ISSN: 1648 - 4460

International Journal of Scholarly Papers


Transformations  in
Business & Economics

Transformations in
Business & Economics

  • © Vilnius University, 2002-2005
  • © Brno University of Technology, 2002-2005
  • © University of Latvia, 2002-2005
Governance and Economic Performance in Transition Economies: An Empirical Investigation
Tjaša Redek

ABSTRACT. The article examines the importance of governance quality, which refers to the capacity of formal and informal institutions to implement and enforce public policies, for the success in economic transition. Following a short theoretical introduction, institutional characteristics of socialism are presented, followed by the changes in governance during transition. Data confirms that the economies, which are the winners of transition (Czech R., Estonia, Poland, Hungary, Lithuania, Latvia, Slovakia and Slovenia) have better governance and this has contributed to better economic performance. The measure of governance quality was formed using principal components methods from Heritage Foundation indices. Several statistical and econometric methods (correlation analysis, discriminant analysis and panel data analysis) confirmed that the governance has affected output performance in transition economies and that the causality (using Granger and Sims) runs in the direction governance – output performance. All economies should thus look out for the quality of governance.

KEYWORDS: transition economies, institutions, economic growth, governance.

JEL classification: P2, O4, F43, P36, G3.

Editorial correspondence:

Scholarly papers Transformations in Business & Economics
Kaunas Faculty
Vilnius University
Muitinės g. 8
Kaunas, LT-44280



Valid XHTML 1.0 Strict