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Defying the odds: initial conditions, reforms and growth in the first decade of transition

Author

Listed:
  • Elisabetta Falcetti

    (European Bank for Reconstruction and Development)

  • Martin Raiser

    (European Bank for Reconstruction and Development)

  • Peter Sanfey

    (European Bank for Reconstruction and Development)

Abstract
This paper investigates the relative importance of three sets of factors – initial conditions, macroeconomic stabilisation and structural reforms – as determinants of growth in transition economies during the first 10 years. The paper has two main results. First, average growth over the last 10 years was substantially determined by initial conditions, both directly and indirectly through their impact on structural reforms. Second, controlling for different starting points, there is strong evidence that reforms pay off, while the effect of initial conditions tends to diminish over time. In addition, we find that stabilisation measures are important for growth but there is little evidence of a feedback effect from growth to reforms.

Suggested Citation

  • Elisabetta Falcetti & Martin Raiser & Peter Sanfey, 2000. "Defying the odds: initial conditions, reforms and growth in the first decade of transition," Working Papers 55, European Bank for Reconstruction and Development, Office of the Chief Economist.
    • Handle: RePEc:ebd:wpaper:55
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    File URL: http://www.ebrd.com/downloads/research/economics/workingpapers/wp0055.pdf
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    Citations

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    Cited by:

    1. Siklos, Pierre L. & Abel, Istvan, 2002. "Is Hungary ready for inflation targeting?," Economic Systems, Elsevier, vol. 26(4), pages 309-333, December.
    2. Pasquale Tridico, 2007. "Regional Human Development in transition economics: the role of institutions," Departmental Working Papers of Economics - University 'Roma Tre' 0070, Department of Economics - University Roma Tre.
    3. Esanov, Akram & Merkl, Christian & Vinhas de Souza, Lúcio, 2004. "A preliminary evaluation of monetary policy rules for Russia," Kiel Working Papers 1201, Kiel Institute for the World Economy (IfW Kiel).
    4. Esanov, Akram & Merkl, Christian & Vinhas de Souza, Lucio, 2005. "Monetary policy rules for Russia," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 484-499, September.
    5. repec:zbw:bofitp:2004_011 is not listed on IDEAS
    6. Foders, Federico & Piazolo, Daniel & Schweickert, Rainer, 2002. "Fit für die EU? Indikatoren zum Stand der Wirtschaftsreformen in den Kandidatenländern," Kiel Discussion Papers 389/390, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    transition; initial conditions; structural reforms; stabilisation;
    All these keywords.

    JEL classification:

    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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