Institutions Matters - En teoriprövande studie om institutionell struktur och ekonomiskt välstånd inom transitionsländerna

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This thesis analyzes and discusses the role of institutions concerning countries' abilities to create economic wealth. The countries that we are analyzing are the former members of the Warsaw pact and former Yugoslavia. These countries are referred to as transition countries. In order to analyze the transition countries institutional structure we are using Douglass C. North's theory regarding institutions and institutional building. North is arguing that economic growth will not occur without well structured and functioning institutions. To test North's theory we use different political variables, such as property rights, control of corruption and political stability to correlate them against economic wealth. The results show that there are three countries, Slovenia, Moldova, and Turkmenistan, which are strongly deviating from a relatively well correlated pattern. According to the findings Turkmenistan has a higher production per capita level compared to other countries with similar institutional structure. We believe that the reason for Turkmenistan's relatively high level of wealth depends on the fact that they export oil and natural gas. Slovenia and Moldova received the same value in the property rights index, which contradicts North's theory since Slovenia is the richest of the transition countries and Moldova is one of the poorest. After further investigation we are able to conclude that Slovenia?s property rights protection is better than Moldova's. To extend the study w...