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Institutional Endowments and the Lithuanian Holding as Innovative Network: A Problem of Institutional Compatibility in the Baltic Sea Area

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Abstract

Post-socialist Lithuania had an undeveloped banking, a weak network commitment, and a resilient nomenklatura. An evolutionary Crossroads game shows that this made the nomenklatura bank convention stronger than the capitalist bank convention. In the nomenklatura bank convention, rent-seeking behavior decreases network commitment and thereby the effect of network complexity, thus making learning-by-financing weaker. This created a problem of institutional compatibility of bank-industry networks in the Baltic Sea Area during Lithuania's first voucher stage of privatization that might be overcome by foreign direct investment initiated in her second hard currency stage.

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  1. University of Södertörn, SE-141 89, Huddinge, Sweden

    Thomas Marmefelt

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Marmefelt, T. Institutional Endowments and the Lithuanian Holding as Innovative Network: A Problem of Institutional Compatibility in the Baltic Sea Area. The Review of Austrian Economics 17, 87–113 (2004). https://doi.org/10.1023/B:RAEC.0000011338.64055.20

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