CEU eTD Collection Romanian Provinces of Transylvania and Moldavia In partialfulfillment oftherequirements forthedegree ofMasterPublicPolicy Comparative Analysis of Informal Institutions ofInformal Analysis Comparative Supervisor: Professor ValentinaDimitrova-Grajzl Central EuropeanUniversity Department ofPublicPolicy Andreea-Raluca Leru Budapest, Hungary Submitted to 2009 By In the CEU eTD Collection higherlevels in of trust people and publicstate’s institutions. levels is Transylvania conclusion, of bylower while characterized Moldavia trust, registers between relation inverse an emphasized analysis empirical the Contrastingly, rejected. was institutions” public the more likely it is for the region to register lower levels of levels lower register to region the for is it likely more the formerUnion, is Soviet which to “thecloseraregion to according of analysis the hypothesis levels of levels expected to distinguish between higher levels higherdistinguish expected to between of themultiple model was variables. Accordingly, explanatory regression estimated previously proximity former to Union Soviet together with development, whileusing model hadmodel in been estimated which times. contemporaneous institutional the and Moldavia provincesof Romanian Transylvania during development of investigatingpreviously the former identified howproximity affects while to Union Soviet development of post-communist countries. Therefore, the aim of this study is tofill the gap institutions have inshaping behavior,andimplicitly people’s economic currentthe picturein ontheinfluence countries with fails correct a clearand scholars socialist providing However, after empirically testing the econometric model estimated, the main the model estimated, econometric the testing empirically after However, Before proceeding with investigating the premise previously stated, an stated, econometric previously premise investigating the proceedingBefore with The institutional on existingcurrent literature developmentin post-communist trust in the region of Moldavia. trust and distance from Kiev torespondentdistance from distance from Kiev torespondentdistance from Abstract trust hadbeen included as proxy institutionalfor i gender trust in region the andlower Transylvania of , age, and trust than the one estimated. In estimated. one the than as proxy for as geographical proxy rural/urban environment in people and in state’s as CEU eTD Collection their efforts and dedication. their efforts to my MAstudies thesuccessfulcompletion Iattribute of in Budapest. European University during the writing ofmy process MA thesis. within Department of the Sociology and Social Anthropology,for herand support suggestions my completion the of MA thesis. Grajzl for hervaluable critique, which suggestions, andbe support, of to proved great help for Last, but not least, I would like to thank the Department of Publiccandidate D. Ph. Simionca, Anca to Policy goes appreciation and thanks special at addition, In Central Valentina tomy Professor I offersupervisor my deepestgratitude First, Dimitrova- Acknowledgements ii CEU eTD Collection eeec it...... 38 Reference List Conclusions...... 36 Chapter 4: Practical ...... 33 Implications 3.4 ...... 30 Conclusions 3.2 Variable Measurement...... 20 3.1 Data Selection...... 20 Chapter 3: Empirical ...... 19 Analysis and Data 2.3 Communism “Worldwide”...... 14 2.2 Where Is Divergence?...... 12 2.1 General Information...... 11 Chapter 2: Regional ...... 11 Divergence in Romania 1.3 Geography and Economic Development: Distance Matters!...... 9 1.2 History and Economic Development...... 8 1.1 Culture and Economic Development...... 5 Chapter 1: Theoretical ...... 5 Background Introduction...... 1 List of Abbreviations...... v List ...... iv of Figures and Tables iii ...... Table of Contents ii ...... Acknowledgements i Abstract...... 3.2.2 Econometric ...... 21 Model Estimation 3.2.1 Choice of Variables...... 20 2.4 Causal Mechanism...... 18 2.3.2 Communism in former Soviet Union...... 16 2.3.1 Socialist Legacy ...... 15 in Romania 1.1.3 The Linkage between Culture and Economic Development ...... 7 1.1.2 What ...... 6 Is Economic Development? 1.1.1 Definitions of Culture...... 5 Table ofContents iii CEU eTD Collection 3. Correlation Correlation table of all independent variables included in the econometric model 3. Estimates and coefficients of the econometric model estimated 2. Transformation and recoding 1. of 23 historical region variable into output variable Tables GDP per capita 2000 (EUR) by County in 1. Romania Figures estimated List of Figures and Tables and Figures of List iv 30 24 13 CEU eTD Collection SRI POB USSR SLP GDP FDI SMEs Romanian Secret Service of Service of Information Secret Romanian Public Opinion Barometer Union of SocialistSoviet Republics Party Labor Socialist Product Domestic Gross Investment Direct Foreign Enterprises Medium and Small List of Abbreviations List v CEU eTD Collection %ă influence significant Contrastingly, (p. 539). thedevelopment institutional states over of these quality of SECEcountries” the (Dimitrova-Grajzl 2007,p.539), whilelegacy socialist has no institutional current the on effect significant a have Empires Habsburg the and Ottoman if and how is establish objectivethis the to of paper provinces of Transylvania and Therefore, Moldavia. proximityinstitutional Romanian period the deepensthe gap between during the contemporaneous to former regions inits vicinity. physical that Union Hence, Ipositproximity Soviet situated to former physicalSoviet proximity formerto USSR can resultinto a deficientinstitutional development of the Union contributesTransylvania and Moldavia. could institutional interregional diminishthe disparities between provinces Romanian the of to the thisfill study is to implications that andthis advance several gap inthe literature practical enlargementthe current economic mechanism of how socialistinstitutions influence and shape behavior,people’s and implicitly of developmentthe of post-communistproblems for thetransition and period contemporaneous of country.the countries.severe pose later will that characteristics regime’s communist the internalize to society Consequently,for a and, consolidate system to consequently, forlarge socialist the enough time-period the aim of conditions” (p.118).In samemanner,the Beckand Leaven (2005) argue 40yearsthat is a of pre-communist any wereindependent had which effects severity of varyingwith degrees descu and Sum (2005) consider that “throughout Eastern Europe, the communist legacy the communist“throughout Eastern Europe, consider that descu andSum (2005) Previous research on the topic of institutional development established that “the that established development institutional of topic the on research Previous Considering above,the the premisefrom which subsequentisthe study starts that However, the current existing literature fails in providing scholars with an exact Introduction 1 CEU eTD Collection characterized by favorable institutions to development. that the closer a region developmentof regionsthe aswell. Consequently, mainhypothesis the of implies paperthe is to former economic the affecting while vicinity in its situated Soviet regions in the development institutional Union, the less likelyexpecting former determine Unionproximity geographical Soviet to faulty vicious to and a it is for that region mightbe formerMoldavia degrees of by caused Union,physical different Sovietto proximity to be mechanism. Iposited thatinstitutional Therefore, developmentdisparities in Transylvania and causal adifferent emphasis on butwith Moldavia, and historical of Transylvania regions betweenthe institutions informal of analysis have acomparative realized I dependence, andRomania’s that institutional isdevelopment theproduct of historical legacies and path a society of performance influence theeconomic can institutions that Considering Moldavia. between institutional Transylvania Romanian economic divergence of andthe provinces and disparities. institutional interregional diminishing for institutional between gap andMoldavia Transylvania and identify possible solutions practical people andin public institutions.state’s former Soviet Union, the more likely is for that region to develop an increased level of trust in to is region the closer the Consequently, one. estimated the than works mechanism causal the way the of direction theopposite emphasize that results significant statistically registered development. Contrastingly, the influence of formerexist Union institutional to estimated Soviet between to proximity regions’ and the investigation. against regressed However, the results of the empirical analysis did not confirm the relation Considering above,anempirical the pursued analysis within was which isobserved an which there to idea according the advances paper also The present distance from Kievtorespondent distance from 2 distance from Kiev to respondent from distance in order to test the hypotheses of the over trust was trust CEU eTD Collection analysis, while providing general information with analysis,regard tothehistorical information providing while general through with process in the regions of division historical the of use the justifying in Romania, regions of division institutional development. in of terms development economic and asgeography aswell development, economic and history development, economic and culture between link the explain that models theoretical and debates existing with and culture of definitions with different reader the accommodate iscome. theoretical to chapter empiricalthis forthe analysis to aim background The of countries. four chapters. into ispaper structured present the above, the Considering post-communist several in development institutional on emphasis with realized be to analysis series a time or variables, institutional cases, of number larger a on be performed additional to empiricalI encourage in post-communist studies Consequently, other countries. regions casesof the inferences indirect towards or directno with Moldavia Transylvania and generalized.be cannot analysis of the results the estimated, model econometric the of biased estimates The results of this study describe the case of the Romanian provinces of economic divergence in Romania. divergence economic development options into the regional policies designed for downsizing the interregional among citizens and institutions, state’s by suggesting theintroduction of institutional improveand transparency level accountability the of waysto possible paper advances present the Additionally, development. overall country’s the affect might that society Romanian and beliefs, implyingthe existence issues of within andthe transparency accountability behavior institutions overpeople’s socialistformer influence the of field to the with regard Chapter 2 gives an overview on the historical, administrative anddevelopment administrative historical, the 2gives on overview Chapter an necessary the presenting while literature, in theexisting paper 1places the Chapter Last, but not least, although measures were taken in order to prevent the registration of in existing valuein the literature this bringing added to Furthermore, succeeded study 3 CEU eTD Collection development, but from different perspectives. Moldavia, approach while further encouraging studies to empirical issuethe institutional of Union institutionalover the of development Romanian the of provinces Transylvania and theanalysisregistered. empirical data tothe regard with implications includes practical Chapter 4also paper. present the hypotheses of totest the order aswell measurement, variable of data as theinterpretation of empirical the analysis pursuedin selection and discussesresearch. methodusedfordata the hypotheses present the It of interregional could betweenthetwoRomanian existence determine the of disparities regions. Romania causalmechanisms that informer ondifferent Union, debating Soviet while and in governance ofthe communist as thecharacteristics aswell Moldavia, Transylvania and of regions Romanian the between disparities economic interregional theobserved discuss this chapter of subsections formed. Moreover, were historical regions Romanian which the Conclusions round up the discussion on the influence of proximity to former Conclusions ofproximity roundto on upthe influence discussion the Soviet Chapter 4 restates the premise from which the present study started, as well as the 4 CEU eTD Collection 1 linkinganthropologists a“complex culture includes to whole, which belief, art, knowledge, anthropological perspective is not very different from other authors’ views of viewsof culture authors’ from other very notdifferent is anthropological perspective function so differently in environments”different (p. 2).Last, butnotleast, the componentof broadly institutionsdefined thatexplains why samethe formalinstitutions often 51). (p.Inaddition,another" defines asbeing Tabellini theconceptof culture (2006) “a peopleof category members from distinguishesprogramming the one of mind,which the of “the factor cultural whocomes collective asbeing from (1984), Hofstede the describes culture of useddefinition a widely sense, In this of culture. define concept the to attempted regions country. the same or of countries gap between development formulation the for useful patterns important and reveal can it as investigating is worth implementation development of different meetscomplex the history,eye, culture, than economic and geography, linkbetween the policy scenariosinfluence with the a considerable alsoexert geography can and ashistory performance, country’s economic goalover of bridging economic themake a differencedevelopment. whichhistory,have andgeography conclusion common reached the to can according culture (Landes sociology, of economics, in field the specialists several country, one within regions across As 1998).day-to-day Still, activitiesthis is not the andonly processesfactor that arecan influencemore a Forfurther informationon definitions of culture please see Damen(1987), and Banks and McGee (1989). For decades,specialists in have history,and sociology, economics, geography even and countries across development in differences the examining to comes it When Chapter 1: Theoretical Background 1:Theoretical Chapter 1.1 Culture and Economic Development 1.1.1 Definitions ofCulture Definitions 1.1.1 5 1 , CEU eTD Collection development reached to mean development following: the economic of concept the fieldeconomics, of in the of developments decades after short, In elements. economic among other growth economic encompasses which concept, extensive economic development” for a necessary or becondition can “aprecondition to be considered growth economic (Grabowskieconomics claim interpretation (Grabowski wrong such that an isWhileet al. 2007). et al.has been often used as having the2007, meaning of economic development, although specialists in p. 6),develop used and, consequently,of concept sincethen,the to economic growth 1930. Since economic development is will in frequently that be thesis. used development the a more economic of concept the of meaning the on light shed is to development economic paper operates. presentthe behavior in the process of resolution. Accordingly, this definition is also the one with which institutions, as such norms,informally and principles, values, human beliefsthat rules, guide informal is of factor which equivalent the cultural the to understanding according culture, of society” (Taylor 1924, p. 1). morals, capabilitieslaw, custom, and byman other any and habitsacquired as amemberof As Grabowski et al. (2007) note, the concept of economic development started to be to started development economic of concept the note, (2007) al. et Grabowski As culturebetween and the linkage regarding in step necessary debate the The next emphasize ageneral accepted definitions In conclusion, above-mentioned all the 1.1.2 WhatIsEconomicDevelopment? 6 CEU eTD Collection admitting that cultural factors are indispensable for the achievement of economic of achievement for the indispensable are factors cultural that admitting the masses of people from subsistence” (p. 13). lifts progress material and flourishes experimentation commercial coincide, logic economic regulations fitbetter in certain environments andwhich not. He claims that “when culture and (Tabellini2). 2005, p. population” and traits cultural educated an “requires specific economic development because especially development, in institutional role important very a plays it as development, economic which facilitate Lipsetcan education theory to 1959, according advancedthe whohavelearned nevertrustanythingfamily” to (Hezel2009,pN/A).Then, outsidetheir in people by self-interest narrow of pursuit excessive the to Italy southern in growth economic theslow p.5). Banfield “attributes Italy 2009, Northern between and Southern (Tabellini differences developmental the for explanation cultural a propose to attempted Banfield when development place. totake for development asuccessful being economic aprerequisite considered institutional development, economic and modernization institutional between relationship acausal exists that there paper concludes present the of facts, these In thelight institutional development. issueof the also encompassing firstconcept the economic growth, 2 According to Adelman (2000) in Richard, Grabowski, Shamistha, Self, & Michael P., Shields. 2007. Sharpe, p.6. Economic Development.A Regional, Institutional,and Historical Approach To conclude, according to the sources, economic development is distinct from is distinct development economic sources, the to conclude,according To In 2000, Grondona designed a “cultural typology In 2000,Grondona designeda“cultural (p.44), of typology development” economic concluded iscan elementsthatIn the culture oneof which that1998, Boettke decide The study of linkthe between culture and economicstarted development in 1958, human conditions upgrading; (4)political,and institutional social, modernization; (5) widespread inimprovement in (1) self-sustaining growth; (2) structural changes in patterns of production; (3) technological 1.1.3 TheLinkage betweenCulture Development andEconomic 2 . 7 . London, England: M.E. England: London, . CEU eTD Collection on what economies will succeed and which will fail” (Hezel 2009, p.N/A). change in all domains of “socialactivity.short, In attitudes and valueshave decisivethe say form favorinnovation of can acountry’sby more development itmaking economic open to high such level inpeople, levelof as ina alowof trust education perceived corruption the or institutions economic be areconsidered whereas informal resistant to features development, to As such (2000)notes, achieving(Grondona 2000).Grondona development economic cultural level of trust in people or anarrow self-interest can slow down or even prevent acountry from low asa such traits Cultural development. andeconomic features cultural certain between country. a of performance canhave economic the over features certain cultural that effect positive aswell forthe development, culture of importance the Tabellini acknowledges (2006) has underdevelopment” chosen or (Grondonadevelopment 2000, p.47).but Last,least, not underdevelopment are not imposed from outside on a society; rather itis the society itself that development. His motivation for such a statement stems from the belief that “development or in history economics, and sociology manifestinterest agreat in linkbetween history the and 2009, p.20). was instrumental in facilitating the rise industrial of capitalism in Western (Nunn Europe” Reformation Protestant “the which to according thought the launched he when Weber Max by between history andis economic development notnew, in topic asthe wasfirst debated 1930 causallink The development. influence overeconomic an important exert also can as history In conclusion, according to the above-mentioned sources, there exists a causal link In pastthe years, this issuehas met aserious “surge” (Nunn 2009, p. 25),as specialists of anation, performance economic the thatcaninfluence only factor is notthe Culture 1.2 History and Economic Development 8 CEU eTD Collection economic development as well. development economic far, leave imprint aserious can been on so geography have developmentdiscussed that and history,in economic linksbetween culture, developmenta society. causal Besidethe economic of path the positively or negatively caninfluence parameters whose variables, several of existence the suggests composition diverse its Consequently, elements. cultural components such as production, technology, human growth, capital, political, and social and non-economic and economic important encompassing eye, the meets than complex more making its society itsmakingless society more or open to innovation and changein general. on economic developmentby influencing institutional the country,of the development N/A). (p. multiple equilibria” between channelsbeing influence culture, “institutions, movementsof knowledge and technology, used often most the development, economic current on impact long-lasting a have events 3). recently, 2006, p. More amonga longlist(2009) of Nunn historical scholars claims that (Tabellini development” economic current with and patterns historical with both correlated are values, asindividual or norms either associal interpreted can be that of culture, indicators makingor favorable change nations resistant to 2006). In thissense,“specific (Tabellini shapes informal institutions, which in influenceturn the economic development of countries, previous-mentioned relationship place takes andaccordingwhich to historical the component performance” (p.26). Additionally,he the causal presents mechanism whichthrough the economic current of determinant important isan history of legacy “cultural the that iseconomic this A claims representative Tabellini of who figure development. group (2006), 1.3 Geography and Economic Development: Distance Matters! As it has been demonstrated so far, the concept of economic development is much is development economic of concept the far, so demonstrated been has it As To conclude, according to the above-mentioned sources, history haveanimpact history does above-mentioned sources, the conclude, to To according 9 CEU eTD Collection economic development. economic to andconsequently economicgrowth, to chances country’s decrease a or increase either Location can each other. with haveininteracting actors economic chances the deeply affect well. as todevelop worsentheiror backward to regions determines situation more regions developed to proximity or from distance Hence, country. same the of regions the between or countries across influence theperformance economic findings, cangreatly spillovers (2002) knowledge analyze thelink between knowledge spillovers According economic and growth. Caniëls to to inhis attempt issue this approaches (2002) place, Caniëls takes economic performance mechanism which between distance andacountry’s relationship the through geographical explainperformance of Although not transition countries. Beck andLaeven do causal the economic variations inthe can Western Europe, determine great proximity to or distance view, theinitial conditions ofa country beginningat the of transition the suchas period, Transition Countries” as well,but from a different perspective than their predecessors. In their business. do to them for is chance the smaller the partners, istrade between distance geographical 138). Thatis,thebigger the (p. decrease in1% increasenoting international representsa-1.1% that in trade distance physical geographical to of (2001) notes, concept, spatial the refers the Ghemawat component distance As trade. affect can variables distance way the to with regard markets in foreign interested In conclusion, according to the previously mentioned authors, geographic distance can In 2005, Beckand Laeven approached theissue of“Institution Building in andGrowth In 2001, Ghemawat developed a tool kit meant to raise the awareness of companies 10 CEU eTD Collection Romania after the end of the First World War. andWalachia in provinces two 1859, these with united Transylvania underthe name of Great Web Moldavia union upper class” the Online Britannica (Encyclopedia site). Following of Saxon German-speaking Lutheran the by cities in the and nobility Hungarian Catholic Roman principalities Transylvania, existed there “in inhabited the countryside by Calvinistthe and of borders these the Web site). Outside Online Britannica (Encyclopedia economic practices Ottomanthe periodEmpire, Romania that during being arural basedsociety on agrarian disparities historical between the theybelong. provinces economic existing the inunderstanding ishelpful division their so and in Romania, regions and form historical they are part the Moreover, inRomania. disparities economic interregional the better paper becauseitreflects present forof thepurposes the important isdivision This site). Web Central (Romania Bucharest and Center, Northwest, West, Southwest, South, Romania is divided into eight Andleast, butnot (Southeast). accordinglast, and standards, toregional European Dobrogea NUTS-II developmentWalachia (South) (East), Moldavia region), Banat the andencompassing center (Northeast, regions, such as Northeast,Romania comprises of four different cultural and historical provinces - Transylvania Southeast, counties and the Bucharestmunicipality. In addition, according to historical patterns, territory into provinces and regions. The administrative division of the country consists of 41 From the 14 Romanian the divide criteria historical and developmental, administrative, Several Chapter 2: Regional Divergence in Romania th to the19 to 2.1 General Information th century, Moldavia influence century,and Walachia Moldavia were underthe of 11 CEU eTD Collection December 1989, foreign investors were expected to revitalize the Romanian economy. revitalize Romanian the to wereexpected investors foreign December 1989, (p35). border” andSouth on Northeast the concentrated areas under-developed most the generally and more advanced, EUmarkets), the disparities have developed asdeep not inwitnessed opinion, “inter-regional In Romania. European Commission’s […] along a West-East developmentaxis, with the since Western the startregions of sameprocess the haveundergone countries notes others that report Additionally, the of the(closer transition to period, but their regional developmental gap is economic gap between regions, suchas, between regions, gap economic identifiesfactors Commission’s fiveimportant report widen can that existing downsize or the Bucharest-Ilfov city capital the of region between the existing discrepancies developmental great Romania, and the in of increasedsincehas transition the theperiod gap greatly regional start developmental rest of the the notes, Asreport same the differences. economic internal by increasing Romaniancharacterized territory.European Commission (2009), developmental regions implicitly,and historical regions are all In relation to this, the European 3 of informal institutions in Romanianthe provinces of Transylvania and Moldavia. historical and cultural division country pursue a the of incomparativeto the attempt analysis European Commission. 2009. Commission Pauna (2005) notes that after the fall of the communist regime in Romania in in Romania regime communist fall after the the of that notes Pauna (2005) obsolete equipment the lossofinternal andexternal competitiveness ofdomesticenterprises asaresultof low-tech and SMEs, the education level oftheoccupied population,and theavailabilityskilled ofahighly workforce, the different localization and volume ofFDI in thedevelopment regions, thelimited access to funding of According ERAWATCHthe to for Romania by Inventory elaborated Report the To conclude, considering the objective of the research, the present paper will usethe paper will present theresearch, of conclude, objective the To considering . Research Inventory for the ERAWATCH Web site, p. 35. 3 . 2.2 Where IsDivergence? ERAWATCH Inventory ReportRomania for elaboratedby theEuropean 12 CEU eTD Collection range are situated between the lowest value of GDP per capita and its mean value. On andits mean the capita value. value per GDP lowest of between the range aresituated performance existing between 21 Romanian counties after the first positive increase in thefirstpositive GDP. after counties between 21 Romanian existing performance ineconomic emphasizes The discrepancies the of following graph agrowth -1.2. registered rate states that in 2000in Romania the real GDP growth rate was 2.4, while in 1999 real GDP capita (Romania Central Web site).forwhen, thefirst time after1989,Romania apositive registered of growth real the GDP per In this sense, the Eurostat database on real GDP growth country followcountry these in regions a descending order region of the Center by the followed country. city, capital the of region in the identified been has inflows capital South, Northwest, West, concentration by As (2005),agreater of noted Pauna FDI(Pauna 2005). across country the Northeast, Southeast, by is of demonstrated distribution asit unequal the transition the at the beginning of period, and development Southwestbusiness for potential same the display not did regions Romanian the However, of the 4 For more information on the exact amounts of capital inflows attracted by each of the Romanian pages 35-47. Romania on Attracting Foreign DirectInvestments. 2005. Pauna. Beatrice Carmen see please regions, development A first analysis table the of reveals thatall of Moldavian the counties included inthe Economic performance discrepancies are easier to observe starting with the year 2000, the with starting observe to areeasier discrepancies performance Economic Source Figure1: GDP per capita 2000 (EUR) by County in Romania : Data from Romania Central Web site, Section 3.3.9: Regional Disparities. 13 Journal for Economic Forecasting, 2005, vol. 2, issue 1, 4 . The Influence of Regional Disparities of CEU eTD Collection socialism might have reinforced the differences between regions. Romanian the between differences have the reinforced might socialism between 1945 and 1989andformer Union, Soviet whilestartingfrom premisethe that of get sectionthis is audience the to acquainted with communistthe politics inRomania as a starting point establishmentthe of communistthe regime inboth situations, the purpose having Therefore, countries. intransition interregional disparities of existence the determine can mechanism that the causal Union, aswell as former Soviet in governance communist site). Web Central (Romania occur to likely and lower levels of economic developmentfor less-developedthe counties, higher levelsof regions development wouldeconomic require for wealthier counties, the of performance economic of a alignment the phenomenon is that sense in this used argument main that is less The overcome. to difficult are development ineconomic such disparities that emphasizes site slightly increased andseveral Transylvanian movedcountries upthe rank. sincenotes, 2000the developmental hasgap between counties widenedas percapita GDP Web site Central as Romania Additionally, performance. economic of Transylvanian the dynamics the below was 2000 before economy Moldavian the of dynamics the that concludes paper present the Web site), sizes” (Eurostat of different between economies time and measure a is used capita per GDP that fact the consideration to into Taking “allow GDP. the of value highest the to comparisons very close and value mean above the aresituated counties ofall Transylvanian almost contrary, the dynamics of economic development both over This section provides a brief description socialistthe of legacy in Romania and Web Romania Central the mentioned, previously facts the consideration into Taking 2.3 Communism “Worldwide” 14 CEU eTD Collection Romanian population (Rusu 2007). Instead, private and secret individual privateandInstead, Romanian existedwith actions secret (Rusu 2007). population for the entire interest issues of andraise voice concerns to right a given with collectivity a about boast not communist apparatus, could Romania of state the repressive power the to Due nonexistent. was in Romania regime communist the during society civil 365, number newthe political regime in country the (Keil and Andreescu 1999,p.490). comewith dissatisfaction andbeing express topeople’s liberal into more policies” supported have may that factions “party for possibilities all shattering life spheres, private and public all in interfered The communistparty p. 485). 1999, Andreescu integrity and (Keil party’s to the threat apotential way in any be to considered was who system the from everyone eliminating andregulations, rules party’s from communist the deviations never tolerated governance education, the and media” (Keil Andreescu p.485).Additionally, and 1999, communist the arts, the including life, cultural of facets all in orthodoxy ideological of level high “a people Romanian the on imposed regime political new The site). Web Romania in (Communism monetary reforms and agrarian on and property of nationalization on focused economy, which (Morrison 2004, p.170). regime” communist exclusive in arigidly autonomy its maintain to trying while expansion resisting modernization, world the capitalist system, Romania undertook industrialization, and view.“While fromof point both andpolitical Europe, of an states economic Eastern the after among itself Romania notesthat numbered poorest fallthe the (2004) communism the of country before andprosperous communism,Morrison beingarich Although failure” (p. 169). communist regime in Romania, depictingin it both instances as “East Europe’s most glaring According to Rusu’s essay (2007) published on the Cultural Observer Web site, Cultural Observer the on Rusu’s(2007) published According essay to Startinga planned,in Romanianeconomy 1945,the was transformed to centralized the of fall the after and before system Romanian the describes briefly (2004) Morrison 2.3.1 Socialist Legacy in Romania SocialistLegacy 2.3.1 15 CEU eTD Collection Union’s society, Soviet former governed new that doctrine becamethe TheWorld-View” “Communistp. 2). and 1976, (Johnson anda newpatriotism” had Party), heads Communist the new(whoever sovereign as a goal formin new “a ina thealthough also Sovietknown religion Union, as a (Marxism), different the “establishmentnationalism (one people)” (p. 2). He believes that these principles continued togovern society and ruler), (one autocracy church), (one orthodoxy as known concepts of “trilogy of a existence Socialism in that country and this havingnegative for repercussions communistandthe Romanian society. post-communist society, of type growth” economic to “less favorable the to closer was Romania communist that paper argues present the Considering this, development. economic incompatible with very resistant societies, being unstable and communistknown as Romaniawas,are as 2000,p.52), (Grondona that ofanirascible,is authority unpredictableto God” similar[…] obstacles and destruction“ 2000,p.48).Moreover,(Grondona thosesocieties in “thewhich up throwing resistance, toward effort energiesconstructive awayfrom rebellion diverts and innovators, without leaves asociety flourish,“submission as to asociety encourage Still, placenot rebellion submission andrebellion (Grondona2000,p.48). do take will or submission and actions in their creative and motivated less be will they believe, to or do,lifeboth of publicif peopleto whatthink spheres. andprivate to aretold However, what andcontrol apparatusoverregulation towardspeople, with an behalf state the from mistrust of martyrdom”acceptance of (Rusu2007). a collective duality were blocking all toorganize, possibilities society’s of which ledeventually tothe communist(Rusu short, fright, andsad image in 2007). In “suspicion, Romania wasa which manifestations incapable butorganized public of country, across the a diffusedistribution In Johnson’s (1976) opinion, Russian the developedEmpire inone yearsthousand of byin increased politics werecharacterized conclude, it To communist seems that 2.3.2 Communism in former SovietUnion informer Communism 2.3.2 16 CEU eTD Collection 5 Union portrays a “less favorable to economic development” type of society as well. development, thepresentpaper endorses which viewaccording the former to the Soviet economic less favorable to asbeing is regarded Romania communist that consideration cultural life in Romanian and societies.Soviet Inlightif factsthese and taking into and education, economics, politics, governed principles communist implicitly and, socialist communistbetween governed Romania regimesimilarand that 1989.Considering this, 1945 Union’s working class (SLP1978,p.6). Soviet to wereawarded communication” of and organization rights “elementary democratic no Nevertheless, 6). p. 1978, (SLP society Soviet the characterized Party” by aCommunist controlled apparatus andbureaucracy,“under asuffocating living stratification, people state anniversary60th RussianRevolution the of (SLP1978,p.1).of 1917” Inits view, economic (SLP) also sharesHahn’s inopinions several “inpublishedarticles the America with highly capitalized LaborParty 1998,p.N/A).of society” The Socialist (Hahn inincapable andresearch so obsessedwith competing secrecy a system of […] development agreat placedemphasissociety, Soviet on“theconstraints on heputs highly bureaucratized (1976), followingthe principles were claimed by newly the formed Soviet Union: Johnson Accordingultimately to 1976,p.49). world”(Johnson the Communism all over William H. E. Johnson. 1976. Series, 1972-1978. Experiences. In conclusion, communism in former Soviet Union notIn from very informerwas communism Union Soviet conclusion, differentthe Hahn Soviet(1998) describes inthe society manner. asimilar Whilehighlighting the restraints on civil liberties,and reduction of trade-union authority Machiavellian tactics and“power ininternational politics” relations, long-time retentionof severe the existence of state andcollective public property, selective system in education, the use of Abolition ofprivate property, establishment ofdictatorship, creation of ahighly industrialized nation, Addresses from the Horace Mann Lecture Series and the Paul Masoner International Lecture International Masoner Paul the and Series Lecture Mann Horace the from Addresses The Development ofSoviet Society: Perspectives from Educational 17 5 . Weekly People on on the CEU eTD Collection institutional causeddisparities by Ottoman the Habsburgand rule. and very rigid systemalmost everywhere 45 years of withincommunist in governance between communistand present Romania that paper endorses 1989,the 1945 the governance borders ofimposed the country, on Romanian while society states these (p. 539). reinforcing a uniform,of development institutional the over influence thestrict,significant no has legacy socialist the while Rule” (p.555), Habsburg or of Ottoman andduration “the presence on depend same country of the between regions or countries among institutional differences concludes that(2007) Dimitrova-Grajzl least, not but Last, country. the of development economic the for problems severe pose later will that characteristics regime’s communist the internalize to society for a and,consolidate system to consequently, forlarge socialist the enough time-period years isa that 40 andLeaven (2005) argue communist Similarly, Beck conditions” (p. 118). whichof independent any had pre- were varying effects severity degrees of legacy with Romania, B Considering the above institutional development theories and the characteristics of the of characteristics the and theories development institutional above the Considering in disparities economic and institutional explain interregional In theattempt to ă descu and Sum (2005) consider that “throughout Eastern Europe, the communist Eastern “throughout consider that Sum (2005) descu and 2.4 Causal Mechanism 2.4 Causal 18 CEU eTD Collection 6 through knowledge,through technological 2007) and(Kološta institutional spillovers 2005) and tomore developed regions can determine higherlevels of economic development are theoretical modelstraditions,many decisions” maintained Concurrently, influence over there (p. 118). political according to which and norms its own cultural with foreign power i.e. Union, Soviet the Bloc states, Eastern proximity to Western Europe (Beck and Leaven needed. if solutions for recovery, possible practical andMoldavia between and identify Transylvania former wideningthe institutional gap to Union how proximity contributed the of to Soviet Transylvania and Moldavia. Consequently, objective the of this is research toestablish ifand institutional between transition of gap Romanian the theprovinces deepened period former the Union during proximity Soviet Hence, physical economicas well.to development within in the regions vicinity” situated its (hypothesis affecting1), this eventually their “geographical proximity formerto USSRcan intoa result deficientinstitutional development Transylvania and Moldavia. to formerwhich influence, varyingcommunist definedas suggested, according to degreesof proximity USSR, Rohner 2004).Considering these, one more theoretical for model institutional is development may affect institutional development in theB However, andpolicies. Ottoman Romanian interregionalthe by and disparities causeddevelopment presence the Hapsburg duration of provinces of Jan-Erik Lane and Dominic Rohner (2004) discuss institutional spillover as “spillovers among institutions” (p. 1). To conclude, the premise from which the subsequent analysis starts isthat starts analysis subsequent the which from premise the conclude, To So far,So it has reinforcedgovernancehascommunist inRomania been established that Chapter 3:Empirical Analysis andData ă descu and Sum (2005) consider that “inRomania and consider that andSum (2005) descu 19 6 (Lane and CEU eTD Collection representativeness of Romanian of population.the representativeness variable Informationof use will I analyzedby (2000), factors first the Grondona cultural andchapter twenty contrasting the ensured method selection the and tri-stadial and probabilistic is stratified, size sample The as well as inequality and poverty. institutions, and culture politics ascorruption, and values, coverssuch variables This database valuesformer of Union. to measurebetween different proximity Soviet anddistinguish to and Moldavia. betweenTransylvania interregional disparities formerinvestigate empirically USSR and to order between to relationshipthe proximity lowerlevels of (hypothesistrust” 3). by be likely it characterized region is for more that to Union, the is former Soviet to region Considering Grondona’s (hypothesis 2). development” to favorable institutions by be characterized region to (2000) contrasting culturalAccordingly, “the closerfactors, the region is to former Soviet Union, the lessI likelyalso it is for that positpotentially that having great influences “the on the economic developmentcloserthis of bothregions, regions.in these development theinstitutional affected kilometers of in terms USSR Considering the objective of the research and guided by the definition of culture from bewill “historical that used I usethe2003POB,whichincludesregion” variable the in (POB) Barometer Public national Opinion from Romanian the The usesdata paper Consideringin the these, following section I will investigate the way proximity to trust in most of the people, in government,trust inmostof church,army, Secret theRomania Service trust . , and , trust in theRomanianeducationalsystem 3.2 Variable Measurement 3.2.1 Choice ofVariables 3.2.1 3.1 Data Selection 20 as proxies for asproxies dependent the CEU eTD Collection 8, as it follows: proximity former to Union. Soviet (output variable), (output is necessary to transform and recode the variable the recode and transform to is necessary it Therefore, between Kievandtherespondent. in inkilometers of understood distance terms not in any variable toregister of biasedorder coefficients. the estimates an 190) and insignificantitisnotvariable” important (Hillp. all apparently toomit2008, et. […]deletionof the to maybevery sensitive “estimates for this isthat reason variables. The recoding being described laterrecoding in being described paper. the region Romanianthe of provinces Moldavia,Transylvania and Iwill use variablethe in institutions of realize a analysis iscomparative to analysis the aim of the happen. Because economicadministrative, resolutions to social, educational and anddecisions, might this still from happened, and everything political where countriesthe were decision centers of cities capital the USSR, former the of existence the during implicitly and times, communist during because, Kiev is. Ihaveconsidered respondent and the Kiev between kilometers Soviet Union. This variable will be understood in terms of how big or small the distance in 1 –Moldavia, 2–Muntenia, 3–Oltenia, 4–Dobrogea, 5 -Transylvania, 6–Crisana and as proxy forformer as physical proximity itsproxy to transformation Union, Soviet and In the 2003 BOP database, the variable database, In 2003BOP the Historical region I also include in the analysis in the include also I The independent variable of the present analysis is physical proximity to former distance from Kiev respondent distance from to 3.2.2 Econometric Model Estimation Model Econometric 3.2.2 will be will used asproxy for former proximity to Soviet Union, whichis Maramures, 7–Banat, and 8–Bucharest. gender , age 21 historical region , and historical region rural-urban environmentrural-urban , in order to measurein geographical to , order is assigned values from 1 to into a different variable a different into asexplanatory historical CEU eTD Collection The following “historical therecoding tablevariable: highlights of the into region” output follows: it as Kievregion, each from county to closest the to according regions the andranked variable between thembeing603 equal kilometers. Therefore,to have I assigned values totheoutput Ukraine’s capital city. From Walachia, Braila is the closest county to Kiev, the distance closest county to KievTulcea 533 kilometers. that is revealed the Furthercalculations between beingthem equal to from Dobrogea, being distance the Kiev from Transylvania, county to is closest the Harghita Seemingly, kilometers. situated at a distance betweenKiev them numbering from 349 of atotal Moldavia,closest distance county the to of 511 kilometers county from each region and Kiev Map 24Web (Navteq site). is Botosani Therefore, the from Romanian closest the between distance a very principle: simple to according variable newthe to assigned been have values new Therefore, from. comes respondent the which from region the to Kiev from distance the emphasize that be assigned to values new needs variable output country. variable of output beingthecategories the these Walachia, andTransylvania, Moldavia, Dobrogea, formed, werefour newregions of Consequently, categories suggest. regions astheirnames samehistorical the theyrepresent will there as benoregrouping Moldavia and Dobrogea, Maramures, and the belong historical region Transylvania of In to Transylvania. caseof the into the four historical regions of the country, which make the object of the study. historical regions of the country. Therefore, it is necessary to regroup the development regions the andnot Romania in regions development eight the represent regions these However, While former proximity to Union Sovietis in understood terms of the kilometers, Muntenia, Oltenia, and Bucharest belong to the historical region Walachia.of Crisana, distance from Kiev to respondent from distance 1 –Moldavia, 2–Dobrogea, 3–Walachia, 4 –Transylvania. , also representing the fourhistorical of regions the 22 CEU eTD Collection the regression model model regression the I estimate. the the wherey variableis thedependent ( analysis has the following form: following the has analysis model. of regression influencethefinalestimates the negatively analysis as these can not least, Ihave manually declared all missing values of variablesthe willbethat used in the but mistaking. minimizein thepossibility from of Last, been to database the order removed have analysis in the be used not will that variables Moreover, labels. and values initial its with ( “trust” Therefore, variables. same different into or recoded distance from Kiev to distance from respondent age of respondent, respondent, of Based on the above-mentioned observations, the multiple regression model of model the of multiple regression the observations, above-mentioned the Based on and be transformed to need not do variables dependent analysis, subsequent the For Table 1:Transformation and recoding of historical region variable into output variable 7 -Banat Maramures and 6 -Crisana 5 -Transylvania 8 -Bucharest 3 -Oltenia 2 -Muntenia 4 -Dobrogea 1 -Moldova Old Values Old ȕ 5 represents the represents Input Variable y i = ȕ 1 + trust ȕ , New Values 2 ȕ x 3 ), i represents the number of respondents, i2 4.00 3.00 2.00 1.00 represents the represents urban/rural environmenturban/rural + ȕ 3 23 x i3 + ȕ 4 x i4 + gender “very small distance” ȕ “very big distance” 5 “small distance” Output variable x “big distance” “big pg i5 + i5 New Labels of the respondent, respondent, the of ) will be kept in ) will be database the kept e i , and e i is the error term of ȕ ȕ 4 2 indicates indicates CEU eTD Collection x x between these variables can be rewritten in the form of a fitted line also, as it follows: respondent between relation the represent of table the row first inthe Coefficients of regression. the coefficients Kievtorespondent distance from results of the statistical investigation only for the relation between the variable gender, Trust in Government in Trust Dependent Variables Dependent Trust in education Trust in Trust in church Trust in people in Trust Trust in army Kiev torespondent b gender b Trust in SRI in Trust 2 1 =1.730describes thelevel of = -0.036 describes a decrease in a describes decrease = -0.036 The variable and , and age age , and , as well as the ǔ trust inpeople. Table 2: Estimates and coefficients of the econometric model estimated i = 1.730+(-0.036)x rural-urban environment trust increases with 1 unit, and all others held constant; held others all and 1unit, with increases -0.062 -0.071 -0.039 -0.061 -0.107 -0.036 B has been against regressed 3.3 Data Interpretation rural/urban environment Based on the estimated econometric model, relation the econometric estimated Basedonthe . Still, the discussion of results will incorporate all trust inpeople i2 -2.305 -4.240 -1.937 -2.642 -4.990 -3.376 +0.044x trust inpeople t Distance from Kiev torespondent 24 are equal zero; to are equal Independent Variable Independent i3 +(-0.001)x when 0.058 0.006 0.010 0.42 0.11 0.25 R with when 0.036 units, 2 distance fromKievtorespondent . The following table integrates the tableintegrates following . The distance fromKievtorespondent i4 + (-0.034)x 2086 1602 1948 2011 1764 1960 Obs. distance Kiev to distance from i5 distance from trust 0.000 0.021 0.053 0.008 0.001 0.000 Sig. and , , CEU eTD Collection x x x relation between these variables can be rewritten in the form of a fitted line also, asit follows: from Kievtorespondent from persons tend to trust less in people than the young ones, as well as people from the rural areas. men Additionally,moreinpeople than older do. women database anditstrust estimate, individuals to trust less in people. Moreover, according to the valuesless accordingin tothe of trust individuals to Moreover, people. determines Kiev respondent and between largerconclude,it distance thata To seems x x x x x increases with 1 unit and all other coefficients areheld constant; coefficients 1unitand all other with increases distance from Kiev torespondent distance from are zero; y, effect on the level of urban environment increases with 1 unit and all others are held are and1 unit constant; with all others increases with 1 unit, while all other coefficients are held constant; b b b R p =0.001implies that b b b 3 2 1 5 4 3 2 =0.277implies that = 2.686 represents the estimated value of estimated the represents =2.686 =-0.034implies that = -0.001 implies that the level of level the that implies =-0.001 =0.044implies that trust inpeople = 0.010 implies that the estimated econometric model explains 1% of the variation of variation the of 1% explains model econometric estimated the that implies =0.010 = -0.071 describes a decrease in the level of inthe adecrease describes = -0.071 Coefficients in the second row of the table represent the relation between relation the represent table in of the row second the Coefficients ǔ , around its mean. i = 2.686+(-0.071)x increases with 1 unit, all others held constant; and trust inpeople trust inpeople distance from Kiev to respondent distance from trust inpeople trust inchurch. trust inchurch increases with 1 unit, all others held constant; ; i2 +0.277x trust inpeople will increase will with if 0.044 units decreases with 0.034 units if variable the Based on the estimated econometric model, the econometric on estimated the Based 25 will increase will with when 0.277 units trust in church in trust i3 +0.005x trust in church in trust decreases with decreases with 0.001 units if i4 when all the other coefficients + 0.166x has a statistically significant has astatistically with 0.071 units, when with 0.071 units, gender i5 gender variable in the variable increase distance gender rural- age CEU eTD Collection x x x x relation between these variables can be rewritten in the form of a fitted line also, asit follows: Kiev torespondent exhibit ahigher level of trust in church than people from urban areas do. menthan youngand Last, personsdo. butnotleast, individuals from rural the environment level of trustthe is lower the inrespondent, and Kiev church.between is distance the bigger the that imply model Furthermore, the of variables independent women and dependent the between and relations above the conclude, older To people tend to trust more in church x x x x with 1 unit and all others are held constant; with 1 unit and all other coefficients are held constant; Kiev torespondent coefficients arezero; coefficients y, effect on the level of t environment unit and all others are held constant; held are unitand all others b b b b p =0.000implies that R b b 4 3 2 1 5 4 2 =0.004implies that = -0.021 implies =-0.021 that = 1.702 represents the estimated value of value of the estimated the represents =1.702 = 0.166 implies =0.166 that = 0.005 implies that =0.005 trust in church in trust = 0.058 implies that the estimated econometric model explains 5.8% of the variation of variation the of 5.8% explains model econometric estimated the implies that =0.058 = -0.061 describes a decrease in adecrease describes = -0.061 Coefficients in the third row of the table represent the relation between relation the of represent table the row inthe third Coefficients increases with 1 unit, all others held constant; ǔ and i = 1.702+(-0.061)x , around its mean. its around , increases with 1 unit ,all others held constant; trust ingovernment. rust trust ingovernment trust in church trust ingovernment distance from Kiev to respondent distance from in church trust inchurch ; trust ingovernment i2 +(-0.021)x increases with increases with if 0.005 units Based on the estimated econometric model, the econometric on estimated the Based 26 decreases with decreases if with 0.021 units increases with if0.166 units increases when with 0.004 units i3 trust in government trust in +0.004x with 0.061units, if i4 has a statistically significant has astatistically + 0.133x age when all the other the all when i5 increases with 1 with increases gender distance from distance from distance age rural-urban increases increases CEU eTD Collection between these variables can be rewritten in the form of a fitted line also, as it follows: Kiev torespondent of Inhabitants rural areas moredisplay trustin government than people from urban areas do. men while moredo, anolder person trusts in government than ayoungdoes person. lesslessAccordingly,people in than ingovernment government. women will the trust trust increases, Kiev torespondent from if that imply distance above estimates the In conclusion, x x x x x x x x y, the level of t environment R p = 0.000 impliesp = 0.000 b increases with 1 unit, all others held constant; b constant; held are unitand all others b with 1 unit and all other coefficients are held constant; b respondent b 5 5 4 3 2 2 = 0.133 implies that =0.133 = 0.054 implies =0.054 that =0.005implies that = -0.117 implies that implies =-0.117 trust ingovernment trust = 0.011 implies that the estimated econometric model explains 1.1% of the variation of variation the of 1.1% explains model econometric estimated the implies that =0.011 = -0.107 describes in = -0.107 a decrease independent variables variables are zero; independent b Coefficients in the fourth row of the table represent the relation between relation the represent table of the row fourth in the Coefficients 1 = 2.907 represents the estimated value of increases with 1 unit, all others held constant;, increases with 1 unit, all others held constant; rust ǔ and i = 2.907+(-0.107)x in government distance from Kiev torespondent distance from trust in army. in trust , around its mean. its around , trust in army in trust trust in army in trust trust in army will trust ingovernment ; Based on the estimated econometric model, relation the econometric estimated the Basedon trust in army in trust increaseswith 0.054units if i2 will +(-0.117)x increases with with increases 0.005 units if 27 decrease with 0.117 units if increases with 0.133 units if increases with 0.133units with with 0.107 units, if i3 +0.005x has a statistically significant effect on trust inarmy i4 + 0.054x rural-urban environment rural-urban distance from Kiev from distance to variable when all age i5 gende increases with 1 distance from rural-urban r increases CEU eTD Collection x x x x x x between these variables can be rewritten in the form of a fitted line also, as it follows: Kiev torespondent from urban areas do. armymore the than people from areas trust rural inhabitantsindividualsleast, young have inarmy but Last, nothigher level of trust a do. than in andolder men people do, have level of army than Women to trust alower tend increases. conclude,To seems it less peoplethat in trust if army, Kiev distancebetween and respondent x x t increases with 1 unit, all others held constant; unit and all others are held constant; held are unitand all others 1 unit, held all others constant; respondent zero; p = 0.021 impliesp = 0.021 b b b b b y, t impliesp = 0.000 R rust rust 5 4 3 2 1 2 = -0.169 implies that implies =-0.169 = -0.012 implies =-0.012 that = -0.110 implies =-0.110 that = 3.055 represents the estimated =3.055representsthe value of trust in army in trust = 0.025 implies that the estimated econometric model explains 2.5% of the variation of variation the of 2.5% model explains econometric estimated the implies that =0.025 = -0.062 describes a describes decrease in = -0.062 Coefficients in the fifth row of the table represent the relation between relation the of table the represent in row fifth the Coefficients in SRI; in in army increases with 1 unit, all others held constant; ǔ ; i = 3.055+(-0.062)x and , around its mean. its around , distance from Kiev torespondent distance from distance fromKievtorespondent trust in army. in trust trust inSRI trust inSRIwill trust inSRI i2 Based on the estimated econometric model, relation the econometric estimated the Basedon +(-0.110)x decreases 0.169units if with trust inSRI will decrease with decrease 0.110 units if decreases with decreases with if 0.012 units 28 trust in SRI trust in i3 +(-0.012)x with with 0.062 units,if has a statistically significant effect on has a statistically significant effect on when all the other coefficients are coefficients when all other the i4 + (-0.169)x rural-urban environment distance Kievfrom to gende age i5 increases with 1 r increases with increases r distance from CEU eTD Collection x x x x x x x relation between these variables can be rewritten in the form of a fitted line also, asit follows: Kiev torespondent tend to have a lower level of trust in SRI. increases.Kiev older Similarly,and respondent people of andinhabitants women, areas rural lessif in between increase. peopleSRI trust Therefore, distance andenvironment rural-urban In conclusion,it seems that people’s level of trust in SRI will decrease if distance, gender, age x y, significant effect on on t effect significant environment with 1 unit and all others are held constant; Kiev torespondent increases with 1 unit, all others held constant; coefficients arezero; coefficients y, R p =0.053implies that b b b b b R 5 4 3 2 1 2 2 = 0.107 implies that =0.107 =0.001implies that implies =-0.002 that = 2.607 represents the estimated value of valuethe of estimated the represents =2.607 trust ineducation trust inSRI = 0.006 implies that the estimated econometric model explains 0.6% of the variation of variation the of 0.6% explains model econometric estimated the implies that =0.006 = 0.042 implies that the estimated econometric model explains 4.2% of the variation of variation the of 4.2% explains model econometric estimated the implies that =0.042 = -0.039 describes a decrease in a describes decrease = -0.039 Coefficients in the last row of the table represent the relation between relation the represent table of the row last inthe Coefficients increases with 1 unit, all others held constant; , around its mean. its around , ǔ i and = 2.607+(-0.039)x increases with 1 unit, all others held constant; , around its mean. its around , rust trust ineducation. trust ineducation distance from Kievrespondent to distance from in education trust ineducation trust ineducation i2 trust ineducation +(-0.002)x ; Based on the estimated econometric model, the 29 will increases with if increases with 0.107 units will will decrease with if 0.002 units increase increase if with 0.001 units i3 +0.001x trust ineducation with 0.039 units, if i4 does not have astatistically not does + 0.107x when all the other the all when i5 distance from distance distance from age rural-urban increases gende r CEU eTD Collection influence, defined asgeographicalmight proximity institutional formerUSSR,affect to Table 3: Correlation table ofall independent variables included inthe econometric model estimated **. Correlation is significant at the 0.01 level (2-tailed). Distance Environment Age Gender shows: as table the following model estimated, econometric the of variables independent the between situation such no is there Fortunately, above. analysis regression in the estimates biased to lead could that situations multicolinearity possible discover intovariables haveindependent introduced to in acorrelation of analysisthe been order table trust ineducation trust statistically significant differences between Transylvania and Moldavia’s mean values for the youngerthan persons anddo people from urban areas do. inhabitants of rural areas exhibita higherlevel trustin of Romanian the system education of and people older Furthermore, do. men than education of system Romanian in the trust level of have alower samemanner,women increases. Inthe Kiev respondent and between In conclusion, people will trust less in the Romanian system of education if the distance variable when regressed against distance from Kiev to respondent, with the exception of withexception the respondent, Kievto from distance against when regressed variable In the beginning of the analysis, I posited that varying degrees of communist variablesAfter allanalysis, dependent required theby regression present the of the are there from results Annex 1emphasize that Samples Test The Independent variable. Pearson Correlation Pearson Correlation Pearson Correlation Pearson Correlation 3.4 Conclusions Gender — — — — 30 .067 Age — — — ** Environment -.067 .088 — — ** ** Distance -.089 -.019 -.007 — ** CEU eTD Collection 2 be specifically, exception with confirmed, the becauseMoldova More of membership. union paper’s hypotheses. present test the to countries numberlarger of and a aswell, regions Romanian consideration other into thattake studies further empirical for I advocate Therefore, analysis. year-based one model, or regression inclusion of an irrelevant control variable, the omission of a relevant control variable from the statistical significant. The causes for these results reside in specification problems,such as the not is NGOs and parties, political unions, in membership on variable distance the of influence significant, is statistically variables between relation casesthe inmost of the Although in inTransylvania people and state’s public institutions is much lower. Information Romanian (SRI), system andineducation, of army,the levelof the whereas trust Service of Romanian Secret the in government, level havetrust church, people, of ahigher as decreases increase asthe increase factors that can favor or hinder economic development, I expected the levels of the expected I development, hinder economic or can favor that factors oncontrasting asGrondona’s (2000)debate Transylvania cultural and aswell Moldavia, between disparities economic interregional the Considering development. economic Union, less the it likely is for region that be to characterized favorable byinstitutions to vicinity.implies formerin ishypothesis Soviet closer thatthe region its to the 2 Seemingly, institutionalMoldavia,a deficient being this conducive to of situated development regions the institutionaldeepened the gap between of Romanian the and provinces Transylvania hypothesisto former proximity 1, physical Unionto Soviet during times contemporaneous in development Romanianthe according of Transylvania andMoldavia.provinces Therefore, To conclude, the data does not confirm hypothesis 1. Therefore, neither can hypothesis limits. and weaknesses statistical registered also analysis present the Unfortunately, Regarding the Regarding Table 3 distance from Kiev torespondentincreases distance from distance from Kievto distance from respondent : Correlation table of the independent variables included in the regression model regression the in included variables independent of the table : Correlation trust variable, none of my expectations was met. In all cases all In met. was expectations my of none variable, 31 increases (hypothesis 3). . Consequently, people in Moldova trust trust to CEU eTD Collection have practical implications for the overall development of the regions in question. regions the of development overall the for implications practical have Thispredicted. relationshipis realandsignificant andshould benot disregarded,asitcan developmentinstitutionsof in andMoldavia Transylvania, although not in directionthe I the influence can Union Soviet former to proximity that reveals analysis statistical the However, analysis. bythepresent revealed differences institutional the of account on be explained cannot regions Romanian two the between differences developmental economic a low levelvalues, but performance, economic of and trust higherregisters participatory 32 CEU eTD Collection and European and regional policies are implemented in order to diminish the development gap development the diminish to in order implemented are policies regional and European and approaches issuethe of institutional development. development regional for implemented policies the of none Therefore, Housing). and rural and education, cultural development, health for and Regional (Ministry Development improvement, infrastructure development, technological investment, direct foreign market, economic increase.This way, anemphasis authorities factoryput on labordevelopment, regional the policies have theissuedevelopment approached a dynamic of and durable socially and professionally. develop forare indispensable people to that networks social creation the of conducive to respectful friendships andbusinessway, and consolidate relations, would be would more in all domains of activity. Ahigh level of trust would helppeople interact in anda better exist,should and should not byanincreasedeveryday becharacterized levelof practices trust democracy in a post-communist country like Romania, accountability and transparency issues of consolidation and for theestablishment that consider Ialso of Romania. likethat transition in asociety of development overall the for threats great being these issues, transparency regions. implications and one the infor have this development the I estimated, can of society both between the Romanian provinces of andTransylvania Moldavia inaninverse direction than anticipated. Even though hypothesis 1 and 2arenot confirmed, institutional the gap still exists between inverse relation Indeed, the Romanian historical regions have different economic development needs development economic havedifferent regions historical Romanian Indeed, the far, So the Ministry accordingfor to in Regional andDevelopment Housing, Romania In my opinion, a low level of trust implies that there exists toan pointed interpretation inThe previousthe chapter analysis data and empirical accountability and Chapter 4: Practical Implications Practical 4: Chapter distance from Kiev to respondentdistance fromKiev to 33 , and , trust than that I have I that than CEU eTD Collection directly directly institutional to point issues and methods, this recovery wayeliminating all that policies formulate should makers policy that consider I least, not but Last, development. institutional is an deficient there observed in areaswhere and regions institutional recovery formed, makers having policy includein the theirto possibility measures projects for beto performed. institutional In clear image overthenational way, a this will be development furtherapproach theissue institutional empiricalthat encourage also of development studies policies shouldinclude also intheir development structure the institutionsof such I as trust. development can enhance and durable development, iswhy this regional development institutional that consider I Moreover, regions. all over intensity same the with society legacies can only be overcome through implementationthe newof institutions within the authorities. local or national bodies, byEuropean implemented matter they are that no policies, cohesion core of the regional be at driven by different economic objectives, common institutional development objectives should canbe whilepolicies regional that, positConsequently, I convergence” (p.4). to andnot divergence, leadto objectives “different notes, Barna(2008) as addition, In andobjectives. economic purposes in bydifferent is actions its Consequently,each region driven to occur. lower levels of economic development for wealthier counties, a phenomenon that is less likely would requirehigherlevels of economic developmentfor less-developed the counties, and As noted on Romania Central areas. by wealthier level economic development from of targeted the different performance Web site, economic of alignmentlevel a target that regions developed in poorly implemented be of cannot areas economic performance of according todifferentthe needs and objectives, as policiesregions that proved to work in more developed formulated andimplemented are policies all regional these between them. However, existing To conclude,To inmyview, institutional caused by weaknesses historical different 34 CEU eTD Collection policy targeted to address regional to address development. policy economic targeted acohesion of lines the between lost be to issue development institutional the for possibilities 35 CEU eTD Collection 9 8 7 communist countries, others countries, communist Moldavia. between differences Transylvania and development institutional of development region,the approached subsequentchapters the institutional betweenisdiscrepancies Andbecauseeconomic influenced greatly them. development by the economic great are there that observe can one between them, gap existing developmental the Whenexamining in Romania. disparities interregional development extremesof arethe these as Moldavia, and study isTransylvania of focus on present the the same country. However, within the between areas disparities iteconomic interregional concerns in examples what country, whichin its affects especially development, turn its economic performance. this sense history, isthat culture, and influence geography theinstitutional of development the in argument They institutions. through development economic of level a society’s influence history accordingwhich culture,reached to and geography can common the conclusion historicalfactors, almost legaciescultural and all geographical characteristics, havethem of in with regard level a society performance the of economic exactly what determines explain the economic development of a country. As seen in Chapter 1 of this paper, in their attempt to history, caninfluence geography and mechanism which culture, causal the researched through development of countries that were once part of the socialist bloc. Therefore, taking into taking bloc. Therefore, socialistof the part were once that of countries development B Dimitrova-Grajzl (2007). Banfield (1985), Tabellini (2009), Hezel (2009), Lipset (1959), Boettke (1998), Grondona (2000). ă descu and Sum (2005), Beck and Laeven (2005). Several inspecialists fieldthe of economics, history, sociology, geography and While some While contrasting regions arevery good historical Romanian above, the Considering the 8 say that socialism has no significant effect on the development of post- 9 argue that the socialist legacy can greatly influence the influence greatly can legacy socialist the that argue Conclusions 36 7 have CEU eTD Collection 10 countries. post-communist other on is performed analysis series empiricalif studies arepursuedinstitutional focus other variables, with regions, or on a time- further if change may implications practical their and improved be may analysis present the of results the However, discussed. have been issues of these implications practical Accordingly, issues wherelevel inthe alowerareas individuals trust andof public instate’s institutions. and transparency accountability of existence the suggest registered results confirmed, the not people and state’s public institutions in Moldavia than in Transylvania. Kiev. Accordingly,former proximity to Soviet Union levelsdetermines higher in of trust that there is an opposite statistically significant relationship between trust and distance from emphasizes thesamedata paper operates, present the which with hypothesis themain rejects has been rejected by the results of the analysis. Even though the empirical analysis pursued institutions their vicinity, and theories higherlevelsin determines developed of areas within situated performance economic regions that emphasize andWesternmorewhich Europe to consideration proximity theoriesaccordingto to the possibility of institutional spillovers between trust in people and in state’s institutions, the relation between the region is to Ukraine’s capital city, the more likely is for that region to register from respondent toKiev influences institutional indevelopment Transylvania and Moldavia. low levels of and specifically, More Moldavia. presentstudy investigated the how distancein kilometers Union institutional during times affected contemporaneous the of Transylvania development Beck and Laeven (2005), Kološta (2007), Lane and Rohner (2004). 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