Frontier economies and economic growth: Evidence from European and Central Asian Countries

Abstract

This paper examines whether the ease of doing business (EDB) frontier improves economic growth (GR) by considering a sample of 47 European and Central Asian countries, clustered into lower-middle, upper-middle and high-income economies. The results show these economies have never reached the EDB frontier. The high-income economies prove to be more advanced in their EDB frontier, especially in terms of legal reforms and satisfying infrastructure needs, access to finance and the quality of policy-making institutions. Certain EDB indicators are revealed as having a positive impact on growth. Finally, we show that if a country fails to reach at least 72 percent of the EDB index, it is no longer providing support for economic growth.

Keywords

• F10
• F43
• O24
• O4
• P16