Transformations  in
Business & Economics

POSSIBILITIES AND LIMITATIONS OF NEO-INSTITUTIONAL ECONOMIC THEORY IN EXPLAINING THE TRANSITION CRISIS: THE CASE OF MONTENEGRO
Mimo Draskovic

ABSTRACT. This article, by using a selective approach, explains the development of the Neo Institutional Economic Theory (NET) in Montenegro through the elaboration of its key problems, dilemmas and achievements. The variation of institutional changes from the proclaimed direction of the reform and its turn to institutional deviations, which have negatively impacted economy and society are analysed. The article explores and explains the transformation of the institutional vacuum to quasi-institutional monism, which has grown into a phenomenon of institutional nihilism, with a consistent application of interest oriented neoliberal solutions. Thus, institutions are not universal means of protecting people from the government's tyranny. That happens due to the dominant neoliberal rhetoric, and privileged (non-market) rules conduct that surpass the institutional domain. This paper attempts to explain: the essence of neglecting the real institutionalization in the post socialist countries, through the identification of the quasi institutionalization model and a short analysis of such reasons, as well as the paradox of the established phenomenon that the institutions, as the stipulations and constraints, have become the barrier for their unlimited avoidance and quasi-institutionalization. Oddly enough, nomenclature authorities are those who should implement institutional changes and form the alternative institutions (from the shadows). Hence, contrary to the recommendations of the NET, they speak out against the formal and informal institutions, interests of citizens as well as social and economic development .

KEYWORDS:  institutions, neo-institutional economic theory, neoliberalism, Montenegro.

JEL classification:  B52, O17, P37.