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Transition And Growth: What Was Taught And What Happened

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  • Božidar Cerovic
  • Aleksandra Nojkovic

Abstract

The paper demonstrates why the transition process is taking more time than predicted and why many countries are still far away from the projected goal: a developed market economy. Analysing the causes and re-examining the endogenous character of the transition progress, the authors conclude that the majority of reforms were implemented at a pace conditional on the initial, pre-transition conditions. The results obtained show a significant impact on the economic and institutional heritage of a country, which lasts much longer than was predicted on the eve of the reform process: initial conditions strongly and significantly affect the speed of transition throughout the entire observed period (1989-2007). They also affect the performance of a country: in the first years the transition progress may affect growth in a positive way, but later it becomes insignificant. This can explain some growth peculiarities previously remarked when transition countries were analysed by means of long-run growth models. Using Barro and Levine-Renelt models the authors show that despite somewhat better results for the second decade of transition many peculiar patterns remain, which could temporarily block poorer transition economies in their attempts to catch up and cause unnecessary losses since transition policies were not properly adjusted to the initial conditions.

Suggested Citation

  • Božidar Cerovic & Aleksandra Nojkovic, 2009. "Transition And Growth: What Was Taught And What Happened," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 54(183), pages 7-31, October -.
  • Handle: RePEc:beo:journl:v:54:y:2009:i:183:p:7-31
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    References listed on IDEAS

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    1. Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 42(1), pages 1-57, April.
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    3. Fidrmuc, Jan, 2003. "Economic reform, democracy and growth during post-communist transition," European Journal of Political Economy, Elsevier, vol. 19(3), pages 583-604, September.
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    5. D. Mario Nuti, 2009. "The Impact Of The Global Crisis On Transition Economies," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 54(181), pages 7-20, April – J.
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    Cited by:

    1. Jan Babecky & Tomas Havranek, 2014. "Structural reforms and growth in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 13-42, January.
    2. William Bartlett, 2020. "Introduction: Special Issue On The Comparative Economics Of Transition In South East Europe (Part Ii)," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(226), pages 7-8, July – Se.
    3. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Growth in Transition: A Meta-Analysis," William Davidson Institute Working Papers Series wp1057, William Davidson Institute at the University of Michigan.

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    More about this item

    Keywords

    Transition economies; transition progress; initial conditions; transition recession; growth; economic performance; comparative economics;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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