Divergence in Growth in Post-Communist Countries

Abstract

The paper analyzes the divergence of economic growth in post-communist countries along geographical lines. It examines the role of culture, manifested in the form of civil society, social capital, trust, religious and business ethics, and historical experience, in the economic growth. Multivariate regression, a path (structural equation) model, and sensitivity analysis are used to determine direct and indirect effects of culture, policy, corruption, war, initial economic conditions, and ethnicity on the economic growth in 28 post-communist countries in 1990–1998. The statistical analyses show that a cultural index, which reflects civil society strength, the proportion of Catholics and Protestants in the population and historical experience, has the strongest effect on growth, economic reform, macroeconomic stabilization policy and corruption.