PDF Ebook A Comparative Analysis of Productivity Growth
The paper examines the macroeconomic performance of 25 transition economies using a comparable data set for 1991-2000. Centrally planned economies were criticized for widespread economic inefficiency and low total factor productivity growth. In order to see whether transition to market based economy increased economic efficiency, technical progress, and total factor productivity, we estimate efficiency measures for East European, Baltic, and the other Former Soviet Union Countries using Stochastic Frontier Analysis SFA) and Data Envelopment Analysis (DEA) as a confirmatory analysis. According to the SFA estimates, the average annual efficiency level for 25 transition economies is 0.559 and the average annual growth in technical efficiency is 2.8 percent over the period 1991-2000. This efficiency change (or catch-up) in transition economies suggests that there is an increase in efficiency levels for the whole period. The average annual technical change in transition economies is -19 percent over the period examined. That is, there is no technological progress, but over the whole period there has been a technological decline. The sum of technical efficiency change and technical change implies a 16.2 percent decline in the average annual total factor productivity over the period 1991-2000. These results suggest that, on average, technical efficiency change or catch-up is overcompensated by the declining technical change.
The competitiveness and welfare level of people of any country is clearly related to the performance of its potential economic growth. Without economic growth there can be no long-term poverty reduction. Economies that have not grown have experienced stagnant or increasing poverty rates. The keen interest in economic growth or productivity growth is the objectives of economic polices. Therefore, the economic performance of regions, countries, and the world as a whole has formed the subject matter of numerous studies over the last three decades. Especially, the recent literature on regional and cross-country studies has paid a great deal of attention to the performance differential across regions in a country and nations across the world (see, for example, Bannister and Stolp, 1995; Albert, 1998; Dinc and Haynes, 1999; Driffield and Munday, 2001; Onder, Deliktas, and Lenger 2003). Moreover, broadly based empirical analyses such as Maddison (1987, 1989, and 1995) provide a general framework for studying and evaluating the economic performance of countries. Fare, Grosskopf, Norris, and Zhang (1994) studied the productivity growth and its components in OECD countries. Rao and Coelli (1998a, 1998b) studied catch-up and convergence in global agricultural productivity and analysis of GDP growth based on ca cross-country study, covering all the regions of the world and accounting for a major portion of the global output and population. Osiewalski, Koop, and Steel (1998) studied GDP growth, efficiency change and technical change in Poland and Western Economies.
Our study examines transition economies. The concept of transition economies emerged in 1990‘s after the collapse of the USSR. About 25 planned or communist economies which are now called transition economies, have decided to transform from centrally planned economy to market economy. The underlying economic reason of the transition was the ever worsening economic inefficiency in the pre-transition period and expectation that economic efficiency would increase after transition to market economy. However, this expectation has not been realized since the beginning of transition. Most of the transition countries are still experiencing recession and economic contraction. Since 1988 the region has experienced a sharp drop in GDP growth rate. Most transition economies recovered pre-transition GDP levels only after 2000. Table 1 shows average annual percentage growth of transition economies over the period 1990-2000.
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PDF Ebook A Comparative Analysis of Productivity Growth
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