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Determinants of economic growth in Central and Eastern Europe: the global crisis perspective

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  • Mariusz Próchniak

Abstract

This article presents an empirical analysis of economic growth determinants in the 10 Central and Eastern European (CEE) countries Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. The analysis covers the period 1993--2009. All the calculations are performed on five three-year subperiods and one two-year subperiod: 1993--95, 1996--98, 1999--2001, 2002--04, 2005--07 and 2008--09. The analysis is composed of three steps: data selection, correlation analysis and regression analysis. The correlation analysis is based on the coefficient of partial correlation to exclude the impact of the global crisis. In the regression analysis we build 10 alternative variants of empirical models of economic growth. Our results suggest that the most important economic growth determinants in the CEE countries are investment rate (including FDI), human capital measured by the education level of the labour force, financial sector development, good fiscal stance (low budget deficit and low public debt), economic structure (high services share in GDP), low interest rates and low inflation, population structure (high share of working-age population), development of information technology and communications, high private sector share in GDP and favourable institutional environment (economic freedom, progress in market and structural reforms). Our study indicates that the CEE countries have developed in line with the hypothesis of income level convergence (both in absolute and conditional terms). This means that less developed CEE economies grew on average faster than more developed ones.

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  • Mariusz Próchniak, 2011. "Determinants of economic growth in Central and Eastern Europe: the global crisis perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 23(4), pages 449-468, May.
    • Handle: RePEc:taf:pocoec:v:23:y:2011:i:4:p:449-468
    DOI: 10.1080/14631377.2011.622566
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    1. Ryszard Rapacki & Mariusz Próchniak, 2009. "The EU enlargement and economic growth in the CEE new member countries," European Economy - Economic Papers 2008 - 2015 367, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    6. Ana-Maria Holobiuc, 2020. "Real Convergence in the European Union: An Empirical Approach," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 126-133, December.
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    11. Ivanov Laurentiu, 2016. "The Industrial Development In Poland And Romania In The Last 100 Years. Theory Of Path Dependency," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 160-169, April.
    12. Maciej Stefański, 2020. "To What Extent does Convergence Explain the Slowdown in Potential Growth of the CEE Countries Following the Global Financial Crisis?," KAE Working Papers 2020-058, Warsaw School of Economics, Collegium of Economic Analysis.
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    14. ARIC Kıvanç Halil & ERKEKOĞLU Hatice, 2014. "The Effect Of Financial Development On Growth In Countries Joining The Eu After 2004: A Panel Data Analysis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 66(3), pages 60-71.
    15. Rosario Scandurra & Ruggero Cefalo & Yuri Kazepov, 2021. "Drivers of Youth Labour Market Integration Across European Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(3), pages 835-856, April.
    16. Mariya Neycheva, 2015. "Impact of Secondary and Tertiary Education on Economic Growth: a Co-integration Model for Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 82-106.
    17. Siudek, Tomasz & Zawojska, Aldona, 2014. "Quality of national governance and rural development: The case of the European Union countries," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182793, European Association of Agricultural Economists.
    18. Ana-Maria Holobiuc, 2020. "Income Convergence in the European Union: National and Regional Dimensions," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2020(2), pages 45-65.
    19. Stefan Apostol, 2023. "Digitalization and Platformization in Romania Based on the Digital Platform Economy Index 2020," Central European Business Review, Prague University of Economics and Business, vol. 2023(4), pages 77-103.
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    21. Rumen Dobrinsky & Peter Havlik, 2014. "Economic Convergence and Structural Change: the Role of Transition and EU Accession," wiiw Research Reports 395, The Vienna Institute for International Economic Studies, wiiw.

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