at least in the initial period of reform, studies on the transition economies have found these 'standard' variables to be insignificant. Accordingly, much of the research on transition has omitted the standard variables from the growth estimation in favour of a range of 'transition specific' variables pertaining to liberalisation and stabilisation (Fischer et al). It is in the spirit of this empirical research that we now interrogate afresh the relationship between institutions and growth in

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... post-communist economies. In particular, given the time elapsed since the 'start' of transition, we are now able to extend the 'transition' approach by (re)incorporating the traditional neo-classical factor accumulation variables while, at the same time, thinking more carefully about how to best capture the effects of macroeconomic stability in the evolving institutional context. Adopting this approach we find evidence, robust to a variety of econometric approaches, that institutions of governance are important for economic growth through their influence on the macroeconomic environment. That is, macroeconomic stability is important for economic growth (see figure 2.1) but it is the quality of the institutional environment which dictates the extent of macroeconomic stability (see figure 2. 2). We also find that human capital (re)emerges as an important driver of growth over the medium term.