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on Transition Economics |
| By: | Krug, B.; Zhu, Z.; Hendrischke, H. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam) |
| Abstract: | China like other transition economies needs to establish a tax regime compatible with a market economy. The paper singles out the general and China-specific features by which national legislation attempts to accompany economic transformation. Based on an empirical study in two provinces this paper shows that without including local government agencies and their budgets, China?s fiscal federalism cannot be analysed. This paper argues that China?s emerging tax regime depends on the institutional design that shapes the interaction between firms (as major tax payers at the local level), local government agencies, and the national tax administration. |
| Keywords: | Tax Regime;Fiscal Federalism;Tax Farming;China;Transition Economy; |
| Date: | 2005–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30001989&r=tra |
| By: | Zhang, X.; Krug, B.; Reinmoeller, P. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam) |
| Abstract: | This paper attempts to explain how institutions in the reform era of China have evolved by looking into the FDI policies and regulations. As history matters, we don?t look solely into the previous direct stage to the reform era, and rather look into a longer history starting from prior to the 14th century. The study shows that a dimension of time is crucial to understand institutional change in China. Though the initiation of the open-door policy in the reform era is commonly regarded as path-break event, we claim that this institutional change is a path dependent event from a longer historical view. The path takes a zigzag that is shaped by interaction among interested parties: the central government, local governments and economic agents (foreign investors in terms of the open-door policies). The historical study shows that mutual needs and their behaviours influence their attitudes which further influence institutional building. This also further implies how Chinese institutions may evolve in the future and what we should concern more about institutional changes in transitional economies. |
| Keywords: | Attitudes;Institutions;Path dependence;China;FDI policy; |
| Date: | 2005–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30001990&r=tra |
| By: | Zhang, J.; Jacobs, J.; Witteloostuijn, A. van (Groningen University) |
| Abstract: | Multinational enterprises (MNEs) play a dominant role in the international business (IB) literature. Traditionally, by far the majority of IB studies deal with issues at the micro level of the individual MNE, or at the meso level of a sample of individual MNEs. This paper focuses on a macro-level issue: the impact of MNE behavior through foreign direct investment (FDI) on international trade, and vice versa. In so doing, this study responds to a recent plea for more macro-level studies in IB into the effect of MNE behavior on the macroeconomic performance of countries as a whole, particularly developing and emerging economies. In this way, IB research would inform the heated debate about the pros and cons of globalization, where antiglobalization rhetoric emphasizes the negative consequences of the increased dominance of MNEs for the world at large and the Third World in particular. In the current study, we focus on the largest developing or emerging economy of all: China. Applying sophisticated econometric techniques, we unravel the causality and direction of FDI trade linkages for the Chinese economy in the 1980 2003 period. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugccs:200413&r=tra |
| By: | Barbara Buchner (Fondazione Eni Enrico Mattei); Silvia Dall’Olio (Fondazione Eni Enrico Mattei) |
| Abstract: | The Russian Federation played a crucial role in the ratification of the Kyoto Protocol. Indeed, after the US decision not to comply with the treaty, its ratification turned out to be indispensable for the Protocol to become legally binding. In early 2002, the Russian government decided to initiate the ratification process. However, notwithstanding this initial commitment, the country long hesitated to fulfil its promises, and for the last two years it sent numerous contradictory signals with respect to its position on climate policy. As a consequence, the factors that shape Russia’s behaviour in the context of climate negotiations received increasing attention. The main focus has been on the economic and international aspects motivating the Russian strategy. This paper attempts to complete this analysis by concentrating on a further feature that significantly contributed to Russia’s final decision, namely domestic forces. These factors have often been overlooked in the discussion of the Russian strategy. In order to fill this gap, this paper reconstructs the Russian ratification process, trying to identify the main domestic players and their role. Our findings provide various indications on the reasons of the recent developments in Russia, confirming the key role of the Russian President. |
| Keywords: | Agreements, Climate, Incentives, Negotiations, Policy |
| JEL: | H11 P27 P28 Q28 Q58 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2004.151&r=tra |
| By: | Centre for the Study of Living Standards |
| Abstract: | The objective of this report is to document China’s productivity performance since 1978 and determine its impact on poverty. The report finds that China has made substantial progress in economic development since economic reform started in 1978. Strong economic growth has been fuelled by rapid productivity growth, and has been accompanied by impressive declines in the incidence of poverty. Productivity performance has not been uniform across the agricultural and industrial sectors, but both have contributed to aggregate growth and poverty reduction. Unfortunately economic reform has also brought increasing income inequality, mostly between rural and urban areas but also within both rural and urban areas and across regions as well. Labour productivity is found to have had a strong negative effect on poverty in China, with productivity increases in the industrial sector more important for poverty reduction than those in the agricultural sector. The econometric results do not show that trends in inequality have a significant effect on poverty. However, the process of economic growth, besides bringing the benefits of productivity increases, also brings structural adjustments that exacerbate income inequality through displacing workers. The government of China has an important role to play in further developing a social security system that will ensure the gains from productivity are more equally shared, thus maintaining a healthy and equitable society in which further productivity gains can be realized. |
| Keywords: | China, Productivity, Poverty, Inequality, Productivity Growth, Social Security System, Social Policy, Reform, Economic Reform, Urban, Rural, Agriculture, State-Owned Enterprises, State Owned |
| JEL: | O47 O53 P27 I32 D31 |
| Date: | 2003–09 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:0307&r=tra |
| By: | Suiwah Leung, Vo tri Thanh, Kem Reat VISETH |
| Abstract: | Coming out of French colonial rule and central planning, the three transitional economies of Indochina, Vietnam, Cambodia and Lao PDR, embarked on market-oriented reforms in the late 1980s and early 1990s. Vietnam was certainly the most successful, but all three countries quickly achieved macroeconomic stability and rapid growth. However, the Asian financial crisis in 1997/98, as well as the countries’ use of administrative edicts in response to the crisis, highlights the fragile nature of their transition. The paper holds as a premise that effective integration of the three Indochina economies with the “old ASEANS” involves the former developing market institutions that can sustain “quality” growth which will take them out of the transitional economy status. It finds that, although the three economies are open to international trade and investment flows, their domestic market structures are still very much under-developed, with heavy protection of the state sector in terms of tariff structures and bank credits, and inadequate legal and judiciary developments. As a result, foreign investment flows which went principally into the state-owned enterprises in Vietnam and Lao PDR, and into the quota-dependent garment sector in Cambodia, peaked in the mid-1990s and have been declining ever since. Private sector developments have been retarded, and the process of building a commercial/legal infrastructure to support private enterprise has only just begun. Meanwhile, modern production technologies and processes involving component manufacturing in different countries and then assembly in yet a third country (the so-called “component production and assembly within integrated production systems”) means that the cost of doing business includes not just labour cost but also cost of services such as transport, telecommunication, electricity, insurance and banking. The latter are high cost industries dominated chiefly by SOEs in Vietnam and Lao PDR. The bilateral agreements already in place and the WTO agreements (when negotiated) will set deadlines for the three countries to open their service sectors to entry by international firms. Competition has, and will continue, to drive down prices for these services, thereby benefiting the domestic private sector as well as improving competitiveness for foreign direct investments. Implementation of the international trade agreements will also help to streamline cumbersome laws and regulations as well as improve the judiciary in the three countries, again with significant benefits for the domestic private sector. An important challenge is to develop the necessary human resources to complement the countries’ public administration reform. Another challenge is to maintain macroeconomic stability whilst opening the countries’ domestic and external financial sectors. A third challenge for the “New ASEANs” is to counter protectionism of the developed countries with whom they enter trade agreements. |
| JEL: | O19 F43 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:idc:wpaper:idec05-1&r=tra |
| By: | Berhanu Abegaz (Department of Economics, College of William and Mary) |
| Abstract: | The diversified business group (DBG) is a ubiquitous institution in developing economies. It is a formal inter-firm network that typically involves financial institutions, distributors and manufacturers. Groupwise diversification is viewed by some as a novel form of organizational innovation by entrepreneurial tycoons while others see it as an instrument for rent seeking. Inspired by Korean chaebols but chastened by Russian financial-industrial groups, China and Vietnam are creating business groups out of state enterprises. After reviewing the theory and cross-country experience, this paper concludes that selective economic grouping can be an efficient transitional organization. DBGs can facilitate government monitoring, exploitation of scale economies for scarce managerial talent, better risk management, and realization of network and scope economies. Success in incubating national champions is, however, predicated on a high technocratic capability for restraining abuse of market power, nurturing competitive market institutions, properly sequencing large scale privatization, and crafting WTO-compatible industrial and technology policies. |
| Keywords: | Diversified business group, Organizational innovation, State enterprises, China, Vietnam. |
| JEL: | G3 L2 L3 O3 P5 |
| Date: | 2005–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:13&r=tra |