Abstract:

The speed of economic reforms is not the only important determinant of the success of the transition to a market economy: the transition of government from a communist state to an institution supporting a market economy is as critical. Survey evidence shows that Russia lags significantly behind Poland in the transition of its government, which may account for its inferior economic performance despite adopting similar economic reforms. I argue that the lack of turnover of old communist politicians, and the creation of inappropriate electoral and fiscal incentives for these politicians, may account for the poor performance of the Russian government, and suggest some strategies for improving the situation.

Notes:

Reprinted in Peter J. Boettke and Peter T. Leeson, eds., The Legacy Of Ludwig Von Mises, Edward Elgar Publishing Company, 2006.