Growth in Transition Economies 1990–97: An Econometric Analysis with Application to Ukraine

Interdependencies between Agriculture and Macroeconomics in Ukraine

“…Ukraine's output performance follows the expected U-shape for the transition economies. The period of initial output decline is followed by the output recovery, but being an "intermediate" reformer Ukraine is only in the middle of this curve in comparison to more advanced transition economies (HAVRYLYSHYN et al, 1999). Figure 19 demonstrates that all countries of the Central and Eastern Europe went through an initial output decline.…”

“…50 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Recent literature on the growth in the transition economies is very broad and the following variables are typically included in the regressions to explain the different countries' performance: initial conditions; inflation representing macroeconomic policy; 51 index of structural reforms; and size of the government measured by government expenditures in percent of GDP, representing factors such as crowding out, distortions through high taxation and large bureaucracies (DE MELO and GELB, 1996;SACHS, 1996;FISCHER et al, 1998;BERG et al, 1999;HAVRYLYSHYN et al, 1999). The main conclusions of these studies are that (1) while initial conditions seriously influenced transition, their influence is mostly on output changes and less on productivity developments; (2) as transition progresses, structural and macroeconomic reforms compensate the influence of initial conditions; 13 and (3) the countries which pursued reforms faster and more thoroughly are currently performing better.…”

“…The impact of the adverse initial conditions was significantly negative on Ukraine's growth (see ODLING-SMEE andHAVRYLYSHYN et al, 1999). But this effect could have been easily overcome by stepping up structural reform policies.…”