Why some sectors of transition economies are less reformed than others? the case of economic research and education

In the paper we analyze economic university research and education in transition countries. University system differs from industry in the nature of output that it produces. University system is engaged in production of public goods rather than private goods. The sector also suffers from the measurement problem of quality of its output. We argue that because of these factors reforms were slower in this sector leading to low productivity growth. Pressure groups succeeded in gaining significant control inside administrative structures regulating the sector. By creating the accreditation commission the state decreases the communication cost of pressure groups making lobbing activity cheaper. A case study from the Czech Republic and Slovakia shows that the accreditation commission which is composed from representatives of state universities and established research institutes succeeded in maintaining their dominant position and set evaluation criteria fitting their interests. This institutional setting led to low university research productivity. The results also show that in Slovakia economic research is still predominantly carried out by central research institutes and universities are engaged mainly in teaching.