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The Institutional Barriers' Impact On The Economic Growth In The International Economic Integration

Author

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  • Iryna Prykhodko

    () (Department of International Economic Relations, Ivan Franko National University of Lviv, Ukraine)

Abstract

The purpose of the paper. In our study we try to assess the causality link between a number of the international economic integration politico-economic factors, institutions and basic production factors with the growth of the economy. We form a sample of 18 post-socialist countries, including Central and Eastern Europe (CEE) countries-members the European Union, and the rest of CEE non-members countries and CIS countries, who have not acquired the membership in the EU, including Ukraine. The time period of our study is 23 years, starting from 1991 - the year of independence of Ukraine till 2013 - the last year for which statistics are published for our group of a corresponding list of indicators that make up our interest. In the estimating equation we use econometric analysis panel data by least squares method with fixed effects transformation to eliminate countries' heterogeneity. In the study we use such determinant of the institutions quality as the Index of Economic Freedom (Heritage Foundation), and we investigate various components of the Index of Economic Freedom (freedom of ownership, freedom of trade, freedom from corruption, freedom of investment). We assume that institutions towards freedom of foreign trade and reducing corruption will have a greater effect on the economy of the investigated countries. It is advisable to attach to the international economic integration politico-economic factors the indicator of foreign trade taxation as a measure of tariff barriers, international aid programs of the foreign donors and the European institutions to assess their role for the economic growth of the countries surveyed, and we take into account the capital and the labor as the basic factors of production. Methodology. The methods of synthesis, logic, abstraction and analysis are used in the study. On a sample of 18 post-socialist countries (CEE and CIS) for the period of 23 years (1991-2013) we had conducted the econometric panel analysis by the method of least squares with fixed effects transformation method, in order to avoid the heterogeneity across countries. The statistics of World Bank, IMF, OECD is used in the study. Results of the survey showed that the specifications test results confirm the positive role of the international aid programs to support the growth of GDP, in addition, we can assume the existence of positive effects simultaneously improving institutions and the positive effect of the external trade determinants. Practical implications. This study makes it possible to confirm that in terms of economic policies, countries that are in the integrating process should focus their efforts on improving the institutions in the trade area. Value/originality. The results of both models provide a better understanding of the impact of political, economic and institutional factors on the economic integration process of Central Eastern Europe countries and Commonwealth of Independent States. Further research in this area will help to reveal the problem in more details.

Suggested Citation

  • Iryna Prykhodko, 2015. "The Institutional Barriers' Impact On The Economic Growth In The International Economic Integration," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 1(1).
  • Handle: RePEc:bal:journl:2256-0742:2015:1:1:23
    DOI: 10.30525/2256-0742/2015-1-1-141-146
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    References listed on IDEAS

    as
    1. Edward E. Leamer, 1986. "Cross Section Estimation of the Effects of Trade Barriers," UCLA Economics Working Papers 417, UCLA Department of Economics.
    2. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-1187, December.
    3. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521377003, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    economic growth; international economic integration; institutional barriers; politico-economic barriers; index of economic freedom; factors;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration

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