- Abdul Abiad, Ashoka Mody, Susan Schadler, and Daniel Leigh
- Published Date:
- January 2007
Growth in the Central and Eastern European Countries of the European Union
Susan Schadler, Ashoka Mody, Abdul Abiad, and Daniel Leigh
INTERNATIONAL MONETARY FUND
© 2006 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Alicia Etchebarne-Bourdin
Figures: Bob Lunsford
Growth in the Central and Eastern European countries of the European Union/Susan Schadler … [et al.]—Washington, D.C.: International Monetary Fund, 2006.
p. cm.—(Occasional papers; 252)
Includes bibliographical references.
1. Europe, Central—Economic conditions. 2. Europe, Eastern—Economic conditions. 3. Europe, Central—Economic policy. 4. Europe, Eastern—Economic policy. 5. International Monetary Fund. I. Schadler, Susan. II. International Monetary Fund. III. Series: Occasional paper (International Monetary Fund); no. 252.
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- Preface vii
- Abbreviations viii
- Scope of the Study
- The Record: Enduring Strengths or a Bounce Back?
- Growth Scenarios: Possible Paths for the Catch-Up
- Policies and Long-Term Growth: What Can Be Learned from Other Countries?
- European Integration: Opportunities for Growth
- Implications for IMF Surveillance
- Appendix. Growth Regressions and Data Description
- Concluding Remarks by the Acting Chair, Executive Board Seminar, February 27, 2006
- 2.1. Macroeconomic Trends in the CEECs, 1990–2004
- 3.1. Emerging Market Economies: Growth in Real PPP GDP Per Capita, 1990–2004
- 3.2. CEECs and Other Emerging Market Regions: Growth in Real Per Capita GDP
- 3.3. Employment Rates in the CEECs
- 3.4. Contributions to Average GDP Growth
- 3.5. Employment and Activity Rates in Emerging Market Economies, 2004
- 3.6. Investment and Growth in Emerging Market Economies, 2000–04
- 3.7. Savings and Investment Rates in Emerging Market Economies, 2004
- 5.1. Global Sample: Institutional Quality and the Speed of Convergence
- 5.2. Emerging Market Economies: Actual and Predicted Per Capita GDP Growth, 2000–04
- 5.3. CEECs: Actual and Predicted Per Capita GDP Growth, 2000–04
- 5.4. Per Capita GDP Growth in the CE-5 and Baltic Countries Relative to Other Emerging Market Regions, 2000–04
- 5.5. CEECs: Predicted Per Capita GDP Growth, 2005–09
- 6.1. European Union: Current Account Deficits and the Speed of Convergence, 1960–2004
- 6.2. CEECs: FDI and Non-FDI Financing of Current Account Deficit
- 6.3. CEECs: Predicted Versus Actual Per Capita GDP Growth
- 6.4. CEECs: Actual Versus Predicted Current Account Balance
- 6.5. CEECs in 2005 and East Asia in 1996: Selected Vulnerability Indicators
- 6.6. The CEECs and East Asia: Selected Governance Indicators
- 7.1. Fiscal Balance and Risk Ratings in Emerging Market Economies, 1990–2002
- 7.2. CEECs: Foreign Currency Government Bond Spreads
- A1. Emerging Market Countries: Actual and Predicted Per Capita GDP Growth, 2000–04
- A2. CEECs: Actual and Predicted Per Capita Growth, 2000–04
- A3. Current Account Balances and GDP Growth in the European Union, 2000–04
- 4.1. CEECs: Convergence with Euro Area Income Per Capita
- 4.2. Decomposing the Income Gap Between the Euro Area and the CEECs
- 4.3. Scenario 1: Speeding Up Convergence in the CEECs Through Higher Investment
- 4.4. Scenario 2: Speeding Up Convergence in the CEECs Through Higher Productivity Growth
- 5.1. Growth Regression Estimates
- 5.2. Evolution of Growth Determinants in the CEECs, 1989–2004
- A1. Global Sample of Economies
- A2. Growth Regressions with Core Controls, Using Different Country Samples
- A3. Growth Regression Estimates
- A4. Growth Accounting Regressions
- A5. CE-5: Decomposition of Growth Differences
- A6. Baltic Countries: Decomposition of Growth Differences
- A7. Growth and Current Account Deficit Regressions
- A8. Emerging Market Economies
The following conventions are used in this publication:
- In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
- An en dash (–) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).
- “Billion” means a thousand million; “trillion” means a thousand billion.
- “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).
As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.
Having smoothly acceded to the European Union (EU) in May 2004, the overarching objective for the EU’s new member states is to continue raising living standards to Western European levels. This Occasional Paper examines the progress toward income convergence achieved by the the EU’s eight Central and Eastern European countries thus far, the prospects for further income convergence over the medium term, and the policy challenges that these countries will face in facilitating the catch-up process.
The paper was prepared by a team led by Susan Schadler and Ashoka Mody, with Abdul Abiad and Daniel Leigh. The paper benefited from comments by various departments of the IMF; by participants at a September 2005 conference on “European Enlargement: Implications for Growth” in Washington, D.C., and at a March 2006 conference on “New Europe, New Frontiers, New Challenges, New Opportunities” in Prague; and by participants at seminar presentations in Tallinn and Warsaw and at the IMF’s European Department. Material presented in this study was originally prepared as background for an IMF Executive Board seminar held in February 2006. The Acting Chair’s concluding remarks are reproduced on pages 53–54 of this publication.
The authors would like to thank Indra Mahadewa, Lina Shoobridge, Sylvia Young, and Indira Bhimani for assistance in preparing the manuscript; David Velazquez-Romero for excellent research assistance; and Esha Ray of the External Relations Department for editing the manuscript and coordinating production of the publication. The opinions expressed in the paper are those of the authors and do not necessarily reflect the views of national authorities, the IMF, or IMF Executive Directors.
Refers to Czech Republic, Hungary, Poland, Slovakia, and Slovenia
Central and Eastern European country
European Bank for Reconstruction and Development
Foreign direct investment
Gross domestic product
Government Finance Statistics
International Country Risk Guide
Information and communication technology
Organization for Economic Cooperation and Development
Purchasing power parity
Penn World Tables
Total factor productivity
World Development Indicators
World Economic Outlook