Valentin M. IONESCU, PhD^

Summary: Based on the new economic and historical institutionalism approach, I sought to explain briefly that in the European Union and probably on a global scale we are in a “critical juncture” that appeared before this economic recession triggered by political decision. The 2020 economic recession tends to speed up some processes, but the decision to change the direction of economic development had already been agreed before this recession. I have considered that the transformation of the economic institutions, most often, does not occur because of an exogenous shock only. People have different experiences, percep-tions, and expectations, which means that their involvement in shaping the future is neither simultaneous nor uniform. The same is happening at the level of government, policy makers and economic actors involved in decisions that reshape the future. Institutional changes are based on a set of sequential processes that I have explained through the concepts of “path dependence”, “path creation” and “critical juncture”. I have explained that the Green Pact is an example of “path creation”, and what could be the implications.

The digital revolution is the main source that leads to the accumulation of antecedent conditions. In this way we reach a cleavage that prepares the ground for a critical juncture. The digital revolution is continuously adjusting business models, communication between individuals, transactions, and market structure. Also, the production processes are reorganized, having an impact on costs and inter-human relationships”.

The implications of the critical juncture and the direction we are heading in the long run are much greater and not necessarily identifiable at this time, as the digital revolution will change the conditions in which economic institutions adjust faster than in the past. Thus, it is possible that a critical juncture will appear at a shorter interval than we could anticipate at present and that will lead to the new “path creation”, respectively another direction of development and another “path dependence”.