Institutions, the resource curse and the transition economies: further evidence

Based on the various works on the relevance of the institutional arrangements for a country’s economic performance, this paper studies the role and the determinants of the reform policies for the development paths of the transition countries. Looking at the U.S.S.R breakdown as an extremely powerful “experiment” and considering the nature of its consequences, the paper investigates the importance of policy reforms for the productivity growth looking for possible structural break and differences among of the nations in transit. The paper studies the different patterns of reforms using a synthetic measure treated as endogeneous and instrumented by the rents coming from the natural endowments, the extent of the democratic progress and the trade openness. The paper proves that these determinants have played a different role in explaining the pattern of reform policies of the transition countries, which in turn has affected their productivity growth paths. Empirically, the paper develops a dynamic approach implementing the more advanced econometric techniques.