Mind the Break! Accounting for Changing Patterns of Growth During Transition

We argue that econometric analyses of growth in post-communist countries are vulnerable to structural breaks across time and/or countries. We demonstrate this by identifying structural breaks in growth for 25 countries and over 18 years. The method we use allows identification of structural breaks at a-priori unknown points in space or time. The only prior assumption is that breaks occur in relation to progress in implementing market-oriented reforms. We find robust evidence that the pattern of growth in transition has changed at least three times, yielding four different models of growth associated with different stages of reform. The speed with which individual countries progress through these stages differs considerably