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Convergence at last? Evidence from Transition Countries

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  • Saso Polanec

Abstract

In this paper, we test the neoclassical growth model and its main prediction of conditional convergence of productivity for a sample of transition countries over the period 1990-2002. We split the sample into three periods: 1990-1994, 1994-1998 and 1998-2002 and confirm the convergence hypothesis only for the last period of transition, while in the early transition, factors specific to the transition process dominated productivity growth. We confirm past findings of importance of the process of liberalization and initial conditions for explaining differences in productivity growth. In the period 1998-2002, transition specific factors play no negative role, while in the period 1994-1998 their role is substantially reduced. These results, however, should not yet be intepreted as a sign of a permenent return to convergence in transition countries as they could be caused by differences in transition cycle.

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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 14404.

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Length: 26 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:lic:licosd:14404

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Keywords: convergence; neoclassical growth; regional growth;

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References

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  1. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  2. Gérard Roland, 2004. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 026268148x, December.
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  7. S. Fisher & R. Sahay & C. A. Vegh, 1997. "Stabilization and Growth in Transition Economies: The Early Experience," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
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  9. Michael Spagat, 2001. "Human Capital and the Future of Transition Economies," Royal Holloway, University of London: Discussion Papers in Economics 01/3, Department of Economics, Royal Holloway University of London, revised Dec 2001.
  10. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
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  14. Iacopetta Maurizio, 2004. "Dissemination of Technology in Market and Planned Economies," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-32, February.
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Cited by:
  1. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Growth in Transition: A Meta-Analysis," Working Papers IES 2013/14, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2013.
  2. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2006. "Theoretical and Methodological Study on Dynamic Growth Regions and Factors Explaining their Growth Performance," Papers DYNREG02, Economic and Social Research Institute (ESRI).
  3. Jan Babecky & Tomas Havranek, 2014. "Structural reforms and growth in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 13-42, 01.
  4. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Economic Growth: A Meta-Analysis," Working Papers 2013/08, Czech National Bank, Research Department.
  5. Spruk, Rok, 2011. "Productivity and income convergence in transition: theory and evidence from Central Europe," MPRA Paper 33389, University Library of Munich, Germany.
  6. Young-Sun Lee & Hyung-Gon Jeong, 2006. "The determinants of economic growth of transition economies: Economic reform versus initial conditions," International Economic Journal, Taylor & Francis Journals, vol. 20(2), pages 241-252.

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