Anders Åslund () (Institute for International Economics) Nazgul Jenish (University of Maryland)
Abstract
In the first decade of postcommunist transition, multiple growth regressions showed that the more radical and comprehensive market economic reform was, the earlier a country returned to economic growth and the more vigorous its growth, and that Central Europe took the lead. Since 2000, however, the Commonweath of Independent States (CIS) countries have had more than 4 percentage points higher annual growth than the Central European countries. A regression analysis for 20 postcommunist countries shows, with strong significance, that reducing public expenditures has most effectively stimulated economic growth. As expected, oil exports are also positive and significant. The distance from the European Union is also positive and significant: that is, the further from the European Union, the higher the economic growth. The effect of corruption is negative for growth but only marginally significant. Neither the laggard effect nor investment reveals any significant effect. The conclusion is that at least among postcommunist countries more emphasis should be given to reducing public expenditures to boost economic growth.
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Find related papers by JEL classification: E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
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