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The Chenery hypothesis and structural change in Eastern Europe

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  • Roland Dohrn
  • Ullrich Heilemann

Abstract

The Newly Liberalizing Countries (NLCs) in Eastern Europe have to undergo a fundamental structural change. In this paper the Chenery Hypothesis (CH) is employed to make a quantitative assessment of this change. The CH, roughly speaking, relates an economy's sectoral structure to its stage of development, its size, and its endowment with natural resources. The paper tests this hypothesis for a sample of 31 developed and developing economies and finds it still valid. Then it uses the results obtained to measure distortions in the NLCs' existing economic structure and to give a projection of future structural change. The calculations make it evident that the industrial sector in the NLCs will experience a marked downsizing whilst the service sector turns out to be too small. But sectoral patterns are not too uniform for all groups of countries. Thus, all projections depend highly on the reference group used to evaluate a ‘master pattern’.

Suggested Citation

  • Roland Dohrn & Ullrich Heilemann, 1996. "The Chenery hypothesis and structural change in Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 411-425, October.
    • Handle: RePEc:bla:etrans:v:4:y:1996:i:2:p:411-425
    DOI: 10.1111/j.1468-0351.1996.tb00180.x
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    References listed on IDEAS

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    1. David Lipton & Jeffrey D. Sachs, 1990. "Creating a Market Economy in Eastern Europe: The Case of Poland," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 75-148.
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    1. Mitra, Pradeep & Muravyev, Alexander & Schaffer, Mark E, 2008. "Convergence in Institutions and Market Outcomes: Cross-Country and Time-Series Evidence from the BEEPS Surveys in Transition Economies," IZA Discussion Papers 3863, Institute of Labor Economics (IZA).
    2. Marija Beg & Martina Basarac Sertic & Ivo Druzic, 2017. "Determinants of Deindustrialisation in Developed European and Post-Communist Countries," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 13(2), pages 93-106.
    3. Raiser, Martin & Schaffer, Mark & Schuchhardt, Johannes, 2004. "Benchmarking structural change in transition," Structural Change and Economic Dynamics, Elsevier, vol. 15(1), pages 47-81, March.
    4. Pradeep Mitra & Alexander Muravyev & Mark Schaffer, 2014. "Labor reallocation and firm growth: benchmarking transition countries against mature market economies," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.
    5. 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.
    6. Tomasz Mickiewicz & Anna Zalewska, 2002. "Deindustrialisation. Lessons from the StructuralOutcomes of Post-Communist Transition," William Davidson Institute Working Papers Series 463, William Davidson Institute at the University of Michigan.
    7. Mitra, Pradeep & Muravyev, Alexander & Schaffer, Mark E., 2009. "Convergence in institutions and market outcomes: cross-country and time-series evidence from the business environment and enterprise performance surveys in transition economies," Policy Research Working Paper Series 4819, The World Bank.
    8. Maciej Grodzicki, 2014. "Structural Similarities Of The Economies Of The European Union," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 9(1), pages 91-117, March.
    9. Frank Barry & John Bradley & Michal Kejak & David Vavra, 2003. "The Czech economic transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 539-567, September.
    10. Ullrich Heilemann & Stefan Wappler, 2009. "Bald so wie überall? Strukturwandel der ostdeutschen Wirtschaft 1992-2006," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(18), pages 30-37, September.
    11. Ilya B. Voskoboynikov, 2023. "Sources of productivity growth in Eastern Europe and Russia before the global financial crisis," Journal of Productivity Analysis, Springer, vol. 59(3), pages 225-241, June.
    12. repec:mje:mjejnl:v:12:y:2017:i:2:p:93-106 is not listed on IDEAS
    13. Ulrich Thießen, 2007. "Aging and Structural Change," Discussion Papers of DIW Berlin 742, DIW Berlin, German Institute for Economic Research.
    14. Ilya B. Voskoboynikov, 2021. "Accounting for growth in the USSR and Russia, 1950–2012," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 870-894, July.
    15. Tomasz Marek Mickiewicz & Anna Zalewska, 2005. "De-industrialisation and the post-communist transition: Rowthorn and Wells' model revisited," UCL SSEES Economics and Business working paper series 59, UCL School of Slavonic and East European Studies (SSEES).

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