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Welfare against growth gains in post-transition countries: What are the consequences for stability?

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  • Lissowska, Maria

Abstract

This paper discusses the underpinnings of the financial crisis of the last decade in post-transition countries. It explores the endogenous reasons of this crisis, and in particular a possible link between delayed and unequal growth of household incomes on the one hand and the instability of the growth and depth of recession after the financial crisis on the other. It indicates possible factors underpinning the rapidly growing indebtedness of households, enabling faster, but unsustainable growth in consumption. Furthermore, it claims also that the artificially boosted growth of consumption and a favourable proportion between wages and profits could attract investment (also FDI), possibly searching for short-term gains. It underlines that while the inflow of financial funds was the major reason for unstable growth in this region, endogenous factors also contributed.

Suggested Citation

  • Lissowska, Maria, 2014. "Welfare against growth gains in post-transition countries: What are the consequences for stability?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-37.
  • Handle: RePEc:zbw:ifweej:201413
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    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2014-13
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    File URL: https://www.econstor.eu/bitstream/10419/95675/1/780761170.pdf
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    References listed on IDEAS

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    1. Luci Ellis & Kathryn Smith, 2010. "The Global Upward Trend in the Profit Share," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(3), pages 231-256.
    2. Hans-Peter Lankes & A. J. Venables, 1996. "Foreign direct investment in economic transition: the changing pattern of investments," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 331-347, October.
    3. Pasquale Tridico, 2012. "Financial crisis and global imbalances: its labour market origins and the aftermath," Cambridge Journal of Economics, Oxford University Press, vol. 36(1), pages 17-42.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Welfare; post-transition economies; crisis; stability;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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