nep-tra New Economics Papers
on Transition Economics
Issue of 2009‒08‒22
five papers chosen by
J. David Brown
Heriot-Watt University

  1. Adjustment of State Owned and Foreign-Funded Enterprises in China to Economic Reforms,1980s-2007: a logistic smooth transition regression (LSTR) approach By Joshua Aizenman; Nan Geng
  2. A Start for Mild Liberalization? Building Civil Society through Co-operative Dynamics in China By Li Zhao
  3. Improving the Functioning of the Slovenian Labour Market By Isabell Koske
  4. Trends and Patterns of Foreign Direct Investments In Asia: A Comparative Perspective By Prema-chandra Athukorala
  5. Measuring Total Factor Productivity and Variable Factor Utilisation: Sector Approach, The Case of Latvia By Ludmila Fadejeva; Aleksejs Melihovs

  1. By: Joshua Aizenman; Nan Geng
    Abstract: This paper applies a logistic smooth transition regression approach to the estimation of a homogenous aggregate value added production function of the State Owned (SOE) and Foreign-Funded Enterprises (FFE) in China, 1980s-2007. The transition associated with the economic reforms in China is estimated applying a curvilinear logistic function, where the speed and the timing of the transition are endogenously determined by the data. We find high but gradually declining markups in both SOEs and FFEs during the early stages of the adjustment, with SOEs having a much larger scale and market size than the FFEs. However, over the transition process, returns to scale in industrial SOEs dropped sharply. For both FFEs and SOEs the transition is slow, with a midpoint about 7 and 14 years, respectively. We find significant increase of TFP growth rate for both FFEs and SOEs, by 0.1436 and 0.1971, respectively.
    JEL: F14 F15 F21 F23 F36 F43
    Date: 2009–08
  2. By: Li Zhao (HIVA, Catholic University of Leuven)
    Abstract: This paper aims to understand the society-state relationship in China, by exploring this dynamics with other types of organizations, i.e. civil society organizations with economic objectives. The dynamics of co-operatives can influence and interact with civil society dynamics. In this sense, this paper presents the evolution of civil society in China by identifying the causal mechanisms of co-operatives’ development and the conditions needed for them to develop. This causal mechanisms are set within the context of one historical process evolving with path dependency. Using this theoretical framework, it further presents the empirical observation. The findings of the paper are that economic development shaped the new co-operative movement in China; this process was different from the former revolutionary communalist co-operative movement; like their counterparts from the liberal democratic tradition, new co-operatives participated in the market economy, developed in an evolutionary and peaceful way, had great respect for private property and especially, were self-motivated and voluntary in nature. The co-operative movement in China can thus be considered as a mild liberalization within civil society’s sphere. Furthermore, its spillover effect would be seen as the effect of enhancing the role of civil society as a critical dialogue partner with the state. The originality lies in its systematic analysis examining the conditions that underpin this dynamics, thus filling the academic gaps in the study of society-state relationship in another way different from the popularly-used perspective which examines the voluntary and non-profit nature of civil society organizations and excludes the economic spheres within civil society.
    Keywords: civil society dynamics, new co-operative movement, China, path dependency
    JEL: L31 N45 N55 O19 P13 P26 P32
    Date: 2009–08
  3. By: Isabell Koske
    Abstract: Labour market outcomes have improved markedly in the past years as the beneficial effects of the economic upswing were reinforced by important structural reforms.With the economy on the verge of a severe economic downturn, it is important to avoid alleviating measures that adversely affect the functioning of the labour market in the long run. Moreover, several structural challenges remain which require further reform efforts. Firstly, to raise labour force participation of the elderly the pension system needs to be reformed by removing incentives for early retirement and facilitating gradual exits from the labour force. Secondly, to increase employment rates of younger age cohorts, the length of tertiary studies needs to be reduced by strengthening incentives for rapid graduation. Moreover, potential negative employment effects associated with the relatively high minimum wage compared to the average wage should be avoided. Thirdly, to combat increasing labour market dualism, employment protection legislation on regular work contracts needs to be eased once the current economic crisis subsides and the preferential treatment of student work should be phased out. This Working Paper relates to the 2009 OECD Economic Survey of the Slovenia.<P>Améliorer le fonctionnement du marché de travail de la Slovénie<BR>La situation du marché du travail s’est nettement améliorée ces dernières années, sous l’effet cumulé du redressement économique et d’importantes réformes structurelles. Face à la menace imminente d’un ralentissement économique grave, il est essentiel d’éviter toute mesure de soutien qui pourrait nuire au bon fonctionnement du marché du travail à terme. Des efforts restent en outre à fournir en matière de réformes pour remédier à certaines difficultés structurelles. Tout d’abord, le régime de retraite doit être remanié afin d’améliorer le taux d’activité des travailleurs âgés, en éliminant les incitations à la retraite anticipée et en facilitant la sortie progressive de la population active. Ensuite, pour stimuler l’emploi des jeunes, il faut réduire la durée des études supérieures, en renforçant les mesures d’incitation à l’obtention rapide des diplômes, et éviter par ailleurs les effets potentiellement négatifs sur l’emploi du niveau relativement élevé du salaire minimum. Enfin, pour lutter contre le dualisme croissant du marché du travail, on devra assouplir la législation sur la protection de l’emploi pour les contrats de travail réguliers une fois la crise économique dissipée, et il convient aussi de supprimer progressivement le traitement préférentiel appliqué à l’emploi des étudiants. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Slovénie 2009.
    Keywords: taux d'activité, Slovenia, Slovénie, labour force participation, labour market dualism, dualisme du marché du travail
    JEL: J21 J22 J26 J32
    Date: 2009–08–03
  4. By: Prema-chandra Athukorala
    Abstract: This paper examines foreign direct investment (FDI) in developing Asia over the past three decades with emphasis on two key issues: the implications of the ongoing process of international production fragmentation and the alleged ‘crowding out’ effect of China’s rise as a major host to FDI on the other countries in the region. The evidence suggests that assembly processes within vertically integrated global industries (in particularly, electrical goods and electronics) has gained prominence over the past two decades as the major area of attraction for foreign investors in the region. Contrary to the popular crowding out fear, China’s rise as a major assembly centre within global production networks seems to have added further dynamism to region-wide MNE operations in the regions. A key policy inference from our analysis is that, in designing policies of outward-oriented development, investment and trade policies must be considered together as co-determinants of the location of production and patterns of trade.
    Keywords: FDI, production fragmentation, developing Asia, China
    JEL: F21 F23 O53
    Date: 2009
  5. By: Ludmila Fadejeva; Aleksejs Melihovs
    Abstract: This research constructs estimates of total factor productivity (TFP) growth for six sectors of the Latvian economy for the period 2000-2008, using a sectoral quarterly data set. Estimates are obtained by controlling for qualitative changes in production factors and assuming a mechanism for capturing changes in the utilisation of labour and capital. The paper delivers two main results. First, the use of indicators for labour and capital utilisation intensity allows for minimisation of fluctuations in the TFP measure and makes it less output growth dependent compared with the Solow residual approach. Second, the comparison of both methods shows that the estimate of the TFP growth obtained by the Solow residual approach might be undervalued for manufacturing, electricity, gas and water supply, wholesale and retail trade as well as hotels and restaurants, while overvalued for the growth in the transport, storage and communication sector of the Latvian economy.
    Keywords: Total Factor Productivity, Solow residual, factor utilisation
    JEL: C22 D24
    Date: 2009–08–13

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