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Convergence at last? Evidence from Transition Countries

  • Saso Polanec

In this paper, we test the neoclassical growth model and its main prediction of conditional convergence of productivity for a sample of transition countries over the period 1990-2002. We split the sample into three periods: 1990-1994, 1994-1998 and 1998-2002 and confirm the convergence hypothesis only for the last period of transition, while in the early transition, factors specific to the transition process dominated productivity growth. We confirm past findings of importance of the process of liberalization and initial conditions for explaining differences in productivity growth. In the period 1998-2002, transition specific factors play no negative role, while in the period 1994-1998 their role is substantially reduced. These results, however, should not yet be intepreted as a sign of a permenent return to convergence in transition countries as they could be caused by differences in transition cycle.

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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 14404.

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Length: 26 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:lic:licosd:14404
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  1. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
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  10. Iacopetta Maurizio, 2004. "Dissemination of Technology in Market and Planned Economies," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-32, February.
  11. Etsuro Shioji, 1997. "It's still 2%: evidence on convergence from 116 years of the US States panel data," Economics Working Papers 236, Department of Economics and Business, Universitat Pompeu Fabra.
  12. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  13. Campos, Nauro F., 2001. "Will the Future Be Better Tomorrow? The Growth Prospects of Transition Economies Revisited," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 663-676, December.
  14. Kasper Bartholdy, 1997. "Old and new problems in the estimation of national accounts in transiton economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 131-146, 05.
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  16. Fischer, Stanley & Sahay, Ratna & Vegh, Carlos A, 1996. "Economies in Transition: The Beginnings of Growth," American Economic Review, American Economic Association, vol. 86(2), pages 229-33, May.
  17. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
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