Growth Patterns of Some Transtion Economies

After the demise of the socialist order in the countries of Eastern Europe, there was a difference in the extent to which the countries were able to raise real income and the standard of living. Some countries, like Slovenia, the Czech Republic and Poland, were experiencing higher than average economic growth and were converging rapidly with the countries in the European Union. Other countries, on the other hand, like Macedonia and the Commonwealth of Independent States, were experiencing the direct opposite: low growth and deteriorating living standards. Once part of the prosperous Republic of Yugoslavia, Macedonia has been among the countries experiencing very turbulent and unstable economic growth. Graph 1, which compares the growth rates in real GDP of some transition economies of Eastern Europe, illustrates the low economic growth of Macedonia as compared to several other formerly socialistic economies. Unlike most of the countries in the graph, Macedonia’s compound growth has been negative, with a current income per capita that is approximately five percent lower than its pre-transition level