Barriers to Institutional Development in Europe

Author: Andrey AKHREMENKO, Aleksandr PETROV, Yegor YURESKUL

Barriers to Institutional Development in Europe1

Abstract. This paper considers the problem of institutional development in the countries of Central and Eastern Europe. We analyze existing approaches to explaining the causes and factors of institutional development and seek to determine why there was no evidence of institutional convergence in European countries between 1990 and 2014. We look at the theoretical and methodological limitations of approaches to the analysis of institutional development characteristic of mainstream political science. The data we utilize comprise a wide range of quantitative variables which measure levels of institutional development, social trust and political capital. We also use our own Total Factor Productivity (TFP) estimates obtained through non-parametric methods using raw data. We analyze relationships between the variables using correlations, regression analysis and clustering. The results of statistical analysis reveal the mechanism through which TFP influences institutional development: we show that TFP is a necessary prerequisite for institutional transformation.

Keywords: total factor productivity, institutional development, social trust, political capital, social capital.

Introduction

One need hardly go to any lengths to argue that the countries of Europe2 are at different stages of institutional development presenting a wide variety of institution quality. Suffice it to compare, for example, Norway and Moldova in terms


A. Akhremenko, D. Sc. (Political Science), professor, Department of Political Science, Faculty of Social Sciences, National Research University-Higher School of Economics. E-mail: aakhremenko@hse.ru. A. Petrov, D. Sc. (Physics and Mathematics), Keldysh Institute of Applied Mathematics. E-mail: petrov.alexander.p@yandex.ru. Ye. Yureskul, Cand. Sc. (Political Science), lecturer, Department of Political Science, Faculty of Social Sciences, National Research University-Higher School of Economics. E-mail: eyureskul@hse.ru. This article was first published under the title "Barriers to Institutional Development in Europe: Economic Productivity, Social Trust and Political Capital" in the journal Obshchestvenniye nauki i sovre-mennost (ONS), No. 4, 2017.

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Fig. 1. Ranging of European countries in terms of government institution efficiency (Worldwide Governance ...

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