, it is necessary to interpret both transitions as processes of institutional transplantation and ask how the informal institutional settings in the different countries interacted with the imported formal institutions.

Suggested Citation

  • Zweynert, Joachim & Goldschmidt, Nils, 2005. "The Two Transitions in Central and Eastern Europe and the Relation between Path Dependent and Politically Implemented Institutional Change," HWWA Discussion Papers 314, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwwadp:26391
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    2. Arslan, Ahmad & Tarba, Shlomo Y. & Larimo, Jorma, 2015. "FDI entry strategies and the impacts of economic freedom distance: Evidence from Nordic FDIs in transitional periphery of CIS and SEE," International Business Review, Elsevier, vol. 24(6), pages 997-1008.
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    5. Vanberg, Viktor J., 2006. "On the Complementarity of Liberalism and Democracy," Freiburg Discussion Papers on Constitutional Economics 06/9, Walter Eucken Institut e.V..
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    8. Nikolay NENOVSKY, 2006. "Book Review: Laszlo Csaba, The New Political Economy of Emerging Europe, Budapest: Akadémiai Kiadó, 2005," The Journal of Comparative Economic Studies (JCES), The Japanese Society for Comparative Economic Studies (JSCES), vol. 2, pages 81-85, July.
    9. 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.
    10. Frederic L. Pryor, 2007. "Culture and Economic Systems," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(4), pages 817-855, October.
    11. Nikola Najman & Petr Rozmahel & Luděk Kouba & Ladislava Grochová, 2013. "Integration of Central and Eastern European Countries: Increasing EU Heterogeneity? WWWforEurope Working Paper No. 9," WIFO Studies, WIFO, number 46856, December.
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    13. Zweynert, Joachim & Wyszyński, Robert & Polkowski, Andreas, 2006. "Measuring the Attitudes Towards the Extended Order in Latvia, Poland and Russia: The Extended Order Index," HWWA Discussion Papers 350, Hamburg Institute of International Economics (HWWA).
    14. Pelikan, Pavel, 2006. "Markets vs. Government when Rationality is Unequally Bounded: Some Consequences of Cognitive Inequalities for Theory and Policy," Freiburg Discussion Papers on Constitutional Economics 06/5, Walter Eucken Institut e.V..
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    More about this item

    Keywords

    Cultural Economics; Institutions; Transition; Path Dependence;
    All these keywords.

    JEL classification:

    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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