Development and Governance in the Ex-Soviet Union: An Empirical Inquiry

Conclusively, in 1992, the Soviet Union broke up and its 15 Republics gained independence. After the initial, difficult transition from planned to market economy, the Republics have shown different development paths. This paper analyses their degree of economic development. Following the growing interest in new and better measures of development, we elaborate an index of development, the Ex-Soviet Development Index (ESDI), based on a set of variables from the World Development Indicators database released by the World Bank. To do this, we select the variables through principal component analysis and calculate the ESDI using factorial analysis. Therefore, to test the wellsupported hypothesis that good governance has a key positive impact on development, we compare the ESDI with a proposed index of governance, the Ex-Soviet Governance Index (ESGI), elaborating data from the Worldwide Governance Indicators database of the World Bank. The correlation between ESDI and ESGI is shown being high as expected, and this allow us thinking that, in order to classify countries in classes, a cluster analysis with the two indices makes sense. The correlation between ESDI and GDP growth is almost zero. This confirms that the concept of socio-economic performance and development expressed by ESDI cannot be reduced to the growth rate.