Explaining economic growth in Eastern Europe

One of the important considerations for the transition economies of Eastern Europe is the prospect for long-term economic growth. The preliminary data since the beginning of the transition period indicates a wide-range of outcomes across the two dozen or so reforming economies. Recent developments in growth theory suggest that differential growth rates are not satisfactorily explained by technology but likely reflect national resources, institutional factors, and the climate for growth and development in each country. Thus, it is likely that country-specific conditions such as the states of property rights, economic freedom, and other social and culture influences will help explain growth rate differences. This study is a preliminary empirical attempt to measure the impact of these factors in several transition countries in Eastern Europe. Clearly, there does not exist a sufficient time series of data for many years. However, the natural experiment of having closely related and similarly influenced countries which underwent (or more likely, continue to undergo) political, economic, and social transformations at about the same time is probably unprecedented. This paper hopes to provide some preliminary explanations of varying growth rates for transition countries.