Hella Engerer

Institutions and Transition - Possible Policy Implications of the New Institutional Economics

There is a simple conjecture uniting quite diverse strands of thinking in institutional economics: institutions matter. If that conjecture is taken as the core, transaction cost economics, property rights economics, and principal agent theory are part of institutional economics, just as are such approaches as public choice and constitutional economics.

Post-Soviet gas sector restructuring in the CIS: a political economy approach

This paper analyses progress and obstacles to gas sector reform in the most important CIS-countries (Russia, Turkmenistan, Ukraine, Uzbekistan), taking a political economy perspective. This reform process is embedded in a very specific post-Soviet institutional framework stemming from the legacy of socialism. Firstly, we review the evolution of the gas sector for the period 1992-1998. The paper then identifies the post-Soviet specifics of gas sector restructuring, to which any reform strategy and technical assistance have to be adapted. We derive concrete, process-oriented policy conclusions to accelerate the reform process in a market-oriented way. The paper concludes with an evaluation of the perspectives of gas sector restructuring in this geopolitically strategic area of the world.

SECURITY AS A PUBLIC, PRIVATE OR CLUB GOOD: SOME FUNDAMENTAL CONSIDERATIONS

Security is often defined as the absence of threats. However, security has far more aspects, reaching from security of nation states to health security. Baldwin (1997) formulated seven questions to narrow the (broad) concept of security. Along with Baldwin’s questions, this paper analyses ‘security’ in the context of private, public, and club goods and their changing mixture. On the individual level, a shift from public provision to private protection can be observed, whereas the international challenge is to provide ‘security’ as a global public good with a fair and efficient financing for both rich and low‐income countries.

Energy in the Caspian Sea region in the late 1990s: the end of the boom?

Central Asia (Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan) have been expected to become important players in the international oil and gas trade. Recent forecasts (1998) still assume net exports of the Caspian region to increase to 75–118 million tonnes of oil and 72–84 billion cubic metres of gas in 2010. However, the real development of the energy sector in these countries, since they gained national independence in 1991, has been dis-appointing. Oil production so far has hardly recovered from the post-Soviet slump (52 mt in 1998) and oil exports have remained marginal (18 mt, i.e. just one per cent of international trade flows). The regions gas production fell from 146 bn cu m in 1990 to 80 bn cu m in 1998. Net gas exports diminished from 61 bn cu m in 1990 to a mere 5 bn cu m in 1998. This paper analyses the development of the Caspian regions energy sector over the last decade. It also looks at the reasons why the high hopes concerning its potential have so far been disappointed: –The macroeconomic development of all Caspian countries suffered badly after the collapse of the Soviet Union. Furthermore, the incipient recovery after 1996/97 was stifled by the fallout of the financial turmoil in Russia and the Commonwealth of Independent States (CIS) after August 1998. –A number of technical, legal and political obstacles has so far prevented the implementation of large investment projects. –The restructuring of domestic oil and gas companies is further complicated by socio-economic obstacles, e.g. overemployment, untransparent systems of governance and the need to diversify regions dominated by a single industry. In view of the existing structural problems, the paper concludes that a major expansion of the regions energy output and exports is unlikely in the medium term (this paper was submitted to the OPEC Review in January 1999).

The globalisation of Russian energy companies: a way out of the financial crisis?

This paper analyses the emergence of global energy companies in Russia. Within the framework of the history and rules of privatisation, the unfavourable investment climate, and the distortions of the internal Russian market, a dual structure of the Russian energy sector developed. Economic survival at present is strongly linked with internationalisation of business activities for one group of companies, while the second group of companies remains trapped in restructuring of assets and loans and reorganisation of ownership. The members of the first group are on their way to becoming Western style energy companies with strategies similar to those of their international counterparts. Case study evidence is provided on Lukoil, Gazprom and the power industry. The success of Russian global energy companies will have consequences for international competition, particularly in Eastern Europe and Russia.

Institutionen und Transformation — Mögliche Politikimplikationen der Neuen Institutionenökonomik

Vertreter der verschiedenen Forschungszweige innerhalb der Neuen Institutionenokonomik teilen eine zentrale Annahme: Institutions matter. Diese zentrale Annahme wird nicht nur von Vertretern der Transaktionskostenokonomik, der Okonomik der Eigentumsrechte sowie der Prinzipal Agent-Theorie geteilt, sondern auch von Vertretern der okonomischen Theorie der Politik sowie der Konstitutionenokonomik.

Institutions, Financial Systems and Transformation

Governments have a substantial influence on the allocation of resources in setting the rules of the game of financial markets. However, up to now, institutional economics and the theory of financial markets are totally separated research areas. To close this analytical gap, our paper connects these two research areas by investigating the roles of the state as a player and a regulator of financial markets. In our empirical case-studies on the transformation process in Poland, Romania and Russia we are analysing the problems that arise from such an unclear definition of the role of the state.

Summary and Prospects

“Property Rights in Transition” was the motto of this examination of the changes of property order in Central and Eastern Europe. It analyzed property which has marked the difference between the economic systems, but has not itself been examined. The result of this study of “property” and the problem of its perception in Central and Eastern Europe will be summarized in the following. In closing, perspectives for theory and practice will be given.

The Monetary Theory of Private Property

Whereas the contractarian model illuminated particularly the correlation between the emergence of ownership and the new definition of the state’s role, the point of view described herein as “monetary” establishes a connection between ownership and money. Unlike neoclassical theory, which assumes the neutrality of money, monetary analysis attributes money a fundamental function. From the monetary viewpoint, the specific ways of functioning and the initial problems of transformation economics require a particular development strategy. In contrast to neoclassical analysis, private property, but not necessarily privatization, is accorded central importance.

The Course of Transformation

Transformation in Central and Eastern Europe does not only pose a challenge to economists, who must rethink their theories. It also requires them to make every effort to master their empirical basis. An increasing amount of statistical data pertaining to Central and Eastern Europe has been published lately, not only by the relevant national offices of statistics but by international organizations as well. However, the comparison of comparable data still produces differences or even inconsistencies, at times. Therefore statistical data on Central and Eastern Europe should be considered carefully, and only treated as a as a mere trend. As the individual countries are not equally advanced with respect to the change of their statistical reporting, the following comparison can describe only roughly the common and the distinguishing features of Central and Eastern European countries.