To Grow or Not to Grow: Belarus and Lithuania

Abstract

We compare the economic growth performance of Belarus and Lithuania since the collapse of the Soviet Union in 1991. Our interest in this country pair is driven by the two countries’ interwoven history as well as by the fact that Belarus remains autocratic and strongly tied to Russia, while Lithuania has reinvented herself as a democratic market economy fully integrated into the EU. Our aim is to understand better the extent to which the growth differential between the two countries can be traced to increased efficiency, i.e., total factor productivity, in the use of capital and other resources via , inter alia , better institutions (intensive growth) as opposed to sheer accumulation of capital (extensive growth), the hallmark of Soviet economic growth. To this end, we compare the development of some key determinants of growth in the two countries since the 1990s. Employing a simple growth accounting model we find that institutional reforms, open and transparent governance, and good education play a more important role for output and efficiency than crude capital accumulation. Hence Lithuania does better than Belarus, which remains marred by problems related to weak governance as well as autocratic rule. As in Estonia and Latvia we find that the EU perspective made a significant contribution to growth in Lithuania. The Russian connection has done less for Belarus. At last, we also touch upon the impact of the corona virus on the economies of the two countries.

Why Did Ukraine’s Economy Fail after the Collapse of the Soviet Union?

“…Because of having a vested interest, the oligarchs did not consider making a difference and just let the sector freely recess. In the research done by Gylfason, Hochreiter and Kowalski (2022), the share of Polish manufacturing in exports grew from about 60% to 80% from 1992 to 2021. However, according to Figure 4, in the period 1996 to 2021, the share of manufacturing exports of Ukraine decreases from 66% to 43%, symbolizing the huge regression of Ukraine's manufacturing industry.…”

Impact of Unemployment on Socio-Economic Development of Poland and Ukraine: Governance Aspects

“…It is clear that the socioimportant to analyse and adapt to Ukrainian realities (Gylfason et al, 2022). Also, during 2020-2021, the dynamics of the COVID-19 pandemic in Poland and Ukraine were very similar as these countries had populations of 37.8 and 43.8 million respectively (World Bank, 2023).…”

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“…It is clear that the socio-economic development of Ukraine's immediate neighbour is much higher, but on the path to European integration, Poland's experience is important to analyse and adapt to Ukrainian realities (Gylfason et al, 2022). Also, during 2020-2021, the dynamics of the COVID-19 pandemic in Poland and Ukraine were very similar as these countries had populations of 37.8 and 43.8 million respectively (World Bank, 2023).…”