nep-tra New Economics Papers
on Transition Economics
Issue of 2009‒05‒09
fourteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Increased Sorting and wage Inequality in the Czech Republic: New Evidence Using Linked Employer-Employee Dataset By Eriksson, Tor; Pytlikowa, Mariola; Warzynski, Frederic
  2. Is the Impact Really That High? The Effect of FDI in Transition By Hagemejer, Jan; Tyrowicz, Joanna
  3. How Important is Export-Platform FDI? : Evidence from Multinational Activities in Poland By Geishecker, Ingo; Nielsen, Jørgen Ulff-Møller; Pawlik, Konrad
  4. EU Enlargement: Migration flows from Central and Eastern Europe into the Nordic countries - exploiting a natural experiment By Pedersen, Peder J.; Pytlikowa, Mariola
  5. When Eastern Labour Markets Enter Western Europe CEECs. Labour Market Institutions upon Euro Zone Accession By Tyrowicz, Joanna
  6. From socialism to capitalism: 1989-2007 By Kitov, Ivan
  7. Chosen informal institutions and their spatial implications in the Czech Republic By Sucháček, Jan
  8. Territorial marketing in the Czech Republic: a trial – and – error process By Sucháček, Jan
  9. The Relative Decline of Agriculture in China By Tey, (John) Yeong-Sheng
  10. Monetary Transmission in three Central European Economies: Evidence from Time-Varying Coefficient Vector Autoregressions By Zsolt Darvas
  11. Political cleavages in Romania. A theoretical overview of the post-communist parties and party systems By OLIMID, ANCA PARMENA
  12. Government Instability Indicators and the Exercise of limited "Consensus" in post-communist Romania 1992-2004 By Olimid, Anca Parmena
  13. Mechanisms of Governance of Sustainable Development By Bachev, Hrabrin
  14. Evaluating inflation forecast models for Poland: Openness matters, money does not (but its cost does) By Mukherjee, Deepraj; Kemme, David

  1. By: Eriksson, Tor (Department of Economics, Aarhus School of Business); Pytlikowa, Mariola (Department of Economics, Aarhus School of Business); Warzynski, Frederic (Department of Economics, Aarhus School of Business)
    Abstract: In this paper, we look at the evolution of firms’ wage structures using a linked employeremployee dataset, which has longitudinal information for firms and covers a large fraction of the Czech labor market during the period 1998-2006. We first look at the evolution of individual wage determination and find evidence of slightly increasing returns to human capital and diminishing gender inequality. We then document sharp increases in both within-firm and between-firm inequality. We investigate various hypotheses to explain these patterns: increased domestic and international competition, an increasingly decentralized wage bargaining, skill biased technological change and a changing educational composition of the workforce. We find some support for that all these factors have contributed to the changes in the Czech wage structure, and that increased sorting is strongly associated with the observed changes in wage inequality.
    Keywords: sorting; wage inequality; linked employer-employee dataset; firm panel data; Czech Republic
    JEL: J31 P31
    Date: 2009–02–01
  2. By: Hagemejer, Jan; Tyrowicz, Joanna
    Abstract: Literature is not clear on the eect of FDI on the economic performance in hosting countries. The analysed eects include productivity, propensity to export, access to financial markets, etc. Although foreign subsidiaries usually perform better than the average of the hosting economies, sometimes the selection eect is found to be considerable. We use a unique dataset based on accounting annual reports to the statistical authorities by all medium and large Polish enterprises over a period 1997-2006. We match firms with FDI entry and to a control group of non-foreign owned companies to disentangle the eect of self-selection and FDI entry. We also distinguish explicitly between foreign ownership and privatisation through a foreign investor. We find strong support of the view that foreign ownership increases access to financing. Evidence suggests also that although FDI enters more frequently companies who already participate in the international trading networks, while approximately 20% of the export intensity may be consistently on average attributed to the treatment effect. On the other hand, we were not able to confirm large effects on effciency not profitability, while the size of the effects are dierent for greenfield investment and private acquisitions as opposed to privatisation.
    Keywords: FDI; transition; propensity score matching; Poland; firm-level analysis
    JEL: C14 P45 O16 P52
    Date: 2009
  3. By: Geishecker, Ingo (Georg-August Universität Göttingen); Nielsen, Jørgen Ulff-Møller (Department of Economics, Aarhus School of Business); Pawlik, Konrad (Jagiellonian Institute)
    Abstract: This paper investigates the link between export performance and multinational enterprise presence utilizing trade and industry data for Polish manufacturing industries for the years 1994-2002. Decomposing trade into final and intermediate goods and assessing the impact of foreign-owned capital on the respective export performance of Polish industries, we suggest a significant role of export-platform FDI into Poland, while the importance of FDI for vertical integration is limited suggesting that the sourcing of intermediate goods from Poland primarily occurs through arm’s-length contractual outsourcing instead of in-house sourcing of multinational enterprises. The paper also suggests that over the sample period, where Poland has evolved into a relatively stable economic environment, the role of export-platform FDI has increased significantly.
    Keywords: Export-platform FDI; Vertically integrated multinational enterprises; Export performance; Poland; Contractual outsourcing
    JEL: F14 F23
    Date: 2008–01–01
  4. By: Pedersen, Peder J. (Department of Economics); Pytlikowa, Mariola (Department of Economics, Aarhus School of Business)
    Abstract: In this paper we look at migration flows from 10 Central and Eastern European Countries (CEEC) to 5 Nordic countries over the years 1985 – 2007. We exploit a natural experiment that arose from the fact that while Sweden opened its labour market from the day one of the 2004 EU enlargement, and Finland and Iceland from year 2006, the other Nordic countries chose a transition period in relation to the “new” EU members. The results based on a differences-in-differences estimator show that the estimated effect of the opening of the Swedish, Finnish and Icelandic labour markets on migration from the CEECs that entered the EU in 2004 is not significantly different from zero. However, the effect of the opening of the Swedish and Finnish labour markets in 2007 on migration from the 2007 EU entrants, Bulgaria and Romania, is significantly positive. Further, we are interested in the overall effect of the “EU entry” on migration. Therefore we look at migration flows from CEECs during the first round of EU enlargement towards the East in 2004 and compare them with migration flows from Bulgaria and Romania. The estimated effect from our D-in-D analyses is positive and significant in all model specifications.
    Keywords: International migration; EU enlargement
    JEL: F22 J61 O15
    Date: 2008–12–01
  5. By: Tyrowicz, Joanna
    Abstract: This paper reviews the literature on the labour market institutions in European Union Member States in the context of monetary integration. Traditionally, labour markets are a key concept in the optimal currency area theory, playing the role of the only accommodation mechanism of asymmetric shocks after the monetary unification. There are several theoretical frameworks linking the institutional design of the labour market to the potential effectiveness of monetary policy in the context of currency areas. Many empirical studies addressed these issues too, yielding important policy implications for labour market reforms in the process of monetary unification. However, there seem to be "white spots" in this patchwork, which may actually be particularly useful from the perspective of CEECs upon the accession to the euro zone. We suggest these research directions encompassing labour supply and theoretical frameworks of labour market flexibility benchmarking in the context of monetary integration.
    Keywords: labour market institutions; monetary integration; labour market reform; CEECs; EMU
    JEL: F16 F15 D02 J21
    Date: 2009
  6. By: Kitov, Ivan
    Abstract: The transition of former socialist countries to capitalist economic system is modelled for the period between 1989 and 2007. The transition is entirely defined by three empirical parameters and the model describes only the evolution of real GDP per capita since the start of the disintegration of socialism. It is found that the transition has practically finished in many Central and Eastern European countries and their economic evolution is driven by forces associated with capitalist system. In the long run, the future evolution of the former socialist countries has to follow the same path as observed in other developed countries in the past. Even in the case of perfect economic performance, the studied countries will never catch up the most advanced countries. In Russia and some countries of the Former Soviet Union, the transition process has not been completed.
    Keywords: socialism; capitalism; transition; economic modelling; GDP per capita
    JEL: P20 P10 O12
    Date: 2009–04–28
  7. By: Sucháček, Jan
    Abstract: The article deals with abundant relations between chosen informal institutions and regional development in our country. It is argued that frequently used macro-view that perceives the country as one unit disregards the inner spatial economic disparities that may weaken the economic stability of the Czech Republic.
    Keywords: informal institutions; territorial identities; regional development; regional disparities; macroeconomic view
    JEL: B52 R0
    Date: 2008–02
  8. By: Sucháček, Jan
    Abstract: There are numerous obscurities connected with territorial marketing. Substantial misunderstandings can occur already for the sake of the fact that this concept was labeled by different notions so far. Naturally, the same – with even higher intensity – holds true for the transition economies. This paper focuses upon the practice of territorial marketing in the Czech Republic. As it is shown, there is rather spontaneous than planned development of this concept in the Czech space. At the same time, there exists sufficient room for future application of selected components of territorial marketing in this country.
    Keywords: territorial marketing; local/regional development; Czech Republic; basic categories of territorial marketing
    JEL: R10 M31 Z0
    Date: 2008–08
  9. By: Tey, (John) Yeong-Sheng
    Abstract: This paper attempts to determine the impacts of three major factors: (a) price changes, (b) factor endowment changes, and (c) technological change on the relative decline of agriculture in China. However, the results suggest that only the price ratio has significant and positive impact on agriculture’s GDP share in China. Nevertheless, the variable of the price ratio explains the model well with about 99 percent of R2 value. The irrelatedness of other variables may require further investigation and explanation.
    Keywords: Relative decline; agriculture; price ratio
    JEL: O13
    Date: 2008–11–29
  10. By: Zsolt Darvas
    Abstract: This paper studies the transmission of monetary policy to macroeconomic variables in three new EU Member States in comparison with that in the euro area with structural time-varying coefficient vector autoregressions. In line with the Lucas Critique reduced-form models like standard VARs are not invariant to changes in policy regimes. The countries we study have experienced changes in monetary policy regimes and went through substantial structural changes, which call for the use of a time-varying parameter analysis. Our results indicate that in the euro area the impact on output of a monetary shock have decreased in time while in the new member states of the EU both decreases and increases can be observed. At the last observation of our sample, the second quarter of 2008, monetary policy was the most powerful in Poland and comparable in strength to that in the euro area, the least powerful responses were observed in Hungary while the Czech Republic lied in between. We explain these results by the credibility of monetary policy, openness and the share of foreign currency loans. 
    Keywords: monetary transmission; time-varying coefficient vector autoregressions; Kalmanfilter
    JEL: C32 E50
    Date: 2009–04
    Abstract: The following article examines the emergence of parties in post-communist Romania concluding that the theoretical basis of cleavages (the Lipset-Rokkanian model) is almost impossible to apply in this country. Accordingly, the historical evolution of the post-communist society and the strategic moves of political actors during democratization were often perceived as an „expected moments lacking any theoretical model”. Contrary to this assumption, I argue that even an incipient cleavage suggests at least two questions about the significance of an ideological framework and a stable party system.
    Keywords: post-communist cleavages; post-communist party systems; transition; the Lipset-Rokkanian model; electoral behavior.
    JEL: P20
    Date: 2009–02–15
  12. By: Olimid, Anca Parmena
    Abstract: During the 1990s post communist societies faced similar challenges at the level of executive government. Since the early studies of Rosenthal (1978), political science literature’s focus is on the different continuums of political stability.In recent years there has been an increased interest in analyzing the effects of political instability in post communist Romania. This article is an effort to look at the indicators of political instability (redefined as Government instability) in an unconsolidated democracy. The issue of political stability in post-communist Romania must of course be analyzed in relation to the challenges of reform and the sources of the limited consensus in government coalition in Romania (1992-2004).
    Keywords: government; post-communist society; political stability;crisis of governality
    JEL: H11
    Date: 2008–11–22
  13. By: Bachev, Hrabrin
    Abstract: In this paper we incorporate the interdisciplinary New Institutional and Transaction Costs Economics (combining Economics, Organization, Law, Sociology, Behavioral and Political Sciences), and suggest a framework for analyzing the mechanisms of governance of sustainable development. The agricultural sector is used to illustrate the approach, test the framework, and support with examples. Firstly, we discuss the modern concepts and the economics of sustainability. Secondly, we present a new framework for analysis and improvement of the governance of sustainable development. This new approach takes into account the role of specific institutional environment; and the behavioral characteristics of individual agents; and the transaction costs associated with the various forms of governance; and the critical factors of economic activity and exchanges; and the comparative efficiency of market, private, public and hybrid modes; and the potential of production structures for adaptation; and the comparative efficiency of alternative modes for public intervention. Finally, we identify specific modes for environmental governance in Bulgarian agriculture; and access the efficiency of market, private and public modes; and estimate the prospects for evolution of environmental governance in the conditions of EU CAP implementation. Agrarian development is associated with specific (different from other European states) environmental challenges such as degradation and contamination of farmland, pollution of surface and ground waters, loss of biodiversity, significant greenhouse gas emissions etc. That is a result of the specific institutional and governing structure evolving in the sector during the past 20 years. Implementation of the common EU policies will have unlike results in “Bulgarian” conditions enlarging income, technological, social and environmental discrepancy between different farms, sub-sectors and regions. Dominating subsistence farming, production cooperatives, small-scale commercial farms, and large business firms will be highly sustainable in years to come.
    Keywords: mechanisms of governance; sustainable development; institutions; market; private; public and hybrid modes of governance; transaction costs; agrarian sustainability; environmental governance; Bulgaria
    JEL: D02 O13 Q01 Q12 Q18 L14 D23 O17 Q13 Q56 L22
    Date: 2009–04
  14. By: Mukherjee, Deepraj; Kemme, David
    Abstract: Countries in which inflation targeting has been adopted require high quality inflation forecasts. The Polish National Bank adopted a variant of implicit inflation targeting and therefore the ability to forecast inflation is critically important to policy makers. Since the domestic price formation process is still evolving, medium term inflation forecasting is often difficult. Using quarterly data from 1995-2007, we estimate and evaluate three types of models for inflation forecasting: (1) output gap models, (2) models involving money, and (3) models which bring the foreign sector into the price formation process. We find that openness is significant in the price formation process and inflation targeting is associated with lower inflation. Traditional measures of forecast accuracy indicate that the simple price gap version of the P* model and the money demand model perform best of this group for medium term forecasting.
    Keywords: Monetary policy; inflation; forecasting; models.
    JEL: E0 E31 E52 E37
    Date: 2008–07–12

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