Working Paper: CEPR ID: DP5718
Authors: Thorsten Beck; Luc Laeven
Abstract: Drawing on the recent literature on economic institutions and the origins of economic development, we offer a political economy explanation of why institution building has varied so much across transition economies. We identify dependence on natural resources and the historical experience of these countries during socialism as major determinants of institution building during transition. Using natural resource reliance and the years undersocialism to extract the exogenous component of institution building, we also show the importance of institutions in explaining the variation in economic development and growth across transition economies during the first decade of transition.
Keywords: economic development; institutions; transition economies
JEL Codes: O10; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| natural resource reliance (Q32) | institution building (D02) |
| years under socialism (P30) | institution building (D02) |
| institution building (D02) | GDP per capita growth (O49) |
| natural resource reliance, years under socialism (P28) | GDP per capita growth (O49) |