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Financial Deregulation and Industrial Development: Subsequent Impact on Economic Growth in the Czech Republic, Hungary and Poland

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  • Patricia McGrath

Abstract

The Czech Republic, Hungary and Poland all experienced an initial reduction in the number of industries and an increase in unemployment, once they moved to a market driven economy. Over time the unemployment problem reduced in significance though Poland still experiences high levels to date. Industries sprung up in the private sector in all three countries which counterbalanced the drop in state enterprises. Private sector industries all reported easy access to credit once the business set up while firms with head offices overseas tended to use the home country for borrowing purposes. For these companies, the most significant feature of financial deregulation in the Czech Republic, Hungary and Poland was that of freedom of capital movement, which increased both the level of business and investment opportunities. Results show that financial deregulation led to industrial development in all three countries. Tests to indicate the impact of industrial production on economic growth, show that for the three countries industrial production caused economic growth. This was a uni-directional causality.

Suggested Citation

  • Patricia McGrath, 2006. "Financial Deregulation and Industrial Development: Subsequent Impact on Economic Growth in the Czech Republic, Hungary and Poland," William Davidson Institute Working Papers Series 818, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2006-818
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/57198/1/wp818.pdf
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    Cited by:

    1. Adel Mohsen & Soo Chua & Che Sab, 2015. "Determinants of industrial output in Syria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-12, December.
    2. A. Sankaran & A. Vadivel & M. Abdul Jamal, 2020. "Effects of dynamic variables on industrial output in one of the world’s fastest-growing countries: case evidence from India," Future Business Journal, Springer, vol. 6(1), pages 1-8, December.

    More about this item

    Keywords

    Transition Economies; Industrial Development; Financial Deregulation; Economic Growth; Eastern Europe;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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