Post-Soviet Transition: The Impact of Russian Influence on Institutions

The post-Soviet space, consisting of the countries of the former USSR and the Warsaw Pact, is a good testing ground for the dynamics of growth. Motivated by the mixed evidence on economic convergence in the region, this paper explores why countries have performed differently, focusing on institutional strength and its determinants. It proposes the hypothesis that, in the region, Russian influence plays a negative role in institutional development, both through opaque business practices that come with it, and through the isolation from European Union influence it entails. The paper uses recent panel data to test this hypothesis, concluding that there is some evidence supporting a negative effect of Russian influence on post-Soviet states’ institutions, but that more rigorous analysis is needed to confirm this link.