Exports and economic growth in Central and East European countries during transition

This paper quantifies the contribution of exports to economic growth in Central and East European countries (CEECs) during transition. Two theoretical models are examined: the first is based on an aggregate production function which includes exports as an additional ‘input’; while the second is based on a two-sector (exports and non-exports) model where exports provide positive externalities in non-export production. Each model is estimated with both fixed and random effects using panel data. Results show that the random effects model is preferred and that exports have a significant impact on economic growth.