The Eurasian Growth Paradox

21 Pages Posted: 29 Jun 2006

See all articles by Anders Åslund

Anders Åslund

Institute for International Economics

Nazgul Jenish

University of Maryland

Date Written: June 2006


In the first decade of postcommunist transition, multiple growth regressions showed that the more radical and comprehensive market economic reform was, the earlier a country returned to economic growth and the more vigorous its growth, and that Central Europe took the lead. Since 2000, however, the Commonweath of Independent States (CIS) countries have had more than 4 percentage points higher annual growth than the Central European countries. A regression analysis for 20 postcommunist countries shows, with strong significance, that reducing public expenditures has most effectively stimulated economic growth. As expected, oil exports are also positive and significant. The distance from the European Union is also positive and significant: that is, the further from the European Union, the higher the economic growth. The effect of corruption is negative for growth but only marginally significant. Neither the laggard effect nor investment reveals any significant effect. The conclusion is that at least among postcommunist countries more emphasis should be given to reducing public expenditures to boost economic growth.

Keywords: economic systems, transition, economic growth, public sector economy, oil

JEL Classification: E62, H30, O23, P27, P35, Q43

Suggested Citation

Åslund, Anders and Jenish, Nazgul, The Eurasian Growth Paradox (June 2006). Institute for International Economics Working Paper No. 06-5. Available at SSRN: or

Anders Åslund (Contact Author)

Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Nazgul Jenish

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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