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Transition and Growth in Post-Communist Countries

Transition and Growth in Post-Communist Countries

The Ten-year Experience

Edited by Lucjan T. Orlowski

Transition and Growth in Post-Communist Countries documents the first ten years of economic transition in Central and Eastern Europe.

Chapter 5: Growth convergence: A comment on Warner

Stanislaw Gomulka

Extract

1 Stanislaw Gomulka The organizing idea of the chapter by Warner is that the ultimate factors important for growth fall into two categories: nature-given physical environments and man-made institutional reforms and economic policies. Hence his argument, rather unusually strong for economists, that geography matters a great deal: how close to the European Union or the USA, how far from the coast, how tropical, how mountainous? Reforms and policies are in turn related to the quality of civil society and the magnitude of international assistance, hence these matter too. Finally, the effects of reforms and policies are related to the size of the entrepreneurship capital, which accumulates slowly over time. In transition economies, it was an important part of country-specific initial conditions in 1989. I do not find this approach wrong, nevertheless it has serious limitations. To begin with, international assistance might be important to initiate growth in some poor countries, but it cannot and does not play much of a role in sustaining rapid growth in those countries over a prolonged period. It did not play a major role in the success of the richest countries. Geographical factors may explain why some parts of the world’s land mass (Siberia, parts of Africa) are significantly more hostile to development than others, and hence remain underpopulated and underdeveloped. However, those factors cannot explain why the two countries north of Rio Grande, USA and Canada, have become so much richer than the countries south of it, and why, in the Sea of Japan...

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