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Understanding the Long-Term Growth Performance of the East European and CIS Economies

Author

Listed:
  • Rumen Dobrinsky

    () (United Nations Economic Commission for Europe)

  • Dieter Hesse

    () (United Nations Economic Commission for Europe)

  • Rolf Traeger

    () (United Nations Economic Commission for Europe)

Abstract

The paper analyses the determinants of long-term economic performance of east European and CIS economies in two periods: 1960-1989 (the era of central planning) and 1990-2005 (the transition to the market economy system). Throughout the 1960s and 1970s economic growth in eastern Europe progressively weakened and during the 1980s most of these economies plunged into a prolonged stagnation or recession, which contributed to the collapse of communism and central planning. The transition from plan to market began with the transformational recession, which persisted until the mid-1990s in eastern Europe, but was longer and deeper in the CIS. Since then, the east European and CIS economies have embarked on a path of strong economic growth. The recovery has been accompanied by a surge in fixed investment, often complemented by large inflows of FDI. Despite robust output growth, however, there has not been - at least so far - a noteworthy recovery in employment. The main feature of the recent strong economic growth in the region has been a remarkable upturn in both labour productivity and total factor productivity. The considerable gains in productive efficiency and rapid technological change were triggered by wide-ranging market reforms and the modernization of the capital stock. Gains in aggregate output per person employed have outpaced by a large margin increases in real GDP per capita. In terms of average productivity and real per capita income levels relative to those of the more developed, industrialized countries, the east European and CIS economies still face a long catching up process.

Suggested Citation

  • Rumen Dobrinsky & Dieter Hesse & Rolf Traeger, 2006. "Understanding the Long-Term Growth Performance of the East European and CIS Economies," ECE Discussion Papers Series 2006_1, UNECE.
  • Handle: RePEc:ece:dispap:2006_1
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    File URL: http://www.unece.org/fileadmin/DAM/oes/disc_papers/ECE_DP_2006-1.pdf
    File Function: First version, 2006
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    Cited by:

    1. Dobrinsky, Rumen, 2006. "Catch-up inflation and nominal convergence: The balancing act for new EU entrants," Economic Systems, Elsevier, vol. 30(4), pages 424-442, December.

    More about this item

    Keywords

    economic growth; East Europe; CIS; transition economies;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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