nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒02‒20
six papers chosen by
Toño Sanchez
Universidad de Valencia

  1. An Assessment of the Currency Board Regime in Bosnia and Herzegovina By Vivek H. Dehejia and Nadja Kamhi
  2. Globalisation, EU expansion and consequences for MNE location By Narula ,Rajneesh
  3. The Distribution of Wages in Poland, 1992-2002 By Newell, Andrew; Socha, Mieczyslaw W.
  4. China’s Employment Challenges and Strategies after the WTO Accession By Douglas Zhihua Zeng
  5. VAT in Ukraine: An Interim Report By Richard M. Bird
  6. Value-Added Taxes in Developing and Transitional Countries: Lessons and Questions By Richard M. Bird

  1. By: Vivek H. Dehejia and Nadja Kamhi (Department of Economics,Carleton University)
    Date: 2004–06–15
  2. By: Narula ,Rajneesh (MERIT)
    Abstract: Many of the EU accession countries are confident that membership will result in substantially increased inward foreign direct investment (FDI). At the same time, other peripheral EU members (such as Spain and Portugal) are concerned that FDI will be displaced to these new countries. I postulate that the new members cannot expect the same increased FDI flows that resulted to earlier EU entrants. Both groups of countries cannot base their industrial development strategy on passive reliance on such flows. Reliance on low costs and other ''generic'' advantages such as basic infrastructure is myopic in a globalised world. Benefiting from FDI requires a comprehensive strategy to build up domestic absorptive capacity and upgrading of the quality of their location advantages, since they are faced with increased competition for FDI not just from other European countries but also from other parts of the world, most notably Asia.
    Keywords: international economics and trade ;
    Date: 2005
  3. By: Newell, Andrew (University of Sussex and IZA Bonn); Socha, Mieczyslaw W. (University of Warsaw)
    Abstract: This paper analyses the changes in the size distribution of wages in Poland over a decade of transition. Until about 1998 there were some forces tending to increase wage inequality and other forces contracting it. The result was a relatively constant level of inequality. Privatisation was the main force tending to increase wage inequality, partly because it generated major increases in the relative wages of professional and managerial workers. We demonstrate how private firms tend to pay less at the bottom end of the wage distribution and more at the top end. The main force contracting the variance of wages was the decline, between 1992 and 1998 in labour market participation of those with low levels of education. Wage inequality seems to have increased since 2000. Suggestively, whereas privatisation has continued, the decline in participation has halted.
    Keywords: wages, Poland
    JEL: J31 P23
    Date: 2005–02
  4. By: Douglas Zhihua Zeng
    Abstract: Although China has made impressive progress in economic development and improving social well-being, it is facing many daunting challenges while transforming toward a knowledge and service-based economy and further opening up to international competition after its WTO accession in the context of knowledge revolution. One of the biggest challenges is how to create 100–300 million new jobs in the coming decade to absorb the millions of laid-offs, rural emigrants, and newly added labor force. China has been successful in building high-technology parks and information and communications technology (ICT) industries, but they are limited in terms of employment generation, while most of the traditional labor-intensive industries are losing competitiveness due to low productivity. To combat the unprecedented employment challenge, China must implement a systemic and sustained strategy, which may consist of the following policy thrusts: encouraging the private sector; promoting small and medium enterprises; expanding the service sector; reforming the state-owned enterprises; strengthening the social security system; improving labor market flexibility; and establishing mass retraining programs. This paper—a product of the Knowledge for Development Division, World Bank Institute—is part of a larger effort in the institute to provide country-focused knowledge services for client countries.
    Keywords: Industry; Labor & Employment; Macroecon & Growth
    Date: 2005–02–11
  5. By: Richard M. Bird (Rotman School of Management, University of Toronto)
    Abstract: This paper consider some aspects of how the value-added tax (VAT) has functioned to date in Ukraine, focusing on linkages between tax design, tax administration, and the structure of the economy. Two problems that have dominated much discussion of the Ukrainian VAT in recent years ? arrears and refunds ? are closely linked to more fundamental economic and political conditions and hence cannot be resolved simply by redesigning either tax law or tax administration, although various problems do of course exist with respect to both law and administration, as developed in the paper. In addition, the equity implications of a VAT in a country like Ukraine with a large ?underground? economy are discussed, as is the recent adoption of a ?simplified? tax system that in some respects seems less likely to resolve the underlying problems than to exacerbate them. In short, while Ukraine has, under difficult circumstances, managed to implement what is in form a modern VAT in a surprisingly short time, there is still much to be done before the tax works as it should.
    Keywords: value-added tax, Ukraine
    JEL: P35 H25
    Date: 2005–02
  6. By: Richard M. Bird (International Tax Program, Rotman School of Management, University of Toronto)
    Abstract: The value-added tax has, in recent decades, become the most important single tax in most developing and transitional economies. This paper reviews some problems that have emerged as important as more experience has been gained with how VATs really work in many such countries and suggests some lines of research that need to be explored further to overcome those problems.
    Keywords: value-added tax, developing countries, transitional countries
    JEL: H25 R10
    Date: 2005–02

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