Three Decades of Economic Development in Central and Eastern Europe. A Bayesian Approach to Quantifying Relevant Growth Factors

With 30 years passing in the transition of the Central and Eastern European countries toward market-based economies, this paper proposes a cross-country growth analysis to observe the most important factors contributing to these unique and historical developments. Specifically, we apply two cross-country growth models based on Bayesian Model Averaging methodology. The analysis outlines the importance of the labor force and the negative correlation between government spending and economic growth in the analyzed countries. These results have interesting implications for decision makers regarding potential policies aimed at promoting economic growth in the region.