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Institutional continuity and change in postcommunist economies

During the heady days following the reunification of Germany, the failed coup in the Soviet Union and the Velvet Revolution in Czechoslovakia, political leaders found themselves in the business of redesigning the fundamental institutions of government. The mood of the time dictated a dramatic break with the past. With the delegitimation of communism, East Europeans seemed enthusiastic to abandon old institutions in favour of newly imported capitalist and democratic ones. For many in the West, the collapse of the Soviet system signified a validation of Western economic and political forms.1 However, with the benefit of hindsight we can see that the repudiation of communism's ideology and symbolism did not mean the wholesale discrediting and demise of past institutions of economic exchange, industrial production and political interaction.2 Despite the legions of Western advisors who went to Eastern Europe to participate in the importation and crafting of new institutions, many past forms of governance and exchange endured intact or permeated new arrangements. Formal and informal institutions survived in many contexts by accident, by default and by choice.