nep-tra New Economics Papers
on Transition Economics
Issue of 2006‒04‒01
twelve papers chosen by
Tono Sanchez
Universitat de Valencia

  1. Does Privatization Hurt Workers? Lessons from Comprehensive Manufacturing Firm Panel Data in Hungary, Romania, Russia and Ukraine By J. David Brown; John S. Earle; Álmos Telegdy
  2. Competitive Pressure in Transition: A Role for Trade and Competition Policies? By Rosen Marinov
  3. Energy Regulation and Legislative Development in the State Duma of Russia: A Spatial Analysis of Roll Call Votes with the Optimal Classification Model, Russia 1994-2003 By Theocharis N. Grigoriadis; Benno Torgler
  4. Sequencing of Capital Account Liberalization - Japan's experiences and their implications to China By Kenji Aramaki
  5. FDI inflows to the Transition Economies in Eastern Europe: Magnitude and Determinants By Johnson, Andreas
  6. Does Reporting Heterogeneity bias The Measurement of Health Disparities? By Teresa Bago d'Uva; Eddy van Doorslaer; Maarten Lindeboom; Owen O'Donnell; Somnath Chatterji
  7. Do Population Control Policies Induce More Human Capital Investment? Twins, Birthweight, and China's 'One Child' Policy By Mark R. Rosenzweig; Junsen Zhang
  8. Environmental Policy and the Location of Foreign Direct Investment in China By Christer Ljungwall; Martin Linde-Rahr
  9. Rent Extraction by Large Shareholders: Evidence Using Dividend Policy in the Czech Republic By Jan Hanousek; Jan Bena
  10. The Characteristics of Business Cycles in Selected European Emerging Market Economies By Fabrizio Carmignani
  11. Does rising landlessness signal success or failure for Vietnam’s agrarian transition? By van de Walle, Dominique; Ravallion, Martin
  12. Some Aspects of Recent Trade Developments in South-East Europe By Vitalija Gaucaite-Wittich

  1. By: J. David Brown; John S. Earle; Álmos Telegdy (Institute of Economics, Hungarian Academy of Sciences)
    Abstract: We analyze the effects of privatization on firm-level wages and employment in four transition economies. Contrary to workers' fears, our fixed effect and random trend estimates imply little effect of domestic privatization, except for a slight negative effect in Russia, and they provide some evidence of positive foreign effects on both wages and employment in all four countries. The negligible employment impact of domestic privatization results from effects on efficiency and scale that are large, positive, but offsetting in Hungary and Romania, and from small effects of both types in Russia and Ukraine. The positive employment and wage bill consequences of foreign ownership result from a substantial scale-expansion effect that dominates the efficiency effect.
    Keywords: privatization, employment, wages, foreign ownership, Hungary, Romania, Russia, Ukraine
    JEL: D21 G34 J23 J31 L33 P31
    Date: 2006–01–12
  2. By: Rosen Marinov (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: This paper investigates the effects of trade reforms and antitrust enforcement on the pricing behavior of firms, shedding light on the respective contributions of these policy instruments to the shaping of competitive markets. To this end, we use a rich panel data set of more than 25,000 manufacturing firms from Bulgaria, the Czech Republic, Estonia, Hungary, Poland, the Slovak Republic and Slovenia, spanning a five-year period. We find a positive and statistically significant relationship between domestic firms' mark-ups and industry protection, as reflected in MFN and trade-weighted import tariffs. The toughness of competition policy enforcement, captured by the number of final instance decisions delivered by national antitrust authorities and an index developed by the EBRD, has a negative impact of greater magnitude than tariff protection. We also test for the significance of enacting major legislative amendments with regard to competition policy in the studied countries, as well as for differential effects in export-oriented and import-competing industries.
    Keywords: Competition policy; Mark-up; Import penetration; Transitional economies
    Date: 2006–03–29
  3. By: Theocharis N. Grigoriadis; Benno Torgler
    Abstract: This paper investigates the role of the State Duma of Russia in energy regulation between 1994 and 2003. We applying Poole’s optimal classification model of roll call votes using an ordered probit model to show impact of partisan, bureaucratic, social and economic determinants on energy law reform in the first decade of Russia’s democratic transition. Our findings suggest that reforms strongly depend on negotiations, compromises and interest equilibrations. The cohesion and accountability of Russian political parties cannot be explained in terms of ideology; the traditional Left-Right axis does not hold in Russian legislative politics. Thus, our results suggest that Russia’s executive federalism and the personal interests of powerful parliamentary actors have the lead in developing competitive market structures in oil, gas and electricity markets. The paradoxical conclusion is that in this turbulent institutional setting State Duma functions as a de facto regulator by contributing to economic transparency and advancing energy law reform under conditions of democratic representation and political competition.
    Keywords: energy regulation; energy roll law reform; roll call votes; legislative politics; State Duma; Russia
    JEL: Q40 D72 K23 P27 P37 P31 R11
    Date: 2006–03
  4. By: Kenji Aramaki (University of Tokyo)
    Abstract: This paper reviews Japan's experiences with the liberalization of capital accounts, and tries to identify their implications to China. Liberalization of capital accounts proceeded very gradually in Japan from the adoption of a system of general prohibition of foreign exchange and capital transactions in 1949 through the shift to a generally liberalized system in 1979. Meantime, Japan was exposed to the turbulent international financial markets due to the move from a peg to a float system of its currency and two oil crises. In response to the massive short-term capital flow in and out of the country caused by these shocks, Japan, which was generally headed for the liberalization of the capital accounts, was frequently forced to resort to foreign exchange and capital control measures to stabilize the market. These experiences by Japan seems to give valuable implications to China, for which significant enhancement of the flexibility of its exchange rate movement under the recently revised formal exchange rate regime and the liberalization of capital accounts continue to be important policy agenda in the years to come.
    Keywords: trade liberialiazation, China, Japan, capital accounts, China, peg system, float system, foreign exchange,
    JEL: F13 F14 F31
    Date: 2006–12
  5. By: Johnson, Andreas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper shows that there are large differences in the volume of FDI that individual European transition economies have attracted and tries to find determinants that can explain this distribution of FDI, using panel data. This paper makes a distinction between ‘traditional’ determinants based on the motive for FDI and ‘transition-specific’ determinants. The empirical analysis contributes to earlier research by separating the transition economies into two groups, CEE and CIS countries. The CEE group consists of countries with a much higher GDP per capita than the CIS group, and this is reflected in the observation that the FDI flows to the CEE are primarily driven by a market-seeking motive while resource-seeking investment can explain the distribution of FDI among the CIS economies. This paper also concludes that transition performance and the choice of primary privatisation method are important in explaining FDI inflows to the transition economies. The analysis only finds weak evidence for efficiency-seeking FDI into the region.
    Keywords: foreign direct investment; Eastern Europe; transition; privatisation
    JEL: F21 F23 P21
    Date: 2006–03–29
  6. By: Teresa Bago d'Uva (University of York); Eddy van Doorslaer (Erasmus Universiteit Rotterdam and Netspar); Maarten Lindeboom (Vrije Universiteit Amsterdam, HEB, IZA, and Netspar); Owen O'Donnell (University of Macedonia, and Netspar); Somnath Chatterji (World Health Organization)
    Abstract: Heterogeneity in reporting of health by socio-economic and demographic characteristics potentially biases the measurement of health disparities. We use anchoring vignettes to identify reporting heterogeneity in self reports on health for Indonesia, India and China. Correcting for reporting heterogeneity tends to reduce estimated disparities in health by age, sex (not Indonesia), urban/rural and education (not China) and to increase income disparities in health. Overall, while homogeneous reporting by socio-demographic group is significantly rejected, the results suggest that the size of the reporting bias in measures of health disparities is not large.
    Keywords: health measurement; vignettes; self-reported health; reporting heterogeneity
    JEL: D30 D31 I10 I12
    Date: 2006–03–28
  7. By: Mark R. Rosenzweig (Economic Growth Center, Yale University); Junsen Zhang (Chinese University of Hong Kong)
    Abstract: In this paper we use a new data set describing households with and without twin children in China to quantify the trade-off between the quality and quantity of children using the incidence of twins that for the first time takes into account effects associated with the lower birthweight and closer-spacing of twins compared to singleton births. We show that examining the effects of twinning by birth order, net of the effects stemming from the birthweight deficit of twins, can provide upper and lower bounds on the trade-off between family size and average child quality. Our estimates indicate that, at least in one area of China, an extra child at parity one or at parity two, net of birthweight effects, significantly decreases the schooling progress, the expected college enrollment, grades in school and the assessed health of all children in the family. We also show that estimates of the effects of twinning at higher parities on the outcomes of older children in prior studies do not identify family size effects but are confounded by inter-child allocation effects because of the birthweight deficit of twins. Despite the evident significant trade-off between number of children and child quality in China, however, the findings suggest that the contribution of the one-child policy in China to the development of its human capital was modest.
    Keywords: Family size, Birthweight, Schooling, China
    JEL: J13 I12 I21
  8. By: Christer Ljungwall (China Center of Economic Research, Peking University); Martin Linde-Rahr (Department of economics and statistics, Goteborg University)
    Abstract: This paper introduce an environmental policy variable, i.e., the provincial pollution levy paid by an average firm, and measure its impact on the foreign investors' location decisions over the 1987 to 1998 period. We argue that less developed regions in China are more inclined to sacrifice environmental policies as an instrument to attract foreign direct investment (FDI). National level results show that stringent environmental policies have insignificant effect on foreign investors' location decision, and that transportation, economic growth, and regional location matters more. At the provincial level stringent environmental policies reduce FDI in the less developed regions.
    Keywords: Foreign Direct Investment, Environmental policy
    JEL: C23 E24 F21 H25 O53 Q28
    Date: 2005–12
  9. By: Jan Hanousek; Jan Bena
    Abstract: Using cross-sectional analysis of corporate dividend policy we show that large shareholders extract rents from forms and expropiate minority shareholders in the weak corporate governance environment of an emerging economy. By comprising divideneds paid across varying corporate ownership structures- concentration, type, and domicile of ownership - we quantify these effects and reveal that they are substantial. We find that the target payout ratio for firms with majotiry ownership is low but that the prescence of a significant minority shareholder increases the target payout ratio and hence precludes a majority owner from extracting rent. In contrast to other studies from developed markets, our unique dataset from teh Czech Republic for the period 1996-2003 permits us to take account of teh endogencity of ownership.
    Date: 2006–03
  10. By: Fabrizio Carmignani (United Nations Economic Commission for Europe)
    Abstract: This paper analyses the business cycles of selected European emerging market economies (EME) in terms of their statistical properties and degree of synchronization with the euro area, and discusses the associated policy implications. The evidence suggests that in these economies cyclical fluctuations are wider and more frequent than in the euro area, that there is moderate consumption smoothing, and that technological shocks and labour hoarding are driving labour-market dynamics. The macroeconomic policy stance is not significantly countercyclical. Furthermore, the degree of synchronization of domestic business cycles with the business cycle of the euro area is weak in all the EME except Hungary and Poland.
    Keywords: business cycles, European macroeconomics, emerging market economies
    JEL: E32 E60 P24
    Date: 2005–12
  11. By: van de Walle, Dominique; Ravallion, Martin
    Abstract: In the wake of reforms to establish a free market in land-use rights, Vietnam is experiencing a pronounced rise in rural landlessness. To some observers this is a harmless by-product of a more efficient economy, while to others it signals the return of the pre-socialist class-structure, with the rural landless at the bottom of the economic ladder. The authors ' theoretical model suggests that removing restrictions on land markets will increase landlessness among the poor, but that there will be both gainers and losers, with uncertain impacts on aggregate poverty. Empirically, they find that landlessness is less likely for the poor and that the observed rise in landlessness is poverty reducing on balance. However, there are marked regional differences, notably between the north and the south.
    Keywords: Land Use and Policies,Rural Land Policies for Poverty Reduction,Rural Poverty Reduction,Rural Development Knowledge & Information Systems,Climate Change
    Date: 2006–04–01
  12. By: Vitalija Gaucaite-Wittich (United Nations Economic Commission for Europe)
    Abstract: This paper aims to provide some insight into the changing potential of trade for the south-east European countries, including Turkey. The study presents a comprehensive analysis of changes in south-east European trade flows over the past ten years (1995-2004) and investigates the region’s factor endowments. It also draws attention to policy measures aimed at addressing challenges in the increasingly competitive global economy. On most of these issues the study draws a comparison with the pre-accession experience of the new EU member countries from eastern Europe (EU-8). The study stresses the importance of openness to trade for the economic development of the region and the need to work together within cooperative arrangements.
    Keywords: South-east Europe, Western Balkans,international trade, factor intensity, revealed comparative advantage
    JEL: F15 P27 P52
    Date: 2005–12

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