Transition economies, such as the countries in Southeast Europe, face an expeditious institutional transformation from a centrally planned to a market economy. While privatizing public companies and dismantling market entry barriers, the state withdraws from its monitoring function, resulting in an unstable institutional setup. Albania’s application for EU candidacy, for example, has been declined, owing to ineffectiveness and instability of the country’s institutions, and EU funds to Bulgaria have been frozen several times, owing to corruption scandals.
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