The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2014, December. Volume: 11 - Issue: 2

Heterogeneity in Institutional Effects on Economic Growth: Theory and Empirical Evidence

by Larysa Tamilina ; Natalya Tamilina

Start page: 205 - End page: 249

Keywords: Economic Growth; Formal Institutions; Institutional Formation; Institutional Change; Post-Communist Countries

Jel code: O17; O43; O57; P26; P37

Abstract:

This article explains the peculiarities of institutional effects on growth rates in post-communist countries. By proposing a certain dependence of the institution-growth nexus on the nature of institutional emergence, the distinction between revolutionary and evolutionary processes of institution formation is introduced. Theoretical and empirical juxtapositions show that transition countries' institutions which are constructed revolutionarily differ from those that emerge evolutionarily in a twofold manner in their relationship to growth. Growth rates of their economies are less likely to depend on the quality of economic institutions and are more likely to be a function of the maturity of political institutions. In addition, economic institutions in post-communist countries are a product of the quality of political bodies to a greater extent than their evolutionary alternatives.

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