nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2014‒12‒08
five papers chosen by

  1. On Thin Ice: CESEE Core Resilient in the Face of EU Stagnation and the Ukraine Crisis By Vasily Astrov; Serkan Çiçek; Rumen Dobrinsky; Vladimir Gligorov; Doris Hanzl-Weiss; Peter Havlik; Mario Holzner; Gabor Hunya; Sebastian Leitner; Olga Pindyuk; Leon Podkaminer; Sandor Richter; Hermine Vidovic
  2. Economic Returns to Speaking the Right Languages)? Evidence from Kazakhstan's Shift in State Language and Language of Instruction By Alisher Aldashev; Alexander M. Danzer
  3. Does too much work hamper innovation? Evidence for diminishing returns of work hours for patent grants By Celbis M.G.; Turkeli S.
  4. ASEAN-India Gas Cooperation: Redifining India's "Look East" Policy with Myanmar By Anindya BHATTACHARYA; Tania BHATTACHARYA
  5. Unemployment and Structural Unemployment in the Baltics By Christian Ebeke; Greetje Everaert

  1. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Serkan Çiçek (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary Despite near stagnation in the euro area and the negative impact of the Ukraine crisis, in most of the NMS economies and some of the Western Balkan countries growth prospects are viewed as positive. While the NMS economies will preserve their positive growth differential vis-à-vis the EU-28, Russia and Ukraine are facing a deterioration of their economic performance. External factors have had a major impact on growth performance in the CESEE region. Financial transfers from the EU have lent essential support to economic growth in the European Union’s new Member States (NMS). Investment and operational costs funded via those transfers have become an integral and increasingly important part of aggregate demand in the NMS economies. 2013 and 2014 have been among the strongest years in terms of transfers in the framework of the EU cohesion policy. Their impact is comparable to that of fiscal stimuli, albeit better inasmuch as they do not give rise to new debt. A possible disadvantage compared to classic fiscal stimuli is that transfers have no steerable relation to business cycles. In the eastern part of the CESEE region, the Ukraine conflict has had a pronounced negative impact on economic growth. 25 years after the fall of the Iron Curtain, the current crisis in relations between Russia and the West is evolving into a dangerous geopolitical conflict. In Ukraine, the main victim of the conflict, the economy may decline by 8% over the current year. In Russia, the costs of the conflict are estimated to be to the tune of about 1% of GDP, primarily on account of increased investment risks and the financial sanctions. The impact on the individual EU countries differs according to their exposure to the Russian market. The Baltic States and some other NMS will be those most affected on account of their trade channels with estimated losses in the order of up to 0.4% of GDP. The global financial crisis has shattered the rapid expansion of financial intermediation in nearly all of the countries in the region; recovery of crediting activities is still fragmentary and weak. High levels of non-performing loans are a major concern throughout much of the region. There seems to be a justified concern over the region having entered a period of ‘creditless recovery’ which threatens to be much slower than a recovery with strong credit growth. The outlook for GDP growth in the CESEE region is again fairly diversified. Compared to 2013, the growth performance is expected to improve in twelve and deteriorate in nine of the twenty-one countries in the region in 2014. The general medium-term trend for the NMS as a whole is seen to be positive in most of these countries, we expect a gradual acceleration of GDP growth; exceptions are Hungary and Slovenia where a deceleration is forecast, and Poland where the relatively high GDP growth rate will remain practically unchanged. For the current year, the assumption is that the NMS will grow by 1.8 percentage points higher than expansion in the euro area and 1.3 pp above the EU-28 average. In 2015, the gap in favour of NMS growth performance will become somewhat narrower 1.5 pp relative to the euro area and 1.1 pp to the EU-28 average. For some of the countries in the Western Balkans, growth prospects will only improve over the period 2015-2016, closely related to the damage caused by the floods this summer. Turkey will continue to register remarkable economic growth. Growth performance in Kazakhstan, Russia and Ukraine will worsen in the current year compared to 2013; the medium-term outlook in Russia and Ukraine is, depending on the evolution of the political crisis, fairly uncertain with considerable downward risks. As for our forecasts for 2015 and 2016, a further weakening of performance in the euro area poses a downward risk, while a longer lasting drop in oil prices will represent an upward risk, except for energy exporters Russia and Kazakhstan.
    Keywords: Central and East European new EU Member States, Southeast Europe, Balkans, Russia, Ukraine, Kazakhstan, Turkey, economic forecasts, employment, foreign trade, competitiveness, debt, financial crisis, deleveraging, exchange rates, fiscal consolidation, Ukraine conflict
    JEL: C33 C50 E20 E29 F34 G01 G18 O52 O57 P24 P27 P33 P52
    Date: 2014–11
  2. By: Alisher Aldashev (International School of Economics, Almaty); Alexander M. Danzer (Ludwig-Maximilians-University, Munich)
    Abstract: This paper investigates the economic returns to language skills and bilingualism. The analysis is staged in Kazakhstan, a multi-ethnic country with complex ethnic settlement patterns that has switched its official state language from Russian to Kazakh. Using two newly assembled data sets, we find negative returns to speaking Kazakh and a negative effect of bilingualism on earnings while Russian was the official state language in the 1990s. Surprisingly, the Kazakh language continues to yield a negative wage premium 13 years after it has been made official state language. While we do neither find evidence for an ethnically segmented labor market nor for reverse causality, the low economic value of the Kazakh language can be explained by the comparatively poor quality of schools with Kazakh as language of instruction. Based on PISA data, we illustrate that scholastic achievements are substantially lower for pupils taught in Kazakh, despite the official support for the titular language. Our results suggest that switching the official state language without appropriate investments in school resources is unlikely to cure the economic disadvantage of a previously marginalized language.
    Keywords: Bilingualism, returns to language skills, wage premium, language policy, language of instruction
    JEL: J24 I21 P23 O15
    Date: 2014–11
  3. By: Celbis M.G.; Turkeli S. (UNU-MERIT)
    Abstract: This study suggests that individual time is an important factor that needs to be considered in innovation research. We define two types of time work time and free time. We find that work time has a positive but diminishing effect on innovative output such that after a certain point the innovation-enhancing role of work time is taken over by individual free time. Using a sample of OECD countries and Russia, we estimate a quadratic relationship between work time and per capita innovative output. For a hypothetical economy that has no other holidays but weekends, we estimate that individuals should not work more than about 6.6 hours a day for maximizing innovative output. We also present a categorization of countries based on their innovative output and work hours that may kindle interest for certain case-specific future research.
    Keywords: Labor Economics Policies; Time Allocation and Labor Supply; Technological Change; Research and Development; Intellectual Property Rights: General; Innovation and Invention: Processes and Incentives;
    JEL: O30 O31 J08 J22
    Date: 2014
  4. By: Anindya BHATTACHARYA (The Celestial Earth Consultant, India); Tania BHATTACHARYA (The Celestial Earth Consultant, India)
    Abstract: As economic power shifts towards Asia---particularly China, India and the Association of Southeast Asian Nations (ASEAN) ---a robust energy cooperation within this region will help sustain the region's development. Cooperation master plans already in place include interconnecting power grids and gas pipelines, engaging in cross-border power projects and promoting freer trade of energy commodities among the countries. The East Asia Summit region (EAS) pioneers such cooperation not only within the ASEAN region and the Greater Mekong Subregion (GMS) but with nations such as India, Russia, the United States, and Australia as well. This study, though, focuses more on India and how its Look East Policy helps forged trade and other bilateral cooperation with the ASEAN nations, and how Myanmar plays a strategic role in India's energy security. This study also concentrates on a particular energy resource---natural gas---and develops a quantitative assessment model to evaluate India and its neighbouring countries' long-term natural gas demand, corresponding infrastructure requirements, and investment demand. Specifically, it looks at how India’s Look East Policy can help secure the required amount of natural gas from the ASEAN and East Asia region and at what cost. There is nothing new with including Myanmar in a discussion on regional energy cooperation. After all, this is a country with abundant untapped natural resources, including hydro and natural gas. However, very few studies have so far focused on Myanmar’s strategic location and geography and how it can provide the non-energy resources---such as land, water, human resources, and maritime channels for seaborne trade---needed to develop a robust integrated energy market. All these are essential factor inputs for large-scale energy infrastructure projects. This study thus explores Myanmar's role in helping India with the latter's own energy security. Through a three-stage analysis of the regional energy problem, the study demonstrates that India is eventually going to depend more on gas (after coal) for its energy supply. As India’s home-grown gas supply is not sufficient to meet its domestic gas demand, it currently imports more than 75 percent of its requirement from Qatar. Given the growth in future demand, growing supply volatility of Middle East gas, and increasing gas prices (including Asian premium), any dependence on the Middle East's supply makes gas more expensive and vulnerable for India. Also, since more than 27 percent of the landed price of gas and LNG in the country consists of transport cost, it is important to reduce the distance of transport.
    Keywords: Energy Market Integration, Natural Gas, India, Myanmar Energy
    JEL: Q43
    Date: 2014
  5. By: Christian Ebeke; Greetje Everaert
    Abstract: While the unemployment rate in the Baltics has fallen sharply from its crisis-peaks, it remains close to double digits. This paper estimates the structural component of the jobless rate in the three Baltic countries and analyzes its causes. Our main findings are that the current still elevated levels of unemployment mostly reflect structural factors. We then turn to why structural unemployment is so high. This paper points to skill mismatches, high tax wedges, and unemployment and inactivity traps as potential causes.
    Keywords: Unemployment;Estonia;Latvia;Lithuania;Baltics;Labor markets;Skilled labor;Migrations;Unemployment, Structural Unemployment, Baltics, Estonia, Latvia, Lithuania
    Date: 2014–08–19

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