State Capture and Corruption in Transition Economies

Abstract

State capture by industrial lobbyists is a significant obstacle to normal economic development of formerly command (socialist) economies, at both the local and the national levels. It is prevalent in transition economics because of an excessively concentrated industrial structure and low labour mobility, both horizontal and vertical, a high level of discretion of public officials in economic affairs, and generally weak political institutions. Most of these features might be traced back to the pre-transition legacy.

Keywords: barriers to entry, command economy, corruption, decentralization, enforcement of contracts, mobility, local government, oligarchs, property rights protection, rule of law, special interests, state capture, transition and institutions, transition economies