The Impact of Variations in Institutional Grafting Modes on Economic Growth: A Three-Dimensional Approach

Larysa Tamilina and Natalya Tamilina

MPRA Paper from University Library of Munich, Germany

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 mode of institutional grafting, the distinction between drift-phase and path-breaking institutional change is introduced. Theoretical juxtapositions show that transition countries’ institutions built through path-breaking institutional reforms differ from those that emerge evolutionarily in the drift phase in a twofold manner in their relationship to growth. Growth rates of their economies are less likely to depend on the quality of legal institutions and are more likely to be a function of the maturity of political institutions. In addition, legal institutional change in the post-communist world is a product of the quality of the political environment to a greater extent than their drift-phase alternatives. These propositions are tested empirically based on a sample of 87 countries derived from the POLITY IV Project's website.

Keywords: institutional economics; formal institutions; institutional change; post-communist transition (search for similar items in EconPapers)
JEL-codes: K40 O10 O17 (search for similar items in EconPapers)
Date: 2015-04-16, Revised 2015-04-16
New Economics Papers: this item is included in nep-fdg and nep-gro
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