nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2019‒06‒17
nine papers chosen by

  1. Grouping of the EU candidate countries and eastern partnership countries according to the degree of self-sufficiency in basic food products By Jankowska, Anna
  2. Wealth inequality in Central and Eastern Europe: evidence from joined household survey and rich lists’ data By Michal Brzezinski; Katarzyna Sałach; Marcin Wroński
  3. Russia’s macroeconomy—a closer look at growth, investment, and uncertainty By Becker, Torbjörn
  4. Foreign Investments Mostly Robust Despite Global Downturn; Shift into Services. FDI in Central, East and Southeast Europe By Amat Adarov; Mahdi Ghodsi; Gabor Hunya; Olga Pindyuk
  5. Determinants of Foreign Direct Investment in Fast-Growing Economies: Evidence from the BRICS and MINT Countries By Simplice A. Asongu; Uduak S. Akpan; Salisu R. Isihak
  6. Republic of Armenia; Fiscal Transparency Evaluation By International Monetary Fund
  8. Republic of Armenia; Selected Issues By International Monetary Fund
  9. Loan maturity aggregation in interbank lending networks obscures mesoscale structure and economic functions By Marnix Van Soom; Milan van den Heuvel; Jan Ryckebusch; Koen Schoors

  1. By: Jankowska, Anna
    Abstract: The article compares the European Union (EU) candidate countries (CC) and the Eastern Partnership countries (EPC) in terms of their self-sufficiency in basic food products by analysing the average consumption of these products between 1992 and 2013. The countries were grouped according to their self-sufficiency ratios by Ward’s method of cluster analysis. Studies have shown that in the first group of countries in 1992-1999 and 2000-2013 there were primarily Albania, Armenia, Bosnia and Herzegovina, Georgia and Macedonia, and they had the lowest self-sufficiency ratios for most products compared to the second and the third group of countries. In both periods, in the second group there were Azerbaijan and Turkey, which have the highest self-sufficiency ratio for fruit, and in the third group there were mainly Belarus, Moldova, Serbia and Ukraine. These countries were characterised by surplus in the production of most foods. Research showed that in the second period under consideration, Montenegro moved to a group of countries with a lower level of self-sufficiency. Studies proved that during the period under investigation the increase in the self-sufficiency of these countries resulted from greater production, lesser loss during production and lower consumption of the products under analysis.
    Keywords: Agricultural and Food Policy, International Development, Research Methods/ Statistical Methods
    Date: 2018
  2. By: Michal Brzezinski (Faculty of Economic Sciences, University of Warsaw); Katarzyna Sałach (Faculty of Economic Sciences, University of Warsaw); Marcin Wroński (Warsaw School of Economics)
    Abstract: We study how the problem of the ‘missing rich’, the underrepresentation of the wealthiest in household surveys, affects wealth inequality estimates for the post-socialist countries of Central and Eastern Europe (CEE). The survey data from the second wave of the Household Finance and Consumption Survey (HFCS) are joined with the data from the national rich lists for Estonia, Hungary, Latvia, Poland and Slovakia. Pareto distribution is fitted to the joined survey and rich lists’ data to impute the missing observations for the largest wealth values. We provide the first estimates of the top-corrected wealth inequality for the CEE region in 2013/2014. Despite a short period of wealth accumulation during the post-1989 market economy period, our adjustment procedure reveals that wealth inequality in the Baltic countries is comparable to that of Germany (one of the most wealth unequal countries in Europe), while in Poland and Hungary it has reached levels observed in France or Spain. We discuss possible explanations of these findings with reference to the speed and range of privatization processes, extent of income inequality, and the role of inheritances and wealth taxes in the region.
    Keywords: wealth inequality, missing rich, Pareto distribution, rich lists, Forbes, Household Finance and Consumption Survey, transition countries, Central and Eastern Europe
    JEL: D31 D63 C46 P36
    Date: 2019
  3. By: Becker, Torbjörn (Stockholm Institute of Transition Economics)
    Abstract: This paper looks at economic growth and its fundamental determinants in Russia over the last decades. It starts by showing that, contrary to the views of some political commentators, growth is highly important for the popularity of president Putin. Furthermore, regular models of growth are relevant to Russia and other transition countries over the last two decades and one important determinant of growth is investments in physical capital. This in turn is correlated with FDI, which is also key for Russia’s strategy to modernize and diversify its economy away from oil, gas and minerals extraction. However, FDI is negatively impacted by the policy uncertainty that Russia generates both by domestic and foreign policy. Reforming institutions on paper will not be enough to reverse the trend of declining FDI but has to be accompanied by a regime that refrains from policy actions at home and abroad that add to the significant macroeconomic volatility that is already created by large swings in international oil prices.
    Keywords: Russia; Putin; macroeconomics; growth; investments; FDI; volatility
    JEL: E60 F40 O52
    Date: 2019–06–14
  4. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Gabor Hunya (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Foreign direct investment (FDI) inflows to Central, East and Southeast Europe (CESEE) declined by 13% in 2018. The decline was almost exclusively on account of lower inflows into Russia, which halved compared with 2017. Inflows to the new EU Member States (EU-CEE11) were largely unchanged from the previous year, despite strong economic growth. By contrast, inflows into the Western Balkans rose by 28%, thanks in particular to rising investor interest in Serbia and North Macedonia. Turkey received a bit more FDI than in 2017, but the overall amount is still very low relative to the size of the economy. The decline in FDI to Russia in 2018 was particularly striking. Russia is becoming more and more inward looking, due to the exchange of sanctions with the West and (related) import-substitution economic policies. Efforts to stimulate the return of capital from abroad do not seem to be working FDI outflows were three times greater than inflows in 2018. Services accounted for the bulk of FDI in most countries in CESEE last year. In particular, producer-related business activities such as ICT, business process outsourcing and shared service centres expanded across the region. Services are not capital intensive, and thus are barely reflected in FDI data. However, the increasing share of services in announced greenfield FDI projects, and of commercial services in total exports, both point to a growing importance for foreign investors in these sectors. Germany and the US are the most important ultimate sources of FDI in CESEE. The share of Austrian outward FDI in CESEE is shrinking, at the expense of Asia and the US. Tax havens, the Netherlands, Cyprus and Luxembourg in particular are among the largest immediate investors but not among the important ultimate investing countries. Several trends shaping the future of FDI that are given special attention in this study. First, we find that the link between FDI inflows and GDP growth has become less strong since the crisis. Second, FDI inflows and participation in global value chains are strongly and positively correlated. Third, using a gravity model we highlight several CESEE countries attracting FDI at a level above their potential, particularly Montenegro and Bulgaria. By contrast, Belarus and Moldova could attract more FDI if business conditions improve. Finally, we note that business sentiment has a significant impact on greenfield investment decisions. Given that economic confidence across EU-CEE11 countries appears to be declining, we expect lower FDI inflows in 2019, which could lead to lower GDP growth. This is owing to faltering global and European economic activity, and restrictive policies in the US, Russia and China. Tax reform in the US will likely continue to have a particularly important negative impact on global FDI activity. The wiiw FDI Database is available online This online access with a modern query tool supports easy search and download of data. The wiiw FDI Database contains the full set of FDI data with time series starting form 1990 as far as available. Access to wiiw FDI Database
    Keywords: foreign direct investment, balance of payments, business sentiment, FDI by form, income repatriation, ultimate investing country, statistics, new EU Member States, Central Europe, Southeast Europe, Western Balkans, Austria, China, Turkey, CIS, Russia, Ukraine
    JEL: C82 F21 O57 P23
    Date: 2019–06
  5. By: Simplice A. Asongu (Yaoundé/Cameroon); Uduak S. Akpan (SPIDER Solutions, Nigeria); Salisu R. Isihak (Rural Electrification Agency, Nigeria)
    Abstract: This study employs panel analysis to examine the determinants of foreign direct investment (FDI) to Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT) using data for eleven years i.e. 2001 – 2011. First, it uses pooled time-series cross sectional analysis to estimate the model on determinants of FDI for three samples: BRICS only, MINT only, and BRICS and MINT combined; then, fixed effects model is also employed to estimate the model for BRICS and MINT combined. The results show that market size, infrastructure availability, and trade openness play the most significant roles in attracting FDI to BRICS and MINT while the roles of availability of natural resources and institutional quality are insignificant. Given that FDI inflow to a country has the potential of being mutually beneficial to the investing entity and host government, the challenge is on how BRICS and MINT can sustain the level of FDI inflow and ensure it results in economic growth and socio-economic transformation. To sustain the level of FDI inflow, governments of BRICS and MINT need to ensure that their countries remain attractive for investment. BRICS and MINT also need to ensure that their economies absorb substantial skills and technology spillovers from FDI inflow to promote sustainable long-term economic growth by investing more in their human capital. The study is significant because it contributes to literature on determinants of FDI by extending the scope of previous studies which often focus only on BRICS.
    Keywords: FDI, determinants, fast-growing economies, BRICS, MINT
    JEL: C52 F21 F23 O40 P37
    Date: 2018–01
  6. By: International Monetary Fund
    Abstract: Armenia’s fiscal transparency practices have benefitted from public financial management reforms over the last decade, and several planned reforms will bring further progress. Fiscal forecasts and budgets have become more forward looking and policy oriented, with the introduction of a medium-term expenditure framework (MTEF), improved fiscal objectives, and a performance budgeting system. Fiscal risk disclosure, though fragmented, has gradually improved, in particular, in macrofiscal risk assessment, and a PPP law is being drafted. The accrual accounting reform will significantly improve the coverage and quality of the budget execution reports and fiscal statistics that already provide timely and frequent information about the financial position of the government.
    Date: 2019–05–15
  7. By: Nataliya V. Ilyushina (National Research University Higher School of Economics); Yulia V. Kuzmina (National Research University Higher School of Economics); Diana N. Kaiky (National Research University Higher School of Economics)
    Abstract: In this study, we aimed to estimate the effect of phonological processing in the emergence of specific maths or combined maths and reading difficulties during the first year of schooling. We also estimated whether the high level of phonological processing could be a resource for coping with math difficulties. The study was conducted on a large sample of Russian first-graders (N=3296 pupils, mean age 7.3 years, 49% of them were girls). Pupils were tested twice, at the beginning and at the end of the first grade in their level of maths performance, reading performance, phonological processing, and number recognition skills. In each test, four groups of pupils were identified regarding their level of maths and reading performance: a group with mathematical difficulties only (MD), pupils with reading difficulties only (RD), pupils with both maths and reading difficulties (MDRD) and pupils without difficulties (TD). The probability to move into the MD group, the MDRD group and in the TD group was estimated for pupils regarding their group status at Time 1 and their level of phonological processing. Results revealed that at first grade, phonological processing did not correlate with specific maths difficulties, but associated with both maths and reading difficulties. At the same time, a high level of phonological processing may prevent typically developing pupils from moving into the MD group. Moreover, a high level of phonological processing increases the probability to move into the TD group for pupils who had specific maths difficulties at the start of schooling
    Keywords: maths difficulties, phonological processing, maths and reading difficulties, elementary school.
    JEL: Z
    Date: 2019
  8. By: International Monetary Fund
    Abstract: Selected Issues
    Date: 2019–06–05
  9. By: Marnix Van Soom; Milan van den Heuvel; Jan Ryckebusch; Koen Schoors
    Abstract: Since the 2007-2009 financial crisis, substantial academic effort has been dedicated to improving our understanding of interbank lending networks (ILNs). Because of data limitations or by choice, the literature largely lacks multiple loan maturities. We employ a complete interbank loan contract dataset to investigate whether maturity details are informative of the network structure. Applying the layered stochastic block model of Peixoto (2015) and other tools from network science on a time series of bilateral loans with multiple maturity layers in the Russian ILN, we find that collapsing all such layers consistently obscures mesoscale structure. The optimal maturity granularity lies between completely collapsing and completely separating the maturity layers and depends on the development phase of the interbank market, with a more developed market requiring more layers for optimal description. Closer inspection of the inferred maturity bins associated with the optimal maturity granularity reveals specific economic functions, from liquidity intermediation to financing. Collapsing a network with multiple underlying maturity layers or extracting one such layer, common in economic research, is therefore not only an incomplete representation of the ILN's mesoscale structure, but also conceals existing economic functions. This holds important insights and opportunities for theoretical and empirical studies on interbank market functioning, contagion, stability, and on the desirable level of regulatory data disclosure.
    Date: 2019–06

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