Sustainable development is the leading concept of our days embracing economic, social and environmental dimensions (Brundtland 1987). The measuring and management of this process is a difficult task because the concept varies, depending on the changing conditions of life. The measurement of social and economic development of a country is a complex phenomenon, which is described by a set of criteria (Podvezko 2008). Many international institutions presented the assessment systems of indicators to measure the sustainability around the world. Despite the main pillars, classifications and sets of indicators differ across various institutions. The problems of analytical analysis based on these indicators were considered by a number of scholars (Grybaite, Tvaronaviciene 2008; Tvaronaviciene et al. 2008).
For many years, GDP has been presented as the main variable showing the level of economic development for a particular country, but it could not reflect the welfare of the country. It is important to ensure that all indicators of sustainable development should change positively. However, there are some indicators having the strongest impact on the development level of every region. Finding the most important variables could simplify the process of monitoring and help to determine areas and policy for future development.
It is assumed that the most important sustainable development indicators are those which are most closely connected with economic growth (expressed as GDP growth).
The aim of this paper is to identify the set of key sustainable development indicators (from Eurostat database) having the strongest impact on the growth of the whole region of Central and Eastern Europe. Correlation and regression analyses are used for estimating the effect of variables. The countries development level will be evaluated based on the calculated regression equation in the context of Central and Eastern Europe.
2. Theoretical background
A great number of economists have tried to understand the economic processes and create models which could help to manage the growth of economy since ancient times. Adam Smith with the 'Wealth of Nation' saw the realization of the economies of large-scale production as an important source of growing national prosperity can be considered to be a predecessor of growth theories (Greenwald 1994). Jumping from classical scholars (Smith, Malthus, Ricardo) to the theories of neoclassical economists (Harrod and Domar, Hicks, Solow), it is seen that growth theory economists have tried to define a systematic frame for the equilibrium paths of the economy. Solow, the best-known neoclassical scholar, presented a model where economic growth was stimulated by changing the constant capital output ratio by a richer standard of the technology in the equilibrium model (Solow 1988). J. A. Schumpeter, with his business cycle theories based on innovation, and John von Neumann, with mathematical theories of economic growth, as well as many other researchers made a valuable contribution to the development of fundamental macro economy theories. The latest theories of macro economy are associated with the intense work on growth theory in the late 1980s and 1990s known as endogenous growth theory. The early contributions here were by Romer and Lucas. Paul Romer (1994) emphasized that economic growth is an endogenous outcome of an economic system, not the results of forces that impinge from outside. R. Lucas (2003) argued that there were economic gains from providing people with better incentives to work and to save, not from better fine-tuning of spending flows. Not going into theoretical considerations about the factors driving economic growth, the paper concentrates on the factual interplay between economic growth and sustainable development indicators in order to find the main variables determining the economic growth in Central and Eastern Europe.