Commitment devices, opportunity windows, and institution building in Central Asia



Commitment Devices, Opportunity Windows, and Institution
Building in Central Asia
*

Christian Danne+

Department of Economics and Institute for International
Integration Studies (IIIS), Trinity College Dublin
First draft - comments welcome

August 3, 2009

Abstract

This paper studies the institutional reform process in Central Asia from a choice per-
spective. We compare institutional reform processes of Central Asian countries from 1995
to 2006 to those conducted in their neighbouring countries in Central and (South) Eastern
Europe, Russia, and the Middle East. Firstly, the paper identifies contemporaneous factors
responsible for the persistence of poor institutional arrangements. Secondly, we identify fac-
tors that can act as commitment devices through which institutional change can be achieved
and sustained. Based on the findings, it is argued that deficiencies in the education system
and preferences of individuals and politicians are responsible for the persistence of poor insti-
tutional arrangements. External factors such as real and financial openness, fixed exchange
rates and non-trade related international agreements, however, provide strong commitment
devices for policy makers to improve institutional arrangements in Central Asia despite poor
initial conditions. Moreover, large external shocks may help to shift preferences towards
more reliable institutional settings.

JEL Classifications: H11, O10, P20.

Keywords: Economic Institutions, Reforms, Central Asia.

* I am grateful to Svetlana Bratakova, Michael Breen, Liam Delaney, Benjamin Elsner, Andreas Tudyka,
Thomas Steger, Julia Matz, and the participants of the conference on ”Institutions, Institutional Change, and
Economic Performance in Central Asia” in Gottingen in September 2008 for their comments and suggestions. I
would also like to thank Jan Teorell, Nicholas Charron, Marcus Samanni, Soren Holmberg and Bo Rothstein for
making their Quality of Government Dataset 2009 available at
http://www.qog.pol.gu.se.

tTrinity College Dublin, Department of Economics, College Green, Dublin 2, Ireland, Email: [email protected].
Funding from the Irish Research Council for the Humanities and Social Sciences (IRCHSS) is gratefully acknowl-
edged.



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