Circumstance and Choice : The Role of Initial Conditions and Policies in Transition Economies

This article takes an integrated approach to evaluating the interaction of initial conditions, political change, reforms and economic performance in a unified framework covering 28 transition economies in East Asia, Central and Eastern Europe, and...

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Bibliographic Details
Main Authors:	de Melo, Martha, Denizer, Cevdet, Gelb, Alan, Tenev, Stoyan
Format:	Journal Article
Language:	English en_US
Published:	Washington, DC: World Bank 2014
Subjects:	ACCOUNTING ADVERSE EFFECT AGRICULTURE ANNUAL GROWTH AVERAGE GROWTH BALANCE OF PAYMENTS BANK NOTES BASE YEAR BLACK MARKET BLACK MARKET EXCHANGE RATE BLACK MARKET EXCHANGE RATE PREMIUM BLACK MARKET PREMIUM BLACK MARKET PREMIUMS BRAIN DRAIN CAPACITY CONSTRAINT CAPITAL ACCUMULATION CENTRAL BANKS CENTRAL PLANNING CIVIL LIBERTIES COMPARATIVE ANALYSIS COUNTRY DUMMY DEFLATORS DEMOCRACY DEMOGRAPHIC DEPRECIATION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT REPORT DEVELOPMENT RESEARCH DIMINISHING RETURNS DISTORTION DISTORTIONS DOMESTIC CURRENCY DUMMY VARIABLE ECONOMETRIC ESTIMATES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC DECLINE ECONOMIC DEVELOPMENT ECONOMIC EQUILIBRIUM ECONOMIC GROWTH ECONOMIC LIBERALIZATION ECONOMIC LITERATURE ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC POLICY ECONOMIC SHOCK ECONOMIC STAGNATION ECONOMIC SYSTEMS ECONOMIES IN TRANSITION EMPIRICAL RESULTS ENDOGENOUS VARIABLE ENERGY RESOURCES EQUATIONS ERROR TERM ERROR TERMS ESTIMATION RESULTS EXOGENOUS VARIABLE EXPORTS EXTERNAL TRADE FEDERAL RESERVE FINANCE CORPORATION FINANCIAL SERVICES FISCAL DEFICIT FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FUNCTIONAL FORM FUTURE RESEARCH GDP GNP GOLD GRAVITY MODELS GROSS DOMESTIC PRODUCT GROWTH EQUATION GROWTH LITERATURE GROWTH PERFORMANCE GROWTH PROSPECTS GROWTH RATE GROWTH RATES GROWTH TERM HIGH GROWTH HUMAN CAPITAL IMBALANCE IMBALANCES IMPORT IMPORTS INCOME INCOME INEQUALITY INCOME LEVELS INCOMES INDEBTEDNESS INDEPENDENT VARIABLE INDIVIDUAL COUNTRIES INDUSTRIALIZATION INFLATION INFLATION PERFORMANCE INFLATIONARY PRESSURES INTERNATIONAL FINANCE INTERNATIONAL TRADE LABOR FORCE LANDLOCKED COUNTRIES LIBERALIZATION LONG-RUN GROWTH LOW INFLATION MACROECONOMIC CONDITIONS MACROECONOMIC REFORMS MACROECONOMIC STABILIZATION MACROECONOMIC STABILIZATION POLICIES MACROECONOMICS MARGINAL UTILITY MARKET DISTORTIONS MARKET ECONOMIES MARKET ECONOMY MIDDLE-INCOME COUNTRIES MONETARY ECONOMICS MONEY DEMAND MONEY DEMAND FUNCTIONS MONEY SUPPLY NATURAL RESOURCE NATURAL RESOURCES NEGATIVE EFFECT NEGATIVE IMPACT OUTPUT OUTPUT GROWTH PER CAPITA INCOME PER-CAPITA INCOME PLANNED ECONOMIES POLICY REFORMS POLICY RESEARCH POLICY STANCE POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL SYSTEM POOR COUNTRIES POSITIVE EFFECTS PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PUBLIC POLICY PURCHASING POWER PURCHASING POWER PARITY REAL GDP REFORM EFFORTS REGRESSION ANALYSIS RELATIVE IMPORTANCE RICH COUNTRIES SIGNIFICANT EFFECT SLOW GROWTH SOCIAL CAPITAL SOCIALIST ECONOMIES STEADY STATE STRUCTURAL CHARACTERISTICS SUPPLY SHOCKS TAX TRADE FLOWS TRADE PATTERNS TRADE SHOCK TRADING SYSTEM TRANSITION COUNTRIES TRANSITION COUNTRY TRANSITION ECONOMIES TRANSITION PATH TRANSPORT UPWARD PRESSURES URBANIZATION WAGES WEIGHTS WORLD ECONOMY WORLD PRICES
Online Access:	http://documents.worldbank.org/curated/en/2001/01/17736672/circumstance-choice-role-initial-conditions-policies-transition-economies http://hdl.handle.net/10986/17217

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Summary:	This article takes an integrated approach to evaluating the interaction of initial conditions, political change, reforms and economic performance in a unified framework covering 28 transition economies in East Asia, Central and Eastern Europe, and the Former Soviet Union (FSU). Initial conditions and economic policy jointly determine the large differences in economic performance among transition economies. Initial conditions dominate in explaining inflation, but economic liberalization is the most important factor determining differences in growth. Political reform emerges as the most important determinant of the speed and comprehensiveness of economic liberalization, raising the important question of what determines political liberalization. Results suggest the importance of the level of development in determining the decision to expand political freedoms.

Circumstance and Choice : The Role of Initial Conditions and Policies in Transition Economies

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