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: Suggested Citation
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