From theory into practice? Restructuring and dynamism in transition economies

Abstract

This paper draws on microeconomic, industry-level, and macroeconomic evidence to investigate the mechanisms of enterprise restructuring in transition economies, its outcomes in terms of industry-level export performance, and its interaction with macroeconomic policy and constraints. The aim is to throw light on the process by which catch-up is taking place in the leading transition economies. We begin at the micro level and find that institutional changes have produced improvements in performance more or less in line with theoretical predictions. Variation in the extent of policy changes helps to account for cross-country differences in restructuring behaviour. In the leading transition countries where growth has been under way for a number of years, many features of the enterprise sector differentiate it from that of an advanced market economy. To measure the extent of catch-up associated with the reforms, use is made of detailed information about the quality of goods traded on the EU market. In the final section, the inclusion of macroeconomic constraints allows distinctive transition paths to catching up in the Visegrad countries to be identified.