Initial fall and the recovery speed in transition economies: an (omitted) aspect of demand

ENThe "growth equation" applied to transition economies do not find significant effects of the traditional factors suggested by the neoclassical theory. A wide set of various transitionspecific structural indicators is then used to establish some correlation, but the growth differences of transition countries is still puzzling (see, for instance, Campos and Kinoshita 2002). It is shown in this paper that the initial fall of income experienced after the collapse of the Soviet empire that could be mainly attributed to the break of (foreign) trade links between the former partners and the respective demand drop has very good correlation with the speed of recovery of transition economies in the CEE region.