Convergence in Transition Countries - Focus on Investment: Central and Eastern Europe, 1970-1996

Authors: Estrin, Saul; Lazarova, Stepana; Urga, Giovanni

Source: Economics of Planning, Volume 34, Number 3, October 2001 , pp. 215-230(16)

Publisher: Springer

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Abstract:

Our data on investment in Central and Eastern European economies reveal that, though investment rates were typically high in the 1970s, the marginal efficiency of investment was low. Investment shares begun to decline in the 1980s, before the collapse of the communist system, but there was some recovery in most countries after transition. We use the Kalman filter framework to test for convergence in investment rates. We find some evidence of convergence in Central European countries - former Czechoslovakia, Poland and the countries of the former Yugoslavia. For the remainder of the socialist bloc, however, we were unable to isolate convergence in investment shares.

Keywords: convergence; growth models; investment rates; Kalman filter; transition countries

Document Type: Research article

DOI: http://dx.doi.org/10.1023/A:1011810922630

Affiliations: 1: Email: g.urga@city.ac.uk

Publication date: 2001-10-01