The Determinants of Economic Growth in Hungary, Poland, Slovakia and the Czech Republic During the Years 1995-2010
Keywords:determinants of economic growth, transition economies of Central Eastern Europe, Sollow growth accounting, non-parametric growth accounting
The main goal of the research is to obtain a comprehensive examination of the economic growth determinants in Hungary, Poland, Slovakia and the Czech Republic (CEEC-4) since 1995. For this purpose, two methodological approaches have been applied: the Solow growth accounting and the non-parametric approach. At the beginning of the analysis, in order to obtain a general overview of the sources of economic growth in the former transition countries of Central Eastern Europe, the Solow growth accounting has been conducted. It decomposes the growth rate of output into contributions from changes in the quantity of the physical capital stock, the amount of labour input and some other unexplained factor commonly interpreted as reflecting technological progress and called the ?Solow residual? or ?Total Factor Productivity (TFP)?. The hypothesis that technological progress together with strong capital accumulation were the dominant factors behind the economic growth and convergence process in the Central Eastern European countries before the crisis is tested. As the Solow growth accounting does not reveal the driving forces behind the technological progress and, thus, a large part of the growth decomposition remains unexplained in the transition economies, the non-parametric approach has been employed to shed more light on the ultimate sources of economic growth in the CEEC-4. The non-parametric (production-frontier) method enables the further decomposition of changes in total factor productivity into changes in the efficiency of production and technological changes. Furthermore, it allows accounting for human capital accumulation, since improvements in quality of labour are also reflected in TFP growth.
Arratibel O., Heinz F., Martin R., Przybyla M., Rawdanowicz L., Serafini R., Zumer T. (2007), Determinants of Growth in the Central and Eastern European EU Member States ? A Production Function Approach, ?ECB Occasional Papers Series?, No. 61, Frankfurt am Main.
?slund A. (2007), How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia and Central Asia, Peterson Institute for International Economics, Washington.
Bakker B., Klingen C. (2012), How Emerging Europe Came Through the 2008/09 Crisis: An Account by the Staff of the IMF's European Department, International Monetary Fund, Washington.
Blanchard O., Kremer M. (1997), Disorganization, ?The Quarterly Journal of Economics?, Vol. 112, No. 4, http://dx.doi.org/10.1162/003355300555439.
Čihák M., Fonteyne W. (2009), Five Years After: European Union Membership and Macro-Financial Stability in the New Member States, ?IMF Working Paper?, March 2019, WP/09/68, Washington.
Commission on Growth and Development (2008), The Growth Report: Strategies for Sustained Growth and Inclusive Development, World Bank, Washington.
Estev?o M. (2003), Structural and Cyclical Labor Market Changes in Poland: Selected Issues, IMF Country Report No. 03/188, Washington.
Fabrizio S., Leigh D., Mody A. (2007), The Dynamics of Product Quality and International Competitiveness, ?IMF Working Paper? WP/07/09, Washington.
Farrell M.J., (1957), The measurement of productive efficiency, ?Journal of the Royal Statistical Society?, Vol. 120, http://dx.doi.org/10.2307/2343100.
Färe R., Grosskopf S., Norris M., Zhang, Z. (1994), Productivity growth, technical progress and efficiency changes in industrialised countries, ?American Economic Review?, Vol. 84.
Henderson D., Russell R. (2005), Human Capital and Convergence: A Production- Frontier Approach, ?International Economic Review?, Vol. 46, http://dx.doi.org/10.1111/j.1468-2354.2005.00364.x.
International Monetary Fund (2008), Regional Economic Outlook, Europe: Dealing with Shocks, ?IMF World Economic and Financial Surveys?, October, Washington.
Iradian G. (2007), Rapid Growth in the CIS: Panel Regression Approach, ?IMF Working Paper?, WP/07/170, July 2007, Washington.
Kumar, S., Russell R. (2002), Technological change, technological catch-up, and capital deepening: Relative contributions to growth and convergence, ?American Economic Review?, Vol. 92, No. 3, http://dx.doi.org/10.1257/0002828 0260136381.
Landesmann M. A., Stehrer R. (2009), Trade and Growth: ?South-North? Integration, Outsourcing and Skills [in:] P. Mooslechner, R. Kronberger, M.A. Landesmann (eds.), International Trade and Domestic Growth: Determinants, Linkages and Challenges, Austrian National Bank, Vienna.
Neuhaus M. (2006), The Impact of FDI on Economic Growth. An Analysis for the Transition Countries of Central and Eastern Europe, Physica-Verlag A Springer Company.
Römisch R. (2007), Changing Regions ? Structural Changes in EU Regions, Study carried out for DG Regional Policy by Applica and wiiw.
Schiff J. A., Egoumé-Bossogo P., Ihara M., Konuki T., Krajnyák K. (2006), Labor Market Performance in Transition: The Experience of Central and Eastern Europe, ?IMF Occasional Paper?, No. 248, Washington.
Solow R.M., Tobin J., von Weizsacker C., Yaari M., (1966), Neoclassical Growth with Fixed Factor Proportions, ?Review of Economic Studies?, Vol. XXXIII, No. 2, http://dx.doi.org/10.2307/2974435.
Solow R.M. (1962), Substitution and Fixed Proportions in the Theory of Capital, ?Review of Economic Studies?, Vol. 29, No. 3, http://dx.doi.org/10.2307/2295955.
Solow R.M. (1957), Technical Change and the Aggregate Production Function, ?Review of Economics and Statistics?, Vol. 39, No. 3, http://dx.doi.org/10.2307 /1926047.
Solow R.M. (1956), A Contribution to the Theory of Economic Growth, ?Quarterly Journal of Economics?, Vol. 70, No. 1, http://dx.doi.org/10.2307/1884513.
Swan T.W. (1956), Economic Growth and Capital Accumulation, ?Economic Record?, Vol. 32, No. 2, http://dx.doi.org/10.1111/j.1475-4932.1956.tb00434.x.
Thörnqvist L. (1936), The Bank of Finland?s Consumption Price Index, ?Bank of Finland Monthly Bulletin?, No. 10.