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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. S. Fisher & R. Sahay & C. A. Vegh, 1997. "Stabilization and Growth in Transition Economies: The Early Experience," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
  2. 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.
  3. 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.
  4. Mária Lackó, 2000. "Hidden Economy - an Unknown Quantity? Comparative Analysis of Hidden Economies in Transition Countries, 1989-95," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 117-149, March.
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  7. Quah, Danny, 1999. "Cross-Country Growth Comparison: Theory to Empirics," CEPR Discussion Papers 2294, C.E.P.R. Discussion Papers.
  8. Gérard Roland, 2000. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182033, June.
  9. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  10. 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.
  11. Gerard Roland & Thierry Verdier, 1997. "Transition and the Output Fall," William Davidson Institute Working Papers Series 37, William Davidson Institute at the University of Michigan.
  12. 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.
  13. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  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.
  15. Xavier Sala-i-Martin, 1997. "I just ran four million regressions," Economics Working Papers 201, Department of Economics and Business, Universitat Pompeu Fabra.
  16. Spagat, Michael, 2006. "Human capital and the future of transition economies," Journal of Comparative Economics, Elsevier, vol. 34(1), pages 44-56, March.
  17. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
  18. Dariusz K. Rosati, 1994. "Output decline during transition from plan to market: a reconsideration," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 419-441, December.
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