IDEAS home Printed from https://ideas.repec.org/p/zbw/roswps/66.html
   My bibliography  Save this paper

Bridging the technology-gap in economic transition, the J-curve of growth and unemployment

Author

Listed:
  • Hetze, Pascal

Abstract

The macroeconomic experience has been somewhat ambiguous during the historic experiment of economic transition in the former centrally-planed countries in Central and East Europe (CEE). The economic restructuring produced a notable catching-up in terms of productivity but also a J-curve shape of output growth accompanied by an increase in unemployment on a large scale. This paper models the transformation progress which leads to these contradictory outcomes. Before transition initiated catching-up, the economies suffered from two limits to growth: a gap of usable capital and a gap of technologies. Accordingly, a rapid technology transfer from the advanced Western economies led to a significant technological and structural change combined with high rates of labor reallocation. If we include frictions in the consequent matching between job seekers and jobs, the model reproduces the pattern of productivity, growth and unemployment that we find in the CEE countries.

Suggested Citation

  • Hetze, Pascal, 2006. "Bridging the technology-gap in economic transition, the J-curve of growth and unemployment," Thuenen-Series of Applied Economic Theory 66, University of Rostock, Institute of Economics.
    • Handle: RePEc:zbw:roswps:66
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/39781/1/610340670.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Felix Fitzroy & Michael Funke, 1998. "Skills, Wages and Employment in East and West Germany," Regional Studies, Taylor & Francis Journals, vol. 32(5), pages 459-467.
    2. Keller, Wolfgang, 2002. "Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March.
    3. 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.
    4. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    5. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
    6. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    7. Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition in Central Europe," NBER Chapters, in: NBER Macroeconomics Annual 1994, Volume 9, pages 283-330, National Bureau of Economic Research, Inc.
    8. Gérard Roland & Thierry Verdier, 1999. "Transition and the output fall," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 1-28, March.
    9. Faggio, Giulia & Konings, Jozef, 2003. "Job creation, job destruction and employment growth in transition countries in the 90s," Economic Systems, Elsevier, vol. 27(2), pages 129-154, June.
    10. Arjun S. Bedi & Andrzej Cielik, 2002. "Wages and wage growth in Poland: The role of foreign direct investment," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 1-27.
    11. Philippe Aghion & Peter Howitt, 1994. "Growth and Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 477-494.
    12. Gang, Ira N. & Yun, Myeong-Su, 2002. "Decomposing Inequality Change in East Germany During Transition," IZA Discussion Papers 579, Institute of Labor Economics (IZA).
    13. Blanchard, Olivier, 1996. "Theoretical Aspects of Transition," American Economic Review, American Economic Association, vol. 86(2), pages 117-122, May.
    14. Svejnar, Jan, 1996. "Enterprises and Workers in the Transition: Econometric Evidence," American Economic Review, American Economic Association, vol. 86(2), pages 123-127, May.
    15. Sachs, Jeffrey D, 1996. "The Transition at Mid Decade," American Economic Review, American Economic Association, vol. 86(2), pages 128-133, May.
    16. John Haltiwanger & Milan Vodopivec, 2003. "Worker flows, job flows and firm wage policies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(2), pages 253-290, June.
    17. repec:bla:etrans:v:11:y:2003-06:i:2:p:205-219 is not listed on IDEAS
    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.
    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. Jozef Konings & Olga Kupets & Hartmut Lehmann, 2002. "Gross Job Flows in Ukraine: Size, Ownership and Trade Effects," William Davidson Institute Working Papers Series 521, William Davidson Institute at the University of Michigan.
    2. Ichiro Iwasaki & Kazuhiro Kumo, 2016. "Decline and Growth in Transition Economies: A Meta-Analysis," KIER Working Papers 951, Kyoto University, Institute of Economic Research.
    3. 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.
    4. Stepan Jurajda & Katherine Terrell, 2001. "What Drives the Speed of Job Reallocation during Episodes of Massive Adjustment?," CERGE-EI Working Papers wp170, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    5. Tyrowicz, Joanna & van der Velde, Lucas, 2018. "Labor reallocation and demographics," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 381-412.
    6. Brown, J. David & Earle, John S., 2004. "Economic Reforms and Productivity-Enhancing Reallocation in the Post-Soviet Transition," IZA Discussion Papers 1044, Institute of Labor Economics (IZA).
    7. Ran Abramitzky & Isabelle Sin, 2014. "Book Translations As Idea Flows: The Effects Of The Collapse Of Communism On The Diffusion Of Knowledge," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1453-1520, December.
    8. Lee, Velma & Viale, Ariel M., 2023. "Total factor productivity in East Asia under ambiguity," Economic Modelling, Elsevier, vol. 121(C).
    9. Djankov, Simeon & Pohl, Gerhard, 1997. "The restructuring of large firms in Slovakia," Policy Research Working Paper Series 1758, The World Bank.
    10. Andrzej Cieślik & Jan Jakub Michałek & Krzysztof Szczygielski & Jacek Lewkowicz & Jerzy Mycielski, 2021. "Foreign Ownership and Within-MNEs GVC Participation as Determinants of Innovation Activities: A CIS-Based Firm-Level Analysis," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 13(2), pages 189-211, June.
    11. Lai, Mingyong & Peng, Shuijun & BAO, Qun, 2006. "Technology spillovers, absorptive capacity and economic growth," China Economic Review, Elsevier, vol. 17(3), pages 300-320.
    12. Maciej Bukowski & Piotr Lewandowski, 2005. "Assessing flows out of employment in Poland: evidence from multinomial logit analysis," Labor and Demography 0511007, University Library of Munich, Germany, revised 30 Nov 2005.
    13. Dominick Salvatore, 2001. "The Problems of Transition, EU Enlargement, and Globalization," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(2), pages 137-157, June.
    14. Bouev Maxim & Matveenko Vladimir & Vostroknutova Ekaterina, 1998. "Transformational Decline and Preconditions of Growth in Russia," EERC Working Paper Series 98-03e, EERC Research Network, Russia and CIS.
    15. Dirk Bezemer & Uwe Dulleck & Paul Frijters, 2003. "Socialism, Capitalism, and Transition-Coordination of Economic Relations and Output Performance," Vienna Economics Papers 0305, University of Vienna, Department of Economics.
    16. Sergei Guriev & Barry W. Ickes, 2000. "Microeconomic Aspects of Economic Growth in Eastern Europe and the Former Soviet Union, 1950-2000," William Davidson Institute Working Papers Series 348, William Davidson Institute at the University of Michigan.
    17. repec:eee:labchp:v:3:y:1999:i:pb:p:2711-2805 is not listed on IDEAS
    18. Jurajda, Stepán & Terrell, Katherine, 2008. "Job Reallocation in Two Cases of Massive Adjustment in Eastern Europe," World Development, Elsevier, vol. 36(11), pages 2144-2169, November.
    19. Vadlamannati, Krishna Chaitanya, 2008. "Do Choice & Speed Of Reforms Matter For Human Rights During Transition?," MPRA Paper 10141, University Library of Munich, Germany.
    20. J. David Brown & John S. Earle, 2002. "Job Reallocation and Productivity Growth under Alternative Economic Systems and Policies: Evidence from the Soviet Transition," CERT Discussion Papers 0208, Centre for Economic Reform and Transformation, Heriot Watt University.
    21. De Loecker, Jan & Konings, Jozef, 2003. "Creative Destruction and Productivity Growth in an Emerging Economy: Evidence from Slovenian Manufacturing," IZA Discussion Papers 971, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    catching-up; growth; unemployment; technological change; transition economies;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

    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:zbw:roswps:66. See general information about how to correct material in RePEc.

    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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/ivrosde.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.