Achieving Rapid Growth in the Transition Economies of Central Europe

The preeminent economic challenge for Central European economies in transition is to grow rapidly for a sustained period of time. On current policies, the Central European economies can expect to grow at moderate rates, faster than Western Europe, but far short of the rapid growth rates achieved in the very fast growing economies (VFGEs) in Asia and elsewhere. This paper discusses the sources of rapid growth in the VFGEs, and the ways in which Central Europe could emulate key aspects of the economic policies of the VFGEs in order to raise the growth rates of the Central European economies. Jeffrey D. Sachs is the Director of the Harvard Institute for International Development and the Galen L. Stone Professor of International Trade at Harvard University. Sachs serves as an economic advisor to several governments in Latin America, Eastern Europe, the former Soviet Union, and Asia. He has also been a consultant to the IMF, the World Bank, GECD, and the UNDP. Andrew Warner is a Research Associate at the Harvard Institute for International Development. He received his Ph.D. in economics from Harvard University in 1991, and has worked at the Board of Governors of the Federal Reserve and the World Bank. He has previously published papers on the international debt crisis of the 1980s and on American trade performance.