IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpma/0303003.html
   My bibliography  Save this paper

Reforms and economic growth in transition economies: Complementarity, sequencing and speed

Author

Listed:
  • Karsten Staehr

    (Central Bank of Norway)

Abstract

Growth regressions have provided important insights into the impact of economic reforms on growth in transition economies. Using principal components to decompose reform variables and construct reform clusters, we address unsettled issues such as the importance of sequencing and reform speed. The results indicate a broad-based reform policy is good for growth, but so is a policy of liberalisation and small-scale privatisation without structural reforms. Conversely, large-scale privatisation without adjoining reforms, market opening without supporting reforms and bank liberalisation without enterprise restructuring affect growth negatively. Swift reform policies allow transition countries to benefit from higher growth for a longer period of time. The speed of reforms otherwise appears to have only limited effects on short-term and medium-term growth.

Suggested Citation

  • Karsten Staehr, 2003. "Reforms and economic growth in transition economies: Complementarity, sequencing and speed," Macroeconomics 0303003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0303003
    Note: Type of Document - ´pdf; prepared on IBM PC ; to print on HP/PostScript/Franciscan monk; pages: 35 ; figures: included
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0303/0303003.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. World Bank, 2002. "Transition, The First Ten Years : Analysis and Lessons for Eastern Europe and the Former Soviet Union," World Bank Publications - Books, The World Bank Group, number 14042.
    2. Beck, Thorsten & Levine, Ross, 2004. "Stock markets, banks, and growth: Panel evidence," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 423-442, March.
    3. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
    4. Fidrmuc, Jan, 2003. "Economic reform, democracy and growth during post-communist transition," European Journal of Political Economy, Elsevier, vol. 19(3), pages 583-604, September.
    5. de Melo, Martha & Denizer, Cevdet & Gelb, Alan & Tenev, Stoyan, 1997. "Circumstance and choice : the role of initial conditions and policies in transition economies," Policy Research Working Paper Series 1866, The World Bank.
    6. Karsten Staehr, 2005. "Reforms and Economic Growth in Transition Economies: Complementarity, Sequencing and Speed," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(2), pages 177-202, December.
    7. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," NBER Working Papers 7664, National Bureau of Economic Research, Inc.
    8. 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.
    9. Mr. Stanley Fischer & Ms. Ratna Sahay, 2000. "The Transition Economies After Ten Years," IMF Working Papers 2000/030, International Monetary Fund.
    10. Mr. Eduardo Borensztein & Ms. Ratna Sahay & Mr. Jeromin Zettelmeyer & Mr. Andrew Berg, 1999. "The Evolution of Output in Transition Economies: Explaining the Differences," IMF Working Papers 1999/073, International Monetary Fund.
    11. Ruth Judson & Ann L. Owen, "undated". "Estimating Dynamic Panel Data Models: A Practical Guide for Macroeconomists," Finance and Economics Discussion Series 1997-03, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    12. 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.
    13. Catherine Pattillo & Hélène Poirson & Luca Antonio Ricci, 2011. "External Debt and Growth," Review of Economics and Institutions, Università di Perugia, vol. 2(3).
    14. Roxana Radulescu & David Barlow, 2002. "The relationship between policies and growth in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 719-745, November.
    15. GÈrard Roland, 2001. "Ten Years After . . . Transition and Economics," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-3.
    16. Nerlove,Marc, 2005. "Essays in Panel Data Econometrics," Cambridge Books, Cambridge University Press, number 9780521022460, October.
    17. Clifford Zinnes & Yair Eilat & Jeffrey Sachs, 2001. "The Gains from Privatization in Transition Economies: Is "Change of Ownership" Enough?," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-7.
    18. Beck, Thorsten & Levine, Ross, 2001. "Stock markets, banks, and growth : correlation or causality?," Policy Research Working Paper Series 2670, The World Bank.
    19. Wolf, H.C., 1999. "Transition Strategies: Choices and Outcomes," Princeton Studies in International Economics 85, International Economics Section, Departement of Economics Princeton University,.
    20. Berta Heybey & Peter Murrell, 1999. "The relationship between economic growth and the speed of liberalization during transition," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(2), pages 121-137.
    21. J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
    22. Mr. Jahangir Aziz & Mr. Robert F. Westcott, 1997. "Policy Complementarities and the Washington Consensus," IMF Working Papers 1997/118, International Monetary Fund.
    23. Oleh Havrylyshyn, 2001. "Recovery and Growth in Transition: A Decade of Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-4.
    24. de Melo, Martha & Denizer, Cevdet & Gelb, Alan, 1996. "From plan to market : patterns of transition," Policy Research Working Paper Series 1564, The World Bank.
    25. Joachim Ahrens, 2002. "Governance and Economic Development," Books, Edward Elgar Publishing, number 2681.
    26. Romain Wacziarg, 2002. "Review of Easterly's The Elusive Quest for Growth," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 907-918, September.
    27. Mr. Norbert Funke & Mr. Saleh M. Nsouli & Mr. Mounir Rached, 2002. "The Speed of Adjustment and the Sequencing of Economic Reforms: Issues and Guidelines for Policymakers," IMF Working Papers 2002/132, International Monetary Fund.
    28. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    29. International Monetary Fund, 2000. "Institutions Matter in Transition, But so do Policies," IMF Working Papers 2000/070, International Monetary Fund.
    30. Mr. Stanley Fischer & Ms. Ratna Sahay & Mr. Carlos A. Végh Gramont, 1996. "Stabilization and Growth in Transition Economies: The Early Experience," IMF Working Papers 1996/031, International Monetary Fund.
    31. 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 229-233, May.
    32. Stanley Fischer & Alan Gelb, 1991. "The Process of Socialist Economic Transformation," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 91-105, Fall.
    33. Mr. N. F. R. Crafts, 2000. "Globalization and Growth in the Twentieth Century," IMF Working Papers 2000/044, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Falcetti, Elisabetta & Lysenko, Tatiana & Sanfey, Peter, 2006. "Reforms and growth in transition: Re-examining the evidence," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 421-445, September.
    2. Iwasaki, Ichiro & Kumo, Kazuhiro, 2016. "Decline and Growth in Transition Economies: A Meta-Analysis," CEI Working Paper Series 2016-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    3. Fidrmuc, Jan & Tichit, Ariane, 2009. "Mind the break! Accounting for changing patterns of growth during transition," Economic Systems, Elsevier, vol. 33(2), pages 138-154, June.
    4. Gouret, Fabian, 2007. "Privatization and output behavior during the transition: Methods matter!," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 3-34, March.
    5. Jan Babecky & Tomas Havranek, 2014. "Structural reforms and growth in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 13-42, January.
    6. Igor Pelipas & Alexander Chubrik, 2008. "Market Reforms and Growth in Post-socialist Economies: Evidence from Panel Cointegration and Equilibrium Correction Model," William Davidson Institute Working Papers Series wp936, William Davidson Institute at the University of Michigan.
    7. Dalibor Roháč, 2013. "What Are the Lessons from Post-Communist Transitions?," Economic Affairs, Wiley Blackwell, vol. 33(1), pages 65-77, February.
    8. Fidrmuc, Jan, 2003. "Economic reform, democracy and growth during post-communist transition," European Journal of Political Economy, Elsevier, vol. 19(3), pages 583-604, September.
    9. Iwasaki, Ichiro & 岩﨑, 一郎 & イワサキ, イチロウ, 2003. "Transition Strategies and Economic Performances in the Former Soviet States: A Comparative Institutional View," Discussion Paper Series a433, Institute of Economic Research, Hitotsubashi University.
    10. Ichiro Iwasaki, 2004. "Evolution of the Government–Business Relationship and Economic Performance in the Former Soviet States – Order State, Rescue State, Punish State," Economic Change and Restructuring, Springer, vol. 36(3), pages 223-257, September.
    11. 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.
    12. Vadlamannati, Krishna Chaitanya, 2008. "Do Choice & Speed Of Reforms Matter For Human Rights During Transition?," MPRA Paper 10141, University Library of Munich, Germany.
    13. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    14. Neil Foster-McGregor & Robert Stehrer, 2005. "Modelling GDP in CEECs Using Smooth Transitions," wiiw Working Papers 36, The Vienna Institute for International Economic Studies, wiiw.
    15. David Aristei & Cristiano Perugini, 2014. "Speed and Sequencing of Transition Reforms and Income Inequality: A Panel Data Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 542-570, September.
    16. DELL'ANNO, Roberto & VILLA, Stefania, 2012. "Growth in Transition Countries: Big Bang versus Gradualism," CELPE Discussion Papers 122, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    17. Mr. Alejandro Simone & Mr. Alex Segura-Ubiergo & Mr. Sanjeev Gupta, 2006. "New Evidence on Fiscal Adjustment and Growth in Transition Economies," IMF Working Papers 2006/244, International Monetary Fund.
    18. Byung-Yeon Kim & Jukka Pirttilä, 2003. "The political economy of reforms: Empirical evidence from post- communist transition in the 1990s," Macroeconomics 0304009, University Library of Munich, Germany.
    19. Sukiassyan, Grigor, 2007. "Inequality and growth: What does the transition economy data say?," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 35-56, March.
    20. Foster, Neil & Stehrer, Robert, 2007. "Modeling transformation in CEECs using smooth transitions," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 57-86, March.

    More about this item

    Keywords

    Economic reforms; growth; principal components; gradualism versus big-bang;
    All these keywords.

    JEL classification:

    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:0303003. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.