nep-tra New Economics Papers
on Transition Economics
Issue of 2007‒03‒17
seven papers chosen by
J. David Brown
Heriot-Watt University

  1. Sophisticated Discipline in a Nascent Deposit Market: Evidence from Post-Communist Russia By A. KARAS; W. PYLE; K. SCHOORS
  2. Accounting for Growth: Comparing China and India By Barry Bosworth; Susan M. Collins
  3. Russia's banking sector transition: Where to? By Vernikov , Andrei V.
  4. A Comparative Study on Landownership between China and England By Deng, Feng
  5. Vietnam’s Trade Liberalisation: Potential Impacts on Child Well-being By Nguyen, Anh; Jones, Nicola
  6. Comparative Analysis of the Relationship Between Poverty and Underground economy in the Highly developed, Transition and Developing Countries By Obayelu, Abiodun, Elijah; Uffort, Larry
  7. Labor Market Dynamics in Romania During a Period of Economic Liberalization By Benoit Dostie; David Sahn

    Abstract: Using a database from post-communist, pre-deposit-insurance Russia, we demonstrate the presence of quantity-based sanctioning of weaker banks by both firms and households. Evidence for the standard form of price discipline, however, is weak. This combination of findings is unusual within the context of the literature on market discipline. But it is consistent with depositors interpreting the deposit rate as a complementary proxy of otherwise unobserved bank-level risk. Testing this hypothesis, we estimate the deposit supply function and show that, particularly for poorly capitalized banks, interest rate increases exhibit diminishing, and eventually negative, returns in terms of deposit attraction.
    Keywords: market discipline, deposit market, Russia
    JEL: G21 O16 P2
    Date: 2007–01
  2. By: Barry Bosworth; Susan M. Collins
    Abstract: We compare the recent economic performances of China and India using a simple growth accounting framework that produces estimates of the contribution of labor, capital, education, and total factor productivity for the three sectors of agriculture, industry, and services as well as for the aggregate economy. Our analysis incorporates recent data revisions in both countries and includes extensive discussion of the underlying data series. The growth accounts show a roughly equal division in each country between the contributions of capital accumulation and TFP to growth in output per worker over the period 1978-2004, and an acceleration of growth when the period is divided at 1993. However, the magnitude of output growth in China is roughly double that of India at the aggregate level, and also higher in each of the three sectors in both sub-periods. In China the post-1993 acceleration was concentrated mostly in industry, which contributed nearly 60 percent of China’s aggregate productivity growth. In contrast, 45 percent of the growth in India in the second sub-period came in services. Reallocation of workers from agriculture to industry and services has contributed 1.2 percentage points to productivity growth in each country.
    JEL: F43 O1 O4
    Date: 2007–02
  3. By: Vernikov , Andrei V. (BOFIT)
    Abstract: This paper applies an analytical paradigm of institutional economics to the transition of the Russian banking sector, focusing on the interplay between ownership change and institutional change. We find that the state’s withdrawal from commercial banking has been inconsistent and limited in scope. To this day, core banks have yet to be privatized and the state has made a comeback as owner of the dominant market participants. We also look at the new institutions imported into Russia to regulate banking and finance, including rule of law, competition, deposit insurance, bankruptcy, and corporate governance. The unfortunate combination of this new institutional overlay and traditional local norms of behavior have brought Russia to an impasse – the banking sector’s ownership structure hinders further advancement of market institutions. Indeed, we may now be witnessing is a retreat from the original market.
    Keywords: banking sector reform; privatization; Russia; economic transition; institutional economics
    JEL: G21 G28 P34 P37
    Date: 2007–03–07
  4. By: Deng, Feng
    Abstract: By comparing the development of landownership in China and England, this paper explores what were behind their different trajectories. In particular, I examined the delineation of property rights, alienation of land, rent and tax, inheritance and accumulation of land. Feudal England was a combination of the Roman system and Anglo-Saxon tradition. From that very strict hierarchical structure England has experienced an evolution toward free land market. In contrast, since very early China has established a unique economic system that allowed free alienation of land, but it has been trying to check the development of land market and private property rights by various means, the most important of which is the strengthening and expanding of patriarchal clan system. The different development paths of China and England show the different responses of two different cultures, which are oriented toward family and individual, respectively, to the same problems related to landownership.
    Keywords: landownership; property rights; culture; institutions; China; England
    JEL: Q15 D23 N95 P52 N50
    Date: 1996–12
  5. By: Nguyen, Anh; Jones, Nicola
    Abstract: Following extensive economic and market reforms and more than a decade of negotiations, Vietnam became the latest country to accede to the World Trade Organization in November 2006. While it is expected that greater integration into the world economy will boost Vietnam’s economic growth and contribute to the country’s ongoing transition towards a market economy, there are concerns about potentially negative impacts on vulnerable sectors of the population, including remote rural populations, women and children. This paper examines the possible impacts of Vietnam’s trade liberalisation on children in poor communities. It focuses on three key aspects of child well-being – child work (domestic and extra-household), educational attainment and health status – drawing on data from the first wave of the Young Lives Vietnam longitudinal survey on childhood poverty. Our main findings point to significant differences based on ethnicity, household poverty status and vulnerability to declining living standards, parental (especially maternal) education levels, children’s involvement in work activities, and access to public services.
    Keywords: Childwelfare; Vietnam; WTO; Education; Child Labour; Young Lives
    JEL: F15 I31 F16 I20
    Date: 2006
  6. By: Obayelu, Abiodun, Elijah; Uffort, Larry
    Abstract: Abstract This study was undertaken with the goal of analyzing the relationship between poverty rates and size of underground economy in the developed and developing countries and exploring whether there is a link between them. There are technical problems in linking them in that getting information from those who have undertaken underground activities are difficult. Secondary data were used to established hypothetical relationship and primary data for the empirical analysis. The results of the descriptive analysis revealed that underground economy and poverty have no geographical boundary. Although the incidence, and the size differs from one country to another. The incidences of poverty and shadow economy are larger in the poor (developing and transition) countries when compared with the highly developed countries. There is also a causal link between poverty and underground economy especially in the developing and transition countries with common factors such as high unemployment and corruption rates affecting both poverty and underground economy. High social security system and tax burden were found to account for the high rates of underground economies in the highly developed countries even with people’s awareness of its implications when caught. In developing countries like Nigeria, most people embark on unlicensed (and hence illegal) micro-enterprises / activities like production and sale of pure water, yoghurts, cutting down of economic trees, illegal running of private schools, drug trafficking, prostitution, black-market currency exchange, fake disclosure of actual business profit, in order to increase their levels of income by tax evasion or avoidance in the name of surviving. Government can reduce this menace to certain extent by engaging itself in sustainable poverty reduction activities, tax policy changes, embarking anti-corruption campaign and increase in job opportunities within the formal economy. Key words: Poverty, underground economy, developed, transition and developing countries
    Keywords: Poverty; underground economy; developed; transition and developing countries
    JEL: P51 P52
    Date: 2007–03–06
  7. By: Benoit Dostie (IEA, HEC Montréal); David Sahn
    Abstract: In this paper, we estimate a model of labor market dynamics among individuals in Romania using panel data for three years, 1994 to 1996.Our motivation is to gain insight into the functioning of the labor market and how workers are coping during this period of economic liberalization and transformation that began in 1990. Our models of labor market transitions for men and women examine changing movements in and out of employment, unemployment, and self-employment, and incorporate specific features of the Romanian labor market, such as the social safety net. We take into account demographic characteristics, state dependence, and individual unobserved heterogeneity by modeling the employment transitions with a dynamic mixed multinomial logit.
    Date: 2006–12

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