Analysing bottlenecks for institutional development in Central Asia: Is it oil, aid or geography?

Inna Melnykovska, Rainer Schweickert

Research output: Contribution to Book/Report typesChapterpeer-review

Abstract (may include machine translation)

While a comprehensive empirical analysis of all relevant external drivers of institutional change in transition countries is still missing, the analysis of internal determinants can be based on a variety of papers. The basic distinction is between economic and political factors. The view that economic performance drives institutional development is supported by the modernization hypothesis which states that higher levels of economic development will lead to better institutional quality (see, e.g. Lipset 1959; Acemoglu et al. 2007). In the same vein, the Grand Transition view sees development as a process where steady economic growth causes transition of all institutions (Paldam and Gundlach 2008). However, economic shocks and macroeconomic crises may also be an important determinant of political transition (Acemoglu and Robinson 2006; Paldam 2002). These shocks give rise to a window of opportunity for citizens to contest power, as the cost of fighting ruling autocratic regimes is relatively low. When citizens reject policy changes that are easy to renege upon once the window of opportunity closes, autocratic regimes must make democratic concessions to avoid costly repression (see also Brückner and Ciccone 2008). Apart from economic performance, economic policy is also important for driving institutional change. Looking at the typical sequencing of reforms suggests that economic liberalization and privatization, as well as the granting of basic political rights and liberties, preceded institutional reforms such as the establishment of a competition Table 10.3 Baseline model estimates, 199 (1)POLS (2)Pooled IV (3)POLS (4)Pooled IV (5)POLS (6)Pooled IV EU basic 1.

Original languageEnglish
Title of host publicationInstitutional Reform in Central Asia
Subtitle of host publicationPolitico-Economic Challenges
PublisherTaylor and Francis
Pages188-212
Number of pages25
ISBN (Electronic)9781136210068
ISBN (Print)9780415602006
DOIs
StatePublished - 1 Jan 2012

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