Abstract

Transition to Markets and the Environment: Evidence from CEE Countries

Tomislav Vukina, John C. Beghin, and Ebru G. Solakoglu

Institute for the Study of International Aspects of Competition

Working Paper 96-3

The paper measures the changes in environmental quality that occurred in the early years of economic transition for eleven CEE countries using information on thirteen pollution effluents in the manufacturing sector. The change in the pollution is separated into scale and composition effects. Pollution decreases substantially in most countries because of large decreases in aggregate manufacturing activity. The composition effect is more diverse depending on the effluent type and country. The reduced form relationship between composition effects and extent of policy reforms is examined. The results indicate a strong relationship between environmental improvement and reforms affecting countries’ openness, and between environmental degradation and enterprise restructuring and privatization reforms.