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Inclusive Growth Policy And Institutional Assessment: The Case Of Central And Eastern European Countries

Author

Listed:
  • Olga Tsapko-Piddubna

    (Ivan Franko National University of Lviv, Ukraine)

Abstract

The article highlights the necessity of inclusive growth and development concept implementation in times of economic and social instability as it is widely recognized as the one that can and should tackle the common long existing problems like poverty, inequality, and insecurity. Thus, the subject of this research is to compare the patterns of inclusive growth and development across economies of Central and Eastern Europe (CEE); and to investigate the driving policies and institutions to countries’ inclusive growth and development. The research objective is to highlight policies that would increase equality, economic well-being, and as a result, the competitiveness of CEE countries. Methods. For this purpose, the comparative analysis of CEE countries’ inclusive growth and development patterns was done; and the empirical evaluation was done to observe relationship between the Inclusive Development Index and indicators that described economic policies and institutional factors relevant to inclusiveness. In a comparative analysis and a cross-country regression model (for both dependent and independent variables), a recently developed by World Economic Forum performance metric was used. Results. The main findings suggest that the Czech and Slovak Republics are the best performing among CEE countries in inclusive growth and development patterns. On the contrary, Ukraine, Moldova, and Russian Federation are the worst. Economic growth of these countries has not transformed well into social inclusion. Still, there is a great potential for all CEE economies to improve their social inclusiveness in comparison with EU-28 and Norway (the most inclusive economy in 2018). Results of the empirical research indicate that redistributive fiscal policy has little influence on inclusive growth and development. Nevertheless, it should create a public social protection system that is engaged in decreasing poverty, vulnerability, and marginalization without hampering economic growth. Besides, an effective and inclusive redistributive state system of CEE economies should accentuate on supporting human economic opportunities. According to the results of the regression model, positive strong influence on inclusive growth and development is associated with the employment and labour compensation policy that allows people to directly increase their incomes and feel active and productive members of society; the basic services and infrastructure policy which is a necessary ground for present and future human and economic development; the asset building and entrepreneurship policy provides diminishing inequality and rising economic opportunities by fostering medium and small business creation and enlarging possibilities of home and other asset ownership. Altogether these policies would increase broad-based human economic opportunities and consequently both equality, economic well-being, and CEE economies’ competitiveness in the long run. The counter-intuitive effect observed in the regression model between education and skills development policy and country’s inclusive growth and development needs further investigations, as education is important for social mobility and decrease in income and wealth inequality.

Suggested Citation

  • Olga Tsapko-Piddubna, 2021. "Inclusive Growth Policy And Institutional Assessment: The Case Of Central And Eastern European Countries," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 7(2).
  • Handle: RePEc:bal:journl:2256-0742:2021:7:2:26
    DOI: 10.30525/2256-0742/2021-7-2-233-239
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    References listed on IDEAS

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    1. Serhan Cevik & Carolina Correa‐Caro, 2020. "Taking down the wall: Transition and inequality," Review of Development Economics, Wiley Blackwell, vol. 24(1), pages 238-253, February.
    2. Filip Novokmet & Thomas Piketty & Li Yang & Gabriel Zucman, 2018. "From Communism to Capitalism: Private versus Public Property and Inequality in China and Russia," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 109-113, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    inclusive growth and development; inequality; economic opportunity;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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