Transition economies and trust building: a network perspective on EU enlargement

Many transition economies are characterised by a relativelyrudimentary institutional framework. Weak legislative structuresand the absence of effective market regulation and propertyright enforcement rules diminish the chance of mutually profitablebusiness transactions and—more generally—restrictthe chances for innovation and sustainable growth. Against thisbackground, we analyse the extent to which more efficient governancemechanisms can contribute to a more favourable business environment.In doing so, we adopt a network perspective. We argue that bothin developed market economies as well as in centrally plannedeconomies much of economic exchange takes place in networks.However, the characteristics of these networks, in particularthe concept of trust, can differ significantly. This leads usto conclude that the real challenge of the process of economictransition is connected to building new economic exchange networks.In this paper, we discuss this argument and analyse how thecurrent enlargement of the EU into Eastern Europe may favourablyaffect this process of institutional change in the accessioncountries.