Institutions, Recessions and Recovery in Transitional Economies

Revista de Economía Institucional, Vol. 8, No. 15, 2006

26 Pages Posted: 4 Dec 2006

Abstract

This article analyses the 1989-2005 economic growth in the transitional economies in Europe and Central Asia, and signals factors that help to explain the differences in outcome. An econometric analysis finds prominent indices of property rights, corruption, economic freedom, tax incidence and civil liberties as statistically insignificant in this regard. Statistically significant variables include the degree of ethnic fractionalization and an index of democracy, both of which were negatively correlated with GDP growth. Overall, the analysis here shows the need for effective national institutions that can enforce legal and general rules of the economic game, reap positive benefits for democracy, and overcome the negative economic legacy of ethnic divisions.

Keywords: institutions, recessions, transitional economies, ethnic fractionalization, index of democracy

JEL Classification: O43, P26, P27

Suggested Citation

Hodgson, Geoffrey M., Institutions, Recessions and Recovery in Transitional Economies. Revista de Economía Institucional, Vol. 8, No. 15, 2006, Available at SSRN: https://ssrn.com/abstract=948535

Geoffrey M. Hodgson (Contact Author)

Loughborough University London ( email )

Institute for International Management
Stratford, London, E20 3BS
United Kingdom

HOME PAGE: http://www.geoffreymhodgson.uk

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