Reforms and economic growth in transition economies: Complementarity, sequencing and speed

Karsten Staehr
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Karsten Staehr: Central Bank of Norway

Macroeconomics from EconWPA

Abstract: Growth regressions have provided important insights into the impact of economic reforms on growth in transition economies. Using principal components to decompose reform variables and construct reform clusters, we address unsettled issues such as the importance of sequencing and reform speed. The results indicate a broad-based reform policy is good for growth, but so is a policy of liberalisation and small-scale privatisation without structural reforms. Conversely, large-scale privatisation without adjoining reforms, market opening without supporting reforms and bank liberalisation without enterprise restructuring affect growth negatively. Swift reform policies allow transition countries to benefit from higher growth for a longer period of time. The speed of reforms otherwise appears to have only limited effects on short-term and medium-term growth.

Keywords: Economic reforms; growth; principal components; gradualism versus big-bang (search for similar items in EconPapers)
JEL-codes: P21 P30 C33 H11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-cwa, nep-dev, nep-eec and nep-tra
Date: 2003-03-12
Note: Type of Document - ´pdf; prepared on IBM PC ; to print on HP/PostScript/Franciscan monk; pages: 35 ; figures: included
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0303003

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