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Growth in Transition: What We Know, What We Don't, and What We Should

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Abstract

This paper surveys the literature on economic growth during the transition from centrally planned to market economy in Central and Eastern European and former Soviet Union countries. It provides a descriptive analysis of regional growth performance vis--vis countries at similar levels of development, including a discussion of the available growth accounting results. The importance of different factors that have been identified in the cross-country literature as being associated with economic growth (namely accumulation and technological change, initial conditions, policies and shocks) is also examined. The paper presents new results on the role of institutions and of government expenditures that fill two main lacunae in the literature . After a brief assessment of the extent to which economic growth has been associated with progress on different measures of well being, the paper concludes with a list of suggested issues to be investigated in the context of specific country studies. 2 ...

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... Nonetheless, similar patterns have been observed elsewhere-in particular, recent evidence suggests that the uptick in growth in emerging market economies during the 2000-12 period is mainly explained by higher total factor productivity (Tsounta 2014). In addition, the very low contribution of labor and human capital to GDP growth in the Western Balkans is in line with findings of other studies (Campos and Coricelli 2002;IMF 2009;and EBRD 2013). ...
... In upper-middleincome countries, boosting productivity growth would require deepening capital markets, developing more competitive and flexible product and labor markets, fostering a more skilled labor force, and investing in research and development and new technologies (Dabla-Norris and others 2013). Finally, a survey of various studies that focus specifically on the transition process concludes that institutional quality and market liberalization policies to promote private sector growth have a positive impact on economic growth, despite their initially disruptive effect (Campos and Coricelli 2002). ...
... Results indicate that gains in TFP in the region-the residual in the growth accounting analysis-explain about half of annual average growth, comparable to New Member States (Annex Figure 1.1.1), in line with other studies on transition economies (Campos and Coricelli 2002;IMF 2009;and EBRD 2013). This TFP improvement has likely reflected the effects of transition to a market economy, including enterprise restructuring and privatization, and increased technology transfer from the European Union. ...
... The relatively weak mobility, in the CEECs, during and after the first phase of the transition, induced a persistent high regional unemployment Campos and Coricelli, 2002;Fidrmuc, 2004;Jurajda and Terrell, 2009). The regional dimension of the labour market appears as a solid argument to understand the dynamic of adjustment mechanisms and to tackle regional (sectoral) heterogeneities (Marelli et al., 2012;Rios, 2016). ...
... According to Campos and Coricelli (2002) the low labour mobility across regions, significantly impacts the persistence in high unemployment rate and the weak participation rate. Fidrmuc (2004), using data on Czechia, Hungary, Poland and Slovakia, covering the 1992-1998 period confirm a regional mobility issue. ...
... Being an EU member implies an increase in EU-members interdependences. The transition was associated with a huge increase in unemployment and a weak mobility amongst regions (Campos and Coricelli, 2002). ...
Thesis
"The subject matter of international economics, then, consists of issues raised by the special problems of economic interaction between sovereign states.” (Krugman et al., 2011)Institutional innovation fosters the development of these interactions. Thus, European states, on a social background, try to benefit from the cooperation leverage effect, to turn centuries of conflicts, into an economic asset. Such a construction and its pantagruelian twists and turns, as a fusion of history and empires, not far from Victor Hugo’s utopia “the United-State of Europe”, demonstrates the incredible ingenuity, national heterogeneities develop to refine the paradigm “Europe”.In this thesis, we propose to shed some light on some of these challenges, with regard to the countries which, not half a century ago, marked the fracture of the continent, CEECs. These economies, from transition to developed economy, are an unprecedented case study, to understand international economic challenges. After explaining the general framework, in which this work takes place (Chapter 1), we investigate the impact of the ECB’s monetary policy, on the peripheral countries of the euro zone, i.e., EU non-Euro members. In chapter 2, we construct two groups of countries, depending on their exchange rate regime (fixed or flexible). Drawn upon this construction, using monetary, price and output data, we measure the impact of a monetary shock, impulsed by the ECB, on the CEECs. We find that economic integration induces spillover effects, that influence domestic monetary decisions. As expected, pegged economies are more strongly affected, by the monetary policy of the ECB. However, in both groups of countries, we find that spillovers tend to have less impact, on the volatility of our variables (GDP and prices), over the last decade. We explain this, via a more efficient exchange rate channel, to absorb shocks (in flexible exchange) and an increased credibility of domestic monetary institutions.We highlighted that spillovers effects significantly influence the CEECs, with direct impact upon domestic monetary challenges. The first phase of the transition, during the 90’s, has been hit by high level of both inflation and unemployment. Over the last years, inflation seems to be under control, and we observe relatively low unemployment rate, closed to its natural level. This could suggest that monetary credibility has been restored. However, in the process of accession to the Euro zone, monetary leeway is becoming increasingly restricted.Throughout Chapter 3, we use the well-known Phillips curve, to understand the relationship between the unemployment rate and price developments, as a proxy for the effectiveness of monetary policy. The Baltic States, Slovenia and Slovakia are perfect candidates to measure the impact of changes in exchange rate regimes, during accession to the EA. During the ERM-II, the relationship is negative and significant. However, the EA entry is prima facie evidence of a flattened Phillips curve. We explain this result by the fact that in a monetary union, "small" economies do not have sufficient power, to significantly influence monetary policy decisions.To be fully effective, the single policy of the ECB must confront, relatively homogeneous economies. This homogeneity transcends the monetary dimension and directly affects the real economy (evidenced by the Phillips curve). The impacts of asymmetric shocks are smoothed through the adjustment mechanisms in an optimal union. Among these mechanisms, we highlight the role of the labour market, which requires flexibility (of wages) and increased factor mobility. Chapter 4 analyses regional adjustment mechanisms, after an exogenous employment shock. Using regional NUTS-II data, we build a VAR panel, to understand these mechanisms. (...)
... At the same time, it is highly inhomogeneous. Long growth slowdown before transition in 1990 was followed by the transformational fall with negative rates -6.8 percent in 1991-98, common for all former socialist economies in Europe ( Campos and Coricelli 2002 ). The post-transition jump off in 1999-2008 with growth rates of 6.7 percent brought Russia in line with the largest booming emerging economies -India, China, and Brazilwhich formed the BRIC club. ...
... The economic structure of command economies was unbalanced in favour of manufacturing and agriculture. That is why it is little wonder that intensive structural change and labor reallocation with the extension of market services and shrinking manufacturing was one of a few basic stylized facts, common for all economies in transition ( Campos and Coricelli 2002 ). ...
... 7 The through point in 1998 was avoided to diminish biases on TFP because of the short-term capacity utilization effects. 8 The concept of communist capital was suggested by Campos and Coricelli (2002). It is defi ned as capital installed in years of planned economy in a different institutional environment. ...
... Around the year 2000, papers on the lessons learned from the first 10 years started to emerge, summarizing the process up to that point. For instance, in an influential paper published in the Journal of Economic Literature, Campos and Coricelli (2002) discussed the literature on short run economic growth in transition and offered a table with seven stylized facts (the 'magnificent seven'): 'We summarize these ten years by means of a list of stylized facts of the transition so far, namely: (1) output fell, (2) capital shrank, (3) labor moved, (4) trade reoriented, (5) the structure changed, (6) institutions collapsed, and (7) transition costs.' (Campos and Coricelli, 2002, p. 794.) This early literature offered some tentative suggestions for understanding the variation in both the magnitude of the initial output drop and in the speed and force of the following recovery. ...
... In particular, reform progress may partly be a function of initial conditions. Factor analysis in Campos and Coricelli (2002) suggests that initial policy related distortions, such as internal trade dependence, repressed inflation, and black market premiums on the currency market, were important. These early distortions can be remedied over time and possibly compensated for, suggesting they may drop in significance in a longer time perspective (Berg et al., 1999). ...
... Meanwhile, papers like Campos and Coricelli (2002) pointed out that some potential key drivers were missing from the growth models in the early literature on transition due to data limitations. A key lesson from the literature is the importance of judicial, political and financial institutions that govern how markets function, how human and physical capital is allocated, how property and control rights are safeguarded, and how corruption and organized crime are contained and punished (Roland, 2000, Popov 2000. ...
Article
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We look at the growth experience of 25 transition countries over the 25 years since the dissolution of the USSR. The initial collapse in income was much more severe in 12 former Soviet Union countries (FSU12) than in the 10 transition countries that joined the EU in 2004 and 2007 (EU10). In 2015, FSU12 income levels were further behind EU10 than they were at the start of transition, despite more rapid growth in the last 15 years. Compared to predictions from a parsimonious growth model, the region as a whole is ‘normal’ in terms of growth performance since the 2000s. However, the FSU12 over‐perform and the EU10 under‐perform relative to model predictions for the last 15 years.
... The transition process that took place in Central and Eastern European countries was marked by widespread liberalizations, featuring substantial reduction in output and either large increases in unemployment rates or outflows of the labor force, reducing the human capital available (Campos and Coricelli 2003;de Melo et al. 1997). Moreover, the transition process led to an expanding private sector, which changed the wage setting procedure, establishing a connection between labor productivity and wages and resulted in increasing wage inequality (Mitra and Yemtsov 2006). ...
... Institutional reforms were accompanied by fiscal austerity, reducing public spending (especially social expenditures), thereby failing to mitigate rising inequality, while the majority of CEE economies resorted to expansionary monetary policy, leading to inflationary pressures. Overall, this liberalization process has been associated with social costs, especially in terms of rising income inequality (Campos and Coricelli 2003). ...
Article
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We study the effects of the adoption of macroprudential policies on income inequality in former transition economies over the period 2002–2014. In general, this adoption leads to rising income inequality; however, the effect depends on the degree of domestic financial development and globalization: for low levels of openness and financial development, they increase inequality. Instead, some macroprudential measures may result in lower income inequality, provided the adopting economy is sufficiently open and has a developed/unrestricted financial system. Our results suggest that reduction in income inequality can be promoted together with financial stabilization and the avoidance of systemic risks.
... Along this line, we argue that the inducement effect of labor cost on innovation could be lower for local SOEs than for central SOEs, for at least two reasons. First, local SOEs are more likely to be subject to intervention from their ultimate owners, the local governments, who tend to promote corporate investment in fixed assets (Campos and Coricelli, 2002) and equity in other local SOEs (Xu, 2011), or reduce R&D investment (Hao and Lu, 2018) to achieve social, economic, or political objectives. 28 Second, the political promotion of managers in local SOEs, which are appointed by the local governments, is more likely to rely on the extent to which the local SOEs act in the interest of the local government (i.e., implementing government policies and fulfilling social goals). ...
... 27 We focus on non-SOEs because SOEs are ultimately controlled by the central or local governments and are expected to be politically connected. 28 The local government tends to promote fixed asset investment, such as the purchase of machinery and construction of plants and infrastructure, as these activities have direct impacts on short-term economic growth (Campos and Coricelli, 2002). The local governments also prefer local SOEs to invest in equity in other enterprises, as equity investment in local SOEs facing financial hardship will help ease any unemployment pressure in the region and enhance local economic and social stability (Xu, 2011). ...
Article
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We examine the inducement effect of labor cost on corporate innovation in emerging markets. To establish causality, we adopt a difference-in-differences approach, based on the variations generated by the passage of the new Labor Contract Law in China, as well as an instrumental variable approach. We find the inducement effect of labor cost is more pronounced for Chinese non-state-owned enterprises, firms without political connections, and firms with low labor productivity. Our results support the induced innovation hypothesis in that increases in wages will induce invention and technology adoption, but also suggest that government intervention through state ownership and political connections largely decreases this inducement effect. Our findings have implications for emerging markets regarding the transition from a low-cost labor development model to an innovation-driven growth model.
... According to Aslund (2008), abandoning such political and economic system led to market economic transformation striving for democracy and market economy based on private property and the rule of law. The Central and Eastern European countries from former Soviet Union were well prepared for rapid take-off: they were industrialised, had reasonably educated and healthy labour forces, population growth was minimal, lagging technology was solvable with the free flow of information and Western assistance, there was substantial technical progress in the defence sector (Campos and Coricelli, 2002). After going through the painful process of restructuring during the 1990s Baltic States reached the catching-up stage of economic development, which meant that their income gap was going to narrow down as compared with rich industrialised countries (Varblane et al., 2007). ...
... And when eight CEECs, including Estonia, Latvia and Lithuania, joined the European Union, their transition process towards fully functioning free market economy was identified as completed (European Bank for Reconstruction and Development, 2006;World Bank, 2008). This transition of CEECs was empirically studied by Aslund (2002), Campos and Coricelli (2002), European Bank for Reconstruction and Development (1999)(2000)(2001)(2002)(2003)(2004) and World Bank (2002), with in depth analysis on the reforms taken by Fischer and Sahay (2000), Staehr (2005), Falcetti et al. (2006), as well as assessments of the strategies of the transition provided by Svejnar (2002). The studies create the comprehensive view not only the transition process and different paths taken by single country, but also define the outcomes that followed the process. ...
Article
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The paper provides an evolutionary study on the transition of national innovation systems (NIS) within the catching up economy context in the Baltic Region. The regional and institutional context provides an exceptional chance to look at the evolution of economies from planned economy towards free market, and reaching advanced high economy profile over 25 years (International Monetary Fund, 2015). However, the authors argue, that economy transition does not simultaneously lead to the technological upgrading and sophistication of NIS. The comparative evolutionary data analysis in three Baltic States, namely Estonia, Latvia and Lithuania, that reached advanced economy profile in 2015 (IMF) is used to illustrate the statement. The period of study encompasses ten years of membership in European Union (2006-2015), and aims at providing the national innovation system transition trends from the evolutionary perspective. The authors aim to provide the reader with the broad overview of transition patterns taken. Empirical findings demonstrate the differences in national innovation system transition, whereas Estonia demonstrates balanced development of national innovation system, and Lithuania together with Latvia demonstrate asymmetries and stagnating development despite successful economic transition.
... About three decades ago the centrally planned economy in the former Soviet Union collapsed leaving newly independent states, in particular, countries in Central Asia to pursue their own path of post-communist economic transformation and destiny. Like other former Soviet republics and countries in Central and Eastern Europe all stan nations of the region, namely Kazakhstan, Kyrgyzstan, 1 Tajikistan, Turkmenistan and Uzbekistan initially seemed to be fairly well prepared for the transition to a market-based economy: they were relatively industrialized, their agricultural sector was operating at a reasonable level of performance, some of them were endowed with sizeable natural resources and there was well educated and healthy labor force in the region (Campos et al. 2002). ...
... Many studies related to the region were chiefly conducted either during the 1990s or early 2000s. Alternatively, a number of authors who explored similar research examined them along with a sample consisting of other post-communist states of the former Soviet Union, and Central and Eastern Europe (Campos et al. 2002;Rapacki et al. 2009;Yormirzoev et al. 2020). ...
Article
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This paper analyzes patterns of long-term economic performance in all five Central Asian countries. We first look at sources of economic growth based on a simple growth accounting exercise. Our findings show that under the period of study total factor productivity growth rates were modest ranging from 1.7% for Kazakhstan, 1.4% for Uzbekistan, and 0.8% for Tajikistan and Turkmenistan to—0.4% for the Kyrgyz Republic. The second part of the paper is connected with exploring productivity level analysis across all Central Asian countries by decomposing differences in output per worker into differences in capital intensity and productivity. Results reflect different levels of productivity performance in the region compared with Japan and South Korea as frontier economies for the analysis.
... The transition countries had limited capabilities in the education system and higher labor market frictions at the beginning of their transition. The education and social systems rather deteriorated in the transition period (e.g., Campos & Coricelli, 2002). The transition to an open and competitive market economy, FDI-induced new technologies and equipment, and the overall skill-biased technological shift in the 1990s suddenly required other skills than the working age population and the education systems were prepared for (see Aghion & Commander, 1999). ...
... During the simultaneous period, transition countries also experienced many structural and institutional changes in political institutions and their economy, such as privatizations of state-owned enterprises, deindustrialization, price liberalizations, financial development, labor and product market deregulation, new models of corporate governance, or shrinking and reforming of the public sector during their transformation from centrally planned to market-based economies (Flemming & Micklewright, 2000;Ivanova, 2007;Milanovic, 1999;Myant & Drahokoupil, 2010;Perugini & Pompei, 2015b;Roland, 2000). One of the most visible outcomes of the systematic change and complex interplay of several forces is a remarkable increase in income inequality (see Campos & Coricelli, 2002;Ivanova, 2007;Perugini & Pompei, 2015a). The market-oriented reforms, moreover, promoted the inflow of FDI and the countries' integration in the global market. ...
Article
We examine how trade openness influences income inequality within countries. The sample includes 139 countries over the period 1970–2014. We employ predicted openness as instrument to deal with the endogeneity of trade openness. The effect of trade openness on income inequality differs across countries. Trade openness tends to disproportionately benefit the relative income shares of the very poor, but not necessarily all poor, in emerging and developing economies. In most advanced economies, trade openness increased income inequality, an effect that is driven by outliers. Our results suggest a strong effect of trade openness on inequality in China and transition countries.
... The pio- neering work by Barro (1991) develops an empirical model with the aim of explaining the performance of transition countries depending on various factors. Campos and Coricelli (2002) are concerned with the data prob- lems in studies of transition. Namely, the availability and reliability of data in econometric studies that pool together very diverse countries like, for instance, in de Melo et al. (2001), may have serious consequences on ...
Chapter
The central puzzle of Croatia’s post-communist transition has been the extent of economic and institutional divergence with new EU member states bound by common historical legacy and imperatives of institutional transformation following a collapse of the old institutional order. In this chapter we identify two key explanations that stand behind this evolution. First, we claim that the political economy of Croatia’s transition represents the case of partial reform equilibrium where winners represent the biggest threat to successful long-term transition. Second, comparative political economy analysis of five key areas (product market competition, collective bargaining, financial sector, social protection and education) shows that Croatia developed a typical variant of capitalism, which is in its attributes closer to South European capitalisms than to capitalisms prevalent in Central and Eastern Europe (CEE-10) EU member states.
... First, during the transition process in the 1990s the CEE countries experienced structural reforms and large declines in output. This created dead capital, or structurally unused capital, that was left over from the era of central planning and which was unusable under the new market economic conditions (Bah & Brada, 2009;Campos & Coricelli, 2002;Izyumov & Vahaly, 2008). Estimates of dead or unused capital in the transition economies differ a lot across various studies. ...
Article
This article presents growth accounting results for 11 EU countries from Central and Eastern Europe for the years 1996–2016. Its contributions include the estimation of new capital stock series and adjustment for the utilisation of capital stock. Before the crisis, growth in total factor productivity (TFP) was the main contributor to output growth in Slovenia, Hungary and Slovakia, while capital deepening was more important in the Czech Republic, Croatia and Poland. During the global financial crisis the contributions of TFP and capital growth differed markedly across the countries, reflecting the very diverse dynamics of the crisis. After the crisis the contribution of TFP growth has been negligible in all of the sample countries coinciding with generally weak output growth. The results are generally robust to changes in estimation methods and parametrisations, but some assumptions regarding the construction of the capital stock series are critical for the results.
... The economic structure of command economies was unbalanced in favour of manufacturing and agriculture. That is why the extension of market services and shrinking manufacturing was one of a few basic facts, common for all economies in transition (Campos & Coricelli, 2002). Russia is no exception. ...
Article
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Although productivity slowdown of the global economy was observed before 2008, it is the 2008 crisis that stimulated studies on its origins. Recent literature mentions in this context inefficient investments to machinery, human capital and organizational processes. This can include the skill mismatch and the lack of technology diffusion from advanced to laggard industries and firms. To what extent is this global view helpful in understanding recent productivity slowdown of the Russian economy? The present study reports that, at least, some of these origins can be observed in Russia. Using the conventional industry growth accounting it compares the pre- and post-crisis sources of growth of the Russian economy. Specifically, it represents aggregate labour productivity growth as the sum of capital deepening and total factor productivity (TFP) growth in industries, and the contribution of labour reallocation between industries. It shows that stagnation of 2008-2014 is more the outcome of TFP slowdown and the deterioration of the allocation of labour rather than the lack of capital inputs. Moreover, TFP slowdown started in Russia a few years before the crisis, the same as in major global economies, such as the United States, OECD countries, China and Brazil. At the same time, relatively stable capital deepening makes the Russian pattern in some degree similar to resources abundant Australia and Canada. Next, the contribution of information and communication capital to labour productivity growth in Russia after 2008 declined, which can hamper technology diffusion. Finally the structure of the flow of capital services in Russia has changed after 2008. Before the crisis the contribution of machinery and equipment dominated, while after the crisis constructions provided the lions’ share of capital inputs.
... References include Djankov, et al. (2001), LaPorta, et al. (1998, Murrell, ed., (2001), Djankov and Murrell (2002) and Campos and Coricelli (2002). They show that societies with "bad" institutions grow considerably more slowly than societies with good institutions, controlling for capital, education, and other variables associated with productivity. ...
... Poland, a member of the centrally planned European Emerging Market Economies (EEMEs), has experienced tremendous economic, social, and political change since 1990. Its transformation was both difficult and painful due to the lack of, or underdeveloped, market institutions (Acemoglu & Johnson, 2005;Campos & Coricelli, 2002). The market reforms implemented in Poland in 1990 resulted in a liberalization of foreign trade opening its economy to flows of goods, services, and capital. ...
Article
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The aim of this paper is to identify and assess recent progress in talent management (TM) among Poland’s MNEs. The authors used a quantitative research design through an online survey. It was supplemented by post-survey interviews designed to help interpret the survey findings. A total of 83 MNEs in Poland responded to the survey. The analysis presented in the paper contrasted the 31 MNEs that rated TM as “high” in strategic importance vs. the 22 companies that rated it “low” in strategic importance. Six variables differentiated the “high” vs. “low” TM importance companies at the .05 level of confidence or beyond. The discussion focuses on the continued need to improve TM/HRM practices among MNEs in Poland, the need to develop a Polish approach to TM, and reasons for optimism regarding TM in Poland in the decades ahead. The paper concludes with a recommendation to adopt learning organization practices to improve TM and to provide an enhanced competitive advantage for Polish MNEs in the global economy. The paper offers insights into the national policies, research agendas, and workplace practices needed to move Poland forward in its quest to meet the talent requirements of its emergent global economy.
... However, poor results in some countries of Central and Eastern Europe, especially the former Soviet Union space, indicate a lack of compliance in reformed strategies. Pointing out the positive aspects of reforms in China, Campos and Coricelli (2002) draw special attention to the importance of initial, i.e. inherited conditions. Good results of certain segments of transition in China draw attention to the importance of inherited conditions and send the most important message of the first ten years of transition, and that is that the reform strategies and recommendations should not ignore and negate the existing different institutional structures. ...
Book
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Papers presented at The Second International Economic Forum on Reform, Transition and Growth (Corvinus University of Budapest, Nov 3-5, 2016), focusing on the Eurozone (Bruno Dallago), post-communist economic transition and privatization (Dragana Mitrovic & Marko Tmusic), East Asia (Csaba Moldicz), Russia (Irina A. Vasilenko), innovation policies (Balázs Hámori & Katalin Szabó) as well as authoritarian populism (Zoltán Ádám).
... The economic structure of command economies was unbalanced in favour of manufacturing and agriculture. That is why the extension of market services and shrinking manufacturing was one of a few basic facts, common for all economies in transition (Campos & Coricelli, 2002). Russia is no exception. ...
... Geçiş ülkelerinin büyüme performanslarının değerlendirildiği çalışmaları derleyen Campos ve Coricelli (2002), ekonomik performansı açıklamada istisnai olarak kurumsal faktörlere değinen çalışmalar da olduğunu belirtilmektedirler. Campos ve Coricelli'nin makalesinde zikredilen iki çalışmadan birisi kurumsal gelişme ile büyüme arasında zayıf bir ilişkiye işaret ederken, diğeri özellikle kamu kurumlarına güven ve sivil katılımın büyüme üzerinde önemli etkisi olduğunu bulmuştur. ...
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Çalışma, Türk Cumhuriyetleri'ndeki girişimcilik ortamını, ekonomi politikaları ve kaynaklar yanında özellikle ülkelerin kurumsal gelişmişlik düzeyi ile ilişkilendirmektedir.
... An implication of this view is that output decline should be accompanied by a decline in productivity. Moreover, real wages would drop as well, as enterprises attempt to generate liquidity to purchase inputs (Campos and Coricelli 2002: page 820). ...
Chapter
This chapter asks a fundamental question: why did some countries go through a ten-year long recession, while others emerged from the post-communist recessions after a mere two years? What was the relative impact of stabilisation policies, liberalisation policies and initial conditions? This question is still important today, as it was the negative experience of the 1990s that turned some societies away from the reform path.
... Det første årti var en periode med omfattende reformer, men fra omkring år 2000 var processen stort set afsluttet og de økonomiske strukturer og institutioner har siden vaeret relativt stabile i de fleste transitionslande. 4 Det betyder også at den økonomiske udvikling siden år 2000 nok relaterer sig til transitionsprocessen, men også til mange andre faktorer (Coricelli & Campos, 2002). De store produktionsfald i begyndelsen af transitionsprocessen og den efterfølgende fremgang gav anledning til en omfattende akademisk litteratur som søgte at analysere i hvilket omfang de post-kommunistiske markedsreformer kunne forklare udviklingen. ...
Article
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Economic growth, production and divergence in the transition countries This article examines developments in income and living standards in the post-communist transition countries. All of these countries had planned economies but differed greatly in their economic and institutional starting points at the time of transition. The extent and speed of reforms has also varied. Production has increased considerably, but many of these transition countries have experienced severe business-cycle fluctuations. Although they have generally narrowed the income gap between them and the world’s richest nations, there are clear signs of divergence, with some of the poorest transition countries making very slow progress here. This is especially the case with the countries of the former Soviet Union and, to a lesser extent, the Balkan countries, but not the 11 countries that have joined the EU. Thus, the economic gains of the post-communist transition have been very uneven across countries.
... In contrast with all other previous enlargements, the eastern enlargement was preceded by a long preparation process, which entailed substantial institutional change both for entrants and for the EU itself (see Bache et al., 2011 andCoricelli, 2002 ). Moreover, the pre-accession period involved free trade and economic integration agreements. ...
Article
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The literature on the growth effects of European integration remains inconclusive. This is due to severe methodological difficulties mostly driven by country heterogeneity. This paper addresses these concerns using the synthetic control method. It constructs counterfactuals for countries that joined the European Union (EU)from 1973 to 2004. We find that growth effects from EU membership are large and positive, with Greece as the exception. Despite substantial variation across countries and over time, we estimate that without European integration, per capita incomes would have been, on average, approximately 10% lower in the first ten years after joining the EU.
... Against the background of the literature on the transition from plan to market (see, e.g., Wachtel 2021 for a thoughtful retrospective, or Campos and Coricelli 2002), this paper aims to extend our comparative approach to the case of Lithuania vs. Belarus, a starker contrast than those offered in the earlier papers because, unlike Georgia and Croatia, Belarus remains under an autocratic ruler with strong ties to Russia and no interest in having anything to do with European integration or markets. Comparing Belarus and Lithuania is warranted by their long, intertwined history and, in some sense, their comparable starting positions when communism collapsed, even if Lithuania, unlike Belarus, was briefly democratic in the 1920s. ...
Article
We compare the economic growth performance of Belarus and Lithuania since the collapse of the Soviet Union in 1991. Our interest in this country pair is driven by the two countries' interwoven history as well as by the fact that Belarus remains autocratic and strongly tied to Russia, while Lithuania has reinvented herself as a democratic market economy fully integrated into the EU. Our aim is to understand better the extent to which the growth differential between the two countries can be traced to increased efficiency, i.e., total factor productivity, in the use of capital and other resources via, inter alia, better institutions (intensive growth) as opposed to sheer accumulation of capital (extensive growth), the hallmark of Soviet economic growth. To this end, we compare the development of some key determinants of growth in the two countries since the 1990s. Employing a simple growth accounting model we find that institutional reforms, open and transparent governance, and good education play a more important role for output and efficiency than crude capital accumulation. Hence Lithuania does better than Belarus, which remains marred by problems related to weak governance as well as autocratic rule. As in Estonia and Latvia we find that the EU perspective made a significant contribution to growth in Lithuania. The Russian connection has done less for Belarus. At last, we also touch upon the impact of the corona virus on the economies of the two countries.
... It is fair to say that the anchor of EU entry, which conceivably was anticipated well before 2004, has crucially affected the dynamics of development of CEECs after 1990. Indeed, the development paths of CEECs, which eventually entered the EU, diverged from those of other transition countries that remained tightly connected with the Russian economy (Campos and Coricelli, 2002). ...
Chapter
Central Eastern European Countries (CEECs) went through a process of deep financial integration with advanced European countries, spurred by the entry in the European Union. Financial integration took place through an unprecedented entry of foreign banks in local banking markets, which led to a rapid expansion of credit and often credit booms. The global financial crisis produced a bust of these booms, with severe effects on the real economy. These dynamics raised the question of whether CEECs experienced a phenomenon of “too much credit” or “too much credit growth.”
... However, poor results in some countries of Central and Eastern Europe, especially the former Soviet Union space, indicate a lack of compliance in reformed strategies. Pointing out the positive aspects of reforms in China, Campos and Coricelli (2002) draw special attention to the importance of initial, i.e. inherited conditions. Good results of certain segments of transition in China draw attention to the importance of inherited conditions and send the most important message of the first ten years of transition, and that is that the reform strategies and recommendations should not ignore and negate the existing different institutional structures. ...
Chapter
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This paper seeks to look at the basic features of Taiwanese economic development and at the same time, it attempts to connect these elements to theoretical questions of economic development. While doing so, it compares the development process of the Taiwanese economy to those of other advanced economies in the region. Thus, the paper includes South Korea and Japan in the analysis. Although Singapore and Hong Kong have very different historic backgrounds and dimensions in terms of population and size leading to dissimilar maneuvering rooms, at certain questions the analysis refers to special experiences of the two economies as well. Keywords: China, Taiwan, Europe, economic structure, institutions
... Poland, a member of the centrally planned European Emerging Market Economies (EEMEs), has experienced tremendous economic, social, and political change since 1990. Its transformation was both difficult and painful due to the lack of, or underdeveloped, market institutions (Acemoglu & Johnson, 2005;Campos & Coricelli, 2002). The market reforms implemented in Poland in 1990 resulted in a liberalization of foreign trade opening its economy to flows of goods, services, and capital. ...
... 7 With the Fall of Berlin Wall in 1989, the countries in the socialist bloc entered into new era and these economies called the transition economies which represent the transition from plan to market. Following the collapse of the old economic structure, these countries initially witnessed a dramatic decrease in output, shrank in capital, movement in the labour market, change in the institutional structure (Campos and Coricelli, 2002;Facchini and Segnana, 2003;Eren and Bildirici, 2001). econometrics is concerned. ...
... There is a growing literature on the impact of structural factors on convergence, though mostly on larger panels of countries. IMF (2015b) found positive relationship of structural reforms with productivity and convergence, while in the following literature review (Acemoglu et al., 2005;Aghion et al., 2005;Campos and Coricelli 2002;Che and Spilimbergo 2012;Ciccone and Papaioannou 2009;Dabla-Norris et al. 2016;IMF 2015a;and Fung 2009) they summarize that reform priorities for sustaining convergence have been found to vary with income levels. The results indicate that the productivity dividends depend on where a country is in the development process, highlighting the need for calibrating reforms to the stage of economic development. ...
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Since the independence, during the period of transition and pre-accession to the European Union, the economy of North Macedonia has grown on average 2-3%. According to the World Bank Diagnostics of the economy estimations are that with this pace it will take 75 years to reach the EU average living standard measured as GDP per capita and with 5% annual GDP growth it will take about 30 years. The aim of this research is to highlight the prospects for accelerating economic growth during the process of EU accession. Our analysis will implement both quantitative and qualitative methods in photographing the economic developments in the past, addressing the challenges that the economy is facing in the present and highlighting the future policy and reform opportunities complying the faster economic growth with economic and social inclusiveness and sustainable development. The policy implications of this research are becoming more relevant in the context of new geopolitical position of the country after NATO membership and forthcoming opening of accession negotiations with the EU.
... Be to, vyravo didelis investicinių srautų kontrastas atskirose pereinamosiose valstybėse (3 lentelė). Įdomu pažymėti, kad kiekvienas lentelės indikatorius atspindi kitokias tendencijas [2]. Pvz., pagal pinno stulpelio duomenis matome didžiulius skirtumus tarp Baltijos valstybių ir Vyšegrado šalių. ...
... Our findings prove that advanced levels of military expenditure of the "Majority" are connected with their lower levels of expenditure on health care. Campos and Coricelli (2009) state that a "quality of infrastructure fundamental for the functioning of a market economy, proxies by telephone lines" and human capital play an important role in the macroeconomic development of TEs. Again, our investigation found indication that TEs with better substructure and higher quality of human capital tend to have higher levels of macroeconomic output. ...
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Rural marketing is an attractive term today as compared to what it was in the mid and late 80s. While rural income continues to rise the rate of growth has slowed down and market is already seeing signs of demand plummeting in urban centers.The rural markets has been growing steadily since 1980s and is now bigger than the urban markets for both FMCG (35%share of total market) and durables (59%). These facts are substantiated in a study of market growth conducted by various researches. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. By this paper the author has revealed various aspects related to rural consumer behaviour and the strategies to uplift the rural market trends. KEYWORDS: Rural Markets, FMCG, Infrastructure, Consumer Behavior, Agriinputs, Strategies, Credibility.
Chapter
For the Western Balkan countries, the transition from socialism to capitalism and democracy has less easy than in other parts of Emerging Europe. Fifteen years of conflict have been a tremendous burden to carry for the people of the Balkans. But once the war ended and peace returned, these resilient countries and communities did more than rebuild: they began a transformation into market economies, liberalizing prices, privatizing many state and socially-owned enterprises, and building the institutions needed to support a market economy. Then came the challenge of enlargement: to access or not to access the Europe Union? Enlargement of the EU is theoretically possible to any European country that respects democratic principles, operates in the free market and wishes to comply with the previous and existing EU laws by attempting to implement those. However, no matter if the country is European or not, it has to be subject to a political assessment by the EU institutions that would evaluate the level of the country’s adherence to the above conditions.
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The paper analyses the economic implications of the accession of New Member States (NMS) to the European Union (EU) in 2004 and 2007. The estimation effects of integration with the EU were carried out as a comparative case study using the synthetic control method (SCM) proposed by Abadie and Gardeazabal. Compared to previous studies analysing the effects of accession to the EU (Campos, Coricelli and Moretti), we check for the importance of the quality of economic institutions for the matching process of the analysed economies with their comparators. The results of the econometric analysis show a positive impact on the country performance 6 years and 12 years after accession to the EU. The gains from accession are large but not universal. For 5 of the 10 analysed countries the difference in levels of per capita gross domestic product (GDP) against the counterfactual is at least 30%.
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Because of the lack of wastewater treatment plants, all Kosovo lakes are exposed to high level of polluton from urban wastewater, as well as from industrial polluton. Batllava Lake drains waters of northern and southern slopes of Drazhnjamountains. The hilly area divides Kosovo Valley with Drazhnja area. The average flow of Batllava Lake from Hertca River is 0.25 m3/s.From ascientfic point of view, the objectve of this research was the determinaton of heavy metal concentratons in the water of Batllava Lake. Heavy metal polluton may cause serious consequences for living organisms in the flow of the rivers, flora and fauna and the populaton living along the river. The research included measurement of heavy metals concentraton: Iron (Fe), Nickel (Ni), Lead (Pb), Manganese (Mn), Zinc (Zn) and Copper (Cu). Samples were taken in 6 sampling sites from surface water and 3 underground waterlocatons, andwere analyzed in the laboratories of the ALS Chemex in Romania and Kosovo insttute – InkosSh.A.Other physical and chemical parameters were measured as well. Atomic Absorpton spectrometry was the methodology used to determine the concentraton of heavy metals.The results of the measurements showed that the water quality of the Batllava Lake is of a poor quality, primarily due to the human actvity impacts, such as wastewaters discharged into the lake, urban polluton, industrial and agriculture polluton.
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The economic implications of government expenditure have been shown to be significant and broad. In particular, government spending has been shown to enhance long-run economic growth by increasing the level of human capital and Research and Development (R&D) expenditure, and by improving public infrastructure. On the other hand, there is evidence that a greater size of government spending may be less efficient and therefore not necessarily associated with a better provision of public goods and higher levels of economic growth. Moreover, it is likely that the size of government expenditure and its composition are associated with key aspects of the quality of growth, such as income inequality and environmental sustainability. This paper presents a review of the theoretical and empirical literature on the relationship between fiscal policy and economic activity, both in terms of long-run economic growth and short-term output fluctuations. In general, empirical evidence on these relationships is not robust and remains inconclusive.
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of our everyday lives. Even at the current stage of development, semi-autonomous or fully automated robots are already indispensable in a staggering number of applications. To bring forth a generation of truly autonomous and intelligent robotic systems that will meld effortlessly into human society in-volves research and development on several levels, from robot perception, to control and to abstractreasoning. When it comes to the smart car, Information and Communication Technologies (ICT) are enabling,for instance, advanced control and communication systems in smart cars which can also be used to control the power train, brakes and steering, as well as infotainment functions. This paper presents a concept of the platoon movement of autonomous vehicles (smart cars). Such vehicles have an Adaptive or Advanced Cruise Control (ACC) system also called Intelligent Cruise Control (ICC)or Adaptive Intelligent Cruise Control (AICC). These vehicles are suitable to follow other vehicles for a desireddistance and to be organized in platoons. A platoon formation is composed of a vehicle which assumes theplatoon leader role (generally the human driven) and other vehicles which play the follower role. For the control of the vehicles with nonlinear dynamics, a combination of feedforward control and feedback controlapproach is used. For simulation and analysis of the vehicle and the platoon of vehicles, Matlab/Simulink models are designed.Keywords: Platoon of vehicles, Smart car, Adaptive cruise control (ACC), intelligent transportation system.
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Early transition literature linked a large number of firm failures with the inability to overcome the pre‐transition misallocation of resources, that is, the inadequate capital–labour ratio. We look at the link between misallocation and firm survival using a rich firm‐level dataset of over 1,600 manufacturing plants established in a centrally planned economy after 1945. Our duration models include the standard Olley–Pakes misallocation measures as well as a firm‐level measure of the counterfactual level of capital that takes into account the present‐day market allocation and productivity. We show that while privatization is positively related to firm survival, misallocation (a) was more of a firm‐level than sector‐level phenomenon and, more importantly, (b) it, in general, did not have a sizeable effect on the actual firm survival nor it had an impact on the outcome of privatization.
Book
The past 25 years have seen a dramatic transformation in Europe’s former communist countries, resulting in their reintegration with the global economy, and, in most cases, major improvements in living standards. But the task of building full market economies has been difficult and protracted. Liberalization of trade and prices came quickly, but institutional reforms—such as governance reform, competition policy, privatization and enterprise restructuring—often faced opposition from vested interests. The results of the first years of transition were uneven. All countries suffered high inflation and major recessions as prices were freed and old economic linkages broke down. But the scale of output losses and the time taken for growth to return and inflation to be brought under control varied widely. Initial conditions and external factors played a role, but policies were critical too. Countries that undertook more front-loaded and bold reforms were rewarded with faster recovery and income convergence. Others were more vulnerable to the crises that swept the region in the wake of the 1997 Asia crisis.
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The aim of this paper is to present the transition towards sustainability and its characteristics in consumer systems of different levels. The relevance of the topic comes from the many development paths and innovation programmes which are initially recognized as sustainable in former socialist countries but which eventually all turn out to be unsuccessful. This study introduces the research which compares the sustainable consumer attitudes of the “50+” population in Switzerland and Hungary. The former is one of the most advanced consumer communities in Europe and the latter is a post-communist economy in transition. The representative sample, which contained over 1000 questionnaires and complementary personal interviews, clearly indicated the difference between the two groups of consumers. While among Swiss population marketing tools and social discussions to promote sustainable and environmentally friendly consumption can easily be applied, in the case of Hungarian society we need to introduce new regulations and legislative standards to achieve the same aim. In the future, taking into account these results is highly recommended when considering the development of sustainability and political programmes. (18) Transition management applications to accelerate sustainable food consumption – comparative analysis between Switzerland and Hungary | Request PDF. Available from: https://www.researchgate.net/publication/328263656_Transition_management_applications_to_accelerate_sustainable_food_consumption_-_comparative_analysis_between_Switzerland_and_Hungary [accessed Nov 06 2018].
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This book explains the conditions under which political parties in government were able to influence economic growth in post-communist European countries. It highlights higher education and international investment as the two essentially related areas that have been steered by governments. The book illustrates how these countries have become reliant on multinational companies (MNCs), given their governments’ strategy to attract foreign capital, how political and economic factors are intertwined and how political parties in power can have a strong influence on the growth prospects of these economies. Furthermore, it illuminates the extent to which political parties use their space for manoeuvres when enacting policies and how they respond to their constituencies when doing so. It shows how structural conditions such as the dependence on MNCs influence policies, and how this pattern varies across Central and Eastern Europe. The book brings political parties back into the discussion on political economy and back into the analyses of welfare politics, varieties of capitalism, and democratic capitalism. This text will be of key interest to scholars and students of comparative politics and comparative political economy, European policy-making, Central and Eastern Europe, trade, welfare and development, and higher education.
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Over half of EU funding is channeled through the 5 European structural and investment funds (ESIF). The purpose of all these funds is to invest in job creation and a sustainable and healthy European economy and environment. Especially, European Regional Development Fund (ERDF) aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. Likewise, accelerator programmes are recognised through other EU programmes, such as Horizon 2020. The SME instrument under H2020 programme has to boost fast company growth and market-creating innovation thanks to staged funding and ramped up business acceleration services. The SME Instrument offers start-ups businesses access to a wide range of business acceleration services and facilitated access to risk finance, to facilitate the commercial exploitation of the innovation. True, it is one of the most demanding programme for start-ups and scale-ups. With the view of facilitating the commercial exploitation of the innovation activities resulting from phase 1 or phase 2, the SME instrument (H2020 programme) proposes business acceleration services. These include support for further developing investment readiness, linking with private investors and customers through brokerage activities and events (including trade fairs), assistance in applying for further EU risk finance, and a range of other innovation support activities and services offered via the Enterprise Europe Network (EEN). Currently, the EU provides a set of support to innovative start-ups and scale-ups through different schemes, but, the most comprehensive is the European Innovation Council (EIC).
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The determination for this study was to ascertain if fiscal and monetary policies are cooperating or rather conflicting with each other in Nigerian economy. Government disbursement and growth of money stock were used to denote fiscal and monetary policy variables. Two reduced form equations of monetary and fiscal policies were specified from underlying structural model. This yielded fourteen RF parameters in contrast to eleven structural parameters and so we had system of over-identification. These prompted use of IV estimators such as GMM and 3SLS. Estimates show similar findings for both estimators as we found evidence that fiscal policy does not respond favourably to monetary policy as monetary policy was found to have an insignificant effect on the fiscal policy. More so, fiscal policy does not respond to lag effect of monetary policy. Relatively, monetary policy responds favourably to fiscal policy. The lag effect of money supply was also found to have a significant impact on money supply. Empirical finding so upholds that Nigerian economy is fiscally overriding notwithstanding money being an integral part of all macroeconomic variables. Significance of lag effects of both fiscal and monetary policy is reflection that implementation process of both policies is excessively time overshadowing. Consequently, there is need for building well-organized units of fiscal and monetary authorities that can accelerate implementation process of these policies.
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Głównym celem monografii jest prezentacja wyników badań przeprowadzonych przez autora. Problemem podjętym w pracy jest pytanie o mechanizm oddziaływania instytucji na gospodarkę. Celem pracy jest charakterystyka i analiza wpływu instytucji formalnych tworzonych przez państwo na wzrost gospodarczy na przykładzie doświadczeń krajów postsocjalistycznych. W książce przyjęto następującą tezę: postsocjalistyczna transformacja ustrojowa była zmianą instytucjonalną, która była realizowana przez państwo. Państwo w warunkach powstałej po upadku gospodarki centralnie zarządzanej próżni systemowej nie tylko musiało się samo zmienić, ale również musiało wprowadzić instytucje państwa niezbędne do właściwego funkcjonowania demokratycznej gospodarki rynkowej. https://www.ceeol.com/search/book-detail?id=758185
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This paper develops a political economy framework to analyse the relations among democracy, financial regulation and banking competition in the emerging banking systems of Central and Eastern Europe. We develop extensive new yearly non-structural indices of bank competition instead of concentration indices as in the previous literature that show its evolution over time with the level of democracy. In addition, we directly test for linkages between democracy, financial regulation and banking competition. Using an unbalanced panel data set over the period 1994–2016 for 617 banks, we show that more democratic countries with better regulatory framework lead to the enhancement of competition. We also find significant support for the core hypothesis that financial regulatory framework in a “partially” democratic environment is inadequate. Given that financial regulatory framework in a “partially” democratic environment can be inadequate we find a U-shaped relation in the sense that there is a threshold level of democracy beyond which banking systems in those countries are more competitive.
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After the 1990 unification, East Germany's capital income share plunged to 15.2% in 1991, then increased to 37.4% by 2015. To account for these large changes in the capital share, I model an economy that gains access to a higher productivity technology embodied in new plants. As existing low productivity plants decrease production, the capital share varies due to the nonconvex production technology: plants require a minimum amount of labor to produce output. Two policies—transfers and government‐mandated wage increases—have opposite effects on output growth, but contribute to lowering the capital share early in the transition. (JEL E20, E25, O11)
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Central Asia both of which became politically independent in 1991 resemble each other with respect to social-cultural life. The most remarkable difference between them is of richness in terms of natural resources. In the 15 years process, a substantial jump in Central Asia economies has been observed while Kyrgyzstan and Tajikistan economies could even not reach its income level in 1991. Despite these differences in terms of economic structure, it is seen that of them have a tendency to get increasingly indebted and has no direct contribution to their economic growth.
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This paper compares the post-Soviet (1990–2014) economic growth performance of the fSU republics with that during the late Soviet period (1969-1990). The winners from the Soviet Union’s dissolution accelerated, and the losers failed to accelerate. Armenia did accelerate against the odds, while Lithuania did not accelerate. A large diaspora is reputed to be the crucial Armenian advantage, but the Lithuanian diaspora in the U.S. was much larger and affluent by 1990. However, the Nagorno-Karabakh war mobilized the American Armenian diaspora, while under peaceful transition in Lithuania American Lithuanians did not mobilize, unlike at the time of the Lithuanian Independence war in 1918–1920.
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The transition from centrally planned to market economy entails a massive process of occupational change that has been largely neglected in the literature. This paper fills this void by providing a detailed description of this process and by investigating its determinants and consequences. Using data from a representative survey of Estonian workers from 1989 to 1995, we estimate that between 35 and 50% of all employed workers changed occupation in this short period of time. Further, we find that the bulk of these occupational switches occurred in the early years of the transition. As for the determinants of occupational change, we find that the main factors lowering the probability of an employed worker changing occupation are gender (female) and longer job tenure. Surprisingly, (present or future) returns to current and alternative occupations do not play a systematic role in explaining the probability of switching. Regarding the impact of occupational change, we find that the private costs of occupational mobility have outweighed the benefits (occupational mobility restrains wage growth). seminar participants at CERGE-EI (Prague), the Universities of Michig an and Newcastle and CEPR/ZEI Workshop on Labor Markets in Transition (Riga) for comments on an earlier version. Our special thanks go to Peter Dolton. We are also thankful for the invaluable data assistance from Mare Zaneva, Aavo Heinlo and Kaja Söstra (Estonian Statistical Office), as well as from Hartmut Lehmann and Peter Luke. The data set used in this paper can be obtained free of charge from the Estonian Statistical Office (at http://www.stat.ee), provided the intended use is scientific. This paper benefited from financial support from the European Commission's Phare ACE Grant P97-8085. All remaining errors are ours.
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This paper analyzes the inter-relations between economic and political processes during transition in 25 post-communist countries of Central and Eastern Europe and the former Soviet Union. The main findings are the following: First, economic liberalization generally has positive effect on growth even when controlling for initial conditions. The effect is U-shaped during the contraction and linear during the recovery, but in both periods complete liberalization is superior to no liberalization. Second, democracy has a negative effect on growth during the contraction, whereas its effect appears insignificant during the recovery. Third, economic performance is a strong determinant of support for the reform in elections: support for the reform falls with unemployment and increases with economic growth, output level relative to 1989, and, surprisingly, inflation. Finally, economic liberalization per se increases opposition against the reform, as the costs of the reform apparently go beyond deteriorating economic performance. The level of democracy, in contrast, increases the support for the reform.
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In this paper, we consider the reform process in those Central and East European countries that have made the decision to move from a more-or a less-planned socialist system to a private market economy, one in which private ownership predominates and most resources are allocated through markets. Because the reform process is both complex and intertwined with political factors—especially the shift towards representative democracy—and because there are substantial differences among the reforming countries, no single detailed road map can guide the way to the new systems. Rather, the paper sets out general considerations that provide a framework for reform and relates the choices to some initial conditions of the various reforming countries. (The framework applies also to the Soviet Union, or in the event of its disintegration, to its successor states as they move to market systems.)
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this paper is the result of joint work with Jan Hanousek, Associate Professor of Economics at CERGE-EI, to whom we express our appreciation for his contributions.
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This article takes an integrated approach to evaluating the interaction of initial conditions, political change, reforms and economic performance in a unified framework covering 28 transition economies in East Asia, Central and Eastern Europe, and the Former Soviet Union (FSU). Initial conditions and economic policy jointly determine the large differences in economic performance among transition economies. Initial conditions dominate in explaining inflation, but economic liberalization is the most important factor determining differences in growth. Political reform emerges as the most important determinant of the speed and comprehensiveness of economic liberalization, raising the important question of what determines political liberalization. Results suggest the importance of the level of development in determining the decision to expand political freedoms.
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This is a concise and reader-friendly introduction to the principles of economic growth for students of economics and business. Gylfason examines theoretical and empirical models of economic growth through case studies drawn from around the world and a trenchant analysis of classic thought in this area. The influence of public policy on economic efficiency and growth is a key theme which underpins this textbook's engagement with issues such as liberalization, stabilization, privatization, and unemployment, as well as technology, education, natural resources and geography. This book will be an ideal introduction to the topic for students of economics and business studying courses in macroeconomic principles, open economy macroeconomics, business and managerial economics, and international business . Chapter summaries and review questions are helpful learning aids, and all technical information is confined to appendices, making the book particularly student-friendly. A 'cast of characters' section gives brief accounts of the influence of key historical figures. These sections, combined with numerous figures and tables, help to make Principles of Economic Growth an exceptionally well-presented and lively guide to one of the most exciting areas of recent economic analysis.
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This paper suggests that output in the transition economies of eastern Europe and the countries of the former Soviet Union is related to, firstly, macroeconomic stabilization, and secondly, the speed of transition. The statistical analysis suggests that those countries which have been most successful in reducing inflation have experienced a lower level of output decline and have been first to achieve recovery in real output. There is also strong evidence that the economies which have been boldest in adopting reforms have been most successful in limiting the fall in output and promoting growth. No support is found for the assertion that the faster the speed of transition the greater the adverse impact on basic social indicators, such as mortality rates. Copyright The European Bank for Reconstruction and Development, 1997.
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This paper diagnoses the symptoms of the Dutch disease in a two-sector stochastic endogenous growth model. A productive, low-skill-intensive primary sector causes the currency to appreciate in real terms, thus hampering the development of a high-skill-intensive secondary sector and thereby reducing growth. Moreover, the volatility of the primary sector generates real-exchange-rate uncertainty and may thus reduce investment and learning in the secondary sector and hence also growth. Cross-sectional and panel regressions based on data for 125 countries in the period 1960-1992 confirm a statistically significant inverse relationship between the size of the primary sector and economic growth, but not between the volatility of the real exchange rate and growth.
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The paper discusses the measurement and interpretation of real GDP in transition economies. It argues that the statistical offices in Eastern Europe, the Baltics and the CIS should place emphasis in the years ahead on improving the mechanism by which estimates of output, consumption, investment and foreign trade are balanced to ensure compliance with standard accounting identities. Improvements to this 'balancing mechanism'may substantially strengthen the reliability of national accounts data and would not necessarily require a major further financial outlay for the statistical offices. In its discussion of the interpretation of real GDP data, the paper demonstrates that the use of the measured change in output at constant prices as a proxy for the evolution of 'social welfare'may be particularly problematic in the context of transition economies. Copyright The European Bank for Reconstruction and Development, 1997.
Article
China's transition to the market followed a different path from those countries in eastern Europe and the former Soviet Union. This paper tells the story of this transition process. In the first stage (1979-1993), the system was reformed incrementally to improve incentives and increase the scope of the market. In the second stage (from 1994), new institutions supporting the market are being built before old institutions have been destroyed. The paper traces the roots to the Chinese planning system since 1958, which differed significantly from the Soviet model. The successful Chinese path of transition challenges the conventional wisdom but fits Popper's notion of "piecemeal social engineering."
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This paper reviews the NBER's "The Transition in Eastern Europe." This book's 18 essays examine privatization, stabilization, fiscal policies, the nascent private sector, bankruptcy, foreign trade, and investment, etc. Individual country performance occupies six studies. These essays, which are of high quality, provide a cross-section of the literature on transition. However, the book's stronger conclusions are not supported by strong evidence. Two conclusions, unemphasized by contributors, emerge. Expectations, which reflect the theories used to design standard reforms, are often unfulfilled during reforms. A plausible explanation for the misplaced expectations is the ahistorical approach of those theories.
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The theme of this paper is the microeconomics of economic growth in Central and Eastern Europe (CEE) and the Newly Independent States (NIS) over the period 1950-2000. The key structural change in this region is the end of the socialist regime in 1989 and 1992, and the subsequent attempt at transition to a market economy. Consequently, the focus of analysis will necessarily be on the nature of the growth process in the transition, and how microeconomic agents affect that process.
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Young adults observe the current interest rate, wage rate, and child mortality and decide about savings and the quantity and quality of their children. Human capital is produced as an external effect of expenditure on child quality and its production is subject to decreasing returns. Depending on the economic environment individuals decide on one of three different lifestyles. The first one generates stabilization at a low income level and high population growth, the second one generates the demographic transition and the third one perpetual growth of a modern economy. If the switch from Malthusian expansion in size towards demographic transition is not generated endogenously, a properly timed development program on education can manage the escape from the low--income equilibrium. Keywords: Demographic Transition, Economic Growth, Stages of Development JEL: J10, J13, 011, O12 I would like to thank Martin Brunner, Sean Holly, Andreas Pick, and participants of the Workshop for Demogra...
From Transition to Market: Evidence and Growth Prospects”, in Lessons from the Economic Transition: Central and Eastern Europe in the 1990s
  • Fischer
  • Ratna Stanley
  • Carlos Sahay
  • Vegh
Fischer, Stanley, Ratna Sahay and Carlos Vegh. 1997. “From Transition to Market: Evidence and Growth Prospects”, in Lessons from the Economic Transition: Central and Eastern Europe in the 1990s. Salvatore Zecchini, ed. Dordrecht: Kluwer, pp. 79-101
Accounting for Growth in Post-Soviet Russia The William Davidson Institute Working Paper No
  • Berkowitz
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Berkowitz, Daniel and David DeJong, “Accounting for Growth in Post-Soviet Russia,” The William Davidson Institute Working Paper No. 127, University of Michigan, 1998. r30 Bernard, Andrew and Charles Jones, “Productivity Across Industries and Countries: Time Series Theory and Evidence,” Review of Economics and Statistics 78 (1), 1996
Resources, Agriculture, and Economic Growth in Economies in Transition r54 Harrison, Mark. 1998. “Trends in Soviet Labour Productivity, 1928-1985: War, Postwar Recovery, and Slowdown
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Gylfason, Thorvaldur. 2000. Resources, Agriculture, and Economic Growth in Economies in Transition, Kyklos 53:4, pp. 545-80. r54 Harrison, Mark. 1998. “Trends in Soviet Labour Productivity, 1928-1985: War, Postwar Recovery, and Slowdown,” Europ. Rev. Econ. Hist., 2, pp. 171-200
How to Reform a Planned Economy: Lessons from ChinaWhy Do Firms Hide? Bribes and Unofficial Activity After Communism
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McMillan, John and Barry Naughton. 1992. How to Reform a Planned Economy: Lessons from China, Oxford Review of Econ. Pol. 8:1, pp. 130-43. r56 McMillan, John; Simon Johnson, Daniel Kaufmann and Christopher Woodruff. 2000. “Why Do Firms Hide? Bribes and Unofficial Activity After Communism,” J. Pub. Econ. 76:3, pp. 495-520
Comparing two Great Depressions: 1929-33 to 1989-93” in Lessons from the Economic Transition: Central and Eastern Europe in the 1990s
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Rostowski, Jacek. 1997. “Comparing two Great Depressions: 1929-33 to 1989-93” in Lessons from the Economic Transition: Central and Eastern Europe in the 1990s. Salvatore Zecchini, ed. Dordrecht: Kluwer, pp. 225-240
The Russian Mortality Crisis and its Causes” in Russian Economic Reform at Risk
  • Judith Shapiro
Shapiro, Judith. 1995. “The Russian Mortality Crisis and its Causes” in Russian Economic Reform at Risk. Anders Aslund, ed. London: Pinter
The Socialist System: The Political Economy of Communism, Princeton: Princeton U.Press. r55 Kornai, JánosTransformational recession: The main causes
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Kornai, János. 1992. The Socialist System: The Political Economy of Communism, Princeton: Princeton U.Press. r55 Kornai, János. 1994. “Transformational recession: The main causes”, J. Compar. Econ. 19:3, pp. 39-63
Death and the Market, mimeo The Role of Social Capital in the Russian Mortality Crisis Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform
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Econ. Rev. 88:5, pp. 1094-1116. Brainerd, Elizabeth. 2001. Death and the Market, mimeo, Williams College. Brainerd, Elizabeth, Kawachi, Ichiro and Bruce Kennedy. 1998. The Role of Social Capital in the Russian Mortality Crisis, World Dev. 26:11, pp. 2029-43. Brandt, Loren and Xiaodong Zhu. 2000. Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform, J. Pol. Economy 108:2, pp. 422-39. Brenton, Paul and Daniel Gros. 1997. “Trade Reorientation and Recovery in Transition Economies,” Oxford Rev. Econ. Pol. 13:2, pp. 65-76. Caballero, Ricardo and Mohamad Hammour. 1996. “On the Ills of Adjustment,” J. Dev
Testing for Ongoing Convergence in Central and Eastern Europe, 1970-95”, CEPR Discussion Paper 1616. r53 European Bank for Reconstruction and Development, various years
  • Estrin
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