Efficient Institutional Support:

Institutions are  made  up  of both formal  and  informal rules.  While  the formal  rules  can  be  changed overnight,  the  informal norms change gradually.  In  view of  this, societies that  adopt  the  formal  rules of  another society will have very different performance characteristics than  the original country because of  the differences in  both the informal norms  and  the enforcement characteristics. The implication, therefore, is that transferring the formal political and economic rules of successful western market economies to weaker  economies cannot automatically ensure good performance. For instance,  'in the transition  economies  of  Russia  and  east Europe  the passage  to  market economy  institutions  and pursuit  of Washington Consensus policies (see Key Words) was associated with much greater and prolonged declines  in output and  income than had  been  originally expected.  In  particular,  privatisation  is  not a solution to improve performance as it works only with efficient institutional base.