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The Empirics of Economic Growth in Previously Centrally Planned Economies


  • Leamer, Edward
  • Taylor, Mark P


We develop a novel Bayesian pooling technique to estimate aggregate production functions for the previously centrally planned economies (PCPEs) of Eastern Europe and for Western economies, as well as for a group of developing countries. This technique adjusts for the low quality of the PCPE data and also possible differences between PCPE and Western and developing-country technologies. We then apply our estimates to study various privatization scenarios concerning the adoption of Western technology. If the transferability of assets to the new technology is low and Western capital is unavailable, it can be better not to privatize at all, than to have full (big-bang) privatization. Large-scale privatization is also less desirable if Western capital is available for new projects. Thus, it may in some instances be desirable to use Western support to slow the rate of privatization, rather than hasten it.

Suggested Citation

  • Leamer, Edward & Taylor, Mark P, 1994. "The Empirics of Economic Growth in Previously Centrally Planned Economies," CEPR Discussion Papers 976, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:976

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    Cited by:

    1. Nauro F. Campos & Abrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 793-836, September.

    More about this item


    Bayesian Econometrics; Big Bang; Gradualism; Previously Centrally Planned Economies; Privatization; Solow Growth Model;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries


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