We estimate equilibrium dollar wages for 15 transition economies of Central and Eastern Europe (CEE) and the former Soviet Union. Equilibrium dollar wages are Interpreted as full employment wages consistent with a country’s physical and human capital endowment, and estimated by regressing actual dollar wages on productivity and human capital proxies in a short (1990- 95) panel of 85 countries. The main results are: (1) equilibrium dollar wages have appreciated steadily in the Baltic countries and fast-reforming CEE transition economies, but have been fiat in most CIS countries: and (2) 1996 actual dollar wages remain below estimated equilibrium dollar wages for most but not ail transition countries covered.
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This study, another in the series focusing on special issues in transition, reviews the experience of output decline and recovery in the 25 countries of eastern and central Europe and the Baltics, Russia, and other countries of the former Soviet Union. Although these countries began the process of economic transformation with similar circumstances of output decline, the extent of decline, its duration, and the sustainability of recovery in growth varied considerably. The authors explore the factors behind this variation and find that the most important policies promoting early and sustained recovery were ones that supported financial stabilization and structural reforms in key areas such as private sector development, the tax system, economic liberalization, and secure property rights.
The recovery of world activity and trade became more firmly established during the first half of 1994. Continental western Europe and Japan have now begun to emerge from some of the deepest recessions in half a century. At the same time, upswings have gained momentum in the United Kingdom, Canada, and Australia, while in the United States a high level of capacity utilization has already been restored. A particularly positive aspect of the world economic situation remains the rapid expansion in many Asian and some Latin American developing countries. The decline in output during the early part of the transition process in central Europe and the Baltic region has bottomed out, and economic growth has resumed in some of these countries. In contrast, registered output has continued to decline in Russia, Ukraine, Belarus, and the Trans-caucasian and central Asian countries in transition. Although the outlook is beginning to improve in some African countries as a result of stronger commodity prices and enhanced economic reform efforts, economic conditions remain difficult in most of the continent.
The transition from predominantly socialist ownership and central planning to a market economy with private ownership is a complex process involving profound changes in the political, economic, institutional, legal, and social domains. While there may not be a simple unifying theme to capture this complexity, the quest for economic recovery and sustained growth is certainly an important common thread for all the transition countries. This paper reviews the record of growth performance in 25 countries, comprising central and eastern Europe (CEE) and the Baltics, Russia, and other countries of the former Soviet Union (BRO).