FACTORS OF ECONOMIC GROWTH IN TEN EAST-CENTRAL EUROPEAN COUNTRIES IN THE YEARS 1993-2007 (Czynniki wzrostu gospodarczego w 10 krajach Europy Srodkowo-Wschodniej w latach 1993-2007)

The paper presents the analysis of economic growth determinants in the 10 Central and Eastern European countries (CEE-10 or EU-10): Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. The analysis covers the period 1993-2007. The author tests many macroeconomic variables that are potential economic growth determinants. His calculations are based on the average data for five 3-year subperiods: 1993-1995, 1996-1998, 1999-2001, 2002-2004, and 2005-2007. The analysis consists of three steps. In the first step, he chooses the variables that can be tested as potential economic growth determinants. The selection is based on economic significance and data availability. In the second step, he performs the correlation analysis in order to choose the variables for the econometric model. The third step is the regression analysis. He estimates many variants of empirical models of economic growth and he chooses those that are the best in explaining the differences in the GDP dynamics between the CEE countries. The author's results indicate that the most important economic growth determinants in the CEE-10 countries are: investment rate (including FDI), human capital measured by the education of workers, financial sector development proxied by the capitalization of stock exchange and the ownership structure of the banking sector (important role of foreign banks), good fiscal stance (low budget deficit and low public debt), economy structure (high services share in income and low agriculture and industry shares), low interest rates, low inflation and slow money growth, advantageous age structure of the population (low share of economically inactive people), computerization of the economy measured by the mobile penetration rate and the number of computers, high private sector share in GDP, and good institutional environment (e.g. high scope of economic freedom and the progress of market reforms). Moreover, his analysis indicates that the CEE countries have been developing in line with the conditional convergence hypothesis while the absolute convergence has not been confirmed.