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Thirty Years After: Economic Growth in Transition Countries

Author

Listed:
  • Josip Tica

    (Faculty of Economics & Business, University of Zagreb)

  • Viktor Viljevac

    (Faculty of Economics & Business, University of Zagreb)

Abstract

In this paper, we use a dynamic threshold panel model to investigate the impact of classical and transition specific growth factors on the economic growth of transition countries during 1989-2019. Following Durlauf, Johnson and Temple (2004) we use more than 40 potential ”mainstream” growth factors and we augment the list of factors with transition specific indicators such as privatization methods and various indicators of institutional quality. Given the difficulty in quantifying the economic policies employed in various countries, we explore a wide list of potential threshold variables that can exogenously split the sample into fast and slow-growing countries. We use a range of model specifications and both fixed effects and system GMM estimators as well as Bayesian averaging in order to investigate the robustness of the results. In total more than 16 million estimates are analysed. Preliminary results suggest that the most robust results are for the initial level of development, long term effects of labor market reforms (employment rate), the share of investment, and the importance of the natural resources.

Suggested Citation

  • Josip Tica & Viktor Viljevac, 2020. "Thirty Years After: Economic Growth in Transition Countries," EFZG Working Papers Series 2005, Faculty of Economics and Business, University of Zagreb.
    • Handle: RePEc:zag:wpaper:2005
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    More about this item

    Keywords

    transition; socialist systems; Solow model; institutions; economic growth; threshold model;
    All these keywords.

    JEL classification:

    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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