There are two strands in the empirical literature on economic growth in transition economies. One focuses on the impact of reforms, while the other emphasizes sustainability issues and the growth prospects these economies face. The most common strategy, in the latter, has been to use coefficients from growth regressions, on large samples of developing countries, and impose them on transition economies' data to obtain projected growth rates. We refer to it as the BLR approach (because it uses specifications from Barro, and Levine and Renelt). We claim that the reported growth rates are suspiciously similar, painting an overly optimistic picture and yielding few policy lessons. We re-estimate the BLR equations for data on transition economies themselves and find that government expenditures have been positively associated and human capital has been negatively associated with output growth. These results contrast sharply with the assumptions and findings from the BLR approach, questioning its might and challenging our understanding of the transition process in its key dimension.
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Paper provided by Commission of the EEC - Ecofin, Country Studies in its series Papers with number
146.
Length: 36 pages Date of creation: 1999 Date of revision: Handle: RePEc:fth:eeccou:146
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Find related papers by JEL classification: E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Durlauf, Steven N. & Quah, Danny T., 1999.
"The new empirics of economic growth,"
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308
Elsevier.
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