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Fostering growth in CEE countries: a country-tailored approach to growth policy

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Author Info

  • Philippe Aghion

    (Harvard University)

  • Heike Harmgart

    (EBRD)

  • Natalia Weisshaar

    (Royal Holloway College)

Abstract

This paper analyses the long term growth experiences of the eastern European accession countries and the effect of various tailored growth policies. We find that there are two overarching growth-enhancing policies that can substantially increase long-term growth: competition and the quality of education. We find empirical evidence that if accession countries from the transition region want to achieve – and sustain – higher growth rates they will need to ensure competition by continuing to remove entry and trade barriers and by strengthening competition agencies. We also find evidence on the positive long-run impact of quality of education on growth, and hence the high return on public investment in education, particularly at the primary and secondary level. The private sector’s role in overcoming skill mismatches will benefit from deepening financial intermediation and reducing constraints in access to finance.

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Bibliographic Info

Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 118.

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Length: 30 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:ebd:wpaper:118

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  1. Blundell, Richard & Griffith, Rachel & van Reenen, John, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 529-54, July.
  2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: An Inverted-U Relationship," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 701-728, May.
  3. Aghion, Philippe & Fally, Thibault & Scarpetta, Stefano, 2007. "Credit Constraints as a Barrier to the Entry and Post-Entry Growth of Firms," IZA Discussion Papers 3237, Institute for the Study of Labor (IZA).
  4. Aghion, Philippe & Algan, Yann & Cahuc, Pierre, 2008. "Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations," IZA Discussion Papers 3680, Institute for the Study of Labor (IZA).
  5. Ammermüller, Andreas & Heijke, Hans & Wößmann, Ludger, 2005. "Schooling quality in eastern Europe: Educational production during transition," Munich Reprints in Economics 20191, University of Munich, Department of Economics.
  6. Wendy Carlin & Mark Schaffer & Paul Seabright, 2004. "A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth," CERT Discussion Papers 0402, Centre for Economic Reform and Transformation, Heriot Watt University.
  7. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  8. Philippe Aghion & Matias Braun & Johannes Fedderke, 2007. "Competition and Productivity Growth in South Africa," Working Papers 54, Economic Research Southern Africa.
  9. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  10. Philippe Aghion & Wendy Carlin & Mark Schaffer, 2002. "Competition, Innovation and Growth in Transition: Exploring the Interactions between Policies," William Davidson Institute Working Papers Series 501, William Davidson Institute at the University of Michigan.
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Cited by:
  1. Nicholas Bloom & Helena Schweiger & John Van Reenen, 2011. "The Land that Lean Manufacturing Forgot? Management Practices in Transition Countries," CEP Discussion Papers dp1065, Centre for Economic Performance, LSE.

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