Thirty Years After: Economic Growth in Transition Countries

In this paper, we use a dynamic threshold panel model to investigate the impact of classical and transition specific growth factors on the economic growth of transition countries during 1989-2019. Following Durlauf, Johnson and Temple (2004) we use more than 40 potential ”mainstream” growth factors and we augment the list of factors with transition specific indicators such as privatization methods and various indicators of institutional quality. Given the difficulty in quantifying the economic policies employed in various countries, we explore a wide list of potential threshold variables that can exogenously split the sample into fast and slow-growing countries. We use a range of model specifications and both fixed effects and system GMM estimators as well as Bayesian averaging in order to investigate the robustness of the results. In total more than 16 million estimates are analysed. Preliminary results suggest that the most robust results are for the initial level of development, long term effects of labor market reforms (employment rate), the share of investment, and the importance of the natural resources.