Transition Report 2013 Stuck in transition?

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Facts at a glance

years after the start of the transition process, economic institutions in the transition region are, on average, still weaker than in other countries with comparable levels of income.

0.5 The correlation between measures of democracy and regulatory quality in a global sample of countries.

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-year period prior to accession saw a peak in terms of institutional improvements in EU accession countries.

of Kyrgyz SMEs say that unofficial payments are required in everyday business.

Economic institutions

Macroeconomic environment

The above episodes took place under very different macroeconomic conditions, which may have had an impact on demand for reform and its implementation. In the Slovak Republic Dzurinda’s tenure began in a low-growth environment, from which the economy recovered as reforms began to attract foreign investment. In Romania the government’s 1997 reform programme coincided with a macroeconomic crisis that reflected the mismanagement of previous years. This highlighted the need for adjustment and reform, but the resulting collapse in output (which fell by a cumulative 11 per cent of GDP during 1997-98) made implementation even more difficult.

Ukraine found itself in the opposite situation, as the aftermath of the Orange Revolution coincided with a boom in capital flows to emerging markets. This allowed Ukraine to grow quickly during 2006-07, even in the absence of reform. The fact that the Rose Revolution happened prior to this boom may have benefited reforms in Georgia.