Abstract
Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment, and international transactions. However, large differences exist across transition economies with respect to services intensity and services policy reforms. We find that reforms in policies toward financial and infrastructure services, including telecommunications, power, and transport, are highly correlated with inward FDI. Controlling for regressors commonly used in the growth literature, we find that measures of services policy reform are statistically significant explanatory variables for the post-1990 economic performance of transition economies. These findings suggest services policies should be considered more generally in empirical analyses of economic growth.
Highlights
Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment and international transactions
In this paper we analyze the impact of service sector policy reforms on the growth performance of 24 transition economies
We find that services policies are an important determinant of growth performance; the coefficient estimates on our reform indices are all statistically significant
Summary
Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment and international transactions. In this paper we analyze the impact of service sector policy reforms on the growth performance of 24 transition economies.
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