Working Paper: CEPR ID: DP3820
Authors: Martin Raiser; Mark E. Schaffer; Johannes Schuchardt
Abstract: The transition to market-based economic systems in the countries of Central and Eastern Europe and the former Soviet Union involve fundamental shifts in the allocation of resources, and deep changes in the structure of production and employment. This Paper uses a simple model of economic development and structural change with technology spillovers to benchmark structural change in the transition economies and simulate the path of adjustment from central planning. We then analyse data from 10 accession candidates and 12 CIS countries to measure the progress in structural change that has taken place thus far and to assess the further structural changes that should be expected, with particular attention to the implications for accession.
Keywords: adjustment; structural change; transition
JEL Codes: O14; O40; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| central planning (P11) | excessive industrialization (L52) |
| central planning (P11) | lower demand for services (J23) |
| central planning (P11) | productivity handicaps in the industrial sector (D24) |
| transition to market economies (P23) | deindustrialization (L52) |
| transition to market economies (P23) | reallocation of labor from industry to services (O14) |
| decrease in parameter c (C24) | reallocation of labor from industry to services (O14) |
| elimination of technological handicap k (O33) | reallocation of labor from industry to services (O14) |
| transition process (P21) | decline in output (E23) |
| transition process (P21) | increase in welfare (I38) |
| transition process (P21) | J-curve pattern of output (O41) |