nep-tra New Economics Papers
on Transition Economics
Issue of 2007‒05‒04
seven papers chosen by
J. David Brown
Heriot-Watt University

  1. Efficiency and Ownership Structure – The Case of Poland By Modén, Karl-Markus; Norbäck, Pehr-Johan; Persson, Lars
  2. The Rise of Foreign Investment in China's Banks: Taking stock By Richard Podpiera; Lamin Leigh
  3. Rebalancing China's Economy: What Does Growth Theory Tell Us? By Jahangir Aziz
  4. Do Economists' and Financial Markets' Perspectives on the New Members of the EU Differ? By Pipat Luengnaruemitchai; Susan Schadler
  5. Corporate Governance Quality: Trends and Real Effects By Gianni De Nicoló; Luc Laeven; Kenichi Ueda
  6. How Does the Introduction of Health Insurance Change the Equity in the Health Care Provision in Bulgaria? By Nora Markova
  7. Tax, Welfare, and Pension Reforms in Slovenia: Implications for Work Incentives and Labor Participation By Anita Tuladhar; Philippe Egoumé-Bossogo

  1. By: Modén, Karl-Markus (Södertörn University College); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: We examine the effects of foreign entry on productive efficiency during the Polish investment liberalization. The performance of foreign acquisitions is compared to foreign firms entering the market through greenfield entry, as well as domestic acquisitions of privatized firms, domestic greenfields and remaining state-owned (non-privatized) firms during the period 1995-2000. We find that foreign privatized firms have realized larger productivity gains than all types of domestic firms and that this is not due to higher price-cost margins, which is consistent with the idea that foreign firms bring in firm-specific knowledge. Foreign greenfields have the highest average labour productivity, while foreign privatizations show the largest productivity increase.
    Keywords: Privatizations; M As; FDI; Foreign Ownership; Productivity
    JEL: F23 J31
    Date: 2007–04–13
  2. By: Richard Podpiera; Lamin Leigh
    Abstract: The recent wave of foreign investment in China's banks and the prospects of further opening of the banking sector under the WTO agreement suggest that foreign banks are likely to play an increasingly important role in China. This paper takes stock of the involvement of foreign banks in the Chinese banking sector in the perspective of international experience. While in most other countries foreign bank entry took the form of direct takeover or majority shareholding, foreign investments in China's banks have been minority shareholdings with very limited management involvement. The paper concludes that China appears to be well positioned to benefit from further opening of the banking sector to foreign investors. International experience suggests that greater competition from and participation of foreign banks can in general bring important benefits if appropriate incentives and sufficient opportunities are created.
    Keywords: Foreign investment , China , banks , WTO , banking reforms , Foreign investment , China , Banks , Bank reforms , World Trade Organization ,
    Date: 2007–01–08
  3. By: Jahangir Aziz
    Abstract: This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly distorted in the 1990s and 2000s. The distortion could have been caused by nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending. If China is to rebalance growth towards relying more on consumption and less on exports and investment, banking sector reforms and financial market development could, therefore, turn out to be key.
    Keywords: Business cycle accounting , rebalancing growth , financial distortions , Economic growth , China , Economic policy , Bank reforms , Financial sector , Capital markets , Capital , Consumption , Investment , Exports , Economic models ,
    Date: 2007–01–08
  4. By: Pipat Luengnaruemitchai; Susan Schadler
    Abstract: In the past several years, the ten new Central and Eastern European members of the European Union have enjoyed rapid growth but frequently alongside growing external imbalances. Economists have pointed to rising vulnerabilities, but markets compressed sovereign bond yields. This paper examines the evidence from the perspective of economists' vulnerability analysis and markets' pricing of sovereign bonds. It finds that spread are lower than can be explained by "fundamentals" and speculates on the causes and permanence of this yield compression.
    Keywords: New Member States , Emerging Markets , Sovereign Spreads , Emerging markets , European Union , Economic growth , Bonds , Prices , Capital markets ,
    Date: 2007–03–22
  5. By: Gianni De Nicoló; Luc Laeven; Kenichi Ueda
    Abstract: This paper constructs a composite index of corporate governance quality, documents its evolution from 1994 through 2003 in selected emerging and developed economies, and assesses its impact on aggregate and corporate growth and productivity. Our investigation yields three main findings. First, corporate governance quality in most countries has overall improved, although to varying degrees and with a few notable exceptions. Second, the data exhibit cross-country convergence in corporate governance quality with countries that score poorly initially catching up with countries with high corporate governance scores. Third, the impact of improvements in corporate governance quality on traditional measures of real economic activity-GDP growth, productivity growth, and the ratio of investment to GDP- is positive, significant, and quantitatively relevant, and the growth effect is particularly pronounced for industries that are most dependent on external finance.
    Keywords: Corporate governance , disclosure , transparency , economic growth , productivity , Governance , Transparency , Economic growth , Gross domestic product , Productivity , Investment ,
    Date: 2007–01–08
  6. By: Nora Markova
    Abstract: The study examines the effect of health care reform in Bulgaria in 1999 on the equity of health care financing. It explores the distribution of different types of health care financing by income. Furthermore, it separates the financial and social reasons for these differences, dividing them into economic and social inequalities. It suggests a method of distinguishing between financially based and "exclusion based" reasons for having progressive/regressive health care financing. Moreover, it looks at the social factors that shape health expenditure patterns and identifies those social characteristics that lead to exclusion from the health care system.
    Keywords: Health care financing , equity in health care financing , income inequality , redistribution , Health care , Bulgaria , Public finance , Income distribution , Social indicators , Poverty , Economic models ,
    Date: 2007–01–03
  7. By: Anita Tuladhar; Philippe Egoumé-Bossogo
    Abstract: The labor participation rate in Slovenia has been lower than in the EU-15 (the members states prior to May 2004), particularly for the low-income and older individuals. Using simulations of tax and social benefits and public pensions, the paper shows how the current tax, welfare, and pension systems create disincentives to work among these groups. The paper finds that incentives to retire early are strong for men, especially low-wage earners. The marginal effective tax rates also make it costly for low-income individuals to work and negatively affect the probability of participating. The paper proposes reform measures to enhance work incentives and labor participation, which will be crucial for dealing with population aging and for achieving higher potential growth in Slovenia.
    Keywords: Labor particiaption , retirement , pensions , taxation , welfare , Slovenia , Labor supply , Slovenia , Labor policy , Tax reforms , Pensions , Early retirement incentives ,
    Date: 2007–01–08

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