Modeling Economic Growth for the Newly Formed Countries of the Former Soviet Union

This chapter identifies the determinants of economic growth for the newly formed countries of the former Soviet Union and the Socialist Bloc. Starting from a neoclassical theory of growth this chapter adds recently identified contributing factors such as human capital, economic freedom, and financial developments to find the determinant of the growth in the region. Other control variables such as population are also included. There are numerous variables that can measure any of the theoretically suggested factors, most of which are correlated. The study checks for multicollinearity among variables. It also accounts for differences in development stages of the countries under study. The data are measured in levels. Tests of normality and randomness are performed to assure compliance with theoretical requirements. This study utilizes panel data analysis using both fixed and random effect models, tested for relevance using the Breusch-Pagan method. The chapter identifies relevant factors and concludes that there are differences among per capita gross domestic products of the countries even after controlling for contributing variables.