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Does growth further improve economic freedom?

  • Miroslav Prokopijevic
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    Countries without natural resources or foreign aid can grow just if they do serious economic liberalization. Liberal reforms are first followed by a post-reform recession, and afterwards with growth, provided they create a well business environment, compared to alternatives. Economies growing because of liberalization just exceptionally undertake further reforms in order to enlarge gains - is the main finding of this study. On the one side, reforms are costly, and after having paid once, people prefer to extract gains, instead to invest again. On the other side, reforms create seeds of their own destruction, by crating environment for a new wave of rent seeking. Other reasons for why countries do not liberalize again, after doing one move, are country-groups specific. After a brief introduction (I), the data indicating degree of liberalization and growth rates throughout the world in the period 1970-2002 are presented (II). The scope of analysis is restricted to some four groups of countries (developed, recently developed from the Far East, transition and Latin American countries), and it is found that - beyond general reason - reform processes merely depend on just a few factors, like previous development, democracy, the rule of law, the conditions in tradable and non-tradable sectors, and the ruling team.(III) Final chapter is about concluding remarks (IV).

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    File URL: http://servizi.sme.unito.it/icer_repec/RePEc/icr/wp2002/prokopijevic16-02.pdf
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    Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 16-2002.

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    Length: 57 pages
    Date of creation: Mar 2002
    Date of revision:
    Handle: RePEc:icr:wpicer:16-2002
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    1. Quiggin, John, 1998. "Social Democracy and Market Reform in Australia and New Zealand," Oxford Review of Economic Policy, Oxford University Press, vol. 14(1), pages 76-95, Spring.
    2. Imai, Yutaka & Kawagoe, Masaaki, 2000. "Business Start-Ups in Japan: Problems and Policies," Oxford Review of Economic Policy, Oxford University Press, vol. 16(2), pages 114-23, Summer.
    3. James D. Gwartney & Robert A. Lawson & Randall G. Holcombe, 1999. "Economic Freedom and the Environment for Economic Growth," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 643-, December.
    4. Loren Brandt & Xiaodong Zhu, 2000. "Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 422-451, April.
    5. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 465-90, May.
    6. David Jones, 1997. "Asian Values and the Constitutional Order of Contemporary Singapore," Constitutional Political Economy, Springer, vol. 8(4), pages 283-300, December.
    7. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
    8. Jain, Arvind K, 2001. " Corruption: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 71-121, February.
    9. Lindbeck, Assar, 1995. "Hazardous Welfare-State Dynamics," Working Paper Series 428, Research Institute of Industrial Economics.
    10. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
    11. Boltho, Andrea & Corbett, Jenny, 2000. "The Assessment: Japan's Stagnation--Can Policy Revive the Economy?," Oxford Review of Economic Policy, Oxford University Press, vol. 16(2), pages 1-17, Summer.
    12. repec:cto:journl:v:20:y:2000:i:1:p:69-72 is not listed on IDEAS
    13. Enrico Colombatto & Jonathan Macey, 1999. "Information and Transaction Costs as the Determinants of Tolerable Growth Levels," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 617-, December.
    14. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
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