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on Transition Economics |
| By: | Vassilis Monastiriotis |
| Abstract: | In most of the European transition economies regional policy is a relatively new phenomenon, given the absence of a coherent framework for such policy during the Communist era. In Southeast Europe in particular, regional policy was slow to develop also in the transition period. This was in many respects due to the relative hysteresis of the transition process in the region but also to other particularities related to the ethnic conflicts and a generally slower European association process. Regional policy in Bulgaria has for all analytical purposes been notably absent in the 1990s and only started shaping up mainly as a response to EU pressures and requirements. This was despite the significant problems of disparity and backwardness faced by many regional and local economies of the country – and the trend of widening inequality associated with the processes of transition and fast economic growth. Nevertheless (or, as a consequence), the emerging regional policy framework in Bulgaria reflects strongly the EU influence and shows little sensitivity to, and appreciation of, the main regional and spatial problems that policy in the country should be addressing. This paper addresses the structure and effectiveness of the emerging regional policy in Bulgaria by evaluating the nature of regional disparities in the country, examining the development of regional policy, and discussing the role played by the EU (through its accession conditionality, its own regional policy and its pre-accession aid) for these developments. This analysis provides useful conclusions regarding the strengths and weaknesses of Bulgaria’s regional policy and helps highlight the main challenges for the future design of regional policy in the country, in its new phase of development as a full EU member. |
| Keywords: | Regional disparities and policy, Bulgaria, Transition, EU accession. |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:hel:greese:15&r=tra |
| By: | Fung , K.C.; Korhonen, Iikka; Li, Ke; Ng, Francis |
| Abstract: | China has emerged as one of the top recipients of foreign direct investment in the world. Meanwhile, the successful transition experience of many Central and Eastern European countries has also allowed them to attract an increasing share of global foreign direct investment. In this paper, the authors use a panel data set to investigate whether foreign direct investment flows to these two regions are complements, substitutes, or independent of each other. Taking into account the role of host country characteristics - such as market size, degree of trade liberalization, and human capital - the authors find no evidence that foreign direct investment flows to one region are at the expense of those to the other. Instead, the results suggest that foreign direct investment flows are driven by distinct regional production networks (and thus are largely independent of each other) and the development of global supply chains (indicating that foreign direct investment flows are complementary). |
| Keywords: | Debt Markets,Foreign Direct Investment,Emerging Markets,Economic Theory&Research,Investment and Investment Climate |
| Date: | 2008–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4689&r=tra |
| By: | Marek Góra; Oleksandr Rohozynsky |
| Keywords: | Gender earnings gap, personnel data, internal labor market, Russia |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwesc:diwesc7&r=tra |
| By: | Yu, J. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, P. |
| Abstract: | This study contributes to the debate on whether China’s domestic enterprises (DEs) have experienced a significant catch-up compared with foreign-funded enterprises (FFEs) in high-tech industries. Our paper tries to estimate a new set of capital stock and R&D capital stock by ownership for China’s high-tech industries. Then, using this newly constructed data set, it assesses the comparative productivity performance of state-owned enterprises (SOEs) (as the most important proxy for DEs) in high-tech industries from 1996 to 2006. The results show that SOEs as a whole have experienced an inverted U-shape trajectory of catch-up for 1996-2006, while those SOEs which originate from competitive industries tend to show a better performance. With respect to the technology catch-up, SOEs in particular are still lagging behind because of their failure to develop indigenous technology capabilities. |
| Keywords: | Productivity; R&D; Catch-up; Indigenous technology capability |
| JEL: | E22 L63 O47 P27 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2008-10&r=tra |
| By: | Luo, Xubei; Zhu, Nong |
| Abstract: | Income inequality in China has risen rapidly in the past decades across regions, between rural and urban sectors, and within provinces. The dynamics of divergence across these sub-national areas have taken the form of a"race to the top"- meaning that all segments of the population, including the poor with low education in lagging inland rural areas, have experienced gains in average income. The largest gains have been registered by those with higher income and education in leading coastal urban areas. Using the China Economic, Population, Nutrition and Health Survey data of 1989 and 2004, we show that the most important factors explaining overall inequality are differential returns to schooling and sector of employment. A decomposition analysis based on household income determination shows that the increase in returns to education explains two-thirds of income changes in urban areas and one-sixth in rural areas. The widening income gaps are the consequence of higher growth in leading urban and coastal areas and that the skilled population has benefited more from the economic reforms carried out during the last 25 years. The authors argue that rising income inequality can be part of a normal process of development at a certain stage, and that the dynamics of spatial income divergence in the form of"a race to the top"can be desirable to some extent as it unleashes competitive pressure and creates incentives for investment in skills. Continuing to improve market efficiency and investing in people, in particular improving education service in lagging areas to poor people, are important for sustainable growth and equitable distribution in the long run. |
| Keywords: | Rural Poverty Reduction,Inequality,Achieving Shared Growth,Population Policies, |
| Date: | 2008–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4700&r=tra |
| By: | Fock, Achim; Wong, Christine |
| Abstract: | The Government of China has placed strong emphasis on addressing problems related to agriculture, farmers, and rural society, with the development of a"new socialist countryside"designated as a top priority for the Eleventh Five-Year Plan (2006-2010). The financing of public services in rural areas will be a key determinant of the Plan's success. This report analyzes the performance of the intergovernmental fiscal system - the financing of rural development through counties, townships, and villages - and the impact of recent reforms. The authors show that achieving the government's objectives will require channeling substantial new resources to rural areas. In addition, ensuring the effective transfer of resources and their efficient utilization will require fundamental reforms to a wide range of public institutions, including budget and planning processes, personnel management systems, and the organization of government agencies. The authors argue that a comprehensive reform strategy is needed to address fundamental vertical and horizontal imbalances in the intergovernmental fiscal system The reforms must reach beyond the fiscal system to build improved accountability mechanisms to improve public service delivery at the grassroots level. And, given China's size and diversity, reform efforts must focus on improving incentive structures at the county, township, and village levels. |
| Keywords: | Public Sector Economics&Finance,Access to Finance,Banks&Banking Reform,Debt Markets, |
| Date: | 2008–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4693&r=tra |
| By: | Zhu, Nong; Luo, Xubei |
| Abstract: | Large numbers of agricultural labor moved from the countryside to cities after the economic reforms in China. Migration and remittances play an important role in transforming the structure of rural household income. This paper examines the impact of rural-to-urban migration on rural poverty and inequality in the case of Hubei province using the data of a 2002 household survey. Since remittances are a potential substitute for farm income, the paper presents counterfactual scenarios of what rural income, poverty, and inequality would have been in the absence of migration. The results show that, by providing alternatives to households with lower marginal labor productivity in agriculture, migration leads to an increase in rural income. In contrast to many studies that suggest the increasing share of non-farm income in total income widens inequality, this paper offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons: (i) migration is rational self-selection - farmers with higher agricultural productivities choose to remain in local agricultural production while those with higher expected return in urban non-farm sectors migrate; (ii) poorer households facing binding constraints of land shortage are more likely to migrate; and (iii) the poorest poor benefit disproportionately from remittances. |
| Keywords: | Rural Poverty Reduction,Population Policies,Access to Finance,Inequality |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4637&r=tra |
| By: | de Brauw, Alan; Giles, John |
| Abstract: | In this paper, the authors examine the impact of reductions in barriers to migration on the consumption of rural households in China. The authors find that increased migration from rural villages leads to significant increases in consumption per capita, and that this effect is stronger for poorer households within villages. Household income per capita and non-durable consumption per capita both increase with out-migration, and increase more for poorer households. The authors also establish a causal relationship between increased out-migration and investment in housing and durable goods assets, and these effects are also stronger for poorer households. The authors do not find robust evidence, however, to support a connection between increased migration and investment in productive activity. Instead, increased migration is associated with two significant changes for poorer households: increases both in the total labor supplied to productive activities and in the land per capita managed by the household. In examining the effect of migration, we pay considerable attention to developing and examining our identification strategy. |
| Keywords: | Access to Finance,Population Policies,Economic Theory&Research,Labor Policies,Debt Markets |
| Date: | 2008–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4585&r=tra |
| By: | Niimi, Yoko; Pham, Thai Hung; Reilly, Barry |
| Abstract: | This paper examines the determinants of remittance behavior for Vietnam using data from the 2004 Vietnam Migration Survey on internal migrants. It considers how, among other things, the vulnerability of a migrant's life at the destination, their link to relatives back home, and the time spent at the destination affect remittances. The paper finds that migrants act as risk-averse economic agents and send remittances back to the household of origin as part of an insurance exercise in the face of economic uncertainty. Remittances are also found to be driven by a migrant's labor market earnings level. The paper highlights the important role of remittances in providing an effective means of risk-coping and mutual support within the family. |
| Keywords: | Population Policies,Access to Finance,Gender and Development,Debt Markets,Remittances |
| Date: | 2008–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4586&r=tra |
| By: | T. Dohmen; H. Lehmann; A. Zaiceva |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:633&r=tra |
| By: | Rutherford, Thomas; Tarr, David |
| Abstract: | This paper develops a seven-region comparative static computable general equilibrium model of Russia to assess the impact of accession to the World Trade Organization on these seven regions (the federal okrugs) of Russia. In order to assess poverty and distributional impacts, the model includes ten households in each of the seven federal okrugs, where household data are taken from the Household Budget Survey of Rosstat. The model allows for foreign direct investment in business services and endogenous productivity effects from additional varieties of business services and goods, which the analysis shows are crucial to the results. National welfare gains are about 4.5 percent of gross domestic product in the model, but in a constant returns to scale model they are only 0.1 percent. All deciles of the population in all seven federal okrugs can be expected to significantly gain from Russian World Trade Organization accession, but due to the capacity of their regions to attract foreign direct investment, households in the Northwest region gain the most, followed by households in the Far East and Volga regions. Households in Siberia and the Urals gain the least. Distribution impacts within regions are rather flat for the first nine deciles; but the richest decile of the population in the three regions that attract a lot of foreign investment gains significantly more than the other nine representative households in those regions. |
| Keywords: | Economic Theory&Research,Emerging Markets,Access to Finance,Debt Markets,Investment and Investment Climate |
| Date: | 2008–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4570&r=tra |
| By: | Bredenkamp, Caryn |
| Abstract: | This paper examines the determinants of child nutritional status in seven provinces of China during the 1990s, focusing specifically on the role of two areas of public policy, namely health system reforms and the one child policy. The empirical relationship between income and nutritional status, and the extent to which that relationship is mediated by access to quality healthcare and being an only-child, is investigated using ordinary least squares, random effects, fixed effects, and instrumental variables models. In the preferred model - a fixed effects model where income is instrumented - the author find that being an only-child increases height-for-age z-scores by 0.119 of a standard deviation. The magnitude of this effect is found to be largely gender and income neutral. By contrast, access to quality healthcare and income is not found to be significantly associated with improved nutritional status in the preferred model. Data are drawn from four waves of the China Health and Nutrition Survey. |
| Keywords: | Health Monitoring&Evaluation,Population Policies,Transport Economics Policy&Planning,Health Systems Development&Reform,Rural Poverty Reduction |
| Date: | 2008–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4587&r=tra |
| By: | Correa, Paulo G.; Fernandes, Ana M.; Uregian, Chris J. |
| Abstract: | The international diffusion of technology presents an opportunity for developing economies distant from the world technological frontier to reduce their income gap relative to advanced economies. It is therefore crucial to understand why, when faced with similar technological alternatives different firms in different countries choose to adopt different vintages of capital. This paper examines technology adoption across firms in Eastern Europe and Central Asia. The findings show that access to complementary inputs - managerial capacity, skilled labor, finance, and good infrastructure - and to international knowledge - through foreign direct investment or exports - is an important correlate of technology adoption. The link between market incentives and technology adoption is more nuanced. Although consumer pressure results in technology adoption, competitor pressure does not, suggesting that only firms with rents are able to adopt technology given substantial resource constraints. Privatized firms exhibit better technology adoption outcomes but only when a clear private owner with a profit incentive is present. Better governance is associated with technology adoption only in the countries that joined the European Union in 2004. Future increases in technology adoption by firms in the region will require complementary reforms of the investment climate. |
| Keywords: | E-Business,Technology Industry,ICT Policy and Strategies,Microfinance, |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4707&r=tra |
| By: | Sabarwal, Shwetlena; Terrell, Katherine |
| Abstract: | Using 2005 firm level data for 26 countries in Eastern and Central Europe, this paper estimates performance gaps between male and female-owned businesses, while controlling for location by industry and country. The findings show that female entrepreneurs have a significantly smaller scale of operations (as measured by sales revenues) and are less efficient in terms of total factor productivity, although the difference is small. However, women entrepreneurs generate the same amount of profit per unit of revenue as men. Although both male and female entrepreneurs in the region are sub-optimally small, women's returns to scale are significantly larger than men's, implying that women would gain more from increasing their scale. The authors argue that the main reasons for the sub-optimal size of female-owned firms are that they are both capital constrained and concentrated in industries with small firms. |
| Keywords: | Access to Finance,,Banks&Banking Reform,Gender and Health,Gender and Law |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4705&r=tra |
| By: | Chen, Shaohua; Ravallion, Martin |
| Abstract: | In 2005, China participated for the first time in the International Comparison Program (ICP), which collects primary data across countries on the prices for an internationally comparable list of goods and services. This paper examines the implications of the new Purchasing Power Parity (PPP) rate (derived by the ICP) for China's poverty rate (by international standards) and how it has changed over time. We provide estimates with and without adjustment for a likely sampling bias in the ICP data. Using an international poverty line of USD 1.25 at 2005 PPP, we find a substantially higher poverty rate for China than past estimates, with about 15% of the population living in consumption poverty, implying about 130 million more poor by this standard. The income poverty rate in 2005 is 10%, implying about 65 million more people living in poverty. However, the new ICP data suggest an even larger reduction in the number of poor since 1981. |
| Keywords: | Rural Poverty Reduction,Population Policies,Achieving Shared Growth,ICT Applications |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4621&r=tra |
| By: | Iimi, Atsushi |
| Abstract: | Economic development is affected by infrastructure services in both volume and quality terms. However, the quality of infrastructure is relatively difficult to measure and assess. The current paper, using firm-level data collected by a business environment assessment survey in 26 countries in Europe and Central Asia, estimates the marginal impacts on firm costs of infrastructure quality. The results suggest that the reliability or continuity of services is important for business performance. Firm costs significantly increase when electricity outages occur more frequently and the average outage duration becomes longer. Similarly, increased hours of water supply suspensions also reduce firms'competitiveness. In these countries, it is found that the total benefit for the economy from eliminating the existing electricity outages ranges from 0.5 to 6 percent of gross domestic product. If all water suspensions are removed, the economy could receive a gain of about 0.5 to 2 percent of gross domestic product. By contrast, the quality of telecommunications services seems to have no significant impact. |
| Keywords: | Transport Economics Policy&Planning,Town Water Supply and Sanitation,Private Participation in Infrastructure,Infrastructure Economics,Urban Slums Upgrading |
| Date: | 2008–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4581&r=tra |
| By: | Loukas Balafoutas |
| Abstract: | Households in the Black Sea Economic Co-operation (BSEC) and Central Asia (CA) regions have adopted coping strategies to withstand negative income shocks during the transition. The most common strategies include family and community support, emigration, and a wide range of activities in the informal sector. Some strategies persist today and are embedded in the new economic environment. |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaac:67-en&r=tra |
| By: | Denis Drechsler; Theodora Xenogiani |
| Abstract: | Informal employment is a widespread phenomenon in Romania and a key challenge for the country’s development. Policies should target two distinct groups: those who voluntarily opt out of the formal system and those with no alternative. Transforming people’s attitudes towards the state and strengthening their trust in public institutions is key. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaac:70-en&r=tra |
| By: | Loukas Balafoutas; Kiichiro Fukasaku |
| Abstract: | Globalisation has brought benefits to the economies in the Black Sea Economic Co-operation (BSEC) and Central Asia (CA), but compounded volatility and uncertainty associated with the transition to market economy. Labour markets have been put under pressure, as BSEC-CA countries compete on the international arena. One important form of labour market adjustment has been a large amount of migration flows within the BSEC-CA region and to the neighbouring countries. |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaac:68-en&r=tra |
| By: | Wang, Hua; Xie, Jian; Li, Honglin |
| Abstract: | In determining domestic water prices, policy makers often need to use information about the demand side rather than only relying on information about the supply side. Household surveys have frequently been employed to collect demand-side information. This paper presents a multiple bounded discrete choice household survey model. It discusses how the model can be utilized to collect and analyze information about the acceptability of different water prices by different types of households, as well as households'willingness to pay for water service improvement. The results obtained from these surveys can be directly utilized in the development of water pricing and subsidy policies. The paper also presents an empirical multiple bounded discrete choice study conducted in Chongqing, China. In this case, domestic water service quality was seriously inadequate, but financial resources were insufficient to improve service quality. With a survey of about 1,500 households in five suburban districts in Chongqing Municipality, this study shows that a significant increase in the water price is feasible as long as the poorest households can be properly subsidized and certain public awareness and accountability campaigns can be conducted to make the price increase more acceptable to the public. The analysis also indicates that the order in which hypothetical prices are presented to respondents systematically affects their answers, and should be taken into account when designing survey instruments. |
| Keywords: | Town Water Supply and Sanitation,Water Supply and Sanitation Governance and Institutions,Environmental Economics&Policies,Water and Industry,Water Supply and Systems |
| Date: | 2008–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4690&r=tra |
| By: | Amiti, Mary; Freund, Caroline |
| Abstract: | Decomposing China's real export growth, of over 500 percent since 1992, reveals a number of interesting findings. First, China's export structure changed dramatically, with growing export shares in electronics and machinery and a decline in agriculture and apparel. Second, despite the shift into these more sophisticated products, the skill content of China's manufacturing exports remained unchanged, once processing trade is excluded. Third, export growth was accompanied by increasing specialization and was mainly accounted for by high export growth of existing products (the intensive margin) rather than in new varieties (the extensive margin). Fourth, consistent with an increased world supply of existing varieties, China's export prices to the United States fell by an average of 1.5 percent per year between 1997 and 2005, while export prices of these products from the rest of the world to the United States increased by 0.4 percent annually over the same period. |
| Keywords: | Economic Theory&Research,Free Trade,Trade Policy,Emerging Markets,Debt Markets |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4628&r=tra |
| By: | Vassilis Monastiriotis |
| Abstract: | In some sense there is a very simple answer to the title question: Southeast Europe is heading towards the EU, though a period of weak regional cooperation, asymmetric relations with the EU and a slow and discontinuous accession process. The speed and discontinuity of this process, together with the changing character and purpose of the process of regional cooperation, raise two crucial questions for the region. First, is there a need for regional cooperation and integration in SEE? Second, what type of cooperation is needed? The paper seeks to address these questions by discussing the challenges and opportunities resulting from recent developments in the region (‘EU distancing’, ‘regional ownership’, etc) and their implications for the perspective that the region can follow. In doing so, it attempts an analysis of the goals of regionalism in Southeast Europe and offers some policy proposals for its future. |
| Keywords: | Southeast Europe, regionalism, developmental model, regional ownership, EU distancing. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:hel:greese:10&r=tra |
| By: | Tran Quoc Trung; Nguyen Thanh Tung; Tran Duy Dong; Phan Hoai Duong (Ministry of Planning and Investment, Viet Nam) |
| Abstract: | The study recommends the formulation of policies that support the development of business linkages and networking, and which promote subcontracting arrangements between small and large enterprises or between domestic firms and foreign investment enterprises. It is also necessary to support and facilitate the direct involvement of SMMEs in exporting or indirectly through large manufacturing enterprises. |
| Keywords: | Export-oriented, SME,SMME, Viet Nam |
| JEL: | F1 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:esc:wpaper:5408&r=tra |