nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒02‒13
nine papers chosen by
Toño Sanchez
Universidad de Valencia

  1. Unemployment dynamics and NAIRU estimates for CEECs: A univariate approach By Camarero, M.; Carrión, J.Ll.; Tamarit, C.
  2. Real Equilibrium Exchange Rate in China By Virginie Coudert; Cecile Couharde
  3. EU Enlargement and Beyond: A Simulation Study on EU and Russia Integration By Sulamaa, Pekka; Widgrén, Mika
  4. Road development, economic growth, and poverty reduction in China By Fan, Shenggen; Chan-Kang, Connie
  5. Agricultural policies in Vietnam By Nguyen, Hoa; Grote, Ulrike
  6. Openness and growth in alternative trading regimes.Evidence from EEC and CMEA’s customs unions By Rosa Capolupo; Giuseppe Celi
  7. On the privatization of "Stolen Goods" in Central and Eastern Europe. By Svetozar (Steve) Pejovich
  8. How Transition Paths Differ: Enterprise Performance in Russia and China By Bhaumik, Sumon; Estrin, Saul
  9. Infrastructure Performance and Reform in Developing and Transition Economies: Evidence from a Survey of Productivity Measures By Antonio Estache; Sergio Perelman; Lourdes Trujillo

  1. By: Camarero, M.; Carrión, J.Ll.; Tamarit, C. (Universitat de Barcelona)
    Abstract: In this paper we test for the hysteresis versus the natural rate hypothesis on the unemployment rates of the EU new members using unit root tests that account for the presence of level shifts. As a by product, the analysis proceeds to the estimation of a NAIRU measure from a univariate point of view. The paper also focuses on the precision of these NAIRU estimates studying the two sources of inaccuracy that derive from the break points estimation and the autoregressive parameters estimation. The results point to the associated with institucional changes implementing market-oriented reforms. Moreover, the degree of persistence in unemployment varies dramatically among the individual countries depending on the stage reached in the transition process.
    JEL: C22 C23 E24
    Date: 2005
  2. By: Virginie Coudert; Cecile Couharde
    Abstract: In this paper, we try to measure the size of a possible misalignment in the Chinese real exchange rate by two ways. On one hand, we address the issue of the “Balassa effect”, by which the real exchange rate of a catching-up country should appreciate. We compare China with other emerging countries, in order to assess the size of a “normal” “Balassa effect”. On the other hand, we follow the FEER (Fundamental Equilibrium Exchange Rate) approach. We use the NIGEM model for representing the foreign trade of China, the United States, the Euro area, South Korea and Japan. We calculate the real effective exchange rate that is consistent with sustainable current accounts. Both methods yield an undervaluation of the renminbi.
    Keywords: renminbi; Balassa effect; BEER; FEER
    JEL: F31 F33
    Date: 2005–01
  3. By: Sulamaa, Pekka; Widgrén, Mika
    Abstract: This Paper examines the economic effects of the opening of the former Soviet Union. The analysis carried out in the Paper is two-fold. First we simulate the impact of the eastern enlargement of the EU and, second, we analyse how deeper integration between the EU and Russia contributes to this. The analysis is carried out with GTAP computable general equilibrium model. We find that there is a trade-off between the two roads of European integration arrangements. Eastern enlargement seems, even in its very deep form, to be beneficial for all EU regions without causing substantial welfare losses outside the Union. EU-Russia integration, on the other hand, has a different impact. To be beneficial for Russia, free trade between the EU and Russia requires improved productivity in the latter, which may be due to better institutions or increased FDI. This might make the negotiations of the agreement cumbersome and, if agreed, its implementation difficult.
    Keywords: european integration; GTAP model; trade
    JEL: F14 F15 F17
    Date: 2004–10
  4. By: Fan, Shenggen; Chan-Kang, Connie
    Abstract: "Since 1978, China has adopted a series of economic reforms leading to rapid economic growth and poverty reduction. National Gross Domestic Product (GDP) grew at about 9 percent per annum from 1978 to 2002, while per capita income increased by 8 percent per annum. The post-reform period was also characterized by an unprecedented decline in poverty. However, income inequality has worsened between coastal and interior provinces as well as between rural and urban areas. A number of factors contributed to this widening disparity in regional development in China, including differences in natural resources endowments, and infrastructure and human capital development... The objective of this study is to assess the impact of public infrastructure on growth and poverty reduction in China, paying a particular attention to the contribution of roads. ...The most significant finding of this study is that low quality (mostly rural) roads have benefit/cost ratios for national GDP that are about four times larger than the benefit/cost ratios for high quality roads. Even in terms of urban GDP, the benefit/cost ratios for low quality roads are much greater than those for high quality roads." from Authors' Abstract
    Keywords: Human capital ,
    Date: 2004
  5. By: Nguyen, Hoa; Grote, Ulrike
    Abstract: Since 1986, Vietnam started to move from a centrally-planned towards a market-oriented system. It underwent several major economic and trade reforms – a process which is still not completed. At the same time, it also started to open its economy. Vietnam has become a member of the ASEAN Free Trade Agreement (AFTA), signed several bilateral trade agreements and is currently negotiating accession to the World Trade Organization (WTO). First positive results of the reform process became visible in the early 1990s when poverty declined to a large extent. Since then, the Vietnamese agricultural sector has also experienced high growth and impressive export achievements. The country changed from a food importer to one of the major exporters worldwide. The question arises to what extent support policies contributed to this growth, especially of the agricultural sector. In order to answer this question, domestic and trade policies in the agricultural sector are analysed and the market price support (MPS) and producer support estimates (PSEs) are calculated. To account for the special conditions in Vietnam, the MPS and PSEs are adjusted for country- and commodity-specific factors like transportation costs, marketing margins and the quality difference of exportables (or importables) at the border and domestically. The selected agricultural commodities for which the MPS and PSEs are estimated include rice, coffee, tea, rubber, pepper, sugar, groundnut, cashew nut and pig meat. These nine commodities are the main agricultural products and exportables of Vietnam. Their shares in total output exceed 70% allowing for a generalization of the calculated PSEs, thus roughly representing the whole agricultural sector. The finding is that most agricultural products were taxed in the mid 1980s until the mid 1990s. This was often due to large inefficiencies in the production and processing of agricultural commodities, the dominance and monopoly position of the state-owned sector, restrictive trade policies like import and export quotas and licenses, and distorted markets and prices in the country. The domestic reform process, the opening of the economy since the early 1990s, and the shift from an import-substitution strategy towards export-promotion, however, impacted on the gaps between the domestic and international prices. Thus, since the mid 1990s, the support of agriculture increased - but still reaching only rather low levels. At its peak, the %PSE for the agricultural sector was 24.2% which is moderate compared with other countries. The low level of protection implies that Vietnam may not face excessive difficulties in its further international integration. This study of Vietnam is the third comprehensive review conducted within an IFPRI project on understanding and assessing domestic and trade policies in the agricultural sector in developing countries. The data are meant to deliver a basis for further trade-related research to be conducted in the future.
    Keywords: Agricultural policies ,Markets ,Free trade ,Trade agreements ,World Trade Organization ,Poverty ,
    Date: 2004
  6. By: Rosa Capolupo; Giuseppe Celi
    Abstract: While common sense would indicate that trade and growth are positively correlated, it is not clear from a theoretical and empirical perspective whether or not trade is a proximate determinant of growth. The voluminous empirical efforts in this area show mixed findings. Trying to elucidate the ambiguities in the literature we study the nexus between trade flows and growth in three groups of countries: historical EEC, the extreme case of CMEA customs union and a group of transitional economies (TEs), most of which just recently added to the EU member states. The comparator group of former communist countries, in which trade-openness is not spurred by market incentives, should be very informative in explaining the impact of trade on growth. Our main finding, by applying different econometric methodologies, is that either for the EEC or CMEA the coefficient of real openness is negative for the former two samples and positive for the third. For the EEC the indicator of openness shows a positive sign solely when the rate of growth of trade share is considered. The findings prove to be robust to variations in the controlling set, to different econometric techniques, and for the last group of countries to changing in the empirical indicator of openness (inter and intra-industry trade indicators).
  7. By: Svetozar (Steve) Pejovich
    Abstract: Many scholars assert that the process of privatizing state-owned firms in Central and Eastern Europe has been a success because privatized firms are performing better than they did before. The assertion is an empty piece of poetry. To begin with, privately owned firms are more efficient than state owned firms. Hence, the evaluation of the process of privatization in Central and Eastern Europe does not depend on some measured efficiency of privatized firms. The evaluation of privatization should be based on the contribution of privatized firms to the attainment of two major initial objectives of institutional restructuring in post-communist Central and Eastern Europe: the acceptance of capitalism and the development of free-market, private-property institutions. The paper argues that the privatization of state-owned firms has failed to contribute to those two objectives. Analysis attributes this failure of privatization to the neoclassical model, the absence of de-communization in the region, and the unwillingness of new rules to assign the value of state-owned firms to their rightful owners.
  8. By: Bhaumik, Sumon (Queen’s University Belfast); Estrin, Saul (London Business School and IZA Bonn)
    Abstract: We use enterprise data to analyse and contrast the determinants of enterprise performance in China and Russia. We find that in China, enterprise growth and efficiency is associated with rapid increases in factor inputs, but not correlated with ownership or institutional factors. However, in Russia, enterprise growth is not associated with increases in factor quantity (except for labor) or quality. The main determinants of company performance are instead demand and institutional factors at a regional level. We explore possible interpretations of these results, including the impact of institutional and managerial quality.
    Keywords: enterprise performance, privatization in Russia and China
    JEL: D23 L22 O12 P31
    Date: 2005–01
  9. By: Antonio Estache; Sergio Perelman; Lourdes Trujillo
    Abstract: Estache, Perelman, and Trujillo review about 80 studies on electricity and gas, water and sanitation, and rail and ports (with a footnote on telecommunications) in developing countries. The main policy lesson is that there is a difference in the relevance of ownership for efficiency between utilities and transport in developing countries. In transport, private operators have tended to perform better than public operators. For utilities, ownership often does not matter as much as sometimes argued. Most cross-country studies find no statistically significant difference in efficiency scores between public and private providers. As for the country-specific studies, some do find differences in performance over time but these differences tend to matter much less than a large number of other variables. Across sectors, private operators functioning in a competitive environment or regulated under price caps or hybrid regulatory regimes tend to catch up best practice faster than public operators. There is a very strong case to push regulators in developing and transition economies toward a more systematic reliance on yardstick competition in a sector in which residual monopoly powers tend to be common. This paper—a product of the Office of the Vice President, Infrastructure Network—is part of a larger effort in the network to document the state of the sector.
    Keywords: Infrastructure; Private Sector Development; Public Sector Management
    Date: 2005–02–08

This nep-tra issue is ©2005 by Toño Sanchez. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.