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Determinants of economic growth in Central and Eastern Europe: the global crisis perspective

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  • Mariusz Próchniak

Abstract

This article presents an empirical analysis of economic growth determinants in the 10 Central and Eastern European (CEE) countries Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. The analysis covers the period 1993--2009. All the calculations are performed on five three-year subperiods and one two-year subperiod: 1993--95, 1996--98, 1999--2001, 2002--04, 2005--07 and 2008--09. The analysis is composed of three steps: data selection, correlation analysis and regression analysis. The correlation analysis is based on the coefficient of partial correlation to exclude the impact of the global crisis. In the regression analysis we build 10 alternative variants of empirical models of economic growth. Our results suggest that the most important economic growth determinants in the CEE countries are investment rate (including FDI), human capital measured by the education level of the labour force, financial sector development, good fiscal stance (low budget deficit and low public debt), economic structure (high services share in GDP), low interest rates and low inflation, population structure (high share of working-age population), development of information technology and communications, high private sector share in GDP and favourable institutional environment (economic freedom, progress in market and structural reforms). Our study indicates that the CEE countries have developed in line with the hypothesis of income level convergence (both in absolute and conditional terms). This means that less developed CEE economies grew on average faster than more developed ones.

Suggested Citation

  • Mariusz Próchniak, 2011. "Determinants of economic growth in Central and Eastern Europe: the global crisis perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 23(4), pages 449-468, May.
  • Handle: RePEc:taf:pocoec:v:23:y:2011:i:4:p:449-468
    DOI: 10.1080/14631377.2011.622566
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    File URL: http://hdl.handle.net/10.1080/14631377.2011.622566
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    References listed on IDEAS

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    1. Ryszard Rapacki & Mariusz Próchniak, 2009. "The EU enlargement and economic growth in the CEE new member countries," European Economy - Economic Papers 2008 - 2015 367, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    Cited by:

    1. Amat Adarov & Mario Holzner & Luka Sikic, 2016. "Backwardness, Industrialisation and Economic Development in Europe," wiiw Balkan Observatory Working Papers 123, The Vienna Institute for International Economic Studies, wiiw.
    2. A Alodadi & J Benhin, 2015. "Long Term Economic Growth in Oil-Rich Saudi Arabia: What is the role for non-oil sectors?," Economic Issues Journal Articles, Economic Issues, vol. 20(1), pages 109-130, March.
    3. Ivanov Laurentiu, 2016. "The Industrial Development In Poland And Romania In The Last 100 Years. Theory Of Path Dependency," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 160-169, April.
    4. Nikolay Nenovsky & Kiril Tochkov, 2013. "The Distribution Dynamics of Income in Central and Eastern Europe relative to the EU: A Nonparametric Analysis," William Davidson Institute Working Papers Series wp1063, William Davidson Institute at the University of Michigan.
    5. ARIC Kıvanç Halil & ERKEKOĞLU Hatice, 2014. "The Effect Of Financial Development On Growth In Countries Joining The Eu After 2004: A Panel Data Analysis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 66(3), pages 60-71.
    6. Ivanov Laurentiu, 2016. "The Social And Economic Evolution Of Poland And Romania For The Last 100 Years," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 120-128, April.
    7. Mariya Neycheva, 2015. "Impact of Secondary and Tertiary Education on Economic Growth: a Co-integration Model for Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 82-106.

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