Public Investment, Growth and Fiscal Constraints

Public Investment, Growth and Fiscal Constraints

Challenges for the EU New Member States

Edited by Massimo Florio

This book makes a unique contribution in advancing understanding of the fiscal condition and growth potential of the New Member States of the European Union. It provides new data, policy evaluation, and offers national and regional perspectives. The core research questions are the effect of public investment in the context of macroeconomic disequilibrium and how it is possible to finance capital accumulation in the present and future conditions of mounting public sector debt.

Chapter 7: Structural Change in New Member States (1995–2005): Shift–Share Analysis of Productivity Growth and its Determinants

Aleksandra Parteka

Subjects: economics and finance, public finance, regional economics, urban and regional studies, regional economics

Extract

Aleksandra Parteka* INTRODUCTION 1. The pace of economic growth and productivity upgrading related to the structural change in EU New Member States (from now on NMS), and in Central and East European Countries (CEECs)1 in particular, has been a crucial issue since the beginning of the system transformation in the early 1990s (for an overview see Kornai, 2006). Aggregate data (GGDC2, 2008) show that average levels of macro productivity in these countries still remain well below the EU-15 standards (in 2006 average productivity in CEECs amounted to only 45 per cent of EU-15 average level). In this context, quality upgrading of economic structures and the rise in productivity can be seen as necessary elements of the eventually successful catch-up process between NMS and EU-15 living standards. The theme of structural change and quality upgrading in NMS gained importance especially in the context of the process of European integration and the division of economic activity across European countries (Boeri, 2000; Landesmann and Stehrer, 2003; Kaminski and Ng, 2005; Crespo and Fontoura, 2007). It has been argued that there are substantial differences in industrial upgrading and competitiveness on world markets among Central and East European Countries (Dulleck et al., 2005; Hotopp et al., 2005). The main aim of this chapter is to propose an empirical framework for the measurement and assessment of the last developments in NMS seen from the perspective of a structural change and quality upgrading. We fit our analysis among empirical studies of the reallocation of resources (in...

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