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Reforms and economic growth in transition economies: Complementarity, sequencing and speed

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  • Staehr, Karsten

    ()
    (BOFIT)

Abstract

Growth regressions have provided important insights into the impact of economic reforms on growth in transition economies. Using principal components to decompose reform variables and construct reform clusters, we address unsettled issues such as the importance of sequencing and reform speed. The results indicate a broad-based reform policy is good for growth, but so is a policy of liberalisation and small-scale privatisation without structural reforms. Conversely, large-scale privatisation without adjoining reforms, market opening without supporting reforms and bank liberalisation without enterprise restructuring affect growth negatively. Swift reform policies allow transition countries to benefit from higher growth for a longer period of time. The speed of reforms otherwise appears to have only limited effects on short-term and medium-term growth.

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Bibliographic Info

Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 1/2003.

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Length: 35 pages
Date of creation: 03 Jan 2003
Date of revision:
Handle: RePEc:hhs:bofitp:2003_001

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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
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Web page: http://www.suomenpankki.fi/bofit_en/
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Keywords: economic reforms; growth; principal components; gradualism versus big-bang;

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