The Relative Levels and the Character of Institutional Development in Transition Economies

Institutional quality in transition countries is roughly as expected given per capita incomes. Institutions are improving continuously. Given prevailing assumptions that the institutional situation is dismal, the developments giving rise to this surprising finding must be investigated more fully. This investigation begins by cataloging the mechanisms that could have improved institutional indexes. Then, evidence is examined on the relative strengths of each of these mechanisms. Formal institutions have contributed more than informal ones. The largest contributions have come from formal institutions separate from the state administrative structure. Political institutions, legal systems, and independent governmental agencies have been important. Journal of Economic Literature Classification Numbers: P5, K0, N4, O57