nep-tra New Economics Papers
on Transition Economics
Issue of 2008‒11‒18
25 papers chosen by
J. David Brown
Heriot-Watt University

  1. Social Learning and Parameter Uncertainty in Irreversible Investment----Evidence from Greenhouse Adoption in Northern China By Wang, Honglin; Reardon, Thomas
  2. The dual corporate income tax in China: the impact of unification By van der Hoek, M. Peter; Kong, Shuhong; Li, Zhenzi
  3. Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness By J. David Brown; John S. Earle; Scott Gehlbach
  4. Valuing forest recreation on the national level in a transition economy: The case of Poland By Bartczak, Anna; Lindhjem, Henrik; Navrud, Ståle; Zandersen, Marianne; Zylicz, Tomasz
  5. Causal Link between Exporting and Innovation Activity. Evidence from Slovenian Firms By Kostevc, Crt; Damijan, Jože
  6. Migrant Labor Markets and the Welfare of Rural Households in the Developing World: Evidence from China By De Brauw, Alan; Giles, John
  7. Do Stronger Intellectual Property Rights Protection Induce More Bilateral Trade? Evidence from China's Imports By Awokuse, Titus; Yin, Hong
  8. X-efficiency versus Rent Seeking in Chinese banks: 1997-2006 By Matthews, Kent; Guo, Jianguang; Zhang, Xu
  9. The Effect of Legal Families on the Development of Business Law in China: Who’s Really Writing the Rules of the Game? By Krug, B.; Betancourt, N.
  10. A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India By Baek, Jungho; Koo, Won W.
  11. The Effect of Exchange Rate Changes on China's Labor-Intensive Manufacturing Exports By THORBECKE, Willem; Hanjiang ZHANG
  12. The rise of obesity in transition economies: theory and evidence from Russian longitudinal monitoring survey By Huffman, Sonya; Rizov, Marian
  13. The Impact of Economic Geography on Wages: Disentangling the Channels of Influence By Laura Hering; Sandra Poncet
  14. Globalization and innovation in emerging markets By Yuriy Gorodnichenko; Jan Svejnar; Katherine Terrell
  15. ICT adoption model of chinese SMEs By Skoko, Hazbo; Ceric, Arnela; Huang, Chun-yan
  16. The on-farm impact of alternative grazing management options to improve sustainability in western Chinese grasslands By Jones, Randall; Kemp, David; Michalk, David; Takahashi, Taro
  17. Explaining Production Inefficiency in China€ٳ Agriculture using Data Envelope Analysis and Semi-Parametric Bootstrapping By Monchuk, Daniel C.; Zhuo Chen
  18. New Evidence on Overweight Children in Urban China and the Role of Socioeconomic Factors By Dong, Fengxia; Jensen, Helen H.
  19. Persistence and Determinants of Firm Profit in Emerging Markets By Stephan, Andreas; Tsapin , Andriy
  20. Vietnam Following in China?s Footsteps: The Third Wave of Emerging Asian Economies By Chaponniere, Jean-Raphael; Cling, Jean-Pierre; Zhou, Bin
  21. Changes in Fruit and Vegetable Consumption over Time and across Regions in China: A Difference-in-Differences Analysis with Quantile Regression By Liu, Kang Ernest; Chang, Hung-Hao; Chern, Wen S.
  22. The Contribution of Foreign Direct Investment to China's Export Performance: Evidence from Disaggregated Sectors By Gu, Weishi; Awokuse, Titus O.; Yuan, Yan
  23. Catching Up or Falling Behind? The Effect of Infrastructure Capital on Technology Adoption in Transition Economies By Schiffbauer, Marc
  24. Is FDI into China Crowding Out FDI into the European Union? By Resmini, Laura; Siedschlag, Iulia
  25. Energy, Environment and the Sustainability of Economic Development in China By Fang, Xingming; Hu, Xiaoping; Wang, H. Holly

  1. By: Wang, Honglin; Reardon, Thomas
    Abstract: This paper introduces social learning into irreversible investment theory through parameter uncertainty, and shows that social learning could reduce parameter uncertainty to facilitate irreversible investment technology adoption. The theoretic model is tested by using household level data from energy saving greenhouse adoption in northern China, and empirical evidences are consistent with the theory: social learning has significantly positive impacts on greenhouse adoption, while market volatility discourages the adoption.
    Keywords: Social Learning, Technology Adoption, Irreversible Investment, Parameter Uncertainty, Energy Saving Greenhouse, Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies, O12, O31, C61, D83, G12,
    Date: 2008
  2. By: van der Hoek, M. Peter; Kong, Shuhong; Li, Zhenzi
    Abstract: For many years, foreign funded companies in China enjoyed a relatively low tax rate and a series of preferential policies which were aimed at encouraging foreign direct investment in China. By adopting a new law in 2007, however, the National People's Congress proclaimed the end of the dual corporate-income-tax system. From 2008, the preferential tax treatment of foreign capital will be phased out. As a result, the income tax rate for domestic and foreign funded companies will be unified at the rate of 25%. This paper explores the impact of the dual corporate income tax system on both domestic and foreign funded enterprises and discusses the possible effects of the unification.
    Keywords: dual corporate income tax; China; unification; foreign funded enterprises
    JEL: H25
    Date: 2008–05
  3. By: J. David Brown (Heriot-Watt University); John S. Earle (W.E. Upjohn Institute for Employment Research and Central European University); Scott Gehlbach (University of Wisconsin, Madison and CEFIR)
    Abstract: Why have economic reforms aimed at reducing the role of the state been successful in some cases but not others? Are reform failures the consequence of leviathan states that hinder private economic activity, or of weak states unable to implement policies effectively and provide a supportive institutional environment? We explore these questions in a study of privatization in postcommunist Russia. Taking advantage of large regional variation in the size of public administrations, and employing a multilevel re-search design that controls for pre-privatization selection in the estimation of regional privatization effects, we examine the relationship between state bureaucracy and the impact of privatization on firm productivity. We find that privatization is more effective in regions with relatively large bureaucracies. Our analysis suggests that this effect is driven by the impact of bureaucracy on the post-privatization business environment, with better institutional support and less corruption when bueaucracies are large.
    Keywords: privatization, bureaucracy, economic reform, Russia
    JEL: H11 L33 P23 P26 P37 P48
    Date: 2008–08
  4. By: Bartczak, Anna; Lindhjem, Henrik; Navrud, Ståle; Zandersen, Marianne; Zylicz, Tomasz
    Abstract: Recreation benefits constitute a substantial part of the total economic value of forests, and are important for the choice of multi-functional forest policies. The application of methods valuing such benefits is in its infancy in transition economies in Central and Eastern Europe (CEE), so value estimates for policy use are sometimes transferred from Western Europe proportionally scaled down by GDP. However, little is known about how recreation values vary with income, and one risks underestimating benefits in CEE. This paper reports the findings of the first comprehensive, national-level study in any CEE country estimating annual and per trip forest recreation values in Poland using the Travel Cost (TC) and Contingent Valuation (CV) methods. Two in-person interview surveys of forest recreation behaviour were carried out. The first was administered onsite in ten representative forest areas, and the other in the homes of a national sample of adult Poles. Results show that forest recreation is highly valued in Poland, at Euros 0.64 – 6.93 per trip per person, depending on the valuation method. Both trip frequency and per trip values are higher than the average in Western Europe, despite a lower income level. Thus, a simple GDP-adjusted transfer from Western Europe would substantially undervalue forest recreation in Poland. Further, a comparison of TC consumer surplus estimates and GDP/capita in Europe shows no clear relationship, indicating that a range of cultural, institutional and other factors may be important
    Keywords: Forest; recreation; valuation; transition economy
    JEL: H41 Q51
    Date: 2008–09
  5. By: Kostevc, Crt; Damijan, Jože
    Abstract: In this paper we investigate the causal relationship between firm's innovation and exporting activity by using detailed firm-level data on innovation activity, financial variables and information on trade for Slovenian firms in 1996-2002. We employ the bivariate probit regression on a system of innovation and exporting equations as well as matching procedures to tease out the direction of causality between exporting status and innovation activity. Our results suggest a strong positive relationship between exporting and innovation activity in both directions, while results on the impacts of lagged export (or innovation) status on the probability to start innovat- ing (or exporting) are less conclusive. In other words, whereby innovating status increases the probability of exporting it does not increase the probability of becom- ing a first time exporter, and vice versa. The results remain unaltered also after allowing for discrimination between product and process innovation.
    Keywords: DYNREG, firm heterogeneity, innovation, exporting, matching
    JEL: D24 F14 F21
    Date: 2008
  6. By: De Brauw, Alan; Giles, John
    Abstract: In this paper, we examine the impact of reductions in barriers to migration on the consumption of rural households in China. We 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. We 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. We 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: Migration, Migrant Networks, Consumption, Poverty, Wealth, Rural China, Community/Rural/Urban Development, Consumer/Household Economics, Labor and Human Capital, O12, O15, J22, J24,
    Date: 2008
  7. By: Awokuse, Titus; Yin, Hong
    Abstract: Most of the previous studies on the effect of IPR protection on international trade have been from the perspective of major industrialized nations. However, much of the current debate on the effects of IPR protection involves large developing countries with high threat of imitation. This study contributes to the literature by analyzing the impact of the strengthening of patent laws in China on its bilateral trade flows. We estimate the effects of patent rights protection on China€ٳ imports at the aggregate and detailed product categories for both OECD (developed) and non-OECD (developing) countries. The empirical results suggest that increased patent rights protection stimulate China€ٳ imports, particularly in the knowledge-intensive product categories. Furthermore, while the evidence in support of the market expansion effect is significant for imports from OECD countries, it is rather weak and mostly insignificant for imports from non-OECD countries.
    Keywords: Intellectual property rights, patent laws, international trade, International Relations/Trade, F13, 034,
    Date: 2008
  8. By: Matthews, Kent (Cardiff Business School); Guo, Jianguang; Zhang, Xu
    Abstract: This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and rent-seeking-inefficiency. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent seeking. This paper uses bootstrap non-parametric techniques to estimate measures of X-inefficiency and rent-seeking inefficiency for the 4 state owned banks and 10 joint-stock banks over the period 1997-2006. The paper adjusts for the quality of loans by treating NPLs as a negative output. The paper shows that Chinese banks have reduced cost inefficiency and reduced X-inefficiency at a faster rate than rent-seeking inefficiency.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping
    JEL: D23 G21 G28
    Date: 2008–11
  9. By: Krug, B.; Betancourt, N. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Legal Origin Theory is applied to Reform China’s legal system in order to create a development model for a national legal system influenced by multiple legal families. Utilizing an extensive literature review and assessment of national laws affecting property rights, the model depicts how a legal system develops on the national level under multiple normative influences. Further research will elaborate on the interactions between the normative influences within the legal system.
    Keywords: law and economics;China;property rights theory;legal origin theory
    Date: 2008–10–29
  10. By: Baek, Jungho; Koo, Won W.
    Abstract: The cointegration analysis and a vector error-correction (VEC) model are applied to examine the short- and long-run relationships among foreign direct investment (FDI), economic growth, and the environment in China and India. The results show that FDI inflow plays a pivotal role in determining the short- and long-run movement of economic growth through capital accumulation and technical spillovers in the two countries. However, FDI inflow in both countries is found to have a detrimental effect on environmental quality in both the short- and long-run, supporting pollution haven hypothesis. Finally, it is found that, in the short-run, there exists a unidirectional causality from FDI inflow to economic growth and the environment in China and India - a change in FDI inflow causes a consequence change in environmental quality and economic growth, but the reverse does not hold.
    Keywords: China, cointegration analysis, environment, FDI, India, vector error-correction, Research Methods/ Statistical Methods,
    Date: 2008
  11. By: THORBECKE, Willem; Hanjiang ZHANG
    Abstract: Chinese policymakers have resisted calls for faster renminbi appreciation partly because they fear it will reduce low technology exports. We investigate this issue using a panel data set including China's exports of labor-intensive goods to 30 countries. We find that an appreciation of the RMB would substantially reduce China's exports of clothing, furniture, and footwear. We also find that an increase in foreign income, an increase in the Chinese capital stock, and an appreciation among China's competitors would raise China's exports. Since Europe is the second leading exporter of labor-intensive manufactures behind China, these results indicate that the large appreciation of the euro relative to the RMB since 2001 has crowded out European exports.
    Date: 2008–11
  12. By: Huffman, Sonya; Rizov, Marian
    Abstract: This study integrates theoretical and empirical models to facilitate understanding of human obesity and the factors contributing to rising obesity in Russia during the transition from a planned to a market economy. Recent individual level data from the Russian Longitudinal Monitoring Survey for 1994 and 2004 show that diet/caloric intake, smoking, gender and education are important determinants of obesity in Russia. Empirical results strongly support our model for production of BMI and demand for inputs in the BMI production function. The analysis provides information on the link between dietary patterns and other factors of obesity in Russia which is important for formulation, implementation and monitoring of effective policies designed to improve overall nutritional wellbeing and reduce obesity and mortality of the Russian population. Interventions, which enhance education toward healthy lifestyles and healthy diet, could play a vital role in preventing obesity in Russia.
    Keywords: Food Consumption/Nutrition/Food Safety,
    Date: 2008
  13. By: Laura Hering; Sandra Poncet
    Abstract: This paper evaluates the role of economic geography in explaining regional wages in China. It investigates the extent to which market proximity can explain the evolution of wages, and through which channels. We construct a complete indicator of market access at the provincial level from data on domestic and international trade flows; this is introduced in a simultaneous-equations system to identify the direct and indirect effect of market access on wages. The estimation results for 29 Chinese provinces over 1995-2002 suggest that access to sources of demand is indeed an important factor shaping regional wage dynamics in China. We investigate three channels through which market access might influence wages beside direct transport-cost savings: export performance, and human and physical capital accumulation. A fair share of benefits seems to come from enhanced export performance and greater accumulation of physical capital. The main source of influence of market access remains direct transport costs.
    Keywords: Economic geography; international trade; wage; trade openness; capital accumulation; China
    JEL: F12 F15 R11 R12
    Date: 2008–10
  14. By: Yuriy Gorodnichenko; Jan Svejnar; Katherine Terrell
    Abstract: Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 transition economies, we test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms' efforts to innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. We find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. We show that the supply chain of multinational enterprises and international trade are important channels for domestic firms' innovation. We detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence.
    JEL: F23 O16 P23
    Date: 2008–11
  15. By: Skoko, Hazbo; Ceric, Arnela; Huang, Chun-yan
    Abstract: Chinese SMEs have played an important role in stimulating economic growth, increasing employment, expanding exports and promoting science and technology innovations. In 2005 there were more than 10 million SMEs registered in the Industry and Commerce Department, accounting for 99 per cent of all registered corporations (UN Economic and Social Commission for Asia and Pacific; China Council for the Promotion of International Trade, 2006). Further development of the Chinese as well as of all modern economies is dependent on the speed and effectiveness of the implementation of ICT based solutions in businesses. While large companies have been quick to adopt ICT solutions and technologies, small and medium-sized enterprises (SMEs) have had more serious problems with the requirements and challenges of e-business. A number of ICT, e-commerce adoption methodologies have been suggested through literature most of this research, has however, focused on developed countries where the structure of the economy is common. There are only few studies that shed some light on prescribing strategies of ICT adoption for SMEs in developing countries, especially Chine. Furthermore, despite the enormous attention given to encourage SMEs to adopt ICT there has been little systematic research into the factors influencing, enabling and inhibiting the adoption of ICT within SMEs. In this article, author developed a model of ICT adoption of Chinese SMEs, founded on premises that the adoption and the use of ICT represent the fundamental source of competitiveness and the basis for firms’ survival in the world market. By applying the Qualitative-Comparative Analysis (QCA) method and Boolean algebra, author proposed a model of necessary and sufficient factors for ICT adoption by SMEs in Chine.
    Keywords: Keywords: adoption models; Boolean Algebra; SMEs; case studies; ICT; qualitative comparative analysis (QCA).
    JEL: O33
    Date: 2008–07
  16. By: Jones, Randall; Kemp, David; Michalk, David; Takahashi, Taro
    Abstract: Chinese grasslands are suffering considerable pressures from human and livestock populations. It has been estimated that 90% of Chinese grasslands are suffering from light to heavy levels of degradation. Allied to this is the low household income of herders and farmers dependant upon livestock products for their livelihood. Although a range of reasons have been proposed for the high levels of grassland degradation, principal among these are the high stocking rates adopted by farmers. This not only results in high utilisation rates of the pasture biomass, leading to bare areas and soil erosion, but individual animal productivity rates also decline. This paper presents the results of a modelling study of a grassland system in Gansu Province and Inner Mongolia Autonomous Region in northern China. This shows that reducing stocking rates leads to not only an increase in livestock productivity, but wholefarm returns are also increased. From a sustainability perspective, the greater pasture biomass remaining on the grassland also reduces the incidence of soil erosion in the areas.
    Keywords: sustainable grazing, bioeconomic model, China, Farm Management, Livestock Production/Industries, Resource /Energy Economics and Policy,
    Date: 2008
  17. By: Monchuk, Daniel C.; Zhuo Chen
    Abstract: In this paper we examine more closely the factors associated with production inefficiency in China€ٳ agriculture. The approach we take involves a two-stage process where output efficiency scores are first estimated using data envelope analysis (DEA), and then in the second stage, variation in the resulting efficiency scores are explained using a truncated regression model with inference based on a semi-parametric bootstrap routine. Among the results we find a heavy industrial presence is associated with reduced agricultural production efficiency and may be an indication that externalities from the industrial process, like air and ground water pollution, affect agricultural production. We also find evidence that counties with a large percentage of the rural labor force engaged in agriculture tend to be less efficient, which suggests that policies to facilitate the removal of labor from agriculture, but not necessarily from the rural areas, would bring about enhanced agricultural efficiency and calls into question policies that promote wholesale migration from rural areas. Sensitivity analysis indicates results are robust to influential observations and outliers.
    Keywords: China's agriculture, DEA, bootstrapping, technical efficiency, Production Economics, C14, Q1, R5,
    Date: 2008
  18. By: Dong, Fengxia; Jensen, Helen H.
    Abstract: Problems of overweight and obesity among children have increased in China and pose a problem both for individuals as well as for public social and health care systems. This study explores factors contributing to weight problems among children age 6 to 18 years old in urban China. Data come from the 2004 China Health and Nutrition Survey. Results from a binary probit model show that parents' being overweight, some patterns of TV use, and more frequent eating in fast food restaurants influence children being overweight. Among younger children, parent's dietary knowledge was a significant factor. For adolescents, TV habits and concern about being liked by friends were significant. The results suggest that targeted nutrition education, especially for parents and adolescents, and control of TV ads are policies that may have an effect on reducing children's overweight.
    Keywords: China, children's nutrition, health, nutrition, obesity, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,
    Date: 2008
  19. By: Stephan, Andreas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Tsapin , Andriy (Europa-Universität Viadrina)
    Abstract: The paper studies the persistence of profit and its determinants in emerging markets. We apply Markov chain analysis, dynamic panel GMM estimation, and quantile regression techniques to a panel of approximately 3,000 Ukrainian companies. The empirical results show a moderate level of profit persistence, as well as a relatively low speed of adjustment to the steady-state profit level, thus providing no support for the hypothesis that there is a lower persistence of profits in emerging markets due to more intense competition. Regarding the determinants of firm profit in an emerging market economy, the findings from alternative methods reveal that ownership structure and regional location of the firm have a significant impact.
    Keywords: profit; persistence; convergence; markov chain analysis; Ukarine
    JEL: G30 G32
    Date: 2008–11–12
  20. By: Chaponniere, Jean-Raphael; Cling, Jean-Pierre; Zhou, Bin
    Abstract: Vietnam has been following China?s path closely and very successfully for the last two decades, since the adoption of ?Doi moi? in 1986. Over those last two decades, economic growth rates in both countries have been the highest worldwide (with GDP growing by 8 per cent and 10 per cent per year, respectively). The increase of the Vietnamese share of world trade is the highest of all major Asian exporters (including China) since the mid-1990s. In the current international context, doubts have been raised by some economists concerning the possibility for new Asian countries -Date take-off and join the group of emerging countries. Several obstacles might block this emergence, such as the rise of China and the stringent rules of the World Trade Organization (WTO). This paper addresses this question with regard -Date Vietnam, who joined the WTO at the beginning of 2007: we study Vietnam?s potential for sustainable growth and international integration. We start by briefly describing economic reform and trade policies in Vietnam, and their results in terms of economic growth and world integration. We then analyse Vietnamese trade specialization and the bilateral relationship with China. Finally, we assess the competition between Vietnam and China on world markets, and show that the export structures are very different. Both countries have benefited Date a boom in their textile and clothing exports following the cessation of quotas (in the case of China) and the signing of USBTA (in the case of Vietnam). For Vietnam, reducing the specialization in textiles and clothing, and joining the Asian production network in electronics, represents a major challenge.
    Keywords: export-led growth, WTO, Vietnam, China
    Date: 2008
  21. By: Liu, Kang Ernest; Chang, Hung-Hao; Chern, Wen S.
    Abstract: Recently, there has been considerable interest in estimating food demand structure in China due to its huge market for food products. Previous literature has focused on the primary food products such as grains and meats, but studies on fruits and vegetables are limited. To fulfill this gap, this paper investigates the changes of fruit and vegetable consumption in Chinese urban households between 1993 and 2001. In this study, we use the difference-in-differences method with quantile regression to demonstrate how these changes of fruit and vegetable consumption over time may differ across regions. Additionally, how these changes may differ over the entire distribution. Using household survey data from 1993 and 2001 of three selected provinces, our results show that fruit consumption of Chinese urban households increased from 1993 to 2001 for households in the central and southern parts of China. Additionally, the magnitudes of the increasing trends differ across the entire distribution. In contrast, significant decreases of vegetable consumption are found, and results are robust across regions. However, the disparities of vegetable consumption across regions are not significant.
    Keywords: Fruit and vegetable consumption, China, inequality, quantile regression, difference-in-differences model., Food Consumption/Nutrition/Food Safety,
    Date: 2008
  22. By: Gu, Weishi; Awokuse, Titus O.; Yuan, Yan
    Abstract: There has been a long debate in the theoretical and empirical economic circles on how host country's exports respond to inward foreign direct investment (FDI). This paper examines whether FDI stimulates export performance of the recipient countries using the case of China. It contributes to the literature by investigating the relationship of FDI and export performance using disaggregated manufacturing sectors from 1995 to 2005. The empirical results suggest that FDI flows into China have statistically significant and positive effects on its exports and it exhibits differences across sectors.
    Keywords: export performance, foreign direct investment, China, panel data, International Relations/Trade, F21, F14, C33,
    Date: 2008
  23. By: Schiffbauer, Marc (ESRI)
    Abstract: This paper demonstrates that a link between infrastructure capital and productivity growth can lead to multiple balanced growth equilibria if one accounts for the endogenous provision of infrastructure. Starting with the contribution of Barro (1990), the literature on infrastructure and growth mainly focuses on the relation between private and public capital investments. In contrast, we focus on the relationship between the provision of infrastructure capital and a country's innovative capacity. This is consistent with recent empirical evidence that reports a positive link between the two variables. The framework leads to bivariate causality between the rate of technical change and the provision of infrastructure services and generates scope for multiple strictly positive balanced growth equilibria.
    Date: 2008–02
  24. By: Resmini, Laura; Siedschlag, Iulia (Economic and Social Research Institute (ESRI))
    Abstract: We estimate an augmented gravity panel model to analyse the effects of FDI into China originating in OECD countries on FDI into EU and other countries over the period 1990-2004. Our results suggest that on average, ceteris paribus, over the analysed period, FDI inflows into China have been complementary to FDI inflows into EU15 countries but they have substituted FDI into the new EU countries in Central and Eastern Europe. In particular, small economies such as Bulgaria and the Baltic countries have been affected negatively by the surge in the FDI into China. This FDI diversion appears in the case of efficiency-seeking FDI.
    Keywords: DYNREG, Foreign direct investment, China, European Union
    JEL: F15 F36 F41
    Date: 2008
  25. By: Fang, Xingming; Hu, Xiaoping; Wang, H. Holly
    Abstract: Whether the high economic growth of China is sustainable is the matter of interest to the public, government and academic circle of China and meanwhile it catches the attention of the world because the development of China has been exerting increasing impact on the world economy. Since the high economic growth of China has been promoted by heavy and chemical industry (HCI) to a great extent, which resulted in high consumption of energy resource, high consumption of mineral resources and high emission of pollutants (the €ܴriple highness€ݩ, the sustainability of high economic growth of China depends on a sustainable growth road for China€ٳ HCI and effective control on the €ܴriple highness€ݮ We find that the contributing factors of the €ܴriple highness€ݠare not the growth of HCI itself but the small scale and out dated technology. We conclude that the €ܴriple highness€ݠcan be effectively controlled if some proper measures are adopted and the high growth of China can be sustainable.
    Keywords: economic growth, energy, resource, pollution, International Development, Resource /Energy Economics and Policy, O10, O11,
    Date: 2008

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