nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2020‒11‒16
six papers chosen by

  1. Monthly Report No. 5/2020 By Vasily Astrov; Alexandra Bykova; Rumen Dobrinsky; Richard Grieveson; Doris Hanzl-Weiss; Gabor Hunya; Sebastian Leitner; Isilda Mara; Olga Pindyuk; Leon Podkaminer; Sandor Richter; Bernd Christoph Ströhm; Hermine Vidovic
  2. Gulags, crime, and elite violence : origins and consequences of the Russian mafia By Lonsky, Jakub
  5. FDI and Investment Uncertainty in the Baltics By Jorge Durán
  6. Labour Tax and Child Benefits Reform in Lithuania: For Better or Worse? By Aurelija Anciūtė; Viginta Ivaškaitė-Tamošiūnė; Anamaria Maftei; Janos Varga

  1. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (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); Isilda Mara (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); Bernd Christoph Ströhm; Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Looking for Shelter from the Storm Economic Forecasts for Eastern Europe for 2020-21 Executive summary (p. I-VI) May 2020 interim forecast update (p. 1-3) 1. Global overview (by Richard Grieveson; p. 4-7) 2. Regional overview (by Richard Grieveson p. 8-28) Albania Double whammy lays the economy low (by Isilda Mara; p. 30-32) Belarus Risky strategy with uncertain outcomes (by Rumen Dobrinsky; p. 33-34) Bosnia and Herzegovina Complex governance structure contributing to foreign dependence (by Bernd Christoph Ströhm; p. 35-36) Bulgaria The shock will likely be passed on to the labour market (by Rumen Dobrinsky; p. 37-38) Croatia Rebound in GDP will require recovery in tourism (by Hermine Vidovic; p. 39-40) Czech Republic Paying a high price for its skewed production structure (by Leon Podkaminer; p. 41-42) Estonia Enough fiscal space to weather the crisis (by Sebastian Leitner; p. 43-44) Hungary Crisis management a zigzag course from day to day (by Sándor Richter; p. 45-46) Kazakhstan The state attempts to rescue the economy under a double burden (by Alexandra Bykova; p. 47-49) Kosovo COVID-19 knocks out the government (by Isilda Mara; p. 50-51) Latvia Laxer restrictions cannot prevent a deep recession (by Sebastian Leitner; p. 52-43) Lithuania Substantial government support to boost the economy after recession (by Sebastian Leitner; p. 54-55) Moldova Keeping low key (by Gábor Hunya; p. 56-57) Montenegro Tourism’s over-dominance exacerbating economic downturn (by Bernd Christoph Ströhm; p. 58-59) North Macedonia Recession looms as pandemic dents vital car industry (by Bernd Christoph Ströhm; p. 60-61) Poland Making the best of the epidemic (by Leon Podkaminer; p. 62-63) Romania Strict lockdown and soaring fiscal deficits (by Gábor Hunya; p. 64-65) Russia Facing a double shock (by Vasily Astrov; p. 66-67) Serbia Recent strong growth hits a wall (by Richard Grieveson; p. 68-69) Slovakia Grim outlook ahead (by Doris Hanzl-Weiss; p. 70-71) Slovenia Pandemic hits manufacturing and service sectors alike (by Hermine Vidovic; p. 72-73) Turkey Heading back into stormy weather (by Richard Grieveson; p. 74-75) Ukraine IMF assistance crucial to keep the economy afloat (by Olga Pindyuk; p. 76-77) 4. Appendix – Table Summary of CESEE key measures regarding COVID-19 as of 30th April, 2020 (pp. 78-82)
    Keywords: CESEE, economic forecast, Europe, Central and Eastern Europe, Southeast Europe, Western Balkans, new EU Member States, EU, CEE, SEE, CIS, Russia, Ukraine, Romania, Czech Republic, Hungary, Turkey, Serbia, China, US, convergence, business cycle, coronavirus, external risks, trade war, EU funds, private consumption, credit, investment, digitalisation, servitisation, exports, FDI, labour markets, unemployment, employment, wage growth, migration, inflation, central banks, monetary policy, fiscal policy
    JEL: E20 E31 E32 F15 F21 F22 F32 F51 G21 H60 J20 J30 J61 O47 O52 O57 P24 P27 P33 P52
    Date: 2020–05
  2. By: Lonsky, Jakub
    Abstract: This paper studies the origins and consequences of the Russian mafia (vory-v-zakone). I web scraped a unique dataset that contains detailed biographies of more than 5,000 mafia leaders operating in 15 countries of the (former) Soviet Union at some point between 1916 and 2017. Using this data, I first show that the Russian mafia originated in the Gulag – the Soviet system of forced labor camps which housed around 18 million prisoners in the 1920s - 1950s period. Second, I document that the distance to the nearest camp is a strong negative predictor of mafia presence in Russia’s communities in the early post-Soviet period. Finally, using an instrumental variable approach which exploits the spatial distribution of the gulags, I examine the effects of mafia presence on local crime and elite violence in mid-1990s Russia. In particular, I show that the communities with mafia presence experienced a dramatic rise in crime driven by turf wars which erupted among rival clans around 1993 and persisted for much of the 1990. Further heterogeneity analysis reveals that mafia presence led to a spike in attacks against businessmen, fellow criminals, as well as law enforcement officers and judges, while politically-motivated violence remained unaffected.
    JEL: K42 N40 P16 P37
    Date: 2020–11–03
  3. By: Hartmut Lehmann (National Research University Higher School of Economics); Aleksey Oshchepkov (National Research University Higher School of Economics); Maria Giulia Silvagni (University of Bologna)
    Abstract: This paper studies the convergence in per capita gross regional products (GRPs) across Russian regions in the period from 1996 to 2017. We estimate growth equations, which are directly derived from a neoclassical growth model, augmented with human capital and migration. To our knowledge, this is the first paper that explicitly applies a neoclassical model to analyze regional convergence in Russia. We also take into account possible spatial effects and do a series of other robustness checks. Our main estimates establish a convergence rate of around 2% per year. While we fail to find any role of human capital for regional economic growth, we find that interregional migration and the interdependencies of the growth of Russian regions contribute to the economic convergence between them.
    Keywords: convergence, economic growth, regional economics, migration, Russia
    JEL: O47 R11 P2
    Date: 2020
  4. By: A. Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: The article provides an analysis of the current state of the procedural legislation of Ukraine in the context of the judicial system reform carried out in 2014-2019. The drastic changes in this direction, which began with the tragic events in the life of Ukraine in 2014, radically reversed the three components of national justice – judicial system, status of judges and legal procedure. The key issue of the judicial reform in Ukraine is the implementation of the principles of the organization and administration of justice, the main of which is the supremacy of the law. The essential principle in terms of the strategic vision of the key results of the judicial reform in Ukraine was the improvement of such principles as political and economic independence of justice. In accordance with constitutional amendments, a reauthorization took place between the High Qualification Commission of Judges of Ukraine and the new constitutional body – the High Council of Justice. The power to review disciplinary cases against all judges, taking decisions on temporary suspension of judges from the justice fall within the competence of the latter. The Higher Qualification Commission of Judges of Ukraine is solely responsible for selection of judges, qualification assessments, holding competitions to fill the vacancy for judges. The second principle of the organization and implementation of the judicial power in Ukraine was the principle of accessibility of justice, which is traditionally viewed as a lack of excessive judicial expenses, lack of judicial corruption, complex judicial procedures and excessive length of the judicial process. The primary change reflected in all procedural codes is the introduction of effective protection of rights the rights of a person. Particular attention is paid to ensuring the activities of the Supreme Court and implementing mechanisms that ensure the unity of law enforcement practice within the framework of a unified cassation proceedings. An important step in the implementation of the justice reform was the reformation of legal institutions related to the judicial system (advocacy, court enforcement action, reform of legal education, etc.).
    Keywords: judicial reform,Supreme Court,judicial procedures,judicial authorities,constitutional reform,procedural codification,Litigations,Procedure law
    Date: 2020–07–02
  5. By: Jorge Durán
    Abstract: Foreign direct investment (FDI) flows into the Baltic states collapsed during the crisis, experienced a short-lived recovery, and then plunged again. Today it remains subdued despite a modest but sustained recovery. This is worrying because FDI is a channel for technology transfers and its shortfall could imply that the Baltic states risk falling into a ‘middle income trap’ at around 70% of the EU-15 average income. This paper argues that the slow recovery of FDI is rather due to poor international market conditions, holding back investment in general and FDI in particular. Accordingly, FDI is expected to pick up once the economic environment improves. Still, further improving the framework conditions for investment could help to attract and reap the benefits of FDI in the future, particularly in Latvia and Lithuania.
    Keywords: Foreign direct investment, capital formation, unit labor costs, FDI and investment uncertainty in the Baltics, Jorge Durán, Héctor Navarrete-Plana.
    JEL: F2 F6 O1
    Date: 2019–03
  6. By: Aurelija Anciūtė; Viginta Ivaškaitė-Tamošiūnė; Anamaria Maftei; Janos Varga
    Abstract: In 2019, Lithuania overhauled the country’s labour taxation. Social insurance contributions paid by employers and employees were consolidated, and were accompanied by adjustments in gross wages and personal income tax rates, and increases in the minimum gross wage and the tax-free allowance. Simultaneously, the government increased the universal child benefit. Simulations based on the EUROMOD and QUEST models are used to assess the fiscal, redistributive, equity and macroeconomic impact of these reforms. Overall, the set of simulated changes marginally decreases the tax wedge, poverty and income inequality. The labour taxation reform is estimated to be costly, with a small stimulating effect on the economy.
    Keywords: Lithuania, labour taxation, child benefits, social insurance contributions, minimum wage, tax wedge, disposable income, income inequality, poverty, growth, Anciūtė, Ivaškaitė-Tamošiūnė, Maftei, Varga.
    JEL: D04 D31 D63 E62 H23
    Date: 2020–09

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