Professional paper
TRANSITION COUNTRIES ECONOMIC GROWTH IN THE PROCESS OF GLOBALIZATION
Vinko Kandžija
Ljiljana Lovrić
Abstract
The transition countries` prospects are based on the neoclassical growth theory and the convergence hypothesis. Most of the previous econometrics studies tend to assume a common and exogenous technology in investigation of cross-country convergence. The models relied heavily on differences in technology to explain international differences in income levels and growth rates. These assumptions are nowadays inconsistent with the features of the process of globalization and economic integration, and recent evidence on technological change. International transfer of technology is the main mechanism through which regional integration influences the growth. The transfer is achieved by purchasing the products in which the new technology is built, by accepting new ideas, new organizational structures and business operations. Technological change is now embodied within capital and labour. Some recent researches suggest that poor countries do not import capital goods that embody advanced technologies, despite their accessibility, and the reason is shortcoming of workers` skills required to use these goods productively. Furthermore, considering institutional and economic restructuring in the process of accession to the EU, European transitional countries have favourable terms for achieving rapid productivity growth, especially from the aspect of „new economy“. The European transitional countries` perspectives and expectations are also in improving of the human capital and its flexibility, as it would be able to productively utilize new products and technologies.
Keywords
economic growth; convergence; econometric models; transition; technological change; new economy
Hrčak ID:
11475
URI
Publication date:
17.7.2007.
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