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Institutional Competition And External Constraints of Transformation: Institutional Transfer and Institutional Imitation in the former GDR and in Central and Eastern Europe
Bernhard Seliger
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Abstract
Twelve years after the change of economic and political systems in Central and Eastern Europe indicators of economic performance and institutional development still point out that transformation is incomplete. However, the debate of transformation strategies, earlier focusing on "shock therapy versus gradualism", changed. Recently, transformation theory focuses on factors influencing the success of transformation, including initial conditions, institutional arrangements and policy choices. In this paper, the external restrictions on institutional choice due to national (in the case of Germany) and international economic integration are analyzed. Especially the EU accession can be seen as a form of institutional commitment and restriction of institutional choice. Based on a brief outline of the theory of institutional competition, the strategies of institutional transfer in the former GDR, institutional imitation in countries aiming at EU membership and institutional innovation are discussed. While closing the window of opportunity in transformation, institutional transfer or imitation can considerably reduce uncertainties surrounding transformation for business and state.