Management of capital inflows has unexpectedly become a major challenge in transition economies. These countries were expected to have an insatiable demand for foreign capital, and an excess demand for capital inflows was, therefore, predicted by most observers. Foreign investors are also known...

This paper hypothesizes that one of the most important reasons behind the prevalence of these distinctive Central European characteristics lies in the fact that economic and political institutions are interconnected differently in this region. After briefly summarizing the most important...