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Exploring Policy Complementarities in Transition Economies: The Case of Kazakhstan

Jibran Punthakey

No 2014/9, OECD Regional Development Working Papers from OECD Publishing

Abstract: Policy complementarities have often been overlooked in transition economies, leading to the exclusion or partial adoption of reforms. This paper examines the key determinants of successful transition strategies, and concludes that an approach exploiting complementary relationships and interactions between policies is most likely to result in a welfare improvement. Based on nine policy areas from the European Bank for Reconstruction and Development (EBRD) Transition Indicators database, composite indicators measuring reform implementation and complementarity are constructed. Panel data estimates for 30 countries over the period 1989 to 2012 demonstrate a positive association between improvements in reform complementarity and economic growth. Moreover, the effects are found to persist over time for up to two years after the initial policy change, and are robust to the inclusion of a wide range of control variables. Applying these findings to the case of Kazakhstan illustrates that comprehensive reforms to a targeted group of complementary policies generate sustained increases in output growth, whereas a partial reform strategy results in a loss of welfare.

Keywords: complementarity; economic growth; Kazakhstan; panel data; reform indicators; structural reforms; transition economies (search for similar items in EconPapers)
JEL-codes: C33 O40 P2 (search for similar items in EconPapers)
Date: 2014-10-07
New Economics Papers: this item is included in nep-cwa, nep-mac and nep-tra
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