TABLE 2
FROM:
Shock Therapy versus Gradualism Reconsidered: Lessons from Transition Economies after 15 Years of Reforms
Vladimir Popov
BACK TO ARTICLETable 2. Description of the data and sources (indicators for China are always for the period 10 years earlier)
| Indicator | Comments | Sources |
|---|---|---|
| Real GDP change | Recession – 1989–1996; recovery 1995–2003 | EBRD (Transition Reports) |
| Pre-transition distortions | Differences in industrial and external trade structure between centrally planned and market economies | Data and explanations are in Popov (2000) |
| PPP GDP per capita in 1987 | De Melo et al. (1996) | |
| War dummy | Equals 1 for Armenia, Azerbaijan, Croatia, Georgia, Macedonia and Tajikistan and 0 for all other countries | |
| FSU dummy | Equals 1 for 15 FSU countries and 0 for all other countries | |
| Decline in government revenues as a % of GDP from 1989–1991 to 1993–1996 | Difference between the average share of government revenues in GDP in 1989–1991 and this same average share in 1993–1996 | EBRD Transition Reports for FSU and EE countries, Asian Development Bank for China (adjusted as explained in Popov, 2000), Mongolia, Vietnam |
| Increase in the share of shadow economy in GDP in 1989–1994, pp | Estimates based on electricity consumption – conservative elasticity scenario | Kaufmann and Kaliberda (1996) |
| Rule of law index, average for 1989–1997, % | The rule of law index is taken from the International Country Risk Guide and calibrated, so that 100% corresponds to the highest possible rule of law | Campos (2000); International Country Risk Guide |
| Democracy index, average for 1990–1998, % | The democracy index is the average of Freedom House political rights index for 1990–1998, but inverted and calibrated, so that complete democracy coincides with 100%, whereas complete authoritarianism with 0% | Freedom House (http://www.freedomhouse.org/rankings.pdf) |
| Cumulative economic liberalisation index by 1995a | Experts' estimate of the level of liberalisation achieved by 1995 on a 1 to 4.5 scale (highest liberalisation – 4.5 – is in OECD countries) | De Melo et al. (1996) |
| Increase in economic liberalisation index in 1995–2003 | The level of index in 2003 minus its level in 1995 (negative sign indicates strengthening of regulations) | EBRD Transition Reports; conservative estimates for China, Vietnam, Mongolia |
| Annual average inflation in 1990–1995 | Log (inflation, % a year, 1990–1995, geometric average) | World Development Indicators |
a This liberalisation index is constructed as explained earlier in De Melo et al. (1996), as the sum of liberalisation 'flows' for 6 years (1989–1994 for all countries, except China, for which the period in 1979–1984). Assuming that before transition the level of liberalisation in communist economies was negligible, the 1995 liberalisation index can be interpreted as the cumulative 'stock' of liberalisation by 1995 or as the total 'flow' of liberalisation in the first 6 years of reforms.
