An Empirical Investigation on Determinants of Sustainable Economic Growth. Lessons from Central and Eastern European Countries

The presented study analyzes the specific features of economic cooperation of Russia and China with the countries of Central and Eastern Europe (CEE). In recent years, China has begun to actively cooperate with the former socialist republics of Central and Eastern Europe, offering them new institutional projects, such as the Belt and Road and 16+1 initiatives. At the same time, the CEE region has been distancing itself from Russia — it's once main economic partner — for a number of political reasons. Russia needs to maintain its standing in the region of its traditional external interests. This makes the analysis of the specific features of China and Russia's strategies for cooperation with the CEE countries relevant and practical. Aim . The study aims to analyze the specific features of economic cooperation of the People's Republic of China (PRC) and Russia with the countries of Central and Eastern Europe, assess the efficiency of their cooperation, and examine the existing problems. Tasks . The authors determine historical and strategic prerequisites for the development of Russia and China's cooperation with the countries of Central and Eastern Europe; examine the institutional framework of interaction between the countries under study; assess the dynamics of changes in the volume and structure of Russia and China's trade with the CEE countries; analyze the dynamics, priority sectors, and regional structure of direct Chinese investment in the countries of Central and Eastern Europe; assess the problems in Russia and China's cooperation with the CEE countries and prospects for further development of their interaction. Methods . This study uses such research methods as verbal and statistical analysis, observation, synthesis, generalization, description, graphical modeling, and data classification. Results . Central and Eastern Europe currently occupies one of the leading positions in China's foreign policy. After a long period of stagnating economic cooperation, relations between China and the CEE countries have entered a new stage within the framework of established institutional formats. The 16+1 strategy has been proposed, and the CEE countries have been included in China's Belt and Road Initiative. The pattern of economic interaction between Russia and the countries of Central and Eastern Europe in 2005-2018 is cyclical. Political factors have a significant impact on Russia's cooperation with the CEE. Conclusions . The lack of diverse tools for economic cooperation between Russia and Central and Eastern Europe, combined with Russia's low investment opportunities, prevents this cooperation from fulfilling its potential. Russia needs new institutional formats of interaction with the countries in this region, similar to those introduced by China.

This paper aims to assess the economic development and development policies in the Central and Eastern European (CEE) countries in 1990–2005, from the collapse of the USSR to the enlargement of the European Union. A great number of authors have generally seen the transition as a very positive process. They have concluded that the reform policies focusing on macroeconomic and price stability have been the key to success for CEE economies. A reliable economic environment is, of course, instrumental for longer-term economic success, as exemplified by the prolonged crisis in most of the former Soviet Union. Our analysis of the economic development and competitive advantages in the region, however, leads to the conclusion that the specific approach to transition that the Central and Eastern European countries followed came at a rather high cost. Comparative neglect and weakness of a set of policies crucial for longer-term development, such as science, technology and innovation policies, has led to deterioration in the last decade rather than the strengthening of the competitive advantages of Central and Eastern European economies. Furthermore, we argue that, in most cases, CEE countries have unfortunately overlooked or misjudged a number of development challenges, and have thus implemented policies that have generated growth at the cost of rapidly increasing risks. This is how the financial fragility of several Central and Eastern European countries has recently increased drastically, and the region seems to have virtually arrived at the brink of economic collapse. Since the CEE countries joined the European Union, the CEE governments have gradually moved towards acquiring a more active role in economic development. These policies need, however, to be strengthened considerably and reinforced by macroeconomic policies that curb current excessive dependence on foreign-financed growth.

The countries of Central and Eastern Europe (CEE) have much to gain from implementing policies that increase investment, support the development of human capital, and promote the legal, regulatory, and policy framework needed for market mechanisms to function. The faster they implement such changes, the faster they will bridge the income gap between them and the countries of the European Union - and the more likely their chances of successful integration. Joining the European Union (EU) is perhaps the key political and economic objective of Central and Eastern European (CEE) countries as they approach the 21st century. But how successful the CEE countries are in achieving this goal depends not only on how well and quickly they adapt their legal and regulatory systems to EU requirements but on how well and quickly they bridge the wide income gaps between CEE and EU countries. Using a model and cross-section data to develop estimates, Barbone and Zalduendo investigate how appropriate structural policies adopted before and after accession to the EU can help CEE countries bridge this income gap. They have much to gain from implementing policies that increase investment, support the development of human capital, and promote the legal, regulatory, and policy framework needed for market mechanisms to function. The faster they implement such changes, the faster they will bridge the income gap between them and the EU countries - and the more likely their accession to the EU will be successful. This paper - a product of Country Department II, Europe and Central Asia - is part of a larger effort in the department to examine issues related to accession to EU by Central and Eastern European countries. Luca Barbone may be contacted at lbarbone@worldbank.org.

Capital flows have been analysed from various perspectives and yet no consensus has been reached about the impact of international capital flows on national economies. The main aim of this paper is to present the theoretical aspects of the effect of international capital flows on national economies, and to analyse the impact of international capital flows on Central and Eastern European (CEE) countries’ domestic savings, investments, consumption, and current accounts. During the investigation, the latest studies on international capital flows were reviewed and systemised, 11 CEE countries’ main indicators from across a 10-years period were collected, and computed coefficients, which represent the change associated with a variation in clusters’ capital inflows, equal to 1 percent change of GDP, were analysed. The analyses conducted show that capital flows have an impact on countries’ economies. The main findings are: first, domestic savings and consumption are seen to have been more strongly associated with capital inflows than investments in developed countries. Second, the relationship between investments, domestic savings, consumption and one inflow in portfolio flows would be negative, in both highly developed countries and emerging market countries. Third, where positive inflows in net and gross capital are concerned, foreign direct investments would have an insignificant positive impact on current accounts in highly developed countries and developed countries but a negative impact in emerging market countries. By achieving economic growth dynamics within a specific country, a wide evaluation of a country’s capital flows can be performed, and control of capital flows gained, by applying different assessment models.

Several Central and Eastern European (CEE) countries require cost-utility analyses (CUAs) to support reimbursement formulary listing. However, CUAs informed by local evidence are often unavailable, and the cost-effectiveness of the several currently reimbursed biologicals is unclear. To estimate the cost-effectiveness as multiples of per capita GDP/quality adjusted life years (QALY) of four biologicals (infliximab, etanercept, adalimumab, golimumab) currently reimbursed in six CEE countries in six inflammatory rheumatoid and bowel disease conditions. Systematic literature review of published cost-utility analyses in the selected conditions, using the United Kingdom (UK) as reference country and with study selection criteria set to optimize the transfer of results to the CEEs. Prices in each CEE country were pro-rated against UK prices using purchasing power parity (PPP)-adjusted per capita GDP, and local GDP per capita/QALY ratios estimated. Central and Eastern European countries list prices were 144-333% higher than pro rata prices. Out of 85 CUAs identified by previous systematic literature reviews, 15 were selected as a convenience sample for estimating the cost-effectiveness of biologicals in the CEE countries in terms of per capita GDP/QALY. Per capita GDP/QALY values varied from 0.42 to 6.4 across countries and conditions (Bulgaria: 0.97-6.38; Czech Republic: 0.42-2.76; Hungary: 0.54-3.54; Poland: 0.59-3.90; Romania: 0.77-5.07; Slovakia: 0.55-3.61). While results must be interpreted with caution, calculating pro rata (cost-effective) prices and per capita GDP/QALY ratios based on CUAs can aid reimbursement decision-making in the absence of analyses using local data.

PurposeThe purpose of this paper is to present an analysis of the size of the banking sectors in central and Eastern European (CEE) countries. The banking sectors' ability is focused to provide financial intermediation between savers and investors in the economy.Design/methodology/approachThe existing literature on banking in transition economies argues in unison that banking sectors in CEE countries are too small and do not provide sufficient levels of financial intermediation. In this paper, a common drawback of the existing measures used to indicate the size of CEE banking sectors is detected: they all relate the volume of bank intermediation to gross domestic product (GDP). It is argued that since transition economies have a low stock of financial wealth relative to economic activity, a more objective measure of the size of the banking sector is the ratio of bank assets to a proxy of the stock of financial wealth rather than to GDP.FindingsThere is evidence that the estimation of the size of the banking sectors relative to GDP produce downward biased measures for the ability of CEE banks to intermediate available financial resources. When the size of the banking sector is measured relative to financial wealth, the gap between the developed European Union banking systems and those of the CEE countries is not as severe as argued in studies based on the traditional approach of measuring the size of the banking system with respect to GDP.Practical implicationsUsing the downward biased measure of financial system development to stress the underdevelopment of the financial intermediation in CEE may produce misleading policy recommendations, e.g. recommendations in the direction of rapid financial system expansion by lowering barriers of entry for new banks. The authors' new measure presents an alternative that should be considered by policy makers in the design of measures promoting financial system development.Originality/valueThe paper challenges the existing consensus on severe underdevelopment of the CEE banking sectors. It presents a new approach of accessing financial system development in emerging economies.

IntroductionMeaningful patient involvement in health technology assessment (HTA) is essential in ensuring that the interests of the affected patient population, their families, and the general public are accurately reflected in coverage and reimbursement decisions. Central and Eastern European (CEE) countries are generally at less advanced stages of implementing HTA, which is particularly true for patient involvement activities. As part of the Horizon2020 HTx project, this research aimed to form recommendations for critical barriers to patient involvement in HTA in CEE countries.MethodsBuilt on previous research findings on potential barriers, a prioritisation survey was conducted online with CEE stakeholders. Recommendations for prioritised barriers were formed through a face-to-face workshop by CEE stakeholders and HTx experts.ResultsA total of 105 stakeholders from 13 CEE countries completed the prioritisation survey and identified 12 of the 22 potential barriers as highly important. The workshop had 36 participants representing 9 CEE countries, and 5 Western European countries coming together to discuss solutions in order to form recommendations based on best practices, real-life experience, and transferability aspects. Stakeholder groups involved in both phases included HTA organisation representatives, payers, patients, caregivers, patient organisation representatives, patient experts, health care providers, academic and non-academic researchers, health care consultants and health technology manufacturers/providers. As a result, 12 recommendations were formed specified to the CEE region’s context, but potentially useful for a broader geographic audience.ConclusionIn this paper, we present 12 recommendations for meaningful, systematic, and sustainable patient involvement in HTA in CEE countries. Our hope is that engaging more than a hundred CEE stakeholders in the study helped to spread awareness of the importance and potential of patient involvement and that the resulting recommendations provide tangible steps for the way forward. Future studies shall focus on country-specific case studies of the implemented recommendations.

Before the transition the principal development objective for the animal production sector in the Central and Eastern European (CEE) countries was the attainment of national self-sufficiency, and, is some countries, export orientation. Increasing production costs and the low productivity were compensated through subsides. During the first years of transition, the number of animals declined from 20 to 80 percent, due to the drastic reduction of demand (elimination of subsides and family revenue decrease), disruption of traditional markets, rise of the cost of production. The establishment of a large number of small private farms have led to the creation of specific production systems in a number of countries. Countries which have retained large production units are confronted with needs to update technology in accordance with new requirements (market, environment). Following the request of made by CEE countries, EAAP has established a Task Force on CEE countries. The Task Force has organised seven meetings (round tables, workshops and seminars) in the period 1991-96. Some experts from CEE and Western Europe participated at these events. Over 1400 pages of studies and proceedings have been published. The Task Force has completed its tasks in 1996, when a Contact Group on CEE countries has been established to identify the major policy issues influencing animal production in CEE, to prepare and organise meetings to address these policy questions, and to promote an increase in effectiveness of linkages between CEE and Western European countries.

The aim of the paper is to provide empirical evidence in support of the relationship between renewable energy consumption and economic growth in eleven Central and Eastern European (CEE) countries over the period 1995-2015 within a multivariate panel data analysis. Based on World Bank data, the panel cointegration analysis reveals that renewable energy consumption and economic growth are positively associated in the long run in CEE countries. The heterogeneous panel causality test indicates a bi-directional causality relationship in support of the feedback hypothesis between economic growth and renewable energy consumption in Central and Eastern European countries.

PurposeThe authors’ aim is to establish the variance of youth welfare citizenship regimes in Central and Eastern Europe (CEE) and to revisit the applicability of the regime approach to the emerging welfare regimes (EWRs).Design/methodology/approachThe empirical analysis follows the descriptive case study strategy aiming to discover diversity of youth welfare citizenship patterns. The case selection is made within the CEE country group, which includes countries in Central Europe, the Baltics, Eastern Europe and Southeast Europe, all sharing the communist past. The subdivision of these countries in reference to the welfare states can be made via the European Union (EU) membership based on the assumption that EU social policy frameworks and recommendations have an important effect on domestic policies. We included countries which are in the EU, i.e., with a similar political and economic transition path. There were three waves of accession to the EU in CEE countries. In the first wave (2004), all the Baltic countries, Czech Republic, Slovakia, Poland, Hungary and Slovenia joined. In the second wave (2007), Romania and Bulgaria joined. Finally, Croatia joined the EU in 2013. Altogether 11 CEE countries are the EU members today, the remaining CEE countries are non-EU members and thus are excluded from the current research. Those countries which are part of the EU share similarities in social and economic reforms during the pre-accession period and after in order to reach a comparatively similar system with other member states. So, in terms of casing strategy these six countries can be named as emerging welfare regimes (EWRs) evolving transformations across different public policy areas. Handpicking of six countries out of 11 relies on the assumption that the Anglo-Saxon welfare system characteristics are more evident in the Baltic countries (Aidukaite, 2019; Aidukaite et al., 2020; Ainsaar et al., 2020; Rajevska and Rajevska, 2020) and Slovenia, while in Bulgaria and Croatia certain outcomes reflect the Bismarckian principles of social security (Hrast and Rakar, 2020; Stoilova and Krasteva, 2020; Dobrotić, 2020). This brings important variety into our analysis logic. Last but not least, we juxtapose six CEE EWR countries under analysis with six mature welfare regime countries representing different welfare regime types. Those mature welfare regime countries (Finland, Sweden, France, Germany, Italy, UK) are not an explicit object of the study but help to put analysed CEE EWR cases into larger context and thus, reflect upon theoretical claims of the welfare regime literature.FindingsThe authors can confirm that the EWR countries can be rather well explained by the welfare citizenship typology and complement the existing knowledge on youth welfare regime typology clusters in the Western Europe. Estonia is clustered close to the Nordic countries, whereas Latvia, Lithuania, Croatia and Slovenia are close to the Bismarckian welfare model despite rather flexible, non-restricted educational path, universal child and student support. Bulgaria is an outlier; however, it is clustered together with mature Mediterranean welfare regimes. Former intact welfare regime clusters are becoming more diverse. The authors’ findings confirm that there is no any intact cluster of the “post-communist” welfare regime and Eastern European countries are today “on move”.Research limitations/implicationsAltogether 11 CEE countries are the EU members today. The remaining CEE countries are non-EU members and thus are excluded from the current research. Those countries which are part of the EU share similarities in social and economic reforms during the pre-accession period and after in order to reach a comparatively similar system with other member states. At least one CEE country was chosen based on existing theoretical knowledge on the welfare regime typology (Anglo Saxon, Beveridgean, Bismarckian) for the Post-communist country groups.Practical implicationsIn the social citizenship dimension we dropped social assistance schemes and tax-relief indices and included poverty risk and housing measures. Youth poverty together with housing showed rather clear distinction between familialized and individualised countries and thus, made the typology stronger. In the economic dimension the preliminary picture was much fuzzier, mainly due to the comprehensive education in the region and intervention of the EU in domestic ALMPs (and VET) reforms. The authors added a new indicator (pro-youth orientation of ALMP) in order better to capture youth-sensitivity of policy.Social implicationsThe authors included a working poverty measure (in-work poverty rate) in order to reflect labour market insecurity as an increasing concern. Yet, the analysis results were still mixed and new indicators did not help locating the regime types.Originality/valueIn order to improve the validity of the youth welfare citizenship regime economic dimension, Chevalier's (2020) model may also be worth revisiting. The authors argue that this dichotomy is not sufficient, because inclusive type can have orientation towards general skills or occupational skills (i.e. monitored or enabling citizenship clusters), which is currently ignored. Chevalier (2020) furthermore associates inclusive economic citizenship with “coordinated market economies” (referring to Hall and Soskice, 2001), which seems hardly hold validity in the Nordic and at least some CEE countries.

To control for the endogeneity problem, this study applies the two-stage least squares technique to examine the impact of bank and stock market development on economic growth in the thirteen Central and Eastern European (CEE) countries in the European Union (EU) during 2001–2020. The first hypothesis states that the higher bank development has not contributed to higher growth in the CEE countries. The overall results only support the hypothesis for the subperiod of 2001–2009. The second hypothesis states that the higher stock market development has not spurred growth in the CEE countries. The overall results support the hypothesis over the entire period of 2001–2020. Finally, despite the CEE integration with the EU developed countries for the past decades, there is a very limited number of empirical studies on the finance–growth relationship in the CEE countries. This study contributes to the relevant literature by examining the bank and stock market development’s relationship with growth in the CEE developing countries.

Background Atopic dermatitis (AD) imposes a hidden burden through its negative effects on quality of life and productivity. We aim to estimate this hidden burden in adults and adolescents in Central and Eastern European (CEE) countries. Methods We created a burden of disease model to quantify AD’s hidden burden. Humanistic burden was calculated by estimating the monetary value of quality-adjusted life years (QALYs) lost, using prevalence data from the Global Burden of Disease study and gross domestic product (GDP) per capita for each country. Indirect economic burden was estimated based on productivity loss from absenteeism and presenteeism, adjusted for labor force participation and unemployment rates. Total hidden burden was determined by combining productivity losses and QALYs lost. Results QALY loss due to AD ranged from 1,832 to 58,596 annually in CEE countries, equating to 38 million to approximately 1 billion Euros per country. Productivity losses ranged from 3.6 to 148.9 million Euros annually. The total hidden burden of AD represents 0.11% to 0.43% of the GDP. Conclusions Our estimates reflect significant differences in population size, prevalence, and economic strength among CEE countries. Adjusting findings to country-specific GDP provided insights into AD’s true hidden burden, offering valuable information for decision-making.

Introduction: Climate change and the limiting nature of fossil natural resources are compelling elements that have driven the search for environmentally friendly alternatives to the traditional economy. In this context, as the main pillar of bioeconomy, biomass can contribute to energy sustainability, temper effects of climate change, and make the use of natural resources more efficiently. Central and Eastern European (CEE) countries have a relatively common economic history of agriculture playing a pivotal role in the former centralized economy. Purpose: This chapter analyzed the importance of biomass produced from residues of crops in CEE countries. This analysis is regarded as incentive to take a deeper look at biomass in CEE countries with acknowledged agricultural potential. CEE countries have been part of the former European socialist bloc, with agriculture being a core component of the centralized economy. Even though their economies have been undergoing a lengthy transition process to the market economy, this sector of activity still holds a significant share. Therefore, CEE countries provide a suitable ground for our analysis. Methodology: The authors selected characteristics of the agricultural sectors and development, and assess their relationship with biomass production in the CEE countries, using an Ordinary Least Squares method. Then, the authors investigate the environmental implications of crop biomass production in a similar framework. Findings: The results reveal that the agricultural biomass sector contributes to economic development, and it does not have negative implications for environmental indicators. These results show that biomass production is a sustainable target to be pursued.

Abstract: This article highlights the role of sourcing inputs from China for Central and Eastern European (CEE) countries' exports and sheds light on the rising trade deficit between China and the se countries. Research findings on gross and value-added trade panel data for 12 CEE countries suggest that a 10 per cent increase of imported capital inputs from China would cause an overall increase of 2.4 per cent in CEE exports. The effect is more pronounced for both intermediates and capital inputs imported from China, taking domestic value-added exports into consideration. By taking into account the possible endogeneity in baseline regression and the COVID-19 pandemic as an instrument of supply shock for imports from China, findings affirm that sourcing from China has promoted significantly CEE countries' gross exports as well as domestic value-added in exports. Moreover, the export boosting effect affects significantly the intensive margin. This article has rich policy implications for CEE countries to improve trade deficits with China.

Purpose This paper aims to investigate theoretically and empirically the interactions between smart economic development (SED) and competitiveness in Central and Eastern European (CEE) countries. The main argument to uphold here is that smartness approach has been traditionally more focused on smart urban planning and smart specialization. Design/methodology/approach An evaluation by index, correlation and significance analysis is used to present original empirical evidence from six CEE countries. Findings Smartness approach integration into economic development justifies the identification of SED determinants: basics (welfare, digitality, environmental, social responsibility) and enhancers (learning, networking, agility, innovations and knowledge-driven). The interaction between SED and countries’ competitiveness in CEE countries might be described by two approaches, namely, focus-based (several most important basics and enhancers) and balance-based (equal importance of basics and enhancers). Research limitations/implications The limitations relate to the particular sample of CEE countries and gathering opportunities of statistical data. Practical implications The combination of SED-Index sub-indices and WEF GCI might aid a more accurate ex ante measurement. Despite common global challenges, each country should choose its own combinations for smartness determinants to achieve long-term competitiveness. Social implications The findings are important for fostering smartness approach in economic development for long-term competitiveness. Originality/value This paper contributes to economic development literature by discovering basics and enhancers for SED. By linking well-known term of competitiveness and economic development with a concept of smartness, the new approaches, namely, focus-based and balance-based, to policy making in CEE countries emerged.