Restitution in transition countries

Abstract

Changing the property rights arrangements to land and buildings is a fundamental step in the transformation process underway in Eastern and Central Europe and elsewhere. The concept of property hinges on the choice of property conventions adopted by each society. Defining what property means is a complex and controversial task, especially when the scope of change in transition countries is so dramatic. Restitution is often a first step in acknowledging a latent property rights paradigm in these nations. Since property rights form the foundation of how and why economies function, it is important to identify the theoretical and empirical evidence relating property rules to economic outcomes. In this paper, we investigate why restitution is implemented in some countries but not in others. Further, if restitution is adopted, how is it implemented? We speculate that the choice of restitution as a property institution may be a proxy for the development of future institutions.