Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-12T23:05:07.685Z Has data issue: false hasContentIssue false
  • English
  • Français

BUSINESS ENVIRONMENT, START-UPS, AND PRODUCTIVITY DURING TRANSITION

Published online by Cambridge University Press:  14 May 2012

Zuzana Brixiová  and
Balázs Égert
Zuzana Brixiová*
Affiliation:
UNDP Swaziland and African Development Bank
Balázs Égert
Affiliation:
Organization for Economic Cooperation and DevelopmentEconomiX at the University of Paris X-NanterreCESifo and William Davidson Institute
*
Address correspondence to: Zuzana Brixiová, Lilunga House, 5th Floor, Somhlolo Road, Mbabane, Swaziland; e-mail: zuzana.brixiova@undp.org.
Get access Rights & Permissions [Opens in a new window]

Abstract

The transition paths from plan to market have varied markedly across countries. Central and Eastern European and Baltic countries, which opted for fast and deep reforms including transformation of their business environments, rapidly narrowed the productivity gap with advanced economies. In contrast, in countries of the Commonwealth of Independent States, which embarked on reforms later and with less depth, the productivity gap remains large. Whereas the literature has focused mainly on empirical studies, this paper develops a dynamic search model of firm start-ups that reflects these trends. The model shows that an enabling business climate contributes to start-ups of highly productive firms at an earlier stage of transition, underscoring the importance of early reforms. The role of the state sector as an employer during transition rises in countries where reforming the business environment is particularly costly.

Keywords

Dynamic Search ModelBusiness EnvironmentPrivate Sector GrowthProductivity
Type
Articles
Information
Macroeconomic Dynamics , Volume 16 , Supplement S2: Time-Varying Modeling with Macroeconomic and Financial Data , September 2012 , pp. 213 - 231
Copyright
Copyright © Cambridge University Press 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Aghion, Phillipe and Blanchard, Olivier J. (1994) On the speed of transition in Central Europe. In Fischer, Stanley and Rotemberg, Julio J. (eds.), NBER Macroeconomic Annual 1994, pp. 283–320. Cambridge, MA: MIT Press.Google Scholar
Aidis, Ruta, Estrin, Saul, and Mickiewicz, Tomasz (2009) Entrepreneurial Entry: Which Institutions Matter? IZA discussion paper 4123.CrossRefGoogle Scholar
Atkenson, Andrew and Kehoe, Patrick (1996) Social insurance and transition. International Economic Review 37, 337–402.Google Scholar
Bilsen, Valentijn and Konings, Jozef (1998) Job creation, job destruction, and growth of newly established private firms in transition economies: survey evidence from Bulgaria, Hungary, and Romania. Journal of Comparative Economics 26, 429–445.Google Scholar
Castanheira, Micael and Roland, Gerard (2000) The optimal speed of transition: A general equilibrium analysis. International Economic Review 41, 219–239.Google Scholar
Brixiova, Zuzana and Kiyotaki, Nobuhiro (1997) Private sector development in transition economies. Carnegie–Rochester Conference Series on Public Policy 46, 241–280.Google Scholar
Brixiova, Zuzana and Yousef, Tarik (2000) Labor market adjustment in transition economies with on-the-job search. Economics Letters 67, 223–229.Google Scholar
De Loecker, Jan K. and Konings, Jozef (2006) Job reallocation and productivity growth in a post-socialist economy: Evidence from Slovenian manufacturing. European Journal of Political Economy 22, 388–408.Google Scholar
European Bank for Reconstruction and Development (2000) Transition Report: Employment, Skills and Transition. London: European Bank for Reconstruction and Development.Google Scholar
Garibaldi, Pietro and Brixiova, Zuzana (1998) Labor market institutions and unemployment dynamics in transition economies. IMF Staff Papers 45, 269–308.Google Scholar
Gollin, Douglas (2008) Nobody's business but my own: Self-employment and small enterprise in economic development. Journal of Monetary Economics 55, 219–233.Google Scholar
Lopez-Garcia, Paloma (2006) Business Environment and Labor Market Outcomes in Europe and Central Asia Countries. Policy research working paper 3885, World Bank.Google Scholar
Mitra, Pradeep, Muravyev, Alexander, and Schaffer, Mark E. (2009) Convergence in Institutions and Market Outcomes: Cross-Country and Time-Series Evidence from the Business Environment and Enterprise Performance Surveys in Transition Economies. Policy research working paper 4819, World Bank.Google Scholar
Parente, Stephen L. and Prescott, Edward C. (2006) What a country can do to catch up to the leader. In Balcerowicz, Leszek and Fischer, Stanley (eds.), Living Standards and the Wealth of Nations: Successes and Failures in Real Convergence, pp. 17–40. Cambridge, MA: MIT Press.CrossRefGoogle Scholar
Rodrik, Dani (1997) What Drives Public Sector Employment? NBER working paper 6141.Google Scholar
World Bank (2010) Doing Business 2011: Making a Difference for Entrepreneurs. Washington, DC: World Bank.Google Scholar