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

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  • Staehr, Karsten

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

  • Staehr, Karsten, 2003. "Reforms and economic growth in transition economies: Complementarity, sequencing and speed," BOFIT Discussion Papers 1/2003, Bank of Finland Institute for Emerging Economies (BOFIT).
  • Handle: RePEc:zbw:bofitp:bdp2003_001
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    More about this item

    Keywords

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

    JEL classification:

    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • P30 - Political Economy and Comparative 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

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