In the world economy, since 1960s, countries, which are open and apply liberal policies succeeded higher economic growth and welfare. Therefore, liberal policies became more attractive. In that case, the transition, which has political, economic, and socio-cultural aspects, means moving from socialist-authoritarian structure to market based-liberal structures. In the literature, there are many studies which point out labor force and capital are not significant on the economic growth. In addition, the literature focuses on the importance of institutions on the economic growth. In this study, we compare the countries which were quickly away from the socialist structures with the countries which were slow on the reforms. Our analysis depends on their economic growth with cross section. However, we know the importance of institutional aspects on the growth research; therefore, we applied 2SLS regression analysis and to determine the economic liberalism indicators we used political rights, civil liberties, years that were under the socialism, openness, secondary school ratio, and public spending/GDP ratio. In the late phase, GDP per capita, as an indicator of economic growth, is explained with an independent variable which is predicted in the first phase via liberalism variable, and labor-population ratio and constant capital stock GDP ratio variables used in Neo-classical Solow-type growth model.
Liberalism and Economic Growth in Transition Economies