nep-tra New Economics Papers
on Transition Economics
Issue of 2005‒10‒15
thirty-one papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Regulatory Reform in the Russian Federation: Enhancing Trade Openness through Regulatory Reform By Blanka Kalinova
  2. The Incidence and Cost of Job Loss in the Ukrainian Labor Market By Hartmut Lehmann; Norberto Pignatti; Jonathan Wadsworth
  3. Financial Sector Reform in China By Michael Thorpe
  4. Fifteen Years of Economic Reform in Russia: What has been Achieved? What Remains to be Done? By Rudiger Ahrend; William Tompson
  5. Optimal Monetary Policy Rules in A Simple Stochastic Macro Model: China's Evidence By Shengzu Wang; Shen Guo
  7. How important is foreign capital to income growth in China and India? By James Laurenceson; Abby Kamalankanthan
  8. China’s exchange rate policy: the case against abandoning the dollar peg By James Laurenceson
  9. Household Savings in Russia during the Transition By Mark C. Foley; William Pyle
  10. Next in Line – Romanians at the Gates of the EU (emigrants, border control, legislation) By Ovidiu SIMINA
  11. Collective Action and Post-Communist Enterprise: The Economic Logic of Russia’s Business Associations By William Pyle
  12. Resolutions, Recoveries and Relationships: The Evolution of Payment Disputes in Central and Eastern Europe By William Pyle
  13. Services Barriers and their Economic Impact: Examples of Banking and Telecommunications Services in Selected Transition Economies By Nora Dihel; Blanka Kalinova
  14. Estimating China’s de-facto capital account convertibility By James Laurenceson; Kam Ki Tang
  15. Obstacles aux échanges de services et leur incidence économique : Exemples de services bancaires et de télécommunications dans certaines économies en transition By Nora Dihel; Blanka Kalinova
  16. Productivity, Ownership and the Investment Climate: International Lessons for Priorities in Serbia By Itzhak Goldberg; Branko Radulovic; Mark E. Schaffer
  17. Impact of Changes in Social Institutions on Income Inequality in China By Hiroko Uchimura
  18. In Search of Efficiency: Improving Health Care in Hungary By Alessandro Goglio
  19. Migration Creation and Diversion in the EU: Are CEECs Immigrants Crowding-out the Rest? By Helena Marques
  20. The Different Extent of Privatisation Proceeds in EU Countries: A Preliminary Explanation Using a Public Choice Approach By Ansgar Belke; Frank Baumgärtner; Friedrich Schneider; Ralph Setzer
  21. SHA-Based Health Accounts in 13 OECD Countries - Country Studies - Poland: National Health Accounts 1999 By Dorota Kawiorska
  22. SHA-Based Health Accounts in 13 OECD Countries - Country Studies - Hungary: National Health Accounts 2001 By Mihalyne Hajdu; Maria Manno
  23. Does Economic Uncertainty Affect the Decision to Bear Children? Evidence from East and West Germany By Sumon Kumar Bhaumik; Jeffrey B. Nugent
  24. Hungarian Innovation Policy: What's the Best Way Forward? By Philip Hemmings
  25. Prices in Economic Systems By Oldrich Kyn
  27. Instrument Choice and the Returns to Education: New Evidence from Vietnam By Jean-Louis Arcand; Béatrice d'Hombres; Paul Gyselinck
  28. Les théories de la planification et la régulation des systèmes économiques. By Irina Peaucelle
  29. A Political Economy Theory of the Soft Budget Constraint By James A. Robinson; Ragnar Torvik
  31. MONGOLIA – HEAVEN FOR FOREIGN CONSULTANTS By Luvsanjamts, Lkham; Söderberg, Marie

  1. By: Blanka Kalinova
    Abstract: This study forms part of Russia’s regulatory reform review undertaken under the OECD regulatory reform programme. It describes Russia’s trade environment and its recent trade and foreign investment policy developments with a focus on trade-related regulations and their role in supporting Russia’s market openness. It examines in particular to what extent Russia’s trade regulations comply with the principles of transparency and non-discrimination and facilitate foreign trade operations and international competition. The paper proposes a series of policy recommendations to make Russia’s regulatory framework more market-oriented and trade-andinvestment friendly.
    Keywords: trade, transparency, regulations, liberalisation, trade barriers, Russia, customs, non-discrimination, WTO
    Date: 2005–03–01
  2. By: Hartmut Lehmann; Norberto Pignatti; Jonathan Wadsworth
    Abstract: We examine the effects of economic transition on the pattern and costs of worker displacement in Ukraine, using the Ukrainian Longitudinal Monitoring Survey (ULMS) for the years 1992 to 2002. Displacement rates in the Ukrainian labour market average between 3.4 and 4.8 percent of employment, roughly in line with levels typically observed in several Western economies, but considerably larger than in Russia. The characteristics of displaced workers are similar to those displaced in the West, in so far as displacement is concentrated on the less skilled. Around one third of displaced workers find re-employment immediately while the majority continues into long-term non-employment. The wage costs of displacement for the sub-sample of displaced workers do not seem to be large. The main cost for displaced workers in Ukraine consists in the extremely long non-employment spell that the average worker experiences after layoff.
    Keywords: Displaced workers, labour markets in transition, Ukraine
    JEL: J64 J65 P50
    Date: 2005
  3. By: Michael Thorpe
    Abstract: China currently maintains an exchange rate fixed against the US dollar and a (relatively) closed capital account, while exercising an independent, controlled interest rate environment. Domestic and international pressures have been mounting for the Chinese government to re-adjust the currency peg or allow more flexibility in the exchange rate and to free up the capital account to foster greater integration with global markets. Given the need for developing a more mature financial system to meet the needs of a growing market economy and with unrestricted foreign bank entry in 2007, there is also a need for less regulated and more market driven interest rates. To the extent that authorities seek to maintain exchange rate stability while easing capital controls, they must forsake monetary independence. This is the so-called macroeconomic policy "trilemma" constraining macroeconomic policy makers generally. The need for continuing reform of China's currently fragile domestic banking system further influences the nature and timing of policy options. This paper reviews recent macroeconomic management performance in China and assesses the options facing policy makers for reform of the financial system given the current environment and subject to the constraint of existing institutional arrangements.
    Keywords: China, banking, financial repression, exchange rate, capital
    JEL: G2 O16 E44
    Date: 2005
  4. By: Rudiger Ahrend; William Tompson
    Abstract: The paper provides an overview of the course of economic reform and the performance of the Russian economy since the early 1990s and an analysis of the structural reform challenges ahead. It assesses the contribution of institutional and structural reforms to economic performance over the period, before turning to the question of where further structural reforms could make the biggest contribution to improved performance. Three major conclusions emerge. First, there is still a great deal to be done to strengthen the basic institutions of the market economy. While the Russian authorities have embarked on some impressive – and often technically complex – ‘second-generation’ reforms, many ‘first-generation’ reforms have yet to be completed. Secondly, the central challenges of Russia’s second decade of reform are primarily concerned with reforming state institutions. Thirdly, the pursuit of reforms across a broad front could enable Russia to profit from complementarities that exist among various strands of reform. <P>Quinze ans de réformes économiques en Russie L’article donne un aperçu du déroulement des réformes économiques et des performances de l’économie russe depuis le début des années 90, ainsi qu’une analyse des enjeux des futures réformes structurelles. L’article considère la contribution des réformes institutionnelles et structurelles à la performance économique durant la période, avant d’examiner dans quels domaines des réformes structurelles additionnelles pourraient avoir la plus grande contribution à l’amélioration de la performance économique. Il en résulte trois conclusions majeures. Premièrement, il reste encore beaucoup à faire pour renforcer les institutions de base d’une économie de marché. Bien que les autorités russes aient commencé quelques réformes de « seconde génération » qui sont impressionnantes – et souvent techniquement complexes-, il reste un bon nombre de réformes de « première génération » à achever. Deuxièmement, les défis centraux de la deuxième décennie de réformes concernent en première ligne la réforme des institutions de l’État. Troisièmement, la poursuite des réformes sur un large front permettrait à la Russie de profiter des complémentarités existantes entre les différents axes des réformes.
    Keywords: growth, corruption, croissance, transition, competition, transparency, transparence, concurrence, Russia, economy, state ownership, Russie, économie, entreprise d'État, corruption, reforms, stabilisation, réformes, stabilisation
    JEL: H1 K2 P21 P27 P31 P37
    Date: 2005–05–13
  5. By: Shengzu Wang (McGill University); Shen Guo (Concordia University)
    Abstract: In this paper we apply a simple macro model to explore and evaluate certain optimal monetary policy rules for China's economy. To be more consistent with the central bank (the People's Bank of China)'s behaviour, we use money supply as a monetary policy instrument rather than the commonly used interest rate. Policy rules are optimal in terms of minimizing the predetermined loss functions, and the parameters of these rules are determined by stochastic simulation. Different forms of policy rule and loss function are considered, especially for exchange rate volatility and money supply volatility. The optimality of monetary policy rules is evaluated by comparing the shifts of policy frontiers.
    Keywords: Monetary Policy Rule, Loss Function, Stochastic Simulation, Policy Frontier, China
    JEL: C15 E47 E52
    Date: 2005–10–08
  6. By: Oldrich Kyn (Boston University)
    Abstract: This is a paper presented at the East-West economic conference in Plovdiv, Bulgaria, 1964. The paper outlines the main features of price policy in the Soviet-type socialist system of Eastern Europe. All the prices were centrally fixed, with the main aim to achieve planned standard of living for the population, but disregarding the goal of keeping the balance between supply and demand for individual commodities. The criticism of the adverse effects of such a policy is presented, and the transition to the free markets with prices to be determined by supply and demand as it was outlined in the blueprint for the Czechoslovak economic reform of 1960's is wholeheartedly recommended.
    Keywords: Socialism, Soviet-type socialism, market socialism, price control, price planning, Czechoslovakia, Economic reform
    JEL: O P
    Date: 2005–10–07
  7. By: James Laurenceson; Abby Kamalankanthan (EAERG - School of Economics, The University of Queensland)
    Abstract: The picture often painted is that foreign capital inflows in China and India are prominently linked to rapid growth at the national level, and contribute to widening income disparities at the provincial/state level. In this paper we revisit Krugman’s (1993) contention that foreign capital can hardly be considered an important income growth driver, when in most developing countries it only accounts for a fractional share of gross capital formation. In the case of contemporary China and India, the data suggests that Krugman’s critique holds largely true, even in the coastal regions that are considered magnets for foreign investment. Thus, domestic factors, rather than the driving forces of globalization, appear to be the more important determinants of income growth in both countries.
  8. By: James Laurenceson (EAERG - School of Economics, The University of Queensland)
    Abstract: This paper critically comments on the policy literature surrounding China’s exchange rate regime. It first seeks to expose as myths several popularly raised contentions regarding the dollar peg employed by China, including the belief that the RMB is clearly undervalued and that its value is a prominent cause of the U.S trade deficit. The paper then describes a consensus position that has emerged which argues that in the interests of better promoting its own macroeconomic stability, China should abandon the peg in favor of a more flexible exchange rate regime. We see numerous weaknesses in this position but a few stand out. Available data do not suggest that flexible regimes outperform fixed regimes in terms of inflationary outcomes. Moving to a flexible regime is also far from proximate policy response to the problems that are in evidence in China’s economy. Institutional realities that make moving to a flexible regime difficult also appear to have been seriously overlooked. The paper concludes by noting that in the longer term moving to a more flexible regime may be in China’s best interests. But for now, the focus needs to be firmly in the area of domestic financial reform.
  9. By: Mark C. Foley; William Pyle
    Abstract: We exploit panel data from the second phase of the Russian Longitudinal Monitoring Survey (RLMS) to investigate the household characteristics that explain saving during a period of extreme dislocation. Among our more noteworthy findings, we find evidence of short-term consumption smoothing behavior as households respond to temporary income shocks. Conditional on income level, we find that savings rates are higher in households benefiting from non-standard (likely transitory) sources of support such as private transfers and sales of home produced food; savings rates are lower, moreover, in households suffering from unemployment or payment arrears. We also confirm the robustness of an atypical U-shaped age-savings relationship to multivariate specifications. And finally, we turn up strong support for an inverse relationship between the household’s stock of durables and its saving rate.
    JEL: D91 P20
    Date: 2005
  10. By: Ovidiu SIMINA (West University of Timisoara, Romania)
    Abstract: The first of May 2004 marked an important date in the history of Europe as a political, geographic, and social entity. After years of negotiations, ten European countries joined the European Union, bringing in their potential and expectations, adding a total population of 75 million people and a territory of 738,000 square kilometres: Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Malta, Cyprus, Estonia, Latvia and Lithuania. The EU will continue its enlargement under the Luxembourg Presidency. The membership treaty with Bulgaria and Romania will be finalised with a view to signature in 25 April 2005, in order to join the EU by 2007. Once it has been signed, this will mark the end of the current accession cycle. Membership negotiations with Croatia should commence on 17 March 2005. In mid-December 2004 EU leaders endorsed eventual Turkish entry into the EU, but said that there could be permanent restrictions on freedom of movement for Turkish workers; earlier, the EU Parliament voted 407-262 in favour of Turkey's entry. Romania feels and acts like a European country. You will rather notice a European flag in Bucharest than in London, for example. Romania is not only a country who makes effort to join the European family, by introducing the necessary legal provisions in the national legislation, but it is already part of one, whole Europe, ruled by law, an area of Freedom, Security and Justice. Romania fights against immigration flows targeting Western Countries and guards the external border of European Union. In the same time, Romanians are spread all over Europe, living there alike other Europeans. Until the European Union Member States will decide that Romania truly deserves to join the family, Romanians have to prove that they do not only feel and act as Europeans, but they truly are Europeans
    Keywords: UE Enlargement, external border, Romania, European migration, labour mobility
    JEL: F02 F22 J11 J61 J70
    Date: 2005–10–08
  11. By: William Pyle
    Abstract: Drawing on a unique set of surveys, this article explores the question of whether Russia’s post-communist business associations are generally antithetical to or supportive of the broad objectives of economic restructuring. Contrary to the most widely cited analysis as to the purposes of collective action in the business community, the survey evidence demonstrates that association members have embraced market-adapting behaviors at greater rates than non-members. The responses of both firms and associations, moreover, suggest that the associations themselves may, at least in part, be directly responsible. These findings point to the conclusion that in contemporary Russia the net returns to collective action in support of market development are high relative to those for purposes that are less benign.
    Keywords: Key words: business associations, collective action, post-communist transition, and market institutions
    JEL: D7 L2 L3 O1 P2
    Date: 2005
  12. By: William Pyle
    Abstract: What determines the mechanism chosen to resolve a commercial dispute? To what degree does the aggrieved recover damages? And does the relationship survive in the aftermath? The answers to these questions affect expectations as to the costs of transacting and, thereby, the development of markets. But they have received almost no attention in the economic literature on the post-socialist transition. This article exploits a rich survey of small and medium-sized manufacturing enterprises in three Central and East European countries to explain responses to an inter-firm payment dispute. The evidence suggests that behavior at successive stages is strongly influenced by the transaction costs associated with greater geographic distance between the firms. The evidence also strongly suggests that the costs of a dispute can be mitigated by membership in a business association.
    JEL: D23 D74 K40 K41 P37
    Date: 2005
  13. By: Nora Dihel; Blanka Kalinova
    Abstract: This paper applies the most advanced methodologies for measuring services barriers to calculate the restrictiveness and the impact of services barriers in selected transition economies, i.e. the Baltic States, and eight South Eastern European (SEE) countries (for telecommunications and banking) and Russia (for telecommunications). Among the selected countries, the Baltic countries record the highest liberalisation scores for both telecommunications and banking services making their situation comparable to that of most developed countries. By contrast, the SEE countries have more room to improve their performance and the price level of their telecommunication services, both in fixed and cellular services by eliminating general restrictions on competition and removing barriers to foreign equity participation. With respect to banking services, the results suggest that the SEE markets are fairly contestable; policy priorities would thus appear to be broad issues of macroeconomic stability and structural reform. The telecommunications estimates put Russia in an intermediate position between the results for the Baltic States and the SEE countries. The WTO...
    Keywords: telecommunications, transition economies, services, banking, liberalisation, barriers, benefits, WTO
    Date: 2004–10–07
  14. By: James Laurenceson; Kam Ki Tang (EAERG - School of Economics, The University of Queensland)
    Abstract: China’s capital account convertibility is presently not well understood. A relatively closed de jure regime sits in contrast with a de facto regime that exhibits distinct signs of being quite open. This paper seeks to shed light on this issue by using an econometric model to predict the level of capital flows that would be expected if China had a fully open capital account. The results show that over 2001-2003, observed capital flows were around 85 percent of the predicted value, suggesting that China’s capital account over a one year time horizon is already quite open. Short run convertibility would expectedly be less than this figure. Thus, the results carry the connotation that the cost of capital controls in terms of allocative inefficiency over the medium and long run is likely to have been modest while some unwarranted short run volatility has been avoided. Nonetheless, the results do not leave room for policy complacency. As China continues to implement its WTO commitments in addition to other arrangements such as the Common Economic Partnership Agreement with Hong Kong, short run convertibility is presently on the rise. This makes implementing policies that are prerequisites for full convertibility a matter of urgency.
  15. By: Nora Dihel; Blanka Kalinova
    Abstract: La présente étude s’appuie sur les méthodologies de mesure les plus avancées pour évaluer la restrictivité et les effets des obstacles aux échanges de services dans un certain nombre d’économies en transition, à savoir les États baltes, huit pays d’Europe du Sud-Est (pour les télécommunications et les services bancaires) et la Russie (pour les télécommunications). Parmi les pays considérés, les États baltes arrivent en tête du point de vue de la libéralisation des services de télécommunications et des services bancaires, ce qui les place dans une situation comparable à celle de la plupart des pays développés. Par comparaison, les pays d’Europe du Sud-Est disposent d’une marge plus importante d’amélioration des performances et des prix dans les télécommunications, qu’il s’agisse des services à réseau fixe ou cellulaire, puisqu’ils peuvent encore abolir les restrictions générales à la concurrence et ne plus limiter les prises de participation étrangères. En ce qui concerne les services bancaires, les résultats indiquent que les marchés des pays d’Europe du Sud-Est sont relativement contestables ; leurs décideurs seraient donc fondés à s’intéresser en priorité à la stabilité macroéconomique et à la réforme structurelle. Selon nos estimations pour les télécommunications, la Russie se situe généralement à mi-chemin entre les États baltes et les pays d’Europe du Sud-Est. Le fait d’adhérer à...
    Keywords: télécommunications, économies de transition, libéralisation, services, secteur bancaire, avantage, obstacle, OMC
    Date: 2004–10–29
  16. By: Itzhak Goldberg; Branko Radulovic; Mark E. Schaffer
    Abstract: This article uses data on 27,000 firms from 50 countries, half of which are transition economies, together with the specific case of Serbia to examine the relationship between productivity, the investment climate and private ownership of firms. As government capacity to address the investment climate constraints is limited, the prioritization of the constraints is critical. Identification of the relative effects of various investment climate constraints and ownership on productivity should serve as a guide for such prioritization. Although ownership has recently received less attention in policy decisions than previously, according to the econometric analysis of productivity reported in the paper, private ownership is an equally or more important determinant of productivity than other components of the investment climate. The importance of ownership shows that an unfinished privatization and restructuring agenda might have negative effects on productivity, in parallel to poor investment climate. Another important finding is that countries in which firms complain more about infrastructure tend to have less productive firms.
    Keywords: Serbia, investment climate, productivity, transition
    JEL: P3 D24 L33 O17
    Date: 2005
  17. By: Hiroko Uchimura
    Abstract: This paper analyses the impact of changes in social institutions, i.e. in the informal and formal social security system, on income inequality in China. This study uses an inequality decomposition analysis approach comparing household survey data for 1988 with 1995. Since 1992 was a decisive year for accelerating to increase the role of market mechanism in China, comparing these two periods shows significant changes in social institutions and their impacts on income inequality. It provides meaningful implications for inequality issues in the present China. In a first step the paper looks at the impact of changes in the family based social security system on income inequality. Secondly, the paper investigates the contribution of current social security system reforms as a potential tool to cope with increasing inequality. Three main results emerge from the analysis: first, the family based social security is losing its importance mainly through the changes in employment pattern in a household. This change has a significant impact on income inequality. Second, this study shows that the introduction of new formal social security system helped to equalise the distribution of retired household members’ income in urban areas. Third, however, these changes have only benefited a restricted number of persons. Benefits for rural migrants are low and most of the rural population has still no access to the new system. Important steps forward will be to raise the fund-pooling level, and to include nonfarming workers into the new system. Ce document analyse l’impact des changements survenus dans les institutions sociales chinoises — à savoir le système de sécurité sociale formelle et informelle — sur l’inégalité des revenus. L’auteur procède à une décomposition des inégalités en comparant des données d’enquêtes auprès des ménages réalisées en 1988 et en 1995. L’année 1992 ayant marqué un tournant décisif en Chine, avec le rôle accru des mécanismes de marché, la comparaison de ces deux périodes fait apparaître des évolutions sensibles au sein des institutions sociales et met en évidence leurs conséquences en matière d’inégalité des revenus. Cette analyse comparative apporte un éclairage utile sur les problématiques actuelles d’inégalités en Chine. Elle s’intéresse tout d’abord aux conséquences de ces évolutions sur l’inégalité des revenus dans le système de sécurité sociale fondé sur la famille. Elle s’attache ensuite à la contribution potentielle des réformes du système de sécurité sociale pour faire face aux inégalités croissantes. Trois grands résultats émergent de cette recherche : i) le système de sécurité sociale fondé sur la famille perd de son importance, du fait notamment de l’évolution de la structure des emplois au sein des ménages, qui aggrave nettement l’inégalité des revenus ; ii) l’introduction d’un nouveau système de sécurité sociale formelle favorise l’égalisation des revenus des membres retraités dans les ménages urbains ; iii) mais ces évolutions n’ont profité qu’à un nombre restreint d’individus. Les bénéfices pour les migrants des zones rurales sont faibles et, pour l’essentiel, la population rurale n’a toujours pas accès à ce nouveau système. Deux mesures contribueront à améliorer la situation — l’augmentation du niveau des fonds gérés en commun et l’intégration des travailleurs non agricoles dans le nouveau système.
    Date: 2005–04
  18. By: Alessandro Goglio
    Abstract: One area where spending discipline will become increasingly important in Hungary is health care. This paper describes the structure of the health care system, highlights outstanding weaknesses and considers ways to make financing more stable and sustainable. The slow progress in modernising the health care system is reflected in the low efficiency of hospitals, excessive recourse to inpatient care and heavy prescription of drugs by doctors. The paper discusses ways to modernise the hospitals, including options for giving them more scope in managing resources and greater incentives to introduce efficiency enhancing improvements. To help reduce unnecessary use of inpatient services, mechanisms are suggested for strengthening the “gatekeeping” function of general practitioners and for reinforcing controls over treatment decisions. The paper also considers ways to contain the cost of subsidies to pharmaceutical companies. <P>A la rercherche de l'efficience La santé est l’un des secteurs où la maîtrise des dépenses va devenir de plus en plus importante. Le présent document décrit la structure du système de soins de santé, met en lumière ses principales faiblesses et examine les moyens de stabiliser et de pérenniser son financement. La lenteur des progrès accomplis dans la voie de la modernisation du système de soins de santé se traduit par un manque d’efficience des hôpitaux, un recours excessif aux soins hospitaliers et une prescription abusive de médicaments. Diverses pistes sont envisagées pour moderniser les hôpitaux, consistant notamment à leur laisser plus de latitude pour gérer leurs ressources et à les inciter davantage à améliorer leur efficience. Afin d’optimiser l’utilisation des services hospitaliers, des mécanismes sont proposés pour renforcer la fonction de filtrage exercée par les médecins généralistes et pour contrôler plus efficacement les décisions thérapeutiques. Enfin, les moyens d’endiguer le coût des transferts au profit des sociétés pharmaceutiques seront examinés.
    Keywords: health, OECD, Hungary, transition economies, santé, OCDE, Hongrie, économie en transition
    JEL: I1
    Date: 2005–09–29
  19. By: Helena Marques (Loughborough University)
    Abstract: This paper applies the concept of trade creation and diversion to immigration into the EU-15 in the 1980s and 1990s. In particular, the 1990s process of East-West integration, culminating in the May 2004 enlargement, could potentially create immigration from the new member countries and at the same time divert migration from non-EU countries. In this context, the question this paper tries to answer is fundamentally whether the extension of the EU Single Market to the new member countries has the potential to crowd-out non-EU immigrants. The analysis is carried out using trend analysis, Truman shares, and panel data gravity models. The results are quite robust to a range of regression methods, model specifications, dependent variables, and time periods. They broadly support the migration creation hypothesis, but the evidence on the migration diversion hypothesis is mixed. There is evidence of some diversion away from other non-member European countries, such as ex-USSR and ex-Yugoslavia countries, in favour of the new Central and Eastern European members. However, the evidence of diversion away from non-European countries is much weaker, if at all existent. The high impact of a common language, when compared to distance or even a common border, may help preserving migration channels from outside Europe. Within Europe, shorter distances and common borders become more relevant.
    Keywords: gravity model, migration creation and diversion, EU enlargement
    JEL: F15 F16 F22 J61
    Date: 2005–04
  20. By: Ansgar Belke (University of Hohenheim and IZA Bonn); Frank Baumgärtner (University of Hohenheim); Friedrich Schneider (University of Linz and IZA Bonn); Ralph Setzer (University of Hohenheim)
    Abstract: This paper empirically investigates the differences in the motives of raising privatisation proceeds for a panel of EU countries from 1990 to 2000. More specifically, we test whether privatisations can be mainly interpreted (a) as ingredients of a larger reform package of economic liberalisation in formerly overregulated economies, (b) as a reaction to an increasing macroeconomic problem pressure and (c) as a means to foster growth and increase tax income and relax the fiscal stance with an eye on the demands by integration of economic and financial markets. Whereas we are able to corroborate claim (a) only partly, we gain consistent evidence in favour of claims (b) and (c).
    Keywords: European Union, panel analysis, partisan theory, privatisation proceeds, state-owned enterprises
    JEL: H42 E62 L33
    Date: 2005–09
  21. By: Dorota Kawiorska
    Abstract: A project aimed at presenting initial results from the implementation of the System of Health Accounts has been carried by the Health Policy Unit at the OECD and experts from thirteen member countries. The results are presented in the form of a comparative study (OECD Health Working Papers No. 16) and a set of OECD Health Technical Papers presenting individual country studies. This volume is the tenth in this series, presenting the Polish SHA-based health accounts. L’Unité des politiques de santé de l’OCDE et des experts originaires de treize pays Membres ont mené un projet visant à rendre compte des premiers résultats de la mise en œuvre du Système de comptes de la santé (SCS). Ces résultats se présentent sous la forme d’une étude comparative (document de travail sur la santé n° 16 de l’OCDE) et d’un ensemble de rapports techniques sur la santé contenant des études par pays. Ce volume est le dixième de la série, il examine les comptes de la santé fondés sur le SCS en Pologne.
    JEL: H51 I10
    Date: 2004–08–17
  22. By: Mihalyne Hajdu; Maria Manno
    Abstract: A project aimed at presenting initial results from the implementation of the System of Health Accounts has been carried by the Health Policy Unit at the OECD and experts from thirteen member countries. The results are presented in the form of a comparative study (OECD Health Working Papers No. 16) and a set of OECD Health Technical Papers presenting individual country studies. This volume is the fifth in this series, presenting the Hungarian SHA-based health accounts. L’Unité des politiques de santé de l’OCDE et des experts originaires de treize pays Membres ont mené un projet visant à rendre compte des premiers résultats de la mise en œuvre du Système de comptes de la santé (SCS). Ces résultats se présentent sous la forme d’une étude comparative (document de travail sur la santé n° 16 de l’OCDE) et d’un ensemble de rapports techniques sur la santé contenant des études par pays. Ce volume est le cinquième de la série, il examine les comptes de la santé fondés sur le SCS en Hongrie.
    JEL: H51 I10
    Date: 2004–09–22
  23. By: Sumon Kumar Bhaumik (Brunel Business School, WDI and IZA Bonn); Jeffrey B. Nugent (University of Southern California)
    Abstract: Although economic agents routinely face various types of economic uncertainty, their effects are often unclear and hard to assess, in part due to the absence of suitable measures of uncertainty. Because of the numerous and very substantial institutional changes that people in the transition economies of Central and Eastern Europe experienced during the last two decades, these countries are excellent candidates for examining the effects of uncertainties on various kinds of behavior. During their periods of uncertainty, moreover, these countries have experienced sharply falling fertility rates. Some have argued that these two phenomena are linked but others have remained skeptical in view of the fact that the evidence is largely confined to the macro level. This paper demonstrates the existence of such a link at the micro level using two different types of uncertainty measures based on GSOEP data from Eastern (and for comparison purposes also Western) Germany for the years 1992-2002. The results suggest that employment uncertainty (but not financial uncertainty) was considerably greater in Eastern Germany during its transition than in Western Germany and had a highly nonlinear effect on the probability of a birth in any period. The result is rather robust to differences in specification and suggests that the higher employment uncertainty in East Germany in the transition could have contributed significantly to the sharp fall and unusually low level of its fertility. In view of the results, we argue that an options based theory is perhaps a richer analytical paradigm for a discussion of fertility decisions in a rapidly changing environment than the traditional Beckerian theory.
    Keywords: falling fertility, uncertainty, Germany
    JEL: J13 J22 D81
    Date: 2005–09
  24. By: Philip Hemmings
    Abstract: The Hungarian government has recently been focusing on innovation policy as part of a wider campaign to improve the business environment. This paper first underscores the importance of a good general business climate in encouraging both formal and informal R&D activity as well as ensuring Hungary benefits from the international diffusion of innovation. In examining specific innovation policies, the new National Innovation System is described and an assessment is made of the National Innovation Fund and the Innovation Contribution used to fund it. Assessment of changes in R&D tax allowances and in the strategy for giving out grants for research is also made. The paper also looks at regulatory reform to improve industry-science links, including the government’s recent legislative changes that make it easier for universities to set up spin-off companies. The final section considers what further reforms are needed to help tertiary and compulsory education become more conducive to innovation and to encourage the deepening of human capital in general. <P>La politique d'innovation en Hongrie Le gouvernement hongrois a récemment mis l'accent sur la politique d'innovation dans le cadre plus vaste d'une campagne destinée à améliorer l'environnement des entreprises. Cet document souligne à quel point il est important que le climat général des affaires soit bon pour encourager les activités formelles de recherche-développement (R-D) et les types plus informels d'innovation, et pour que la Hongrie puisse tirer parti de la diffusion internationale de l'innovation. Dans le cadre de l'examen des dispositifs spécifiques de promotion de l'innovation, nous décrivons le nouveau Système national d'innovation et nous évaluons le Fonds national pour l'innovation, ainsi que la Contribution à l'innovation utilisée pour le financer. Nous examinons également l'évolution des mécanismes de crédits d'impôt et de la stratégie d'attribution des subventions de recherche. Cet document aborde ensuite les mesures de réforme de la réglementation axées sur le resserrement des liens entre entreprises et milieux scientifiques, notamment les dispositions législatives adoptées récemment qui facilitent la création par les universités d'entreprises issues de la recherche. Dans la dernière partie, nous nous demandons quelles sont les réformes complémentaires nécessaires pour que l'enseignement supérieur et l'enseignement obligatoire favorisent davantage l'innovation et le renforcement du capital humain en général.
    Keywords: Hungary, Hongrie, research and development, recherche-développement, innovation policy, education policy, politique innovation, politique enseignement
    JEL: I20 O30 P20
    Date: 2005–09–28
  25. By: Oldrich Kyn (Boston University)
    Abstract: This short paper was presented during discussion at the CESES Conference in Florence 1966. The first part describes and criticize the way prices were determined centraly in Czechoslovakia and other Soviet-type economies. The second part outlines the role of prices and planning in different economic systems.
    Keywords: Socialism, Soviet-type economy, Economic Systems, Planning and Market Mechanism, Czechoslovakia, Lange-Lerner model
    JEL: O P
    Date: 2005–10–08
  26. By: Håkansson, Peter (European Institute of Japanese Studies); Sjöholm, Fredrik (European Institute of Japanese Studies)
    Abstract: Bosnia and Herzegovina has experienced a turbulent post-independence transition. It can be argued that the level of trust is likely to have been negatively affected by this turbulence and that it is important to restore trust to achieve sustainable political and economic development. This paper looks at trust in Bosnia and Herzegovina and puts a special focus on the role of ethnicity. We find generalized trust to be low in Bosnia and Herzegovina and it seems to have declined in recent years. Moreover, generalized trust is negatively affected by the degree of ethnic heterogeneity in the region. However, a further and more detailed examination of trust reveals a more complex relationship between ethnicity and trust: people tend to show low levels of trust in all other people irrespective of their ethnic belongings. We argue that ethnic distribution might capture some other regional specific characteristics that also affect the level of trust. One possibility is that ethnically heterogeneous regions tended to be severely affected by the war and that this has negatively affected the level of trust towards all people outside of a person’s family.
    Keywords: Trust; Social Capital; Ethnicity; Southeast Europe; Bosnia and Herzegovina
    JEL: O17 P20 Z13
    Date: 2005–10–06
  27. By: Jean-Louis Arcand (CERDI-CNRS, University of Auvergne & European Development Network); Béatrice d'Hombres (CERDI-CNRS, University of Auvergne & University of Padua); Paul Gyselinck (CERDI-CNRS, University of Auvergne)
    Abstract: This paper focuses on instrument choice while consistently estimating the returns to education in Vietnam. Using data culled from the 2 rounds of the Vietnam Living Standards Survey (VLSS), we explore different sets of exogenous instruments that rely on demand and supply side sources of variation in schooling as well as the matrix of instruments proposed by Hausman and Taylor (1981). Instrument validity tests suggest that many variables do not satisfy the necessary conditions allowing them to be used as instruments. As in several studies, we find that IV estimates of the returns to education are substantially higher than the corresponding OLS estimate. We show how the Hausman-Taylor matrix of instruments, when combined with other instruments, may be a useful way of consistently estimating an average return to education rather than a local average treatment effect (Angrist, 1994).
    Keywords: ate of return, instrumental variables procedures, Instrument choice, Hausman-Taylor estimator, Hahn-Hausman test, Vietnam
    JEL: J31 I21 C30
    Date: 2005–10–11
  28. By: Irina Peaucelle
    Abstract: In this text the principles of planning such as they were formulated by the creators of these economic theories are recalled. I analyze also their transformation one century later and new application in production and management. I characterize the mechanisms of macroeconomic forecast, of the companies strategic planning and the regulation of the companies through the financial instruments. ### [résumé : Dans ce texte les principes de planification tels qu'ils ont été formulés par les créateurs de ces théories économiques sont rappelés pour analyser leur transformation et application dans l'organisation de production et la gestion d'aujourd'hui. Il s'agit des mécanismes de prévision macroéconomique, de la planification stratégique des entreprises et de la régulation de l'activité des entrepris à travers les instruments financiers.] ###
    Date: 2005
  29. By: James A. Robinson (Department of Government, Harvard University); Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology)
    Abstract: Why do soft budget constraints exist and persist? In this paper we argue that the prevalence of soft budget constraints can be best explained by the political desirability of softness. We develop a political economy model where politicians cannot commit to policies that are not ex post optimal. We show that because of the dynamic commitment problem inherent in the soft budget constraint, politicians can in essence commit to make transfers to entrepreneurs which otherwise they would not be able to do. This encourages such entrepreneurs to vote for them. Though the soft budget constraint may induce economic inefficiency, it may be politically rational because it influences the outcomes of elections. In consequence, even when information is complete, politicians may fund bad projects which they anticipate they will have to bail out in the future.
    Keywords: Political Economy; Investment; Development
    JEL: H20 H50 O20
    Date: 2005–08–06
  30. By: Sigurdson, Jon (European Institute of Japanese Studies)
    Abstract: This report provides insights on the expansive development in Shanghai of human resources in higher education and the creation of a huge web of incubators, university science parks, district industrial parks, and various specialized development zones. With a total population of some 17 million and a GDP per capita of around US$3,000 the city planners expects that 2.5 per cent of its GDP will in 2005 be used for research and development. FDI in high technology and returning scientists in microelectronics illustrate the ambitions of Shanghai to become a knowledge city. More than 140 foreign-controlled R&D laboratories have already been established in Shanghai. Their number and sizes will increase and also involve more basic research as the IPR regime improves. Shanghai will emerge as innovative knowledge region on the world stage that before 2020 will be competing with other global knowledge regions such as the Oxford-London-Cambridge triangle by attracting talent and creating new knowledge. This report highlights a rapid and continued expansion of higher education in Shanghai that now has 59 colleges and universities with a total enrolment in 2004 of 600,000 students. The City has 10 universities which are included in the national list of Top-100 Universities which have been selected by the Ministry of Education to receive special treatment and extra resources. Three of a dozen Chinese universities with expectation to become recognized as world-famous research universities are located in Shanghai – Fudan University, Tongji University and Shanghai Jiaotong University. Fudan University Science Park and the School of Microelectronics at Fudan University provide examples of the changing character of the university system in Shanghai Linked to the development of human resources is a web of technological infrastructure of which Zhangjiang High-Technology Development Zone provides an illustration of ongoing efforts to integrate industrial production, research and university education. Shanghai is attracting overseas entrepreneurs in its advancing semiconductor industry, exemplified by SMIC with one of its bases in Zhangjiang High-Technology Development Zone, Shanghai is also attracting returning scientists to expand its IC knowledge base as exemplified by the School of Microelectronics at Fudan University, which has 600 graduate students.
    Keywords: Human factors; Universities; Fudan University; Regional innovation System (RIS) Semiconductors; High Technology Parks; Overview of Science and Technology
    JEL: I18 O31 O32 R58
    Date: 2005–10–06
  31. By: Luvsanjamts, Lkham (Mongolian University of Science and Technology); Söderberg, Marie (European Institute of Japanese Studies)
    Abstract: In Mongolia with 2.5 million inhabitants, population density is extremely low. It has a sever climate. Three quarters of the countries territory are grasslands, with the remaining area being deserts or mountain areas. This description does not depict Mongolia as a very attractive place, but somehow, however, it managed to attract considerable amounts of foreign aid workers. Today Mongolia is the fifth most aid-dependent country in the world. The high dependency rate on foreign aid, raises the question if this limits the Mongolian policy options. Is high aid dependency connected to weak ownership of ones own development? The purpose of this paper is to analyse the concepts of ownership and partnership as well as institutional change in the aid relation with Mongolia. We will start by looking at Mongolia as a recipient. This will be followed by Mongolian development strategies and shifts taking place over time as well as processes of receiving aid. Then we will also compare Japanese and Swedish aid to Mongolia in the field of human resource development. We will start by looking at Japan as a donor and its processes for giving aid to Mongolia. We will have a case study in the field of human resource development. Then we will look at Swedish policy and processes for giving aid to Mongolia and make a case study of Swedish aid for human resource development.
    Keywords: Japanese aid; Nordic aid; ODA for Mongolia; Japan-Mongolia; Sweden-Mongolia; partnership; ownership; institutional change
    JEL: A10 D63 F35 I38 N15 N35 O53 R58
    Date: 2005–10–06

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