Essays on the Historical and Current Institutional Development of South East and Central European States

This dissertation examines the institutional determinants of one set of countries - the former socialist states in South East and Central Europe. It is motivated by the observation that fifteen years after the beginning of transition we see a divergence in the institutional performance of the transition countries. The Balkan (South East European states) have been consistently lagging behind the Central European states. Why is there such a substantial difference in the performance and level of institutions in these two sets of former socialist countries? Unlike the sparse existing literature, which attempt to answer this question, this dissertation identifies the Ottoman and Habsburg historical legacies, rather than the socialist legacy, as a key source of divergence in institutional performance of the countries of South East and Central Europe. In Chapter 1, we identify the legacies of the Ottoman Empire and their historical origins. The chapter's main contribution is twofold. First, it identifies and discusses the origins of characteristics of the Ottoman Empire that shaped the institutional structure of its successor states. Second, the chapter analyzes the impact of these characteristics on people's behavior and incentives. Building upon the key historical dynamics identified in Chapter 1, Chapter 2 develops a stylized theoretical model of the Ottoman Empire. The model attempts to explain the rise and decline of the Empire and indirectly, the historical evolution of the Ottoman legacy. It, thereby, contributed to the literature by looking at how the Ottoman seemingly irrational and static structure could have been optimal subject to certain constraints. Chapter 3 attempts to explain the reasons for the 'great divide' in performance of the countries of South East and Central European post-socialist states. By comparing the historical developments and legacies of the Ottoman Empire with those of the Habsburg Empire, Chapter 3 draws a number of hypotheses about the effect of these legacies on current institutional performance. It presents three estimation procedures that allow us to test the hypotheses and discusses the estimation results in light of alternative theories

Political trust and historical legacy: the effect of varieties of socialism

This paper, unlike the vast existing literature on political trust, focuses on trust in post-socialist countries, and more specifically on their emerging elites, rather than on their general populations. Studying emerging elites is important in the context of establishing democracy and the survival of democracy. We stipulate that political trust is significantly determined by historical legacy: type of socialist regime, accounting for path dependence and thus, for pre- socialist legacies. Utilizing individual-level data from an institutional survey, we find that distinguishing between different types of socialism is instrumental in explaining trust of emerging elites. Our findings have implications for policies aimed at fostering political trust in post-socialist countries and more importantly for discerning future patterns of political and social developments

The great divide revisited

The former socialist countries of South East and Central Europe exhibit great variation in institutional quality. Unlike the sparse existing literature, I claim that the variation can be explained by the legacies of the Ottoman and Habsburg Empires. I identify historical legacies of the Empires, which have affected the current institutional quality of the successor states. I show empirically that the Empires\u27 legacies are key determinants of institutional quality, and that the Habsburg successors have institutions that are more efficient in a market economy than the Ottoman successors. In contrast, I findan insignificant effect of socialism on institutional quality

The Choice in the Lawmaking Process: Legal Transplants vs. Indigenous Law

We develop a model of lawmaking to study the efficiency implications of, and variation in, jurisdictions choices between promulgation of indigenously developed laws and legal transplants. Our framework emphasizes the sequential nature of lawmaking, the ubiquity of uncertainty, considerations about ex-ante promulgation versus ex-post adjustment costs, and the importance of the political context of legal reform. In discerning the patterns of inefficiencies in both transplantation and indigenous lawmaking, we elucidate the role of heterogeneity of interests and adaptability of a legal system. We also find that domestic corruption per se need not justify transplantation of foreign legal models. Our results support the view that local conditions are a crucial determinant of the appropriate path of institutional reform.

Héritage économique ottoman dans les Balkans

« Un coup d’œil sur l’histoire économique de la région au cours de cette période permettra de découvrir les héritages qui configureront son avenir économique. Le repérage des modèles à long-terme de l’arriération relative fournirait des indices au sujet du potentiel de la région pour rattraper son retard. L’analyse des tendances lourdes de continuité et de changement dans les institutions et les relations économiques internationales fournira une perspective sur leur évolution probable. » (Goo..

The Ottoman economic legacy on the Balkans

When discussing South East Europe, the Ottoman Empire stands out in history asa prime candidate for an inquiry on historical path-dependence of institutions in the region. This paper analyzes the historical origins of the Ottoman legacy and identifies the legacy with particular pertinence to the economic performance of the South East European states. It distinguishes the legacy in relation to social values and beliefs as the one, which has had the most persistent and profound effect on the Ottoman successor states\u27 paths of economic development