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on Transition Economics |
| By: | Olga Lazareva (New Economic School (NES), Center for Economic and Financial Research (CEFIR), Center for Economic Policy Research (CEPR)); Konstantin Sonin (Stockholm School of Economics, Stockholm; Centre for Economic and Financial Research (CEFIR), Moscow) |
| Abstract: | The move of five million Russian and Russian-speaking people from the former Soviet Union countries to Russia which took place during 1990s has been studied by demographers, sociologists and to a lesser extent by economists. This paper presents a study of the labor market outcomes for the Russian migrants to Russia, using the data from a representative survey of the Russian population in 2004 and 2005. Author focuses on the location choice by Russian immigrants and tests the hypothesis of skill sorting across regions. It is shown that in the regions with low fraction of immigrant population immigrants are doing better in terms of employment opportunities than local population while in the regions with high fraction of immigrants they are doing worse than locals. This result is consistent with the hypothesis that immigrants choose regions where the demand for their skills is high and compete for the jobs with fellow immigrants rather than with locals. Wage premiums for the migrants are found in some occupations but not in others. The results of the analysis indicate that the Russian migration to Russia has played some equilibrating role in the regional labor markets in presence of high barriers for internal labor migration. |
| Keywords: | migration, regional labor markets, wages, employment |
| JEL: | J61 J31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0117&r=tra |
| By: | Cerami, Alfio |
| Abstract: | This paper provides a brief description of the main systemic problems (strukturprobleme) of post-communist capitalism(s), as well as exploring the main changes occurring in the social structure and the subsequent new social risks and welfare state responses emerging. It shows that post communist societies are characterized by more intense strukturprobleme, which are resulting in the materialization of broader social risks types and groups. As a consequence of a difficult and still uncompleted process of recalibration (functional, distributive, normative and institutional), the welfare states in Central and Eastern Europe and in the Russian Federation are called to face a double burden of responsibilities: they must ensure protection against old and new social risks for a larger proportion of citizens than those in the West, while, simultaneously, dealing with the most serious social, economic and political challenges stemming from the transition. |
| Keywords: | Central and Eastern Europe; social policy; welfare state; welfare regime; transition economies; Russian Federation |
| JEL: | P30 D31 O10 N30 P51 D61 J18 P26 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8479&r=tra |
| By: | Wendy Dobson (Institute for International Business, Rotman School of Management); A.E. Safarian (Rotman School of Management) |
| Abstract: | How is the Chinese economy making the transition from imitation to innovation as the source of sustained long term growth? We address this question using the evolutionary approach to growth in which institutions support technical advance and enterprises develop capabilities to learn and innovate. Growth is seen as a series of disequilibria in which obstacles to innovation such as outdated institutions and weak incentive systems can cause growth to slow. We review existing literatures on institutions and firm behavior in China and compare these findings with those of our survey of Chinese firms in 2006. Industry and firm studies in the literature show how productivity is rising because of firm entry and exit rather than the adoption of new technologies. A striking feature both of the studies in the literature and our survey is the increasing competitive pressures on firms that encourage learning. Our survey of privately owned small and medium enterprises in five high tech industries in Zhejiang province found a market-based innovation system and evidence of much process and some product innovations. These enterprises respond to growing product competition and demanding customers with intensive internal learning, investment in R&D and a variety of international and research linkages. |
| JEL: | O23 H20 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ttp:iibwps:11&r=tra |
| By: | Appleton, Simon (University of Nottingham); Knight, John (University of Oxford); Song, Lina (University of Nottingham); Xia, Qingjie (Peking University) |
| Abstract: | Why is it that, as the Chinese Communist Party has loosened its grip, abandoned its core beliefs, and marketized the economy, its membership has risen markedly along with the economic benefits of joining? We use three national household surveys, spanning eleven years, to answer this question with respect to labour market rewards in urban China. We conceptualize individual demand for Party membership as an investment in “political capital” that brings monetary rewards in terms of higher wages. This wage premium has risen with the growing wage differentials associated with the emergence of a labour market and the continuing value of political status in the semi-marketized transitional economy. However, a demand-side explanation does not explain the fact that the wage premium is higher for the personal characteristics that reduce the probability of membership. We develop an explanation in terms of a rationing of places and a scarcity value for members with those characteristics. |
| Keywords: | China, Communist Party, labour market, economic transition, wages |
| JEL: | J31 J40 J71 P20 P30 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3454&r=tra |
| By: | Cerami, Alfio |
| Abstract: | This paper discusses the emergence of a new model of welfare and social assistance in Central and Eastern Europe. It starts by briefly summarizing the most recent social policy developments occurring in Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia and continues investigating the most urgent reform challenges and adaptational strategies. As argued elsewhere (see Cerami 2006a), the main argument of the paper is that CEECs are moving towards a new world of welfare capitalism, which combines old with new social policy characteristics. A special emphasis in this paper is, however, given to the systems of social assistance, since these represent the last public policy instrument to prevent citizens to fall into extreme poverty. As it will be argued, social assistance schemes did not only play a crucial role in the process of democratic transition cushioning the negative effects of the economic transformation, but they also represent important sources of democratic engineering providing legitimacy to the newly established market-oriented order. A substantial reconsideration in the social policy logic behind their establishment is, however, urgently required. |
| Keywords: | Central and Eastern Europe; social policy; welfare state; economies in transition; reform challenges; social assistance; welfare regimes |
| JEL: | P30 D31 O10 N30 P51 D61 J18 P26 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8377&r=tra |
| By: | Appleton, Simon (University of Nottingham); Song, Lina (University of Nottingham); Xia, Qingjie (Peking University) |
| Abstract: | This paper estimates trends in absolute poverty in urban China from 1988 to 2002 using the Chinese Household Income Project (CHIP) surveys. Poverty incidence curves are plotted, showing that poverty has fallen markedly during the period regardless of the exact location of the poverty line. Income inequality rose from 1988 to 1995 but has been fairly constant thereafter. Models of the determination of income and poverty reveal widening differentials by education, sex and party membership. Income from government anti-poverty programs has little impact on poverty, which has fallen almost entirely due to overall economic growth rather than redistribution. |
| Keywords: | poverty, inequality, economic growth, welfare, public policy, China |
| JEL: | O15 J38 O38 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3459&r=tra |
| By: | Karas, Alexei (BOFIT); Schoors , Koen (BOFIT); Weill, Laurent (BOFIT) |
| Abstract: | We study whether bank efficiency is related to bank ownership in Russia. We find that foreign banks are more efficient than domestic private banks and – surprisingly – that domestic private banks are not more efficient than domestic public banks. These results are not driven by the choice of production process, the bank’s environment, management’s risk preferences, the bank’s activity mix or size, or the econometric approach. The evidence in fact suggests that domestic public banks are more efficient than domestic private banks and that the efficiency gap between these two ownership types did not narrow after the introduction of deposit insurance in 2004. This may be due to increased switching costs or to the moral hazard effects of deposit insurance. The policy conclusion is that the efficiency of the Russian banking system may benefit more from increased levels of competition and greater access of foreign banks than from bank privatization. |
| Keywords: | Bank Efficiency; State Ownership; Foreign ownership; Russia |
| JEL: | G21 P30 P34 P52 |
| Date: | 2008–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_003&r=tra |
| By: | Kozluk, Tomasz (BOFIT) |
| Abstract: | In a broad sample of developed and emerging economies over the past ten years we apply the approximate factor model in a search for common global and regional driving-forces in stock market returns and volatility. We focus particularly on two emerging stock markets - Russia and China, because of their unique characteristics and performance in the past years. We find that while Russian markets, like the CEEC region, substantially increased their integration with global stock markets, both the Chinese A- and B-share markets continued to move largely independently from global movements and only slightly increased in comovement with regional forces. We provide evidence of a general increase in global comovement of stock markets over the past decade and a decline in the role of regional forces, which imply a decrease of the effectiveness of cross-country hedging strategies. |
| Keywords: | stock markets; financial integration; Russia; China; global and regional integration |
| JEL: | F36 G11 G14 |
| Date: | 2008–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_004&r=tra |
| By: | Song, Lina (University of Nottingham) |
| Abstract: | This paper tests three hypotheses concerning intra-household resource allocation in rural China. First, whether increasing the women's bargaining power alters household expenditure patterns. Second, whether households allocate fewer resources to daughters than to sons. Third, whether increasing the bargaining power of women reduces pro-boy discrimination. We find that expenditure patterns do vary with proxies for women's bargaining power. Pro-boy discrimination is suggested by: lower female outlay equivalent ratios for adult goods; greater sensitivity of household health spending to young boys than to young girls; and high male sex ratios. No evidence is found to support the third hypothesis. |
| Keywords: | intrahousehold allocation, women, bargaining power, China |
| JEL: | D1 D13 D61 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3464&r=tra |
| By: | Dong, Fengxia; Jensen, Helen H. |
| Abstract: | China's bilateral trade in food and agricultural products has grown dramatically following entry into the WTO, but the country faces significant problems related to sanitary and phytosanitary (SPS) compliance. The authors summarize current SPS conditions, the food safety regulatory system, production environment, inspection technology, and information systems. This discussion includes China's progress on resolving SPS problems and adjusting to SPS measures in world markets. |
| Keywords: | China, food safety |
| Date: | 2008–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12898&r=tra |
| By: | James Harrigan; Haiyan Deng |
| Abstract: | China's trade pattern is influenced not just by its overall comparative advantage in labor intensive goods but also by geography. We use two variants of the Eaton-Kortum (2002) model to study China's local comparative advantage. The theory predicts that China's share of export markets should grow most rapidly where China's share is initially large. A corollary is that exporters that have a big market share where China's share is initially large should see the largest fall in their market shares. These market share change predictions are strongly supported in the data from 1996 to 2006. We also show theoretically that since trade costs are proportional to weight rather than value, relative distance affects local comparative advantage as well as the overall volume of trade. The model predicts that China has a comparative advantage in heavy goods in nearby markets, and lighter goods in more distant markets. This theory motivates a simple empirical prediction: within a product, China's export unit values should be increasing in distance. We find strong support for this effect in our empirical analysis on product-level Chinese exports in 2006. |
| JEL: | F1 F14 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13963&r=tra |
| By: | Yang, Ling; Lahr, Michael/L |
| Abstract: | The literature on regional disparities in China is both broad and deep. Nonetheless much of its focus has been on the effects of trade liberalization and national policies toward investment in interior provinces. Few pieces have examined whether the disparities might simply be due to differences in industry mix, final demand, or even interregional trade. Using multiregional input-output tables and disaggregated employment data, we decompose change in labor productivity growth for seven regions of China between 1987 and 1997 into five partial effects—changes in value added coefficients, direct labor requirements, aggregate production mix, interregional trade, and final demand. Subsequently we summarize the contributions to labor productivity of the different factors at the regional level. In this way, we present a new perspective for recent causes of China’s interregional disparity in GDP per worker. |
| Keywords: | Decomposition; input-output analysis; productivity; regional disparity; China |
| JEL: | O1 C6 R11 O4 |
| Date: | 2008–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8313&r=tra |
| By: | Song, Lina (University of Nottingham); Appleton, Simon (University of Nottingham) |
| Abstract: | Survey data from urban China in 2002 show levels of life satisfaction to be low, but not exceptionally so, by international comparison. Many of the determinants of life satisfaction in urban China appear comparable to those for people in other countries. These include, inter alia, unemployment, income, marriage, sex, health and age. Communist Party membership and political participation raise life satisfaction. People appear fairly satisfied with economic growth and low inflation, and this contributes to their overall life satisfaction. There is dissatisfaction over pollution, but this – like job insecurity – does not appear to impact on life satisfaction. |
| Keywords: | life satisfaction, happiness, economic growth, unemployment, China |
| JEL: | I31 I38 J18 D63 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3443&r=tra |
| By: | Laurent Weill (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg); Christophe J. Godlewski (Laboratoire de Recherche en Gestion et Economie, Université Louis Pasteur) |
| Abstract: | This paper tackles the question of knowing whether collateral helps solve adverse selection problems in transition countries. We use a unique dataset of about 400 bank loans from 16 transition countries. Our findings support the view of a positive link between the presence of collateral and the risk premium, which is in accordance with the observed-risk hypothesis. This suggests that collateral does not mitigate adverse selection problems in transition countries. |
| Keywords: | Bank, collateral, transition economies. |
| JEL: | G21 P20 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2008-10&r=tra |
| By: | Fragkiskos Filippaios; Constantina Kottaridi |
| Abstract: | Central and Eastern European countries with the liberalisation process and the recent accession to the EU are, nowadays, well engaged in trade with partner countries and at the same time receive significant and increasing interest from foreign investors. Trade and Foreign Direct Investment can potentially enhance economic growth and development as widely evidenced in the literature; hence their relationship may be of particular interest for the region especially in the context of an enlarged EU. This paper addresses the imperative need to understand the relationship of FDI and trade as well as international investors’ behaviour by developing a new theoretical approach and providing empirical evidence. We use the most expanded data span in the current literature, from the early stages of transition in 1992 to 2006 and an enriched dataset of countries, sectors and location factors. In regards to the inward FDI vs. imports relationship, results comply with our theoretical formulation and strongly indicate an overall complementarity with each other. In the case of FDI we find strong locational characteristics such as the large market size, the gradual improvement of the macro-environment and finally the quality of labour force to play a positive role. |
| Keywords: | Central & Eastern European Countries (CEEC), Investment Development Path (IDP), inward Foreign Direct Investment (FDI), imports |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:uop:wpaper:0026&r=tra |
| By: | Natalia Kuznetsova; Irina Peaucelle |
| Abstract: | This article investigates the relationships between the evolution of Russian social psychology and the transformations of the modes of education in Russia. Social psychology is a science born the last century and also a status of the social conscience of people, forged historically on the basis of proper cultural artifacts. In Russia education is mainly the process of human development and, like wherever, it is the institution of knowledge transmission. We show on the case of Russian history that the scientifically proven educational practice can contribute enriching development of social conscience after ideological and economic shocks. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2008-23&r=tra |
| By: | Oxelheim, Lars (Research Institute of Industrial Economics (IFN)); Ghauri, Pervez (King's College London) |
| Abstract: | In this paper it is argued that the restructuring following the stiffer competition stemming from increased global integration will trigger a race between countries to attract inward foreign direct investment (FDI). It is further argued that this race consists of last minute efforts and tailor-made packages designed by governments and their agencies to temporarily improve their country’s otherwise inferior profile. This race is non-transparent and the factors used to compete for inward FDI (the 'elements' of the race) deviate from those of long-term efforts to develop a favourable investment climate and improve productivity, as well as medium-term efforts, such as lowering corporate taxes. The paper elaborates on the research problem of properly understanding the drivers of inward FDI in the absence of data on the elements of the non-transparent race. It also addresses the economic policy problem following from this race with a scenario where a large share of global FDI ends up in China, putting the cohesion of the EU at stake and triggering a regional race within China. |
| Keywords: | Inward FDI; China; European Union; Investment-diverting Policies |
| JEL: | E61 F15 F21 F23 F36 F42 G18 G34 |
| Date: | 2008–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0745&r=tra |
| By: | Zu, Liangrong (International Labour Organization); Song, Lina (University of Nottingham) |
| Abstract: | This paper empirically investigates how Chinese executives and managers perceive and interpret corporate social responsibility (CSR), to what extent firms’ productive characteristics influence managers’ attitudes towards their CSR rating, and whether their values in favour of CSR are positively correlated to firms’ economic performance. Although a large proportion of respondents express a favourable view of CSR and a willingness to participate in socially responsible activities, we find that the true nature of their assertion is linked to entrepreneurs’ instincts of gaining economic benefits. It is the poorly-performing firms, or rather, firms with vulnerable indicators – smaller in size, State-owned, producing traditional goods and located in poorer regions that are more likely to have managers who opt for a higher CSR rating. Managers’ personal characteristics per se are not significant in determining their CSR choice. Moreover, controlling for other observed variables, we find that managers’ CSR orientation is positively correlated with their firms’ performance. The better-off a firm is, the more likely its manager is to get involve in CSR activities. Firms with better economic performance before their restructuring would sustain higher post-restructuring performance. |
| Keywords: | corporate social responsibility, profit maximisation, China |
| JEL: | M14 M21 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3449&r=tra |
| By: | Krug, B.; Hendrischke, H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | We start our exploration of China’s institutional change by asking what the China experience can tell us about institutional economics and organization theory. We point to under-researched areas such as the formation of firms and the interplay between firms and local politics. Our findings support the dynamic capability approach which concentrates on activities rather than on pre-defined groups and models institution building as a co-operative game between the local business community and local government agencies. We find that the analysis of firms has to set in before they are formed by entrepreneurs and networks and we identify political management as a core competence of these two groups. While this contradicts the conventional view of clientelism or principle agent relations as institutional building blocks, we don’t propose competing models. Instead, we suggest focusing on a dynamic process in which the role of players can change. Faced with the spontaneous emergence of institutions, our concept of institutional architecture captures the fact that the two models can co-exist side by side and that, once the dichotomy between formal and informal institutions is given up, there can be a transition from local patron-client relations to local business-state coordination. |
| Keywords: | institutional change;entrepreneurship;networks;dynamic capabilities;diversity and convergence of institutions |
| Date: | 2008–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:1765012191&r=tra |
| By: | Ahlgren, Niklas (Swedish School of Economics, Department of Finance); Sjö, Bo (Swedish Agency for Development Evaluation); Zhang, Jianhua (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | In this paper we study market segmentation and information flows in China’s stock markets. By using panel data methods we test for a unit root in the price premium of domestic investors' A shares over foreign investors’ B shares as well as cointegration between the prices of the A and B shares on the Shanghai and Shenzhen stock exchanges. We find that the A-share premia are nonstationary and the A- and B-share prices are not cointegrated up till January 2001. After February 2001, when domestic investors were allowed to trade B shares, the A-share premia become stationary and the A- and B-share prices cointegrated. Our findings suggest that the relaxation of the investment restrictions decreased the information asymmetry betwen the A- and B-share markets in China.<p> |
| Keywords: | Chinese A and B shares; Market segmentation; Information flow; Panel unit root and cointegration tests |
| JEL: | C32 G12 G15 |
| Date: | 2008–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0300&r=tra |
| By: | Emek Basker (Department of Economics, University of Missouri-Columbia); Pham Hoang Van |
| Abstract: | We use data from the Census of Retail Trade and the International Trade Commission to test the theory that big retail chains serve as a platform for imports from LDCs. Controlling for overall sector growth, Chinese and other LDC imports have increased disproportionately in retail sectors with the largest consolidation into chains over the period 19972002. Our estimation results imply that between 1997 and 2002 the marginal propensity to import from China was 3.3 times larger for the largest firms than for smaller retailers. The disproportionate growth of large retailers over this period explains 19% of the growth in consumer goods imports from China. |
| Keywords: | Imports, Retail Chains |
| JEL: | F12 F14 L11 L81 |
| Date: | 2008–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0804&r=tra |
| By: | Friberg, Richard (Stockholm School of Economics); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We provide a model that explains the following empirical observations: i) private ownership is more efficient than public ownership, ii) privatizations are associated with increases in efficiency and iii) the increase in efficiency predates the privatization. The two key mechanisms explaining the results are: (i) a government owner keeping control takes into account the negative effect on employment of investment and (ii) a privatizing government has a stronger incentive to invest than an acquiring firm: the government exploits the fact that investments increase the sales price not only due to the increase in the acquirer's profit, but also due to a reduced profit for the non-acquirer. |
| Keywords: | Privatization; Asset Ownership; Restructuring; Oligopoly |
| JEL: | D44 L13 L33 L40 P31 |
| Date: | 2008–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0744&r=tra |
| By: | Al Campbell |
| Abstract: | There is widespread discussion both within and outside Cuba concerning what direction the Cuban economy will go under its new interim president Raúl Castro. This short paper is intended to contribute two pieces of information that are needed to intelligently discuss that issue- where Cuba’s economy stands today, and what type of reforms Cuba’s political and economic leadership say they intend to implement. Its goal is to compactly present current information on some of the key economic issues Cuba faces in regards to both the present and the near future, and thereby give a solidly information-based picture of Cuba’s current economic reality. It presents two central conclusions. First, that the evidence supports that there indeed has been real and meaningful accelerated improvement in the Cuban economy in recent years, and at the same time Cuba remains far from being able to meet many of its citizens’ economic needs in accord with its own principals of human development. Second, that Cuba intends to continue the process of economic reform that it has been engaged in since at least the early 1990s. This will involve significant restructuring of aspects of how the economy functions, with a central concern with improved efficiency. Cuba intends to introduce some (further) market-mechanisms and in certain areas even markets. But the whole reform process will be conducted in a frame that intends to keep both efficiency considerations and market instruments subordinated to their central goal of building socialism. Two aspects are particularly important in assuring that capitalism-like instruments remain subordinate. The first is an expanded role of the entire population in determining both what is most socially desired, and in presenting ideas on how to improve the economy. The second is the continued use of central planning even as they shift many appropriate decisions in their planning and management process out from the central ministries to the regions and especially to the enterprises. |
| Keywords: | Cuba, Current Economic Conditions, Socialism |
| JEL: | P27 P30 O54 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2008_08&r=tra |
| By: | Yoshino, Hisao |
| Abstract: | In the IT industry, there has been a remarkable increase in the demand for system LSI. A system LSI must be tailor-designed for each electrical appliance, and then produced. It is said that in recent years, this production method has made the IC cycle ambiguous. It can be sought that the choice of whether the economy pursues a development path centering on technology which is tradable or technology which is embodied in labor, depends on the historical background. In this paper, the economic background is explained in order to analyze and capture movements in the IT industry and technology. Then, an econometric model for Hungary has been constructed to estimate the effect of technological progress on the economy. |
| Keywords: | Technology Choice, IT industry, Trade Structure, Econometric Model, Information technology, Information services industry, International trade |
| JEL: | D24 E27 O31 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper139&r=tra |