Stylized Economic Facts Of Transition

In the course of transition, former socialistic countries moved from planned to market economy. This journey typically started with sharp falls in economic activity in all transition countries, accompanied by deterioration of various social indicators. Hence, their main objective was the recovery of economic activity, i.e. increasing the economic growth rate, which in addition was supposed to enable catching up with the European developed economies. This growth movement is usually described by famous U-curve of transition. However, in spite of the efforts and reforms, all transition economies recorded various paces of recovery. This study discusses that difference, through various GDP indicators, real GDP path, GDP growth rates path, the height of the GDP index achieved and the volatility of growth rates. Analysed in concert, these indicators suggest several other variations of the transition U-curve, such as: the rapid-J group, the wide-U group and the L-curve group. Namely, almost three decades after the start of the transition, the differences persist, suggesting that some transition economies has not moved significantly towards catching up with the successful transition countries, or with the developed economies.