Deindustrialisation in post-Soviet economies: premature deindustrialisation, Dutch disease, human capital, and institutions

ABSTRACT This study examines deindustrialisation in 15 post-Soviet economies by investigating the country-specific fixed effect in the relationships among manufacturing, population, and income and the factors contributing to deindustrialisation in terms of the premature deindustrialisation hypothesis. The fixed-effect estimation suggests deindustrialisation in the ten middle-income post-Soviet countries due to their comparative disadvantages in manufacturing as the overall contributor, with the lack of human capital, the Dutch Disease effect (mainly in Azerbaijan, Kazakhstan, the Russian Federation, and Uzbekistan), and immature institutions (mainly in Kyrgyz, Tajikistan, Ukraine, and Uzbekistan) as sub-factors that explain deindustrialisation in these countries based on factor analyses.