Working Paper: CEPR ID: DP5625
Authors: Felix Eschenbach; Bernard Hoekman
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 towards 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.
Keywords: Economic Growth; Services; Transition Economies
JEL Codes: F14; F43; O14; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic growth (O49) | service sector policy reforms (E69) |
| service sector policy reforms (E69) | inward foreign direct investment (FDI) (F21) |
| inward foreign direct investment (FDI) (F21) | economic growth (O49) |
| service sector policy reforms (E69) | economic growth (O49) |
| service sector policy reforms (E69) | per capita GDP growth (O49) |
| banking sector reform (G28) | economic growth (O49) |