P48 - Other Economic Systems: Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional StudiesReturn

The purpose of this paper is to address a relation between governance quality and long-run growth using a case of post-soviet transition countries. Alternative approaches to the growth theory emphasize the role of formal institutions, in particular, political and economic institutions. Based on literature overview, a positive effect of governance quality can be assumed. Governance quality is represented by concept of World Bank's Governance Matters and its influence is estimated within panel data analysis. The results confirm the assumptions. Furthermore, they indicate the importance of political stability and negative impact of voice and accountability.

This article deals with a comparison of the impact of institutional environment on the competitiveness of Croatia and Serbia between 2000 and 2010. After 2000, both states began to implement institutional and economic reforms. Institutional environment is measured and evaluated by concept Governance Matters of World Bank. Because of limited extent of the text, two indicators of the Governance Matters concept - the level of political stability and the level of rule of law - were chosen for a deeper analysis. Competitiveness is determined by the World Competitiveness Index of World Economic Forum. The paper concludes that institutional environment is a weakness of both countries and the slow dynamics of institutional change is, in accord with new institutional economics and new political economy one of the reasons why both countries have had slow growth of competitiveness and in global comparison have fallen behind.