Economic Growth Paths in Central and Eastern European Countries and in Selected Emerging Economies
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Publication date: 2012-02-29
GNPJE 2012;253(1-2):65-96
The paper offers an empirical analysis of economic growth paths in two groups of countries. The first group consists of 10 Central and Eastern European (CEE10) countries. The second group constitutes a benchmark and encompasses 29 emerging economies in other regions of the world. The authors compare the growth paths of the CEE10 countries and the reference emerging economies. They use two econometric methods to test their research hypotheses: income-level convergence analysis and growth accounting exercise. The existence of convergence is checked using linear regression equations estimated with the least squares method (the explanatory variable is the rate of real GDP per capita growth in the case of β convergence and standard GDP per capita deviation between countries in the case of σ convergence. Total factor productivity (TFP), on the other hand, is calculated using the residual method, by subtracting from the overall rate of real GDP growth the average weighted growth rate of measurable factors of production: labor and physical capital. The main findings from the analysis are as follows: (1) individual CEE countries and the CEE10 group, as a whole, displayed relatively fast economic growth, compared with the remaining 29 emerging economies; (2) the analysis did not confirm that the fast economic growth of the CEE10 countries (in comparison with the other emerging economies) resulted from the mechanism of absolute convergence. There were signs, however, that the former group was subject to conditional β convergence; (3) rapid economic growth in the CEE10 countries was to a large extent (more considerably than in other analyzed countries) driven by the increase in total factor productivity.
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