## _wp08235 ## Source details **Canonical URL:** [_wp08235](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp08235.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp08235.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp08235.pdf.json) --- ### I. Introduction — motivation and puzzle - Comparison of the fifteen states that emerged from the Soviet Union highlights sharply different economic evolution. - Three Baltic States that are now EU members have fared much better in economic terms than other FSU states, including Russia. - Central question: Why did Estonia converge rapidly to the EU/Finnish income level while Georgia lagged? - Stylized comparison: Estonia and Georgia are both small, poorly endowed with natural resources, with historical periods of prosperity, yet diverged sharply after 1991. - Key empirical observation: - Estonia’s GNI per capita rose to a half of that of Finland within less than fifteen years after independence. - Estonia joined the EU in 2004 and NATO in 2004. - Political/institutional hypothesis: the “EU perspective” provided an anchor for sustained political, institutional, and economic reforms in Estonia; Georgia lacked such an anchor until the Rose Revolution in 2003. ### II. Theoretical background — production function and mapping to determinants - Aggregate constant-returns-to-scale production function produces output per person as a function of: - Efficiency (A, TFP) - Human capital per person (H/L) - Capital/output ratio (K/Y) - Natural capital per person (N/L) — set to zero for Estonia and Georgia in the paper’s exercise - Simplifying assumptions: - Set output elasticities a = b = 1/3 (standard Mankiw/Romer/Weil style) - Reduce determinants of medium-term per-capita growth to: efficiency A, human capital per person H/L, and capital/output ratio K/Y - Human capital (Mincer-style): - H = L * exp(v * u) where u is years of schooling and v is the productivity of schooling - v cited as a number like 0.1 in some studies (Bils and Klenow, 2000) - Capital/output dynamics: - Capital/output ratio related to investment rate I/Y and depreciation δ; capital and output grow at rate g - Hours worked and labor-market adjustment: - Q/L decomposed into labor force participation, hours per employed, and unemployment; hours affect measured output per person vs output per hour worked - Empirical strategy: - Evaluate expression under the square root in equation (12) (education, investment, labor-market measures) and attribute residual income differential to efficiency (A) ### III. Empirical evidence — comparative indicators (1991–2005 and related periods) A. Investment and education - Average machinery & equipment investment 1989–2005: - Estonia invested 29 percent of GDP on average. - Georgia invested 20 percent of GDP on average. - Schooling and enrollment: - Primary-school enrolment: Estonia 100 percent, Georgia 95 percent. - Secondary attendance: nearly all Estonian youngsters attend secondary school; about four fifths of Georgians do. - Tertiary attendance in 2004: nearly two thirds of young Estonians; 42 percent in Georgia. - Education spending: - Recent public and private expenditure on education: Estonia about six percent of GDP; Georgia about two percent of GDP. - ICT and technological sophistication (2004–2005 indicators): - Personal computers per 1,000 inhabitants in 2005: Estonia 483 per 1,000; Finland similar; Georgia 39 (2004 figure cited). - Internet users per 1,000 inhabitants in 2005: Estonia 513 per 1,000; Georgia lower (39 in 2004 cited). - Mobile phone subscribers per 1,000 inhabitants in 2004: Georgia 326 per 1,000; Estonia higher. - Foreign direct investment net inflows, 1992–2005 average (% of GDP): - Estonia: 7 percent. - Georgia: 4 percent. - Note: difference larger if computed per capita. B. Exports, inflation, and economic structure - Exports of goods and services, average 1992–2005 (% of GDP): - Estonia: 73 percent. - Georgia: 33 percent. - Customs/import duties: Georgia collects a higher share of tax revenue from import duties (figure referenced). - Clearing times for imports: - Estonia: 1.7 days on average. - Georgia: 3.4 days on average. - Inflation (consumer prices, 1993–2005): - Georgia experienced much higher inflation in the early 1990s; by the late 1990s/2000s both countries brought inflation down, with Georgia lagging Estonia somewhat. - Financial depth (broad money as % of GDP, 1992–2005): Georgia exhibits shallow financial depth relative to Estonia. - Interest rate spread (2005): - Estonia: 3 percent. - Georgia: 14 percent (World Development Indicators 2007); The National Bank of Georgia reports 8.7 percent in 2005 (definitions differ). - Economic structure: - Agriculture value added as % of GDP declined in both countries; Georgia remains more agriculturally dependent (about one fifth of GDP earlier; paper reports Georgia diminished share down to five percent in recent years, “only a little more than the EU average”). - Manufacturing share in exports, 1995–2005: - Estonia: manufacturing almost three fourths of merchandise exports. - Georgia: about one third of merchandise exports. - Business environment indicators (World Bank Ease of Doing Business, 2006–2007): - Time to start a business (2006): Estonia 35 days vs Georgia 16 days in that snapshot; more recent World Bank (2007) figures: Estonia 7 days, Georgia 11 days. - Cost of registering a business (2006): Estonia five percent of GNI per capita; Georgia eleven percent (down from 23 percent in 2003). - World Bank Ease of Doing Business ranking (2007): Estonia 17th; Georgia 18th (Georgia jumped from 112th in 2003 to 18th in 2007). C. Labor markets - Labor force participation (15–64 year olds, 1989–2005): declined in tandem in both countries. - Hours of work per employee per week (nonagricultural, 1995–2008): Estonia increased from 33 to 35 hours; ILO data for Georgia available only for 1998–1999 with small differences. - Unemployment (1989–2004): average rates shown as rather similar 1998–2004; Estonia and Georgia experienced comparable increases in joblessness during the 1990s transition. D. Democracy, governance, and demography - Democracy (Polity IV index, -10 to 10, 1991–2004): - Estonia scores: around 6 (lower due to unresolved issues with Russian citizens). - Latvia: 8; Lithuania: 10. - Georgia: between 4 and 5 since 1992; 7 in 2004. - Enterprise survey perceptions (2005): - Lack confidence in courts to uphold property rights: managers reporting this — Estonia 30 percent; Georgia 29 percent. - Managers reporting lack of confidence as a major business constraint: Estonia 2 percent; Georgia 12 percent. - Crime as major business constraint: Estonia 2 percent; Georgia 24 percent. - Time spent dealing with officials: Estonian managers 2 percent of time; Georgian managers 3 percent of time. - Corruption perceptions index (Transparency International, 1998–2006): Estonia scores 3–4 points better than Georgia; World Bank enterprise surveys: corruption as major constraint — Estonia 4 percent of managers; Georgia 20 percent of managers. - Income inequality (Gini index, 2003): - Estonia: 36. - Georgia: 40. - Late 1990s: both around 38. - Fertility (births per woman, 1960–2005): - Both countries experienced a collapse in fertility since 1987. - Estonia partial recovery since 1996; Georgia has not recovered. - Life expectancy at birth (1960–2005): Estonia’s life expectancy took a deep dive before 1990, recovered after a decade, and surpassed Georgia in the late 1990s. - Health infrastructure and outcomes: - Hospital beds per 1,000 inhabitants in 2001: Estonia 6.7; Georgia 4.3. - All child births attended by skilled medical staff: Estonia 100 percent in recent years; Georgia 92 percent. ### IV. Accounting for the income differential — back-of-the-envelope growth accounting - Empirical targets: - 2005 per capita GDP: Estonia’s per capita GDP was 4.73 times larger than Georgia’s. - Average investment rates used: 0.29 in Estonia and 0.20 in Georgia. - School life expectancy (UNESCO measures, 2005): - Imputed years of schooling (UNESCO’s 2005 figures): Estonia sixteen years; Georgia twelve years. - The authors recompute a measure over 1991–2005 by weighting primary, secondary, tertiary years with average enrolment rates; imputed years reported and used in the accounting. - Accounting exercise components (via equation (12)): - Education (years of schooling via H/L term) - Investment (I/Y via K/Y term) - Labor-market variables (hours worked per person) - Residual attributed to efficiency differential (A, TFP) - Quantitative results: - Differences in education measured by years of schooling could by themselves explain a bit more than a twofold per-capita-output difference between Estonia and Georgia. - Investment differences could account for a 20 percent income differential between Estonia and Georgia. - After accounting for schooling and investment differences, an 86 percent per-capita-output difference remains to be explained by the efficiency differential (TFP and related factors) per the authors’ computation. - Expressed differently, the computation suggests a 51 percent efficiency differential from equation (14) is required to rationalize the observed income gap when including schooling, investment, and assumed labor market parity. - If labor force participation, hours per employee, and unemployment differences are taken at face value from Figures 14–16, those labor-market differences could explain a 22 percent difference in income per person, reducing the residual efficiency differential to about 52 percent (text notes sensitivity). ### V. Conclusion — synthesis and policy implications - Overall finding: Estonia’s stronger performance relative to Georgia since independence reflects both: - Greater accumulation of human and physical capital (education and investment); and - A much larger role for higher efficiency/TFP arising from trade openness, price stability, structural change, better governance, and related institutional reforms. - Relative contributions: - Education and efficiency make roughly comparable contributions to explaining the per-capita-income differential. - Investment plays a less significant role than education and efficiency in this accounting. - Intensive growth (efficiency-driven) appears to dominate extensive growth (input accumulation) in explaining Estonia’s advantage. - Policy implications (emphasized for Georgia and other lagging countries): - (i) Public policies that foster education and training, free trade, and domestic as well as foreign investment in a business-friendly environment. - (ii) Monetary and fiscal policies that support price stability, sustainable government budgets, and international, consumer-friendly competition. - (iii) Sound and transparent societal institutions that support the rule of law. - (iv) Good governance of both the public sector and the private sector. - Role of EU perspective: - For countries like those under review, the prospect of EU membership may create favorable conditions for sound economic policies, rapid structural change, and institution building by anchoring reforms and helping forge political consensus. - Final assessment: - Estonia has, on most counts reviewed, surpassed Georgia in growth-friendly reforms and outcomes. - Georgia has begun to catch up since the Rose Revolution, but doubts remain about the depth and durability of its institutional reform agenda and unresolved territorial disputes. - The authors present a coherent qualitative and back-of-the-envelope quantitative account suggesting large differences in TFP/governance are critical. *Source: _wp08235 - References (PDF)._ ### References.............................................................................................................. ### _wp08235 - References.............................................................................................................. ### Figures - 1. Gross National Income per capita 1991 and 2006 ..........................................................3 - 2. Gross Domestic Product per capita 1975–2005 ..............................................................5 - 3. Gross Domestic Product per capita 1975–2005 ..............................................................6 - 4. Gross Capital Formation 1980–2005 (% of GDP) ........................................................11 - 5. Secondary School Enrolment 1991–2005 (% of Cohort)..............................................12 - 6. Foreign Direct Investment 1992–2005 (Net Inflows, % of GDP) ................................13 - 7. E4 - 8. C - . Inflation 1993-2005 (%, Consumer Prices)...................................................................15 - 0. Financial Depth 1992-2005 (Broad Money as % of GDP) ...........................................15 - 11. Agriculture 1980-2005 (Value Added as % of GDP) ...................................................17 - 12. Manufactures Exports 1995-2005 (% of Merchandise Exports)...................................18 - 13. Economic Freedom Index 1995-2008 ...........................................................................18 - 14. Labor Force Participation 1989-2005 (% of Population) ..............................................19 - 15. Hours of Work per Employee per Week 1995-2008.....................................................20 - 16. Unemployment 1989-2004 (% of Total Labor Force) ..................................................20 - 17. Democracy 1991-2004 (Index from -10 to 10) .............................................................21 - 18. Corruption 1998-2006 (Index from 1 to 10) .................................................................22 - 19. Fertility 1960-2005 (Births per Woman).......................................................................23 ### Main Text Sections and Subsections (as listed) - I. Introduction ......................................................................................................................3 - II. Theoretical Background ...................................................................................................7 - A. Explaining Differences in Output per Capita ............................................................7 - B. From Output to Efficiency ........................................................................................9 - II ent and Education ........................................................................ - n, and Economic Structure .............................. - xports of Goods and Services 1987–2005 (% of GDP) .............................................1 - evenue) .............................14 ustoms and Other Import Duties 1991-2005 (% of Tax R - 9 - 1 * _wp08235 - References.............................................................................................................._* ### 20. Life Expectancy at Birth 1960-2005 (Years) ................................................................23 ### 20. Life Expectancy at Birth 1960-2005 (Years) ### I. Introduction — motivation and puzzle - Comparison of the fifteen states that emerged from the Soviet Union highlights sharply different economic evolution. - Three Baltic States that are now EU members have fared much better in economic terms than other FSU states, including Russia. - Central question: Why did Estonia converge rapidly to the EU/Finnish income level while Georgia lagged? - Stylized comparison: Estonia and Georgia are both small, poorly endowed with natural resources, with historical periods of prosperity, yet diverged sharply after 1991. - Key empirical observation cited: - Estonia’s GNI per capita rose to a half of that of Finland within less than fifteen years after independence. - Estonia joined the EU in 2004 and NATO in 2004. - Political/institutional hypothesis: the “EU perspective” provided an anchor for sustained political, institutional, and economic reforms in Estonia; Georgia lacked such an anchor until the Rose Revolution in 2003. ### II. Theoretical background — production function and mapping to determinants - Aggregate constant-returns-to-scale production function (textual form) yields output per person as a function of: - Efficiency (A, TFP) - Human capital per person (H/L) - Capital/output ratio (K/Y) - Natural capital per person (N/L) — set to zero for Estonia and Georgia in the paper’s exercise - Simplifying assumptions adopted: - Set output elasticities a = b = 1/3 (standard Mankiw/ Romer/Weil style) - Reduce determinants of medium-term per-capita growth to: efficiency A, human capital per person H/L, and capital/output ratio K/Y - Human capital formulation (Mincer-style): - H = L * exp(v * u) where u is years of schooling and v is the productivity of schooling - v cited as a number like 0.1 in some studies (Bils and Klenow, 2000) — v measures the proportional increase in human capital per additional year of schooling - Capital/output dynamics: - Capital/output ratio related to investment rate I/Y and depreciation δ; capital and output grow at rate g - Hours worked and labor-market adjustment: - Hours per person Q/L decomposed into labor force participation, hours per employed, and unemployment; hours affect measured output per person vs output per hour worked - Empirical strategy: evaluate expression under the square root in equation (12) (education, investment, labor-market measures) and attribute residual income differential to efficiency (A). ### III. Empirical evidence — comparative indicators (1991–2005 and related periods) A. Investment and education - Average machinery & equipment investment 1989–2005: - Estonia invested 29 percent of GDP on average. - Georgia invested 20 percent of GDP on average. - Schooling and enrollment: - Primary-school enrolment: Estonia 100 percent, Georgia 95 percent. - Secondary attendance: nearly all Estonian youngsters attend secondary school; about four fifths of Georgians do. - Tertiary attendance in 2004: nearly two thirds of young Estonians; 42 percent in Georgia. - Education spending: - Recent public and private expenditure on education: Estonia about six percent of GDP; Georgia about two percent of GDP. - ICT and technological sophistication (selected 2004–2005 indicators): - Personal computers per 1,000 inhabitants in 2005: Estonia 483 per 1,000; Finland similar; Georgia 39 (2004 figure cited). - Internet users per 1,000 inhabitants in 2005: Estonia 513 per 1,000; Georgia lower (39 in 2004 cited). - Mobile phone subscribers per 1,000 inhabitants in 2004: Georgia 326 per 1,000; Estonia higher. - Foreign direct investment net inflows, 1992–2005 average (% of GDP): - Estonia: 7 percent. - Georgia: 4 percent. - Note: difference larger if computed per capita. B. Exports, inflation, and economic structure - Exports of goods and services, average 1992–2005 (% of GDP): - Estonia: 73 percent. - Georgia: 33 percent. - Customs/import duties (1991–2005): Georgia collects a higher share of tax revenue from import duties (figure referenced). - Clearing times for imports: - Estonia: 1.7 days on average. - Georgia: 3.4 days on average. - Inflation (consumer prices, 1993–2005): - Georgia experienced much higher inflation in the early 1990s; by the late 1990s/2000s both countries brought inflation down, with Georgia lagging Estonia somewhat. - Financial depth (broad money as % of GDP, 1992–2005): Georgia exhibits shallow financial depth relative to Estonia. - Interest rate spread (2005): - Estonia: 3 percent. - Georgia: 14 percent (World Development Indicators 2007); The National Bank of Georgia reports 8.7 percent in 2005 (definitions differ). - Economic structure: - Agriculture value added as % of GDP declined in both countries; Georgia remains more agriculturally dependent (about one fifth of GDP earlier; paper reports Georgia diminished share down to five percent in recent years, “only a little more than the EU average”). - Manufacturing share in exports, 1995–2005: - Estonia: manufacturing almost three fourths of merchandise exports. - Georgia: about one third of merchandise exports. - Business environment indicators (World Bank Ease of Doing Business, 2006–2007): - Time to start a business (2006): Estonia 35 days vs Georgia 16 days in that snapshot; more recent World Bank (2007) figures: Estonia 7 days, Georgia 11 days. - Cost of registering a business (2006): Estonia five percent of GNI per capita; Georgia eleven percent (down from 23 percent in 2003). - World Bank Ease of Doing Business ranking (2007): Estonia 17th; Georgia 18th (Georgia jumped from 112th in 2003 to 18th in 2007). C. Labor markets - Labor force participation (15–64 year olds, 1989–2005): declined in tandem in both countries. - Hours of work per employee per week (nonagricultural, 1995–2008): Estonia increased from 33 to 35 hours; ILO data for Georgia available only for 1998–1999 with small differences. - Unemployment (1989–2004): average rates shown as rather similar 1998–2004; Estonia and Georgia experienced comparable increases in joblessness during the 1990s transition. D. Democracy, governance, and demography - Democracy (Polity IV index, -10 to 10, 1991–2004): - Estonia scores: around 6 (lower due to unresolved issues with Russian citizens). - Latvia: 8; Lithuania: 10. - Georgia: between 4 and 5 since 1992; 7 in 2004. - Enterprise survey perceptions (2005): - Lack confidence in courts to uphold property rights: managers reporting this — Estonia 30 percent; Georgia 29 percent. - Managers reporting lack of confidence as a major business constraint: Estonia 2 percent; Georgia 12 percent. - Crime as major business constraint: Estonia 2 percent; Georgia 24 percent. - Time spent dealing with officials: Estonian managers 2 percent of time; Georgian managers 3 percent of time. - Corruption perceptions index (Transparency International, 1998–2006): Estonia scores 3–4 points better than Georgia; World Bank enterprise surveys: corruption as major constraint — Estonia 4 percent of managers; Georgia 20 percent of managers. - Income inequality (Gini index, 2003): - Estonia: 36. - Georgia: 40. - Late 1990s: both around 38. - Fertility (births per woman, 1960–2005): - Both countries experienced a collapse in fertility since 1987. - Estonia partial recovery since 1996; Georgia has not recovered. - Life expectancy at birth (1960–2005): Figure referenced showing Estonia’s life expectancy took a deep dive before 1990, recovered after a decade, and surpassed Georgia in the late 1990s. - Health infrastructure and outcomes: - Hospital beds per 1,000 inhabitants in 2001: Estonia 6.7; Georgia 4.3. - All child births attended by skilled medical staff: Estonia 100 percent in recent years; Georgia 92 percent. ### IV. Accounting for the income differential — back-of-the-envelope growth accounting - Empirical targets: - 2005 per capita GDP: Estonia’s per capita GDP was 4.73 times larger than Georgia’s (recall Figure 1). - Average investment rates used: 0.29 in Estonia and 0.20 in Georgia (investment rate I/Y averages reported earlier). - School life expectancy (UNESCO measures, 2005): - Imputed years of schooling (averaged over period 1991–2005; methodology described): Estonia imputed years of schooling reported as sixteen years in UNESCO’s 2005 figure; Georgia twelve in UNESCO’s 2005 figure. - The authors recompute a measure over 1991–2005 by weighting primary, secondary, tertiary years with average enrolment rates; reported imputed years: Estonia and Georgia values discussed (text shows placeholders in supplied extract; the paper proceeds with these schooling measures in the accounting). - Accounting exercise structure: - Use equation (12) to evaluate contributions of: - Education (years of schooling via H/L term) - Investment (I/Y via K/Y term) - Labor-market variables (assumed small differences for hours worked per person) - Residual attributed to efficiency differential (A, TFP) — includes trade openness, price stability, economic structure, governance, and other TFP-related factors. - Quantitative results (back-of-the-envelope): - Differences in education measured by years of schooling could by themselves explain a bit more than a twofold per-capita-output difference between Estonia and Georgia. - Investment differences could account for a 20 percent income differential between Estonia and Georgia. - After accounting for schooling and investment differences, an 86 percent per-capita-output difference remains to be explained by the efficiency differential (TFP and related factors) per the authors’ computation. - Expressed differently, the computation suggests a 51 percent efficiency differential from equation (14) is required to rationalize the observed income gap when including schooling, investment, and assumed labor market parity. - If labor force participation, hours per employee, and unemployment differences are taken at face value from Figures 14–16, those labor-market differences could explain a 22 percent difference in income per person, reducing the residual efficiency differential to about 52 percent (text notes sensitivity). ### V. Conclusion — synthesis and policy implications - Overall finding: Estonia’s stronger performance relative to Georgia since independence reflects both: - Greater accumulation of human and physical capital (education and investment); and - A much larger role for higher efficiency/TFP arising from trade openness, price stability, structural change, better governance, and related institutional reforms. - Relative contributions (qualitative summary): - Education and efficiency make roughly comparable contributions to explaining the per-capita-income differential. - Investment plays a less significant role than education and efficiency in this accounting. - Intensive growth (efficiency-driven) appears to dominate extensive growth (input accumulation) in explaining Estonia’s advantage. - Policy implications emphasized as especially relevant for Georgia and other lagging countries: - (i) Public policies that foster education and training, free trade, and domestic as well as foreign investment in a business-friendly environment. - (ii) Monetary and fiscal policies that support price stability, sustainable government budgets, and international, consumer-friendly competition. - (iii) Sound and transparent societal institutions that support the rule of law. - (iv) Good governance of both the public sector and the private sector. - Role of EU perspective: - For countries like those under review, the prospect of EU membership may create favorable conditions for sound economic policies, rapid structural change, and institution building by anchoring reforms and helping forge political consensus. - Final assessment: - Estonia has, on most counts reviewed, surpassed Georgia in growth-friendly reforms and outcomes. - Georgia has begun to catch up since the Rose Revolution, but doubts remain about the depth and durability of its institutional reform agenda and unresolved territorial disputes. - The authors do not claim a fully quantified decomposition of all sources of the growth differential but present a coherent qualitative and back-of-the-envelope quantitative account suggesting large differences in TFP/governance are critical. *Source: World Bank, World Development Indicators 2007; World Development Indicators 2005; Transparency International 1999-2007; Polity IV (Marshall and Jaggers, 2001); data and analysis as presented in the supplied IMF chapter excerpt.* ### References ### References ### A - Development in the Making of the Modern World Income Distribution,” Quarterly Journal of Economics, Vol. 117, No. 4, November, 1231 - Acemoglu, D., and S. Johnson (2005), “Unbundling Institutions,” Journal of Political Economy, Vol. 113, No. 5 ### B - Bardhan, P. (1997), “Corruption and Development: A Review of the Issues,” Journal of Economic Literature, Vol. 35, No. 3, September, 1320-1346. - Interim Assessment of Output Developments in Ukraine, 2000-01,” IMF Working Paper WP/02/97. Washington. - Bils, M., and P. Klenow (2000), “Does Schooling Cause Growth or the Other Way Around?,” American Economic Review, Vol. 90, No. 5, December, 1160-1183. - Campos, N. F., and F. Coricelli (2002), “Growth in Transition: What We Know, What We Don’t, and What We Should,” Journal of Economic Literature, Vol. 40, No - Dixit, A. (2004), “Lawlessness and Economics: Alternative Institutions of Governance,” Princeton: Princeton University Press, Ch http://pup.princeton.edu/titles/7729.html - r, A., P-G. Méon, and FDrehe.Schneider, (2008), “The Devil is in the Shadow: Do ivity?,” CESifo Working Paper No. 2150. - Fortez., and M. Rama (2006), “Labor Market 'Rigidity' and the Success of Economic 5-38. - Institutions Affect Income and Productivity or only Official Income and Official Product - Fischer, S., and R. Sahay (2000), “The Transition Economies after Ten Years,” IMF Working Paper WP/00/30. Washington. - a, A - Reforms Across More Than 100 Countries,” Journal of Economic Policy Reform, Vol. 9, No. 1, March, 75-105. - Funke, M. (2006), “Taxation, Growth and Welfare: Dynamic Effects of Estonia’s 2000 Income Tax Act,” Finnish Economic Papers, Vol. 19, No. 1, Spring, 2 - Gosh, A. R., A. Gulde, and H. C. Wolf (2000), “Currency Boards: More Than a Quick Fix?,” Economic Policy, Vol. 1 - Hall, R. E., and C. I. Jones (1999), “Why Do Some Countries Produce So Much More Output Per Worker Than Others?,” Quarterly Journal of Economics, Vol. 114, No ### H - 28 - 28 - Havrylyshyn, O. (2001), “Recovery and Growth in Transition: A Decade of Evidence,” IMF Staff Papers, Vol. 48, Special Issue, 53-87. - Havrylyshyn, O. (2007), “Growth Recovery in CIS Countries: The Sufficient Minimum Threshold of Reforms,” mimeo, University of Toronto. ### K–M - Klomp, J., and J. de Haan (2008), “Political Institutions and Economic Volatility,” mimeo, University of Groningen. - Levy-Yeyati, E., and F. Sturzenegger (2003), “To Float or to Fix: Evidence on the Impact of Exchange Rate Regimes,” American Economic Review, Vol. 93, No. 4, December, 1173-1193. - Maliszewski, W. S. (2000), “Central Bank Independence in Transition Economies,” Economics of Transition, Vol. 8, No. 3, November, 749-789. - Mankiw, N. G., D. Romer, and D. N. Weil, “A contribution to the empirics of economic growth,” Quarterly Journal of Economics, Vol. 107, No. 2, May 1992, 407-437. - Marshall, M. G., and K. Jaggers (2001), “Polity IV Project: Political Regime Characteristics and Transitions, 1800-2000.” Available at HUhttp://www.cidcm.umd.edu./inscr/polity/UH . ### M–S - Marsiliani, L., and T. I. Renström (2007), “Political Institutions and Economic Growth,” Economics of Governance, Vol. 8, No. 3, May, 233-261. - Mauro, P. (1995), “Corruption and Growth,” Quarterly Journal of Economics, Vol. 110, No. 3, August, 681-712. - Mincer, J. (1974), Schooling, Experience and Earnings, Columbia University Press, New York. - Paldam, M., and G. T. Svendsen (2000), “An Essay on Social Capital: Looking at the Fire behind the Smoke,” European Journal of Political Economy Vol. 16, No. 2, June, 339-366. - Sachs, J. D., and A. M. Warner, (1995, revised 1997, 1999), “Natural Resource Abundance and Economic Growth,” NBER Working Paper 5398, Cambridge, Massachusetts. - Senhadji, A. (2000), “Sources of Economic Growth: An Extensive Growth Accounting Exercise ,” IMF Staff Papers, Vol. 47, No. 1, November, 129-157. - Williamson, O., 2005, “The Economics of Governance,” American Economic Review, Vol. 95, No. 2, May, 1–18. ### W - World Bank (2007), Doing Business—Economy Rankings. Available at HUhttp://www.doingbusiness.orgUH. See also HUhttp://www.enterprisesurveys.orgUH. *Source: _wp08235 - References (PDF).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2008/_wp08235.pdf_