nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2016‒11‒20
eight papers chosen by

  1. Factory Asia and Asia-Pacific Economic Regionalism: The Connectivity Factor Revisited By Evgeny A. Kanaev; Alexander S. Korolev
  2. Estimating GDP and Foreign Rents of the Oil and Gas Sector in the USSR then and Russia now By Kuboniwa, Masaaki
  3. Bridging or Bonding? Preferences for Redistribution and Social Capital in Russia By Ekaterina Borisova; Andrei Govorun; Denis Ivanov
  4. Revolutionary Developments in the World Economy By Horst Hanusch
  5. Price Levels across Russian Regions By Gluschenko, Konstantin; Karandashova, Maria
  6. Decline and Growth in Transition Economies: A Meta-Analysis By Iwasaki, Ichiro; Kumo, Kazuhiro

  1. By: Evgeny A. Kanaev (National Research University Higher School of Economics); Alexander S. Korolev (National Research University Higher School of Economics)
    Abstract: With its strong economic, technological and innovative potential, Asia-Pacific has the potential to drive the global economy. The “engine” of this drive is the system of supply-value chains within the vertically-organized Asia-Pacific conglomerates specializing in producing value-added intermediate goods and services. In the academic literature, this phenomenon is conceptualized as “Factory Asia”. To unlock Asia-Pacific’s true potential, the implementation of measures embracing regional infrastructural, institutional and people-to-people connectivity becomes the key prerequisite for success. The initiatives of Asia-Pacific economic regionalism covering the trans-Pacific and the East Asian/South Asian geographical domain—the Free Trade Area of Asia-Pacific (FTAAP), the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP)—have different possibilities to develop the connectivity agenda. While FTAAP and potentially RCEP can stimulate these processes, for TPP it is highly problematic. This broadens the possibilities for Russia to get more involved in Asia-Pacific economic cooperation with an emphasis upon technologically-advanced exchanges within Factory Asia. Strengthening regional connectivity is the key component in Russia’s agenda in multilateral cooperation with Asia-Pacific countries, which was exemplified by Russia’s APEC agenda. While at present the resource-intensive production in Russia’s Far East is prioritized, the multiplier effect produced by the Territories of Advanced Development on the industrial and innovative sectors of Russian economy can help Russia to enter Factory Asia.
    Keywords: Asia-Pacific, economic regionalism, Factory Asia, TPP, RCEP, Russia
    JEL: F5
    Date: 2016
  2. By: Kuboniwa, Masaaki
    Abstract: A Soviet legacy for present-day Russia is found in its resource dependency as well as its implicit exposition of resource rents from foreign trade in the national accounting. Estimating rents from the oreign trade of oil and gas, we demonstrate how large the GDP of the oil and gas sector had been in the Soviet Union and has been in present-day Russia, as well.
    Keywords: Soviet legacy, oil and gas, rent, GDP
    JEL: E01 P33 P51
    Date: 2016–10
  3. By: Ekaterina Borisova (International center for the study of institutions and development, National research university higher school of economics (Moscow)); Andrei Govorun (International center for the study of institutions and development, National research university higher school of economics (Moscow)); Denis Ivanov (International center for the study of institutions and development, National research university higher school of economics (Moscow))
    Abstract: Does bridging or bonding social capital matter for redistribution preferences? Existing literature demonstrates causal link between measures of social capital and such preferences but does it mostly for developed countries with good enforcement of formal rules and without a distinction between two completely different types of social capital. We argue that welfare state relies on contributions from an immense number of anonymous citizens, thus attitudes towards strangers, i.e. generalized trust and solidarity should be salient. Using two surveys of about 34,000 and 37,000 Russians we prove this proposition showing the importance of the bridging type but not the bonding one. Instrumenting social capital with education, climate and distance from Moscow we deal with endogeneity concerns. Additionally we claim that connection between social capital and redistribution preferences for less developed countries such as Russia could be similar to developed countries
    Keywords: preferences for redistribution; inequality; social capital; trust; corruption; Russia
    JEL: Z13 H10
    Date: 2016–11
  4. By: Horst Hanusch (Institute of Economics, University of Augsburg, Augsburg)
    Abstract: In the last decades the world changed dramatically. From a global point of view three disruptive processes are on their way which can be called revolutionary: a political, a technological and an economic revolution. This paper aims to give an overview when and how these movements started what the essence of these processes is and with which consequences we will have to deal with in the future. Concerning the political revolution the year 1990 can be characterized as a historical landmark because of two reasons: At first, it finished with orthodox communism as it was practiced primarily in the former Soviet Union. Secondly, this year created a new illusion which is described at its best by Francis Fukuyama in his book "The End of History" (1990). The Western form of a liberal representative democracy had overruled communism as its most important counterpart and it promised to stay forever as a political system when combined with a capitalistic market economy. That means in last consequence "the end of history". The paper shows how this illusive thinking has been demolished in the last twenty years and in which way a new regime of political thinking, the "autocratic system" of political decision making, is gaining relevance worldwide in developed as well as in developing countries. Starting in China and spreading over to other countries in the second half of the last century it now even reached countries in Europe which after 1990 tried to install a liberal representative democracy with great empathy, for instance Russia, Hungary, the Czech Republic and recently also Poland. The paper tries to grasp this process, to find answers why the attractiveness of the democratic ideal is fading away in these days and to show which consequences this political transformation process might have for the global economy. The last two decades of the 20 th century set off a third great wave of technological invention and disruptive innovation, the "digital revolution". Radical advances in computing-, information- and communication-technology may deliver a similar mixture of transformation as societies had experienced in the centuries before, getting acquainted to the steam engine, electricity, the telegraph and telephone for instance. The larger part of economists and scientists today sticks to the opinion that this new technological revolution will change fundamentally essential characteristics of the three pillars which constitute a socio-economic system: the financial, the public and the real sector. The paper intends to show how each of these pillars are already affected by the eruptive development of digitalization and how this process may go on in the future with all its social, economic and institutional consequences. If the 1990’s are taken as a historical landmark for fundamental changes in the world, one miraculous development has to be stressed as most important: The economic "catching up" process of the developing world, especially in those emerging countries called the BRICS group consisting of Brazil, Russia, India, China and South Africa. In the last 20 years these nations’ growth has far outpaced that of the US and the EU, with China already having become the second largest economy in the world. The paper will show how this growth phenomenon already changed fundamentally the structure of the world economy and which consequences can be expected in the future, if a country like China will be successful in combining elements of the political and the technological revolution in its development strategy. This scenario and the economic system standing behind may be called "state capitalism" and it is thoroughly in conflict with what is named as "entrepreneurial capitalism", concretized at its best in the US and its Silicon Valley. If we go back to Schumpeter, the Silicon Valley example can be pictured as a realistic portrait of what he had in mind in his 1912 book (The Theory of Economic Development). Whereas the Chinese kind of forming the country’s development process and its innovation culture seems to be more in accordance with the Schumpeter book of 1942 (Capitalism, Socialism and Democracy). The paper will at the end shortly focus on this interesting issue, which might be called a "Schumpeterian Battle of Systems", namely "Entrepreneurial Capitalism" against "State Capitalism". Perhaps, this antagonism might shape the development of the world economy in the coming decades of the 21 st century more than any other event.
    Keywords: Development Economics, Institutional Theory, Technological Change, Schumpeterianism
    JEL: B52 O3 P10
    Date: 2016–11
  5. By: Gluschenko, Konstantin; Karandashova, Maria
    Abstract: Based on price levels (cost-of-living indices) across Russian cities that are published by the Russian Statistical Agency, regional price levels relative to the national average are computed over 2009–2015. Results obtained are compared with approximate estimates of regional price levels that are based on the cost of the fixed basket of goods and services for cross-region comparison of population’s purchasing capacity (many publications use such estimates). This comparison makes it possible to conclude that the crude method provides an acceptable accuracy. Regional price levels obtained are applied to estimating real (i.e. comparable between regions) incomes per capita relative to the national average.
    Keywords: cost-of-living index spatial price index fixed basket of goods and services real income
    JEL: D31 R10
    Date: 2016–11–12
  6. By: Iwasaki, Ichiro; Kumo, Kazuhiro
    Abstract: Immediately after the collapse of socialism, the countries of Central and Eastern Europe and the former Soviet Union fell into a serious economic crisis, after which they experienced a gradual recovery. Therefore, without exception, these countries followed a J-curved growth path. However, there were marked differences among them in the length and depth of the crisis and the speed of recovery. In this paper, we perform a comparative meta-analysis of the effect size and statistical significance of structural change, transformation policy, the legacy of socialism, inflation, and regional conflict in order to elucidate the mechanism that generated the J-shaped trajectory in transition economies. The meta-synthesis, which employs 3,279 estimates drawn from 123 previous studies, revealed that while the growth-enhancing effects of structural change and transformation policy were small yet significant, inflation and regional conflict had a highly significant and strongly negative effect on output. In addition, the legacy of socialism might exacerbate the decline in production in the early stages of transition. The meta-regression analysis that simultaneously controls for various research conditions and the assessment of publication selection bias provides supporting evidence for the results obtained from the meta-synthesis.
    Keywords: decline, growth, transition economies, meta-analysis, publication selection bias, Central and Eastern Europe, former Soviet Union
    JEL: E31 O47 O57 P20 P21
    Date: 2016–10
  7. By: Rodica PERCIUN (National Institute for Economic Research, Republic of Moldova); Viorica POPA (National Institute for Economic Research, Republic of Moldova)
    Abstract: In this paper, the authors examine the state of public finances in the Republic of Moldova in recent years, in terms of financial stability indicators. Article aims to identify weaknesses and risks in public finance by presenting recommendations for remediation. Therefore, the worsening economic situation in Moldova in recent years has had a negativ impact on the fiscal year 2015. The financial destabilization of the banking sector, reduced remittances, shrinking exports and imports, depreciation of national currency are several factors that influenced negatively on the completion of the National Public Budget registering in 2015 less budget revenues than expected. Respectively, the tightening of monetary policy by the National Bank of Moldova was pushing the average weighted interest rate on state securities by 3 times compared to 2014. And the country's economic risks have caused the slowing of external grants by 51.7% compared to the same period of the last year. Therefore, foreign assistance has been discontinued due to lack of the program with the International Monetary Fund. In this context, we emphasize that the deterioration of budgetary stability has led to increased cost of funding, but with an impact on economic performance in the medium term. Thus, we consider as a challenge for 2016 the implementation of reforms that would increase the efficiency of public finance management and to counteract the pressures of damage of the structural component of the budget deficit.
    Keywords: public finance, national public budget, planning, revenues, expenditures, deficit, devaluation, risks.
    JEL: G28 H2 H3 H6 H7
    Date: 2016–11
  8. By: Ion PARTACHI (Academia de Studii Economice, Chișinău, Republica Moldova,); Vitalie MOTELICA (Academia de Studii Economice, Chișinău, Republica Moldova,)
    Abstract: Implementing effective inflation targeting strategy requires the knowledge of all the factors that are responsible for the inflationary process. The consumer price index includes sub-components, such as trend or seasonality that makes it difficult to analyze the inflationary pressures for the monetary policy decision making. The annual inflation indicator eliminates these deficiencies to a certain extent. However, in the decision making process and for communication purposes, monthly inflation is used as well which, first must be seasonally adjusted to provide information relevant for monetary policy. In this study we addressed the seasonality issues for both CPI, and for the main sub-components of this indicator in Moldova to track the sources responsible for seasonal fluctuations. The study established that the seasonal factor has moderate positive values in the first 4 months of the year, then in the summer months it becomes negative. During the fall and in December, the seasonal factor is back in positive territory. Furthermore, the largest impact on seasonal fluctuations is determined by the seasonal factor of food prices.
    Keywords: Seasonal factors, CPI inflation, monetary policy, inflation targeting strategy
    Date: 2016–11

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