Journal of Comparative Economics 29, 663–676 (2001) doi:10.1006/jcec.2001.1741, available online at http://www.idealibrary.com on Will the Future Be Better Tomorrow? The Growth Prospects of Transition Economies Revisited 1 Nauro F. Campos University of Newcastle, Newcastle upon Tyne, and Centre for Economic Policy Research, London, United Kingdom; and The William Davidson Institute at the University of Michigan, Ann Arbor, Michigan E-mail: n.f.campos@ncl.ac.uk Received April 19, 1999; revised August 20, 2001 Campos, Nauro F.—Will the Future Be Better Tomorrow? The Growth Prospects of Tran- sition Economies Revisited The favored approach in the literature on the growth prospects for transition economies is based on specifications from Barro (1991) and Levine and Renelt (1992). This paper exam- ines this literature critically by identifying and testing for the underlying assumptions. Our main finding is that this approach performs poorly in the transition context. Our results indi- cate that, almost a decade after the transition began, the former centrally planned economies are still structurally different from market economies at similar levels of per capita in- come. The legacies of central planning are more resilient than previously thought. J. Comp. Econ., December 2001, 29(4), pp. 663–676. University of Newcastle, Newcastle upon Tyne, and Centre for Economic Policy Research, London, United Kingdom; and The William DavidsonInstituteattheUniversity of Michigan, Ann Arbor, Michigan. C  2001 Elsevier Science Journal of Economic Literature Classification Numbers: E23, O40, P20, P52. 1 I thank John Bonin, Laszlo Csaba, Jan Fidrmuc, Randall Filer, J¨ urgen von Hagen, Ella Kallai, Jan Kmenta, Vincent Koen, Maxim Nikitin, Jeffrey Nugent, Vladimir Popov, James Robinson, Mark Schaffer, two anonymous referees, seminar participants at CERGE-EI, Universities of Bonn and S˜ ao Paulo, CEPR Summer Workshop on Transition Economics (Budapest), and EACES (Varna), IMAD (Bled), and EPCS (Lisbon) meetings for valuable comments on earlier versions. I also thank the Center for European Integration Studies (ZEI) at the University of Bonn for the hospitality. Earlier versions were circulated under the title “Back to the Future: The Growth Prospects of Transition Economies Reconsidered.” I thank Rodica Cnobloch and Dana Zlabkova and especially Aurelijus Dabuˇ sinskas for the alacritous research assistance. The responsibility for all remaining errors is entirely mine. 663 0147-5967/01 $35.00 C  2001 Elsevier Science All rights reserved.