Neighbours in Transition

Abstract

The breakdown of the communist regime in Eastern Europe marked a historical event for countries on both sides of the iron curtain. Applying the recently released EU KLEMS database on sectoral growth and productivity measures, we study the period after the transformational recession 1995-2004 for Austria, Czech Republic, Hungary, Slovak Republic, and Slovenia and compare the performance to a group of European core economies. Our analysis reveals pronounced differences in performance but also striking similarities in terms of industrial structure. Beginning with a brief account of aggregate growth and its components, the focus is then on specialisation patterns and the varying contribution of industries characterised by educational intensity. Finally, we investigate the manufacturing sector in more detail, demonstrating that the Eastern European countries successfully specialised in higher-tech sectors which might be explained by high productivity growth rates in these sectors.

Keywords

Economic transition growth total factor productivity

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