Macroeconomic Stability and the Economic Growth in European Transition Countries

Abstract

Macroeconomic stability and the economic growth are the first aim of the economic policy in sovereign countries. Economic policy spends most of the time in searching the means and instruments to realize high growth rates and maintain macroeconomic stability. Increased interest into analysis of economic growth can be seen from mid 80-ies of last century. On a world scale economic growth started slowing down in the first half of the 70-ies and continued during the 80-ies, with a slight improvement of the standard of living in industrially developed countries, whilst a large number of poor countries experienced stagnation. That experience, followed by a few examples in Asian countries which achieved a spectacular economic growth, encouraged economists to pay attention again to the analysis of the economic growth and to the research of factors influencing that growth. The problem of the economic growth and macroeconomic stability becomes particularly actual in moments of recession and economic crises, as nowadays. The beginning of the new millennium, namely, brought another recession to the world economy and put the question on the economic growth again in the centre of interests of economic researches. The question: Are there limits to the economic growth and has world economy reached those limits? The affirmative answer is based on limited economic resources, and the negative answer is based on unlimited human creativity. However, a large number of developing countries is still on an existential level. The economic growth in the long run represents the synergy of numerous determinants, such as labor, capital, natural resources, technology, human resources, innovation, research and development, trade openness and etc. What measures of economic policy improve the economic growth? Why some countries are technologically advanced, while others constantly stagnate at the low level of income? These are central questions of the macroeconomic research of the long term economic growth, which fall into one of the most interesting part of economic sciences. Although the interest for the economic growth phenomena present for centuries in the economic theory and practice, is still not uniformly accept scientific attitude why some countries develop slowly and some quickly, nor are the key determinants for rapid economic development for a given national economy. Low economic growth and stagnation in former socialist European countries in the nineties of the last century made those countries take the transition way towards democracy and market economy. This paper will attempt to identify some determinants which were of