CUPRINS nr. 112


Notes on Corrupt Post-Communist Privatization


Undoubtedly, the privatization of state-owned enterprises has received the most attention of all components of the post-communist economic restructuring unfolding in Eastern Europe. Policy makers and commentators writing on the subject have argued that state asset transfer to foreign and domestic private hands is needed for 'objective' economic reasons related to improved efficiency and productivity, the separation of political and economic decisions, the introduction of hard budget constraints and business practices consonant to market demands, new capital influx and quicker adaptation to consumer market demands. It was argued that the cornerstone of a market economy is the presence of clearly defined property rights, including possession of the asset and the rights to use, derive income, exclude others and exchange the asset. According to the economic theory of post-communist, property rights are the determinant of economic prosperity and a complete re-socialization of economic actors, both private and state-owned.

Few authors warning that privatization could turn into a process dominated by corruption and clientelism were taken seriously in the early 1990s. Among these few was David Stark, who argued in a seminal article that the Hungarian spontaneous privatization process was moving the economy not from plan to market but from plan to clan.1 Stark claimed that instead of being a process that will take care of itself once the appropriate institutional and legal frameworks were set in place, privatization had to be understood as a path-dependent and networks-focused process. The strategic choice was "not between clans or markets but of clans for markets." Yet according to him, Hungary could still see the light at the end of the tunnel with a "combination of direct foreign investment and enough real private entrepreneurs," since its particularistic networks of enterprise directors and small-scale producers could ultimately work as clans for market. I rely on the metaphors of plan and clan to compare the starting points, factors, processes and outcomes of post-communist transformation in Hungary and Romania. Focusing on clientelistic privatization and corruption networks, and the governmental attempts to countervail clandestine relationships, I suggest that whereas Hungary benefited from its 'clans for market', the Romanian clans endanger the functioning of the market and, as in the Russian case, often prepare the reemergence of 'clans for plan'.

Note that the ambiguity of the post-communist political context made the privatization process a hotbed for corruption and mismanagement. Instead of allowing new domestic and foreign actors to enter the economy and bring in capital and novel business practices, privatization gave communist managers de jure ownership rights over enterprises they already controlled de facto. Instead of bringing revenue to impoverished state budgets, privatization forced the state to bail out unprofitable enterprises and allocate important funds to wipe out the enormous arrears these enterprises had accumulated over the years. Instead of lifting the burden of bankrupt enterprises off the state's shoulders or ending state subsidies to economic agents that formally belong to the private sector, privatization perpetuated them for reasons of national interest or because of the protection these agents enjoyed from high-ranking state officials. Instead of granting ordinary citizens a stake in the economic transition and the enterprises in which they had worked for decades, some privatization methods excluded them in favor of a handful of well-connected members of the political and economic elite. Instead of bringing in much needed competition that would benefit Eastern European consumers, privatization often permitted the establishment of large trusts integrating a multitude of inter-connected firms and enjoying monopoly over specific markets. In short, as Stark claimed, instead of facilitating transition from plan to market, privatization marked the transition from plan to clan.

Clearly, privatization has faced difficulties other than corruption and clientelism. As documented, change in ownership posed serious challenges that could not be easily mitigated. Former Polish Minister of Property Transformation Janusz Lewandowski referred to these difficulties when remarking that "privatization is when someone who doesn't know who the real owner is and doesn't know what it's really worth sells something to someone who doesn't have any money."2 A decade after the start of the process, we know that ownership rights transfer by itself could not produce a well-functioning market economy. To make property rights meaningful, post-communist societies need a regulatory system for titles encouraging the lawful use of goods and a criminal penalty severe enough to deter theft, two conditions that Eastern European countries have yet to fulfill. Unfortunately, few of the predictions associated with the transition to a market economy did materialize. Property rights were not clearly defined though it would have been inexpensive to do so, the fiscal system became predatory though rights enforcement should have freed resources, and the state failed to repress crime though it had more resources at its disposal.3 While privatization was nurtured by the belief that private enterprises are more efficient than state-controlled monopolies, policy makers apparently forgot that a free market without the restraining rules of a civil society inevitably creates opportunities for a great number of abuses.

This study must rest on a clear definition of corruption. But deciding which that might be, proves a difficult task, the more so since in post-communist countries, corruption is not just misdemeanor described by criminal legislation but an integral part of the local culture, a widely accepted predisposition that most Eastern Europeans do not take the time to question. People live by rules that conflict systematically with the norms written into laws largely because formal systems fail to meet popular demands. Therefore, a purely legalistic definition of corruption is insufficient. Often the law does not define a category of social actions and behaviors as corruption, but focuses on subsets (bribery, graft, fraud, extortion, office abuse, etc). Other times, it may not cover cases publicly perceived as corrupt, and not infrequently it can itself breed corruption. A process-oriented, sociological definition would recognize the fact that corruption implies agreement between social actors to use resources they control in ways that are not consonant with the interests of the people in general. "A natural consequence of the use of power,"4 corruption is intimately linked with power mechanisms and institutionalization, and with the idea of subordinating the public interest to the rational principle of maximizing private gains.5 Going one step further, this study identifies clans as the locus of corrupt practices that affected the privatization process in Hungary and Romania.

Plan and Clan under Communist Rule

All major characteristics associated with the development of mafia-like clans were present before 1989: 1) an abdication of legitimate government power, possibly encouraged by popular rejection of government's authority, 2) excessive bureaucratic power, 3) discretion and bureaucratic decisions that are unclear and difficult to monitor and evaluate, and 4) financial potential of illegal markets.6 In all communist economies, networks served to integrate the first and second economies. Inflexible political hierarchies generated a demand for informal intermediaries to sustain economic activities. Whenever money did not work as an exchange medium, intermediaries forged deals through personal connections according to the principle 'favor for favor, commodity for commodity'. Selective enforcement of laws, rules and regulations governing economic conduct and selective use of power enabled authorities to control informal corrupt activity for their own purpose. Personal connections were critical in accessing the nomenklatura ranks and in securing access to the state resource distribution system. Enrichment of high ranking party members was common, as they managed public wealth and were the source of power. Shortage of goods bred extra-legal activity, virtually everyone having ties to the second economy. Some of the parallel forms of material earnings were direct results of scavenging the public wealth. Gift offering and receiving became a habitual custom, with its most prominent practitioners being party ranks. Their concerted actions of enforcing and breaking the system of rules influenced the level and distribution of favoritisms. State enterprises managers had to befriend those higher up to procure raw materials and supplies, thus developing a "network of cozy relations among economic managers and their bureaucrats."7

Long tenure periods permitted party officials and enterprise managers to create fiefdoms and dynastic clans dominated by personal ties, overlapping membership, and patron-client relations. These clans were particularistic networks of trust and reliability, cohesive, dense and tightly intertwined, hierarchical and non-transparent. Within clans, exchange was vertical, obligations were asymmetric, and secretive honor codes facilitated cooperation among clan members. Each clan shared its own values, enforced its own behavioral norms, maintained strong intra-group solidarity and guarded barriers to entry. Clans were held together by informal, personal ties and family relations, but also by formal ties of authority subordinating weak clients to powerful patrons. Defending and promoting insiders, clans stifled outsiders, limiting their options and increasing entry costs into the second economy. While clans did exhibit forms of social capital, that capital did not go beyond the tight circle of clan members. Instead of breeding networks of trust and solidarity at the level of the general society, the communist-era clans rested on the 'amoral familistic' inter-personal relations characteristic of Southern Europe.

During communism, clans had to reckon with the restrictions imposed by the plan. Command economies were based on five-year plans of economic development, outlined by central agencies and enforced by political leadership through direct state control. The logic of communist development, and the desire to outperform the capitalist world, led to the imposition of ever higher plan targets which in late communism became impossible to reach by most economic actors. As a result, managers and bureaucrats misrepresented data, and did not shy away from reporting inflated results. The chain of lies and corruption stretched from high-level apparatchiks, responsible for making bureaucratic appointments, to low-level civil servants. Note, however, that planning was neither fully enforceable nor comprehensible. Plan revisions and bargaining between enterprise directors and central planners were common practices that followed market logic but were constrained by bureaucrats and the legal system. But while it partially corrected for the rigidity of the communist economic system, the second economy blurred the lines of responsibility and accountability. Under communism, enterprise managers acquired the right to use, and to profit from, enterprises and could "supplement their individual wealth by hiding profits and skimming extra production."8 Many opportunities to organize informally and covertly existed for small groups of high ranking administrators and enterprise managers in export-oriented companies and specific industries.

Of all Eastern European communist states, Hungary went the furthest in allowing legalized second-economy activity. Household farming was recognized as part of the private sector, though it remained technically dependent on the state. The Hungarian communist regime favored enterprise autonomy, instructed enterprises to maximize profits, and encouraged people to find extra employment. Under gulash communism, the second economy helped individuals meet their needs and acted as social mollifier. After the 1968 New Economic Mechanism, economic life was largely depoliticized and informal economic activities were widely tolerated. The 'social contract' binding the regime to its people accepted economic prosperity in exchange for preservation of the political status quo. In contrast, Ceausescu's brand of communism was driven more by dogmatic ideology and less by economic concerns, and rejected the mixed character of gulash communism. The informal economy helped circumvent supply bottlenecks in a rigid command economy, but was considered to represent a direct threat to state regulatory powers. Officials, for whom private entrepreneurship represented a parasitic bourgeois attitude antagonistic to the building of socialism, strove to limit the second economy as much as possible. Less flexible, tolerant or pragmatic than Hungarians, the Romanian communist officials mythologized plan, suppressed the market and neglected public needs and interests, sowing the seeds of public dissatisfaction and future confrontation with the elite. Fearful for his control of the country, Ceausescu frequently rotated party cadres and marginalized those who could be regarded as his potential successors or who directly opposed him. Cadre rotation did not affect members of Ceausescu's family, who towered unchallenged over the Romanian society. Disdain for the mad dictator united his silent opponents within the party. These sympathies were to form the basis of post-communist clans gathering former apparatchiks.

Clans in Post-Communist Times

After the collapse of state-controlled economies, the mixture of formal and informal networks saved Hungarian and Romanian societies from total breakdown. The deterioration of the bureaucracy-run economy devalued formal network endowments in favor of the informal endowments in attaining wealth and power. Networking became even more crucial in the post-communist period given the manifold uncertainties and hardships of transition. New pressures bolstered personal networks as a means of coping with difficulties and grabbing new opportunities. The persistence of unofficial bargaining resulted in the further ascension of clans as informal, particularistic, extra-legal and non-transparent entities. Building on older particularistic groupings, closed clans of interconnected politicians, industrialists, bankers, media figures, consultants and private security forces emerged. Pursuing expansion, these clans practiced the politics of exclusion, seeking to protect and promote the gains and interests of their members while at the same time suppressing competition and blocking new entrants to the market. They were propped up, among other things, by uncertain property rights, underdeveloped legal system, poor investment conditions, public distrust and political instability.

Privatization had significant implications for clans, but transition could not end corruption. In both countries the privatization process began spontaneously. At the start of the reform process more pragmatically minded members of the outgoing communist administration and enterprise managers (the so-called directocracy) took advantage of their privileged positions and became the primary property-owners, lobbying in favor of privatization models allowing managers and workers to purchase shares and greatly resisting models seeking to separate management from ownership. Some directors were content to have ownership dispersed among enterprises workers as long as workers' collectives agreed not to interfere with management in exchange for job security. Other managers acquired a controlling block of shares through a variety of manipulative schemes directed against their own workers. As a result, well-positioned and well-connected insiders acquired most of the state properties gratis, converting their previous politically-based status into economic power and taking advantage of the fact that newly created firms had not had the time to overcome the difficulties of collective action. This meant that "lobbying power . . . iwass held disproportionately by those enterprises that need to be replaced by new or foreign firms."9

Stark makes the important observation that in Hungary the political vacuum of 1989 was not a legal vacuum, while the negotiated transition of political power was not a negotiated transition of economic power because the roundtable negotiations were not attended by key economic players - enterprise managers, trade unions, workers' councils. Unbound by the outcomes of roundtable discussions, managers and bureaucrats, who entered transition as the strongest organized group, decided to move unilaterally and with unparalleled independence. Spontaneous privatization allowed enterprise managers to choose their own owners, and the elite of the party-state apparatus to take advantage of the transformation process. In these nomenklatura buy-outs, apparatchiks with no prior industrial experience or expertise in production or marketing bailed out into profitable ventures.

Spontaneous privatization thus became related to illicit or improper gains (transfer of wealth by stealth) giving rise to ambiguous structures characterized by the blurred boundaries of public and private, the fluid boundaries among enterprises, and discretionary asset and liability distribution. In both countries, the volume of assets privatized through the "rape of the state" was reportedly enormous, though nowhere it can be accurately estimated. As spontaneous privatization took place informally, through the blatant theft of state assets and diversion of revenues from state enterprises, it represented the very essence of extra-legal activities, a continuation of the corrupt practices that flourished under communism. Many of the new entrepreneurs were nomenklatura members with a long experience of suppliers in the secondary economy. By making them important capital owners, spontaneous privatization allowed them to preserve a hold on economic resources while giving them freedom unimaginable during the old regime. To accomplish their economic interests, some of these managers and bureaucrats turned to politics to influence the political resources of the system and to exert pressure on political outcomes (usually by opposing rapid reforms). They were uninterested in serious economic and administrative reforms because they profited handsomely from plundering the state. Seeking market domination, they continuously forged alliances - both horizontal (local) and vertical.

This uncontrolled and inequitable distribution of public resources weakened the state and incited public outrage. Both Romanian and Hungarian authorities reacted by introducing official privatization programs. In Hungary, a public offering of shares, competitive tenders and employee-share ownership programs were introduced, but soon it became clear that they were doomed to failure due to the enterprise managers' reluctance to aid the programs. Adopting a realistic stance, the Hungarian government admitted defeat and agreed to the self-privatization of small- and medium-sized enterprises. This modified version of spontaneous privatization was implemented under the supervision of the State Privatization Agency, and it enriched both former managers and privatization officials. In contrast to Hungarian pragmatism, Romanian privatization was colored by blatant populism. In the mass privatization program, citizens received vouchers, but failed to acquire any tangible assets as a result. Only well-connected and well-informed individuals could obtain attractive pieces of state property through accumulating large blocks of vouchers. Excluded from the voucher privatization program were the most important and profitable export-oriented industries, whose fate was arbitrarily decided behind close doors by a circle of top politicians, bankers, industrialists and the State Ownership Fund. Special laws for special cases favored bidders with better access to top politicians and their entourage, rather than bidders offering best price or bidders with most potential to redress the failing enterprises.

Despite divergent official privatization scenarios, in both Hungary and Romania inside information, insider lending, and insider privatization were the key tools for the distribution of state property. Under the patronage of the political architects of privatization, the most valuable resources were channeled to their own select clients. In Hungary, the already existing limited private ownership needed formalization. Pilfering was permissible if it allowed national asset reproduction or if it gave political elites a chance to have their own feast.10 But the key difference was the fact that by favoring property de-concentration through breaking up large companies into smaller ones, Hungarian reforms stimulated competition and attracted outside capital. Hungary's relative openness was related to the fact that the country could not succeed without foreign investment, but also to the fact that economic pragmatism was combined with the society-wide intellectual and moral desire to Westernize institutionally and be recognized as part of Europe. During privatization, foreigners acquired shares of strategic companies in the oil, gas, telecommunications and electric industries. The country attracted over one-third of all foreign direct investment in the former communist block, hence every Hungarian aspiring to become rich had to rely on international networks. Operating on commercial grounds and relatively disengaged from the pre-existing personal networks in the country, foreign capital played an anti-clandestine role in Hungary.

By contrast, the Romanian economy was much more monopolized, and the country's choice of privatization methods allowed for the survival of the fattest, instead of the fittest, producing financial empires unable to sense market changes. Reliance on powerful political patrons remained indispensable to beat the country's notorious red-tape. Instead of welcoming it, the first three Romanian governments confronted foreign capital, a stand supported by special interest groups wishing to keep the national economy under domestic control. Exploiting the advantages of national monopolies, the Romanian elite managed to protect the communist legacy of a closed economy in an increasingly open world market. Theft on a grand scale was possible because the communist elite maintained its hold on the state. Around 75 percent of Romanian nouveaux riches were members of the nomanklatura or the secret police.11 Nationalist sentiment translated into a false perception of a nation's self-sufficiency, while national self-closure was orchestrated by domestic financial-political clans that could preserve their power only by remaining exclusive. The clans did admit friendly foreigners, but only under conditions of close supervision. A strong distinction between those who belong and those who do not belong has endured during transition. Romania also lacked foreign capital as a benign vehicle for profitability and efficiency. Foreigners on the fringes of Romanian clans have been too weak to promote a strategy of clans for market.

In the country, much opposition to broadly-based privatization came from enterprise managers because they stood to lose their job and personal comfort and social position. Delayed privatization allowed them to develop their own businesses, thus benefiting a handful of people and impoverished the public property and every taxpayer. Former party ranks, while continuing to hold key positions, transferred funds and goods from state enterprises to their private companies through the formation of affiliated limited companies. By virtue of their positions, these individuals constantly bribed departmental directors, ministers and members of Parliament to have reservations on quick economic liberalization and to maintain state subsidies to unprofitable enterprises. The Romanian business sector is both overregulated (in the number of stamps and approvals required for every franchise) and under-regulated (in the lack of protection for consumer or honest firms) as a result of these corrupt practices. Though Law 58/1991 allowed for a variety of privatization methods, up to 1995 medium-sized enterprises and small establishments were sold or given away to insiders often with payment accepted in the form of vouchers or deferred payment arrangements, in order to solve the problem of a lack of capital in the purchasers. The process occurred at a snail pace, lacked transparency, left discretionary power to high level officials, and bred high levels of corruption.

While in both countries upper nomenklatura echelons were partly dismantled, Hungary's political context has been less inviting to corruption than Romania's. Hungarian civil society was more influential and successful in imposing limits on the range of actions at the disposal of government officials. By contrast, civil society in Romania started to organize itself only after the demise of communism. The separation of powers was clearer than in Romania where the judiciary, the real bastion of nomenklatura, remains the most corrupt branch of power. In Romania the notions of trust and credibility remain vague, and both winners and losers of reforms could only depend on networks as a tested trust and support system for copping and grabbing. Hungarian and Romanian networks also differ in terms of their potential for learning and change. A resolute and continuous market building in Hungary contrasted a hesitant "one step forward, two steps back" development in Romania. Consequently, the trajectory "clans for markets" pursued in Hungary meant a metamorphosis of clan networks into less rigid, loosely coupled networks guided primarily by market-style instrumental rationality rather than value rationality. Though less cohesive, these networks are more adaptable and effective in the pursuit of marketization. In Romania, however, deep distrust of the impartial hand of the market has reinforced heavy reliance on the visible hand of the state and high-ranking patrons as the facilitator of actions and the protector from formal demands. The resilience of communist-era hierarchical, closed and ambiguous structures in Romania has been the outcome of both resistance to market rationality in the interest of preserving previous monopolies and the backlash against a poorly implemented, painful transition that seemed to go nowhere.


The literature is contradictory as to the relationship between corruption and economic development. Respected scholars see corruption as facilitating economic modernization and benefiting democracy. Huntington, for example, argues that corruption is indirect participation in the decision-making process, highly functional during early modernization or rapid socioeconomic change. Occasionally, corruption may even raise economic growth. Leff opined that at first "speed money" may enable individuals to avoid bureaucratic delay, while later public servants may work harder because bribes serve as rate compensations. Corrupt practices may thus provide practical solutions to social problems, and their potentially negative consequences are overcome by their public benefits: economic development and capital formation, national integration through consensus between leaders and masses, and increased governmental capacity to legitimize newly created institutions.12 More recent studies relate corruption to economic backwardness, and argue that "speed money" may increase transaction efficiency only in countries where government officials artificially create delays in order to be bribed by imposing excruciatingly cumbersome bureaucratic regulations.13 Other studies argue that corruption prospers if market competition is weak, since a few firms collude more easily. Then, once firms have learned to collude, they are able to more efficiently bribe politicians and public officials to avoid antitrust enforcement, obtain favorable legislation, and rig public contracts."14

But the literature is more unanimous in its assessment that corruption impedes marketization. Among the first to tackle the intricacies of corruption in post-communist Eastern Europe, Holmes identified a panoply of processes whereby particularistic interests appropriate state resources at the expense of the larger society. More recently, Rose-Ackerman suggested that, with the exception of over-bureaucratized states, corruption can never help build and sustain the dual political and economic transition in Eastern Europe.15 Building on Putnam's study of Italy but discussing the case of post-communist Russia, Stoner-Weiss concluded that in the short run corruption and clientelism might help regions overcome their problems of common action by oiling both commerce and bureaucracy, but that in the long run that advantage would prove to be only apparent as in those regions economic clans would ultimately work for their own benefit rather than that of the larger community.16 Stark anticipated this insight when arguing that the key to successful marketization are clans capable of nurturing the civic spirit akin to democracy and building cohesive networks of trust, cooperation and stable subcontracting that made possible the Japanese miracle. The focus, according to these authors, should be on the kind of norms, values and relationships developed within the major groups participating in the economy. The feelings of cooperation and solidarity that tie friends and business partners together should be carried out of the group into the larger community for economic benefits to be reaped. If not, the group resembles more a clan that, by always looking for its immediate interest and assuming that the others are doing, will reject cooperation with outsiders.17

Twelve years after the collapse of communism, and as many years since the launching of post-communist transition, the general feeling among those studying Eastern European politics, as well as among those practicing it, is one of dissatisfaction for not having taken seriously early warnings that the prescribed recipe of economic transformation might lead not to a successful marketization of the Japanese type but to an economic hybrid combining monopolistic remnants of communist era with Southern European mafia-like clans. Rather than accepting one single blueprint of transition for all Eastern European countries, we should have strived to find different medicine for countries of different background and economic potential. Hungary's gulash communism allowed for the emergence of a second economy that would later generate both potential buyers and a significant source of capital for the privatization process. Romania's Stalinist authorities suppressed the second economy. Other things being equal, some privatization methods are more likely to breed corruption, and the same method might lead to different economic configurations in different countries.

1 David Stark, "Privatization in Hungary: From Plan to Market or From Plan to Clan?," East European Politics and Societies vol. 4, no. 3 (Fall 1990), pp. 351-392.
2 K. Verdery, What Was Socialism and What Comes Next? (Princeton, NJ: Princeton University Press, 1996), p. 210.
3 Frederico Varese, "The Transition to the Market and Corruption in Post-Socialist Russia," in Political Corruption, ed. by Paul Heywood (Oxford: Blackwell, 1997), pp. 163-180.
4 Andras Sajo, "Corruption, Clientelism and the Future of the Constitutional State in Eastern Europe", East European Constitutional Review (Spring 1998), pp. 37-46, here p. 41.
5 J. S. Nye, "Corruption and Political Development: A Cost-Benefit Analysis," American Political Science Review vol. 61, no. 2 (1967), p. 419.
6 Annelise Anderson, "The Red Mafia. A Legacy of Communism," in Economic Reform in Russia, ed. By Edward Lazear (Stanford, CA: Hoover Institution Press, 1994).
7 Verdery, What Was Socialism, p. 22.
8 M. McFaul, "The allocation of property rights in Russia: the first round," Communist and Post-Communist Studies vol. 29, no. 3 (1996), pp. 287-308, here 291.
9 M. Olson, "Why the transition from communism is so difficult?," Eastern Economic Journal vol. 21 no. 4 (1995), pp. 437-461, here 458-9.
10 Jozsef Torgyan, leader of the Smallholders' Party part of the Hungarian coalition government, displayed nepotism; members of his family held high-level positions in Malev airlines, OTP Travel (exclusive travel organizer of Torgyan's Ministry of Agriculture and Rural Development) and Szerencsejarek Rt. (a state-owned company controlling lotteries and gambling in Hungary).
11 Alin Ceobanu, When Socialism Meets Capitalism: Corrupt Practices and Post-Communist Transition. A Comparative Analysis (University of Nebraska, MA thesis, 1998.
12 Nathaniel Leff, "Economic Development through Bureaucratic Corruption," American Behavioral Scientist vol. 8, no. 3 (1964), pp. 8-14.
13 Susan Rose-Ackerman, "Democracy and Grand Corruption," International Social Science Journal vol. 48 (1996), pp. 360-380 and Corruption: A Study in Political Economy (New York: Academic Press, 1978), Michael Johnson, "The Search for Definitions: The Vitality of Politics and the Issue of Corruption", International Social Science Journal vol. 48 (1996), pp. 320-335 and "Corruption and Political Culture in Britain and the United States," Polity vol. 18 (1989), pp. 367-391, Serguey Braguinsky, "Corruption and Schumpeterian Growth in Different Economic Environments", Contemporary Economic Policy vol. 14 (1996), pp. 14-25, Paolo Mauro, "Corruption and Growth", Quarterly Journal of Economics vol. 109 (1995), pp. 681-712, and Andrei Shleifer and Robert Vishny, "corruption", Quarterly Journal of Economics vol. 108 (1993), pp. 559-617.
14 Varese, "The Transition to the Market," p. 170.
15 Rose-Ackerman, Corruption: A Study in Political Economy.
16 Robert Putnam, Making Democracy Work. Civic Traditions in Modern Italy (Princeton: Princeton University Press, 1996) and Katherine Stoner-Weiss, Local Heroes: The Political Economy of Russian Regional Governance (Princeton: Princeton University Press, 1997).
17 Daniel Kaufmann and Paul Siegelbaum, "Privatization and Corruption in Transition Economies", Journal of International Affairs vol. 50 (1996), pp. 419-458.

- Dr., Director al "Centrului pentru Studii Post-Comuniste", St. Francis Xavier University, Canada.




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