Transition in FSU and sub-Saharan countries: The role of institutions

Juhani Laurila
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Juhani Laurila: Bank of Finland

Macroeconomics from University Library of Munich, Germany

Abstract: This study compares transition processes in countries of Central and Eastern Europe, the former Soviet Union (FSU) and sub-Saharan Africa. By widening the scope from most- to least-developed transition economies, the study establishes the importance of a strong state with evolved institutional capacity to protect citizens, enforce property rights and generate social capital. The evidence presented further argues that enforceable, credible property rights with associated market discipline are among the best antidotes to corruption, shadow economies, criminal injustice and poverty. The presence of accountable institutions also influences economic growth and the ability of a country to attract trade and foreign direct investment. Consequently, when institutions of FSU and sub-Saharan countries develop to the point they become attractive to traders and investors from rich countries, their governments need to focus on abolition of barriers to trade, investment and capital. The author commends the recent reorientation of the international donor community towards encouraging recipient governments to commit credibly to increasing capacities of their state institutions with a view to supporting property-based rule of law and social order.

Keywords: sub-Saharan Africa; former Soviet Union; property rights; institutions; growth; international trade; development assistance (search for similar items in EconPapers)
JEL-codes: F0 I3 K1 O17 O5 P2 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2002-09-17
New Economics Papers: this item is included in nep-afr, nep-dev and nep-law
Note: Type of Document - pdf; prepared on PC; pages: 66; figures: included
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0209005

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