Institutional Regression in Transition Economies: Playing ‘Follow the Leader’ During the Global Financial Crisis
Property rights, the judiciary, financial sector oversight agencies, and banking sector institutions have seen deteriorating quality and protections within the United States and the European Union over the past five years. Given that many of the transition economies of Central/Eastern Europe and the former Soviet Union attempted to approximate Western (specifically EU) institutions during their transition, are they now aping the general decline in market-friendly institutions in the so-called “developed” world?
A new report by Senior Research Fellow Dr. Christopher A. Hartwell examines the state of institutional development in transition economies. The study focuses on institutional changes over the past 7 years, with an eye on the effects of the global financial crisis. The author concludes that policies that threaten the very institutions of the market economy are deleterious for growth and attracting investment. Among these crucial market institutions, property rights remain most in need of attention and nurturing, and focus on regulatory protection of property would be a better use of scarce government resources. Financial reforms within the transition economies also need to be re-thought, including the regression in financial sector institutions that has become precipitous in the past five years, in order to focus on needed liberalization and move away from higher taxation and property rights infringement.
Download Institutional Regression in Transition Economies in English or Russian.