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Economic Welfare, International Business and Global Institutional Change

Edited by Ram Mudambi, Pietro Maria Navarra and Giuseppe Sobbrio

The distinguished authors in this volume address the fundamental causes for such heterogeneous international experiences, placing particular emphasis on the role of institutions. They demonstrate how the study of economic development is increasingly linked to the development of institutions, which allow for more complex exchanges to occur in markets and societies. Institutions can be understood as rules or constraints that channel individuals' actions in specific directions, and can be formal or informal depending on their genesis. The book highlights the connection between institutions and economic welfare by examining countries at different stages of development. Although the authors' study material effects, they also look at individual well-being which is more strongly influenced by the non-material products of institutions such as opportunity, freedom and relationships. They move on to highlight the role of institutions in global business, in terms of innovation, entrepreneurship and foreign direct investment. In the concluding chapters they focus on the actual process of transition from one institutional framework to another. Amongst other examples, they examine reforms to international financial institutions and constitutional adjustments in transition countries.
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Chapter 14: On the Delegation of Powers – With Special Emphasis on Central and Eastern Europe

Eli M. Salzberger and Stefan Voigt


* Eli M. Salzberger and Stefan Voigt 1. INTRODUCTION During the late 1980s and early 1990s, the countries of Central and Eastern Europe went through a peaceful transition to democracy, after half a century of communist rule. All of these countries adopted a new (or significantly amended an existing) written constitution. The vast majority of them based their new system of government on the continental model, two of whose main features are parliamentary democracy and a special constitutional court. However, there are significant differences in the specific details of their governmental structures. In this chapter, we try to determine the possible sources for the institutional differences in these regimes, which emerged in the same period of time and against a similar historical background. This is a very broad task, and obviously we will be able to address neither every possible feature that might be a viable explanatory factor for these institutional differences, nor every possible effect of such differences. The same limitation applies to the range of institutional components that will be scrutinized here. We will focus our analysis on the structure of the separation of powers and especially on the delegation of powers to domestic organizations, such as independent judiciaries and central banks, and to international bodies, such as international organizations. This chapter is part of a more general project on the delegation of powers in which we attempt to explain why politicians delegate powers and their choice between international and domestic delegation (Voigt and Salzberger, * This chapter was written...

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