The Best Laid Plans: The Impact of Informal Rules on Formal Institutions in Transitional Regimes

How do informal institutions influence the formation and function of formal institutions? Existing typologies focus on the interaction of informal institutions with an established framework of formal rules that is taken for granted. In transitional settings, such typologies are less helpful, since many formal institutions are in a state of flux. Instead, using examples drawn from post-communist state development, I argue that informal institutions can replace, undermine, and reinforce formal institutions irrespective of the latter’s strength, and that the elite competition generated by informal rules further influences which of these interactions dominate the development of the institutional framework. In transitional settings, the emergence and effectiveness of many formal institutions is endogenous to the informal institutions themselves.