nep-tra New Economics Papers
on Transition Economics
Issue of 2006‒12‒16
eight papers chosen by

  1. Can China’s Growth be Sustained? A Productivity Perspective By Zheng, Jinghai; Bigsten, Arne; Hu, Angang
  2. Foreign Direct Investment in China: Reward or Remedy? By Olena Havrylchyk; Sandra Poncet
  3. The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data By Charles Yuji Horioka; Junmin Wan
  4. Foreign direct investment and economic growth: Empirical evidence from Russian regions By Ledyaeva , Svetlana; Linden, Mikael
  5. Forecasting market crashes: further international evidence By Jokipii, Terhi
  6. Estimation of Individual Demand for Alcohol By Yuriy Andrienko; A. Nemtsov
  7. Developing and Transition Economies in the Late 20th Century: Diverging Growth Rates, Economic Structures, and Sources of Demand By Codrina Rada; Lance Taylor
  8. Dictators, Repression and the Median Citizen: An “Eliminations Model” of Stalin’s Terror (Data from the NKVD Archives) By Paul R. Gregory; Philipp J.H. Schr oder; Konstantin Sonin

  1. By: Zheng, Jinghai (Department of Economics, School of Business, Economics and Law, Göteborg University); Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University); Hu, Angang (Center for China Studies, School of Public Policy and Management)
    Abstract: China’s unorthodox approach to economic transition has resulted in sustained high growth. However, in recent years Chinese economists have increasingly referred to the growth pattern as “extensive”, generated mainly through the expansion of inputs. Our investigation of the Chinese economy during the reform period finds that reform measures often resulted in one-time level effects on TFP. China now needs to adjust its reform program towards sustained increases in productivity. Market and ownership reforms, and open door policies have improved the situation under which Chinese firms operate, but further institutional reforms are required to consolidate China’s move to a modern market economy. <p>
    Keywords: Growth; Productivity; China
    JEL: D24 O47 O53
    Date: 2006–11–28
  2. By: Olena Havrylchyk; Sandra Poncet
    Abstract: In his book "Selling China" Huang (2003) states that a high level of foreign direct investment (FDI) in China is not necessarily a sign of strength, but can be partly attributed to the distortive nature of state policies that put restrictions on private enterprises. The Chinese financial system allocates resources to the least efficient firms – state-owned enterprises – while denying the same resources to Chinese private enterprises, forcing them to look for a foreign investor. We propose to analyze determinants of FDI in Chinese provinces to test the above hypothesis. We control for traditional determinants of FDI such as market access, labor costs, productivity, infrastructure, reform advances and banking sector size in order to assess the impact of inter-provincial heterogeneity in terms of the access that private enterprises have to credit.
    Keywords: China; banking sector; FDI; government intervention; banking system; credit; monetary policy; international integration
    JEL: F15 F22 G28
    Date: 2006–08
  3. By: Charles Yuji Horioka; Junmin Wan
    Abstract: In this paper, we conduct a dynamic panel analysis of the determinants of the household saving rate in China using a life cycle model and panel data on Chinese provinces for the 1995-2004 period from China's household survey. We find that China's household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate, and (in some cases) the real interest rate and the inflation rate. However, we find that the variables relating to the age structure of the population usually do not have a significant impact on the household saving rate. These results provide mixed support for the life cycle hypothesis, are consistent with the existence of inertia or persistence, and imply that China's household saving rate will remain high for some time to come.
    JEL: D12 D91 E21 J10
    Date: 2006–12
  4. By: Ledyaeva , Svetlana (BOFIT); Linden, Mikael (BOFIT)
    Abstract: Barro and Sala-I-Martin empirical framework of neoclassical Solow-Swan model is specified to determine the FDI impact on per capita growth in 74 Russian regions during period of 1996-2003. The Arellano-Bond GMM-DIFF methodology, developed for dynamic panel data models, is used in estimations. Results imply that in general FDI (or related investment components) do not contribute significantly to economic growth in Russia in the analyzed period. Regional growth in 1996-2003 is explained by the initial level of region’s economic development, the 1998 financial crisis, domestic investments, and exports. However some evidence of positive aggregate FDI effects in higher-income regions is relevant. Another interesting result is that natural resource availability seems to be growth-inducing in rich regions, while in poor regions it is not significant. We also found convergence between poor and rich regions in Russia. However FDI seems not to play any significant role in the recent growth convergence process among Russian regions.
    Keywords: foreign direct investment (FDI); Russian regional economy; and economic growth
    JEL: E22 F21 P27
    Date: 2006–12–14
  5. By: Jokipii, Terhi (Bank of Finland Research)
    Abstract: This paper studies the extent to which market crashes are predictable for a set of six countries, focusing in particular on possible differences between transition economies (The Czech Republic, Hungary and Poland) and mature markets (UK, US and EU). We estimate a set of individual country and pooled specifications to find that market crashes, in the broader sense, are predictable for all countries analysed. We additionally investigate the role that investor heterogeneity, proxied by trading volume, plays in this predictability and find some varying results between countries. For the Central and Eastern European Countries (CE3), an increase in trading volume relative to trend appears to have great predictive power, a result that is supportive of the theory of investor heterogeneity outlined in the relevant background studies. For the more mature markets (G5), on the other hand, market crashes appear more likely to follow a period of increased stock prices and returns, a result fitting a number of traditional theories, in particular the stochastic bubble model. Further analysis, allowing for time-varying coefficients, confirms the volume-crash relationship for the CE3 and provides preliminary evidence that macro news releases may additionally contribute to the predictability of market crashes.
    Keywords: aggregate market returns; skewness; trading volume; market crash
    JEL: C14 G12 G15
    Date: 2006–12–14
  6. By: Yuriy Andrienko (CEFIR); A. Nemtsov
    Abstract: Using individual data from RLMS, the longitudinal survey of the representative sample of the Russian population, we study static and dynamic models of demand for alcohol. We show the demand curve has traditional negative slope for any type of alcoholic drink: vodka, beer, and wine. We find substitution of moonshine for vodka with higher price on vodka and between vodka&beer with higher price on one of them. As a result of substitution vodka price has no impact on total ethanol consumption, while higher price on beer and wine reduce demand for ethanol. We also demonstrate that income has important effect on demand for alcoholic drinks. Risk to be drinker is rising with individual income. Higher income results in lower consumption of moonshine and in higher consumption of vodka, beer, and wine.
    Keywords: Alcohol; Demand; Russia
    JEL: I1 I18
    Date: 2006–01
  7. By: Codrina Rada; Lance Taylor
    Abstract: This study reviews the growth and development performance of developing countries in the latter part of the 20th century. Sustained growth among “successful” countries was accompanied by structural change in terms of output and labour share shifts, trade diversification, sustained productivity growth with some strong reallocation effects due to movements of labour from low to high productivity sectors. Neither the widely accepted “twin deficits” nor the “consumption-smoothing” behaviour views of macro adjustment seem to apply, though macroeconomic flexibility may be very important. Finally, neither human capital accumulation nor foreign direct investment are sufficient, by themselves, to stimulate growth.
    Keywords: economic development, structural change, comparative studies, development policy
    JEL: O11 O57
    Date: 2006–09
  8. By: Paul R. Gregory (University of Houston and Hoover Institution, Stanford University); Philipp J.H. Schr oder (Aarhus School of Business, Denmark); Konstantin Sonin (CEFIR/NES)
    Abstract: This paper sheds light on dictatorial behavior as exemplified by the mass terror campaigns of Stalin. Dictatorships – unlike democracies where politicians choose platforms in view of voter preferences – may attempt to trim their constituency and thus ensure regime survival via the large scale elimination of citizens. We formalize this idea in a simple model and use it to examine Stalin’s three large scale terror campaigns with data from the NKVD state archives that are accessible after more than 60 years of secrecy. Our model traces the stylized facts of Stalin’s terror and identifies parameters such as the ability to correctly identify regime enemies, the actual or perceived number of enemies in the population, and how secure the dictators power base is, as crucial for the patterns and scale of repression.
    Keywords: Dictatorial systems, Stalinism, Soviet State and Party archives, NKVD, OPGU,Repression
    JEL: P00 N44 P26
    Date: 2006–11

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