Blog assignment 2

I have written a study with the title ”A comparison of the effects on economic growth and income inequality of two transition models – a study of Central and Eastern European Countries after the collapse of Communism”. I think the title tells you what I studied.
The way how to reform can be divided into two major policies: shock therapy and gradualism. The names indicate the speed of the transition, where the shock therapy countries transition were fast while the gradualist countries implemented the market reforms more slow and gradual.
I chose six CEEC countries, three shock therapy and three gradual countries, and among other things studied if the choice of transition model have had any effect on the GDP growth or income inequality. I have also studied if the CEEC economies converge against some picked OECD countries. That’s because I wanted to see if the theory behind growth convergence holds for the chosen CEEC countries.
My study shows that the choice of transition model has had a significant effect on the economic growth rate and on the income distribution.
The result shows that shock therapy countries have had a slower growth rate than the gradualism countries. The CEEC countries have in two time periods of three grown faster than the OECD countries, and that result strengthens the convergence theory.