What can institutional analysis say about capitalism in Central and Eastern Europe? Results and limitations

Abstract

A growing literature examines institutional arrangements in Central and Eastern European (CEE) market economies. Some sources claim that there is a distinct model of capitalism in this region. This paper overviews and analyzes the results of these studies in connection with crucial methodological issues showing the limitations of institutional analysis. Despite all methodological difficulties, with a combination of different methods, institutional comparison is able to provide essential insights into the position and future prospects of CEE member states. One of the most important insights is that the maintenance of economic convergence to Western European countries requires substantial institutional changes. This paper also suggests that a broader historical context can help to evaluate opportunities and the risk of path dependency. It seems fruitful if the current development is fit into the conceptual framework which conceives of CEE as the region of “in-betweenness,” where the legacy of incomplete modernization attempts hinders the optimal institutional arrangement.