Abstract

The paper attempts to assess the validity of competing theories of institutional determinants and change using a sample of both transition countries and non-transition countries. Economic theory explains the determinants of institutions as results of political economy approaches, legal origin theory or culture differences between societies. As dependent institutional variables investor protection, labor market institutions and a composite index of coordination are chosen. In order to allow for different slopes and intercepts of transition countries several interaction terms are included. All variables are able to explain some of the variation across countries, but it seems that for transition countries political and cultural approaches are most applicable.