Economics at your fingertips  


Ruzica Simic Banovic ()
Additional contact information
Ruzica Simic Banovic: University of Zagreb, Croatia

Equilibrium. Quarterly Journal of Economics and Economic Policy, 2015, vol. 10, issue 1, 179-205

Abstract: Only recently has the influence of culture on economic development been increasingly discussed among theoretical economists. Besides observing culture through cultural traditions inherited from ancestors, current social interactions are also considered as an influential factor. Over a long period of time, the research on East European transitional societies has been focused on formal institutions. Throughout that period, informal networks, many of which originated from the previous socio-political system, have mostly strengthened their position in the society and gained power in the formal structures. They helped in building the new capitalist states and therewith had positive effects by speeding up the transition process. Yet, in medium and long term, their activities typically resulted in state capture. This paper explores the persistence of tight informal and mostly inefficient formal business-government-society relations in Eastern Europe. It emphasises the influence of informal networks in the interaction of formal and informal institutions, and questions the possibility of new generations to make a turnaround in the functioning of the networks. Newly emerging social interactions are contextualised in the cultural dimensions: Power Distance and Collectivism versus Individualism. This paper argues that even when informal communities solely serve their own opportunistic purposes, the prevailing collectivist culture in the society provides tacit support to their existence and therewith delays the transformation from relation-based to rule-based governance. The empirical findings confirm the oversocialised view of the society and networks suggested by economic sociologists. Additionally, the changes in transitional institutional environment are deemed to be in line with the claims of institutional economists on durability and impact of informal institutions.

Keywords: informal networks; institutional interaction; transition; Eastern Europe; post-socialism (search for similar items in EconPapers)
JEL-codes: O17 P21 P37 Z10 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Equilibrium. Quarterly Journal of Economics and Economic Policy is currently edited by Adam P. Balcerzak

More articles in Equilibrium. Quarterly Journal of Economics and Economic Policy from Institute of Economic Research Contact information at EDIRC.
Series data maintained by Adam P. Balcerzak ().

Page updated 2017-09-29
Handle: RePEc:pes:ierequ:v:10:y:2015:i:1:p:179-205