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

Priorities of government leaders and their advisers

Although observers of the Rose Revolution and its aftermath in Georgia disagree on Mikheil Saakashvili’s overall presidential record, there can be little doubt that the success with institutional reforms reflected his priorities. In turn, these were influenced by his experience of training and living in the United States and France, with their accountable public institutions and comparatively low corruption.

In contrast, the leaders of the Orange Revolution were trained and made their careers exclusively in Ukraine during the Soviet and Kuchma eras, when they worked in government or industry. Institutional reform was not their main preoccupation, and that would probably have remained the case even in the absence of opposition from vested interests. The reasons for this may have included a limited understanding of the importance of institutions for well-functioning market economies, but also different priorities, such as nation-building through the promotion of the Ukrainian language and the rebuilding of various religious and cultural landmarks.

Reformist ideas and priorities also differed outside the inner circle of leaders and their closest associates. Saakashvili recruited many young reform-minded Georgians who had trained abroad (and some foreign advisers), and who were keen to contribute to the post-revolution rebuilding of Georgian institutions. By contrast, there was no discernible increase in the number of Western-trained Ukrainians in government after the Orange Revolution.

Differences in leadership priorities were also apparent in the way in which post‑revolution governments approached the problem of corruption. Links between corruption and powerful vested interests may have made it even harder to tackle corruption in Ukraine than in Georgia. Nonetheless, in the immediate aftermath of the Orange Revolution, Ukraine’s leaders had the opportunity to set an example – by cracking down on any signs of corruption within the new government – which could have changed public expectations and redefined standards of tolerance. Instead, examples of nepotism and corruption among the new authorities emerged soon after the elections, sending a clear signal to society that nothing had really changed.