Laeven, LucBeck, Thorsten2012-06-152012-06-152005-07https://hdl.handle.net/10986/8203Drawing on the recent literature on economic institutions and the origins of economic development, the authors offer a political economy explanation of why institution building has varied so much across transition economies. They identify dependence on natural resources and the historical experience of these countries during socialism as major determinants of institution building during transition by influencing the political structure and process during the initial years. Their empirical analysis shows that countries that are more reliant on natural resources and spent a longer time under socialist governments are more likely to see former communists remain in power and to start the transition process with less open political systems, with negative repercussions for the development of market-compatible institutions. Using natural resource reliance and the years under socialism to extract the exogenous component of institution building, the authors also show the importance of institutions in explaining the variation in economic development and growth across transition economies during the first decade of transition.CC BY 3.0 IGOACCOUNTABILITYBANKING SECTORBUDGET CONSTRAINTSBUSINESS ENVIRONMENTCAPITA GROWTHCAUSAL EFFECTCENTRALIZATIONCITIZENCITIZENSCIVIL SOCIETYCIVIL SOCIETY INSTITUTIONSCIVIL WARCOMPETITION POLICYCOMPETITIVENESSCONCEPTUAL FRAMEWORKCONSOLIDATIONCONTRACT ENFORCEMENTCORRUPTIONCOUNTRY CHARACTERISTICSDATA SOURCESDEPOSITSDEVELOPING COUNTRIESECONOMIC CONDITIONSECONOMIC DECLINEECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC GROWTH PERFORMANCEECONOMIC PERFORMANCEECONOMIC POWERECONOMIC REFORMSECONOMIC RENTSECONOMIC] GROWTHEMPIRICAL ANALYSISEMPIRICAL EVIDENCEENTREPRENEURSHIPETHNIC FRACTIONALIZATIONEXPORTSFINANCIAL CAPITALFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFREE ELECTIONSGDPGDP PER CAPITAGOVERNMENT EFFECTIVENESSGROWTH PERFORMANCEGROWTH RATESHARD BUDGET CONSTRAINTSHOUSEHOLD CONSUMPTIONHOUSINGHUMAN CAPITALINCOMEINFLATIONINSTITUTIONAL ARRANGEMENTSINSTITUTIONAL CHANGEINSTITUTIONAL DEVELOPMENTINSTITUTIONAL FRAMEWORKINSTITUTIONAL QUALITYINSTITUTIONAL REFORMINTANGIBLE ASSETSLANDLOCKED COUNTRYMACROECONOMIC PERFORMANCEMACROECONOMIC POLICIESMACROECONOMIC REFORMSMARKET ECONOMIESMARKET ECONOMYNATURAL RESOURCESNEW ENTRANTSOILOIL RESERVESPARLIAMENTPOLICY RESEARCHPOLITICAL CONDITIONSPOLITICAL DETERMINANTSPOLITICAL ECONOMYPOLITICAL INFLUENCEPOLITICAL INSTITUTIONSPOLITICAL LEADERSPOLITICAL PARTIESPOLITICAL STABILITYPOLITICAL SYSTEMPRIME MINISTERPRIVATE PROPERTYPRIVATIZATIONPROPERTY RIGHTSREGULATORY QUALITYRELATIVE IMPORTANCEREVERSE CAUSATIONRULE OF LAWSAFETY NETSECURE PROPERTY RIGHTSSTATE ENTERPRISESSTATE-OWNED ENTERPRISESSTRUCTURAL REFORMSUSTAINABLE GROWTHTERTIARY EDUCATIONTRADE LIBERALIZATIONTRADE UNIONSTRANSITION COUNTRIESTRANSITION ECONOMIESTRANSITION PROCESSWESTERN EUROPEMicrodata SetWorld Bank10.1596/1813-9450-3657