Growth Recovery in CIS Countries: The Sufficient Minimum Threshold of Reforms

Econometrics of transition growth showed that Central Europe recovered earlier because stabilisation, liberalisation and institutions came earlier. Commonwealth of Independent States (CIS) still lag on reforms, and yet growth surged after 2000. This paper shows that the puzzle is only partly explained by energy prices; thus a new question is asked: was there some threshold of reforms sufficient to re-start growth? Indeed, the CIS reached in 2000 the same threshold Central Europe had prior to recovery. Exploring the surprisingly low threshold level of institutions reveals two important insights: institutions lagged well behind liberalisation everywhere; there is not a single country with institutions moving faster than liberalisation. Comparative Economic Studies (2008) 50, 53–78. doi:10.1057/ces.2008.5