J-Curve in Transition Economies: A Large Meta-analysis of the Determinants of Output Changes

  • Ichiro Iwasaki
  • Kazuhiro Kumo


Immediately after the collapse of socialism, the countries of Central and Eastern Europe and the former Soviet Union fell into a serious output decline, after which they experienced a gradual recovery. Therefore, without exception, these countries followed a J-curved growth path. However, there were marked differences among them in the length and depth of the output fall and the speed of recovery. In this paper, we perform a comparative meta-analysis of the effect size and statistical significance of structural change, transformation policy, the legacy of socialism, inflation, and regional conflict in order to elucidate the mechanism that generated the J-shaped trajectory in transition economies. The meta-synthesis, which employs 3279 estimates drawn from 123 previous studies, revealed that while the growth-enhancing effects of structural change and transformation policy were small yet significant, inflation and regional conflict had a highly significant and strongly negative effect on output. In addition, the legacy of socialism might exacerbate the decline in production in the early stages of transition. The meta-regression analysis that simultaneously controls for various research conditions and the assessment of publication selection bias provides supporting evidence for the results obtained from the meta-synthesis.


Output changes Transition economies Meta-analysis Publication selection bias Central and Eastern Europe Former Soviet Union 

JEL Classification

E31 O47 O57 P20 P21 



This research work was financially supported by grants-in-aid for scientific research from the Ministry of Education and Sciences in Japan (Nos. 23243032, 26245034), the Joint Usage and Research Center of the Institute of Economic Research, Kyoto University (FY2016), and Center for Economic Institutions of the Institute of Economic Research, Hitotsubashi University. We thank Tomáš Havránek, Robert J. Johnston, Martin Paldam, Tom D. Stanley, Manabu Suhara, Paul Wachtel (the editor), two anonymous referees of the journal as well as participants in the study meeting at the Institute of Economic Research, Hitotsubashi University, Kunitachi, May 25, 2016, and the MAER-NET Colloquium at Hendrix College, Conway, September 16, 2016, and the Kyoto International Conference “Frontier of Transition Economics” at the Campus Plaza Kyoto on February 23–25, 2017 for their helpful comments and suggestions. We also would like to thank Eriko Yoshida for her research assistance and Dawn Brandon for her editorial assistance. Last but not least, we also wish to express our deepest respect to the authors of the literature subject to the meta-analysis in this paper. The usual caveats apply.

Supplementary material

41294_2018_58_MOESM1_ESM.docx (55 kb)
Supplementary material 1 (DOCX 54 kb)


  1. Ahtiainen, H., and J. Vanhatalo. 2012. The value of reducing eutrophication in European marine areas: A Bayesian meta-analysis. Ecological Economics 83: 1–10.CrossRefGoogle Scholar
  2. Babecký, J., and N.F. Campos. 2011. Does reform work? An econometric survey of the reform–growth puzzle. Journal of Comparative Economics 39(2): 140–158.CrossRefGoogle Scholar
  3. Babecky, J., and T. Havranek. 2014. Structural reforms and growth in transition: A meta-analysis. Economics of Transition 22(1): 13–42.CrossRefGoogle Scholar
  4. Bah, E., and J.C. Brada. 2014. Labor markets in the transition economies: An overview. European Journal of Comparative Economics 11(1): 3–53.Google Scholar
  5. Bernardes, L.G. 2003. Reference-dependent preferences and the speed of economic liberalization. Journal of Socio-Economics 32(5): 521–548.CrossRefGoogle Scholar
  6. Bilan, Y., and W. Strielkowski. 2016. Migration in post-transition economies: Immigration surplus in Visegrad group countries. International Journal of Trade and Global Markets 9(2): 182–196.CrossRefGoogle Scholar
  7. Brada, J.C., and A.E. King. 1992. Is there a J-curve for the economic transition from socialism to capitalism? Economics of Planning 25(1): 37–53.Google Scholar
  8. Cohen, J. 1988. Statistical power analysis in the behavioral sciences, 2nd ed. Hillsdale: Lawrence Erlbaum Associates.Google Scholar
  9. Coricelli, F., and M. Maurel. 2011. Growth and crisis in transition: A comparative perspective. Review of International Economics 19(1): 49–64.CrossRefGoogle Scholar
  10. de Macedo, J.B., and J.O. Martins. 2008. Growth, reform indicators and policy complementarities. Economics of Transition 16(2): 141–164.CrossRefGoogle Scholar
  11. Doucouliagos, H. 2011. How large is large? Preliminary and relative guidelines for interpreting partial correlations in economics, School Working Paper No. SWP 2011/5. Melbourne: School of Accounting, Economics and Finance, Faculty of Business and Law, Deakin University.Google Scholar
  12. Fidrmuc, J., and I. Korhonen. 2006. Meta-analysis of the business cycle correlation between the Euro area and the CEECs. Journal of Comparative Economics 34(3): 518–537.CrossRefGoogle Scholar
  13. Godoy, S., and J.E. Stiglitz. 2006. Growth, initial conditions, law and speed of privatization in transition countries: 11 years later, Working Paper No. 11992. Cambridge: National Bureau of Economic Research.Google Scholar
  14. Hanousek, J., E. Kočenda, and M. Maurel. 2011. Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis. Economic Systems 35(3): 301–322.CrossRefGoogle Scholar
  15. Havranek, T., and A. Sokolova. 2016. Do consumers really follow a rule of thumb? Three thousand estimates from 130 studies say “probably not”, Working Paper No. 15/2016. Prague: Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague.Google Scholar
  16. Heybey, B., and P. Murrell. 1999. The relationship between economic growth and the speed of liberalization during transition. Journal of Policy Reform 3(2): 121–137.CrossRefGoogle Scholar
  17. Iwasaki, I. 2004. Evolution of the government–business relationship and economic performance in the former Soviet states: Order state, rescue state, punish state. Economics of Planning 36(3): 223–257.CrossRefGoogle Scholar
  18. Iwasaki, I., and E. Kočenda. 2017. Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure. Economic Systems 41(4): 537–568.CrossRefGoogle Scholar
  19. Iwasaki, I., and K. Kumo. 2016. Decline and growth in transition economies: A meta-analysis, Working Paper No. 2016-9. Tokyo: Center for Economic Institutions, Institute of Economic Research of Hitotsubashi University.Google Scholar
  20. Iwasaki, I., and S. Mizobata. 2017. Post-privatization ownership and firm performance: A large meta-analysis of the transition literature. Annals of Public and Cooperative Economics. Scholar
  21. Iwasaki, I., and T. Suzuki. 2006. Radicalism versus gradualism: An analytical survey of the transition strategy debate. Journal of Economic Surveys 30(4): 807–834.CrossRefGoogle Scholar
  22. Iwasaki, I., and M. Tokunaga. 2014. Macroeconomic impacts of FDI in transition economies: A meta-analysis. World Development 61: 53–69.CrossRefGoogle Scholar
  23. Iwasaki, I., and M. Tokunaga. 2016. Technology transfer and spillovers from FDI in transition economies: A meta-analysis. Journal of Comparative Economics 44(4): 1086–1114.CrossRefGoogle Scholar
  24. Iwasaki, I., and A. Uegaki. 2017. Central bank independence and inflation in transition economies: A comparative meta-analysis with developed and developing economies. Eastern European Economics 55(3): 197–235.CrossRefGoogle Scholar
  25. Iwasaki, I., S. Mizobata, and A. Muravyev. 2018. Ownership dynamics and firm performance in an emerging economy: A meta-analysis of the Russian literature. Post-communist Economies. Google Scholar
  26. Kornai, J. 1994. Transformational recession: The main causes. Journal of Comparative Economics 19(1): 39–63.CrossRefGoogle Scholar
  27. Kuboniwa, M. 2014. A comparative analysis of the impact of oil prices on oil-rich emerging economies in the Pacific Rim. Journal of Comparative Economics 42(2): 328–339.CrossRefGoogle Scholar
  28. Kuusk, A., and T. Paas. 2013. A meta-analysis-based approach for examining financial contagion with special emphasis on CEE Economies. Eastern European Economics 51(3): 71–90.CrossRefGoogle Scholar
  29. Segura-Ubiergo, A., A. Simone, A. Gupta, and O. Cui. 2010. New evidence on fiscal adjustment and growth in transition economies. Comparative Economic Studies 52(1): 18–37.CrossRefGoogle Scholar
  30. Staehr, K. 2005. Reforms and economic growth in transition economies: Complementarity, sequencing and speed. European Journal of Comparative Economics 2(2): 177–202.Google Scholar
  31. Stanley, T.D. 2005. Beyond publication bias. Journal of Economic Surveys 19(3): 309–345.CrossRefGoogle Scholar
  32. Stanley, T.D., and H. Doucouliagos. 2012. Meta-regression analysis in economics and business. London: Routledge.Google Scholar
  33. Stanley, T.D., and S.B. Jarrell. 2005. Meta-regression analysis: A quantitative method of literature surveys. Journal of Economic Surveys 19(3): 299–308.CrossRefGoogle Scholar
  34. Tokunaga, M., and I. Iwasaki. 2017. The determinants of foreign direct investment in transition economies: A meta-analysis. The World Economy 40(12): 2771–2831.CrossRefGoogle Scholar

Copyright information

© Association for Comparative Economic Studies 2018

Authors and Affiliations

  1. 1.Institute of Economic ResearchHitotsubashi UniversityKunitachi CityJapan

Personalised recommendations