The purpose of the paper is to define the growth enhancing policy measures that have proven efficient during the transition reform period and could be relevant under the new global setting. Firstly, the findings of the transition period from centralized to market economy are discussed, recommendations of policy measures based on transition period experience are given.
Secondly, the results of the first five years of EU membership are discussed, and policy measures based on this experience are suggested. This consideration allows defining the economic policy that could have a positive impact on economy during the transition period.
The author claims that policy makers have to focus on facilitating an environment conducive to establishing new SMEs in new sectors of economy, instead of focusing on restructuring the old sectors. Restructuring some loss-making industries takes some time, but the efficiency of investments could be ensured if cost reduction is prioritized and leads to an increase in the total factor productivity.
The main findings of paper are as follows:
- regulated markets set better conditions for the growth of economy than do self-regulated markets, while the most important problem of economic strategy is to evaluate the degree of impact of each determinant on growth and to set their combination favorable for a long-term growth
- policy makers have to focus on facilitating an environment conducive to establishing new SMEs in new sectors of economy instead of fixing the focus on restructuring the old sectors
- economic governance during transition is an innovative process: it is impossible to follow a uniform approach or to use the same growth model in order to achieve the same results
- sound institutions and macroeconomic sustainability are needed for capital and labor mobility management to avoid accumulation of significant internal and external imbalances
- the growth-enhancing public policy should be based on the necessity to increase the total factor productivity to ensure competitiveness in the global market
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