The Two Transitions in Central and Eastern Europe as Processes of Institutional Transplantation

By Zweynert, Joachim; Goldschmidt, Nils | Journal of Economic Issues, December 2006 | Go to article overview

The Two Transitions in Central and Eastern Europe as Processes of Institutional Transplantation


Zweynert, Joachim, Goldschmidt, Nils, Journal of Economic Issues


In the euphoria of the early 1990s the former socialist countries of Central and Eastern Europe (in the following: CE and EE) were generally expected to quickly turn into democracies with market economies. The experience of the last 15 years, however, has shown that only some of them (the Baltic States, Poland, Hungary, the Czech Republic, Slovakia and Croatia) have done so. With Russia, Belarus, Bulgaria, Moldavia, the Ukraine, Romania, and Serbia and Montenegro it is not yet clear where the journey goes. The increasing gap between the two groups of transition countries with regard to both their economic and political orders (see Kitschelt 2003) cannot be explained by their different starting conditions after the breakdown of the Soviet Union alone. (1) Rather it also has its causes in the cultural and historical circumstances shaping their particular traditions and societal environments. The experience of transition has strongly challenged the neoclassical paradigm (see Murrell 1991), and it has led to a growing awareness of the role of informal institutions in the process of institutional change, not only in institutional and evolutionary economics, but also increasingly in the mainstream. In view of the variety of transitional trajectories, the countries of CE and EE are now sometimes seen as prime examples of historical path dependence with the performance of individual countries "dependent on informal rules carried over from the pre-communist past" (Winiecki 2004, 143). As much as the idea of path dependence has contributed to a better understanding of transition in CE and EE, it should not be overlooked that when we speak of European history it is problematic to define individual national cultures which might have determined the developmental path of a given society, because there have always been strong mutual cultural influences among the European nations. In addition, the European nations developed in close political, military and economic competition with their neighbors. This competition repeatedly forced them to adapt to the institutional arrangements of their more successful neighbors. (2) This political dimension should not be dismissed lightly by one-sidedly referring to "cultural legacies." Undoubtedly, the study of the pre-communist past contributes much to understanding today's political and economic processes in CE and EE, but there is no good reason to neglect the impact of the socialist past.

This is not to say that the idea of historical and cultural path dependency is to be abandoned. However, the impact of historically and culturally determined trajectories can be better understood when seen in the context of and contrasted with the influence of political processes. Our attempt to achieve a better understanding of the interplay between path dependent and politically implemented institutional change in the transition countries is based on the paradigm of the transfer or transplantation of institutions (see Badie [1992] 2000; Polterovich 2001a; Djankov et al. 2003, 609-12; Oleinik 2005). The gist of this paradigm is that if formal institutions are transferred from one country to another, they mingle with the "soil" of the prevailing informal constraints of behavior and thought, which are shaped by the legacies of the past. The theory of institutional transplantation stresses the importance of political competition and the actions of political entrepreneurs on the one hand, and the significance of historical and cultural inertia on the other. This way, the theory of the transplantation of institutions helps to bridge the gap between "institutional monocropping," that is, "the imposition of blueprints based on idealized versions of Anglo-American institutions, the applicability of which is presumed to transcend national circumstances and cultures" (Evans 2004, 30), and the fatalistic assumption that the inertia of informal institutions makes it almost impossible to change the developmental paths of societies. …

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