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We examine the contribution of institutional reforms to economic growth. To this end, we distinguish between several classes of institutional reform in the approach to economic liberalisation. Based on a sample of 24 current and former transition economies for the period 1980–2016, we estimate the counterfactual scenarios related to each distinctive institutional approach to the economic liberalisation by making use of the synthetic control method. Our evidence uncovers notable contrasts in the long‐term effectiveness of designated policy approaches in recovering from the transitional recession. A variety of synthetic control estimates suggests that a sustained big bang approach (rapid reforms) appears to be the most effective approach, while an abortive and gradualist approach tends to produce a permanent breakdown of the growth trajectories relative to the estimated counterfactuals. The point estimates survive an extensive battery of placebo tests. By employing the same methodological tool kit, future research could examine the impact of transition reforms on other socio‐economic variables, such as the poverty rates, income inequalities, health and environmental outcomes. [ABSTRACT FROM AUTHOR]

We examine the effect of sectarian politics in the presence of weak state capacity on long-term economic growth. To this end, we exploit the 1956 civil uprising between Maronite Christian and Sunni Muslim factions in Lebanon to estimate the impact of sectarian political tensions on long-term growth. To isolate the impact of the uprising, we use synthetic control estimator and match Lebanon's pre-1956 growth and development trajectory with the rest of the world where such uprising did not occur, and estimate the counterfactual growth trajectory in the hypothetical absence of the sectarian conflict. Our evidence indicates large and pervasive negative growth effects of factionalism. Our estimates imply that Lebanon's per capita income down to the present day is on average 57% lower than that of its pre-1956 synthetic control group without sectarian clashes, and does not seem to be driven by preexisting or subsequent trends and shocks. The negative long-term growth effect of sectarian conflict is robust to a battery of spatial and temporal placebo checks, choice of samples and is not sensitive to the composition of control groups. [ABSTRACT FROM AUTHOR]

We estimate the effects of the Syrian civil war using a synthetic control method which is based on a counterfactual scenario of an absence of the armed conflict that has led to the humanitarian crisis and one of the largest population displacements without a precedent in modern history. By comparing Syria's growth and development trajectories with the characteristics of a set of sixty-six countries with no armed internal conflict between 1996 and 2021, we can deduce a series of gaps in economic growth, human development, and institutional quality that can be attributed to the civil war. Our analysis shows that the effect of the Syrian civil war on the trajectory of economic growth was temporary and almost disappeared before the start of the COVID-19 pandemic. Conversely, the war led to an unprecedented decline in human development, a high rise in infant mortality, and a prevalent degradation of institutional quality. To the present day, the civil war has led to more than 4500 additional infant deaths with a permanently derailed trajectory of longevity. The unparalleled and permanent deterioration in institutional quality resulting from the war is indicated by a diminished rule of law, civil liberties, government efficiency, and a widespread escalation of corruption. To ensure the internal validity of the findings, the estimated effects were subjected to and passed a variety of placebo checks. [ABSTRACT FROM AUTHOR]

We examine the long-term effects of civil war in former Yugoslavia on economic growth and development. To this end, we employ the synthetic control methodology, and estimate the missing counterfactual scenario for the long-run growth and development of former Yugoslav republics, in the absence of the civil war by matching their growth and development characteristics with non-Yugoslav countries at the similar stages of development. The results suggest that the civil war led to unprecedented long-run growth and development losses. In the absence of the war, per capita income levels of former Yugoslav republics would improve markedly with notable differences in the magnitude of the growth and development gains across the affected countries. The estimated effects of the civil war are robust to a large number of placebo checks, and falsification-based random permutation tests. The results show that not a single former Yugoslav republic down to the present day has achieved the level of per capita income predicted by their synthetic control groups in the years preceding the civil war. Our results show that the Yugoslav civil war appears to be a permanent institutional shock with long-lasting implications for economic growth and development. [ABSTRACT FROM AUTHOR]

Rapidly aging population in high-income countries has exerted additional pressure on the sustainability of public pension expenditure. We present a theoretical model of public pension expenditure under endogenous human capital, where the latter facilitates a substantial decrease in equilibrium fertility rate alongside the improvement in life expectancy. We demonstrate how higher life expectancy and human capital endowment facilitate a rise of net replacement rate. We then provide and examine an empirical model of old-age expenditure in a panel of 33 countries for the period 1998-2008. Our results indicate that increases in effective retirement age and total fertility rate would reduce age-related expenditure substantially. While higher net replacement rate would alleviate the risk of old-age poverty, further increases would add considerable pressure on the fiscal sustainability of public pensions.

The Synthetic Control Method (SCM) has become a widely used tool in both identifying and estimating the causal impact of policies, shocks, and interventions of interest on economic and social outcomes. The technique has become particularly popular in estimating the effect of these shocks on a single treated unit. As a transparent and data-driven statistical technique, the goal of the SCM is to construct an artificial control group for the treated unit that has similar pretreatment characteristics but has not undergone the treatment itself thus developing a plausible counterfactual against which impacts resulting from structural changes can be evaluated as part of a historical investigation. The method works well when the control group balances pre-intervention outcomes and auxiliary covariates as much as possible. In spite of its widespread adoption, the use of the SCM in comparative economic history has lagged behind other areas of economics. In this article, we critically review the properties of the SCM and discuss the necessary conditions for a plausible application of the technique to comparative economic history in support of research designed to answer some of the long-running historical questions and demonstrate the potential to use SCM in comparative economic history studies by estimating the impact of the oil discovery in the 1920s on Venezuela's long-term economic growth. [ABSTRACT FROM AUTHOR]