nep-tra New Economics Papers
on Transition Economics
Issue of 2009‒10‒17
eight papers chosen by
J. David Brown
Heriot-Watt University

  1. The dynamics of the Russian lifestyle during transition: Changes in food, alcohol and cigarette consumption By Herzfeld, Thomas; Huffman, Sonya K.; Oskam, Arie; Rizov, Marian
  2. The Impact of Chernobyl on Health and Labour Market Performance in the Ukraine By H. Lehmann; J. Wadsworth
  3. Entrepreneurship and Growth: Evidence from China By Hongbin Li; Zheyu Yang; Xianguo Yao; Junsen Zhang
  4. Determinants of government bond spreads in new EU countries. By Ioana Alexopoulou; Irina Bunda; Annalisa Ferrando
  5. Home market determinants of FDI outflows from developing and transition economies By Kayam, Saime Suna
  6. Product variety and the export pattern of Poland 1999-2006 By Tomasz Brodzicki
  7. Models of market integration in Central Asia – comparative performance By Libman, Alexander
  8. Retaliatory disagreement point with asymmetric countries. Evidence from European wine sector during enlargement By PERJU, Genoveva Elena

  1. By: Herzfeld, Thomas; Huffman, Sonya K.; Oskam, Arie; Rizov, Marian
    Abstract: This paper examines changes in aspects of the lifestyle of Russian adults between 1994 and 2004. We present evidence on the impact of individual as well as regional characteristics on changes in fat, protein, alcohol and cigarette consumption, and on diet’s diversity. The results from a dynamic econometric model suggest that among individual determinants, initial levels of consumption, gender, holding a university degree, household income changes and having access to a garden plot have a significant impact on the changes in consumption behavior in Russia. Regarding the macroeconomic variables, inflation has a significant impact on changes in alcohol and cigarettes consumption, while unemployment changes significantly impact smoking behavior. Analysis of subsamples conditional on initial consumption behavior reveals significant differences in consumption patterns, which is important for effective policy targeting different population groups in achieving healthier lifestyle choices in Russia.
    Keywords: food consumption, smoking, alcohol, economic transition, Russia
    Date: 2009–10–14
  2. By: H. Lehmann; J. Wadsworth
    Date: 2009–10
  3. By: Hongbin Li; Zheyu Yang; Xianguo Yao; Junsen Zhang
    Abstract: This paper examines the impact of entrepreneurship on economic growth by using a panel data set of 29 provinces in China over 20 years. Two indicators of entrepreneurship are defined and introduced into the traditional growth regression framework that is estimated using the system generalized method of moments. We also use the ratio of staff and workers of state-owned enterprises and per capita sown land area as the instrumental variables to identify the causal effect of entrepreneurship on economic growth. Our results suggest that entrepreneurship has a significant positive effect on economic growth and this finding is robust even after we control for other demographic and institutional variables. Our study provides some evidence that may be used as a basis for evaluating the effect of China’s policy on private business which has been increasingly relaxed since the late 1970s.
    JEL: L26 O53 O53
    Date: 2009–10
  4. By: Ioana Alexopoulou (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Irina Bunda (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Annalisa Ferrando (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: Based on a rich database of government bond spreads and macroeconomic indicators over the period 2001-2008, we propose an empirical assessment of the role of fundamentals in driving long-term sovereign bond spreads of the new EU countries (Bulgaria, Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia). The results of a dynamic panel error correction model that accounts for both common long-run determinants and cross-country heterogeneities in sovereign bond spreads tend to suggest that fundamentals still matter for market’s assessment of a country creditworthiness. Countries’ levels of external debt, fiscal and current account balances, exchange and inflation rates, their degree of trade openness as well as short-term interest rate spreads play an important role in the new EU countries’ access to long-term finance. We furthermore challenge the pooled mean approach in order to check whether other factors may become relevant in the long-run for two subgroups of countries according to the developments in their current account balances. Fiscal fundamentals seem to matter most for one group of countries, those characterised by widening external imbalances and historically high levels of spreads. In a context of heightened risk aversion and potential for spill over effects, this group of countries are more exposed to domestic sources of vulnerability as well as to swings in market perceptions of sovereign risks. JEL Classification: G12, H60, E62.
    Keywords: long-term government bond spreads, new EU countries, pooled mean group estimation.
    Date: 2009–09
  5. By: Kayam, Saime Suna
    Abstract: Outward foreign direct investments (FDI) from developing countries and transition economies have picked up in the last decade. This study examines the home country factors that determine the outward foreign investments from 65 developing and transition countries in the period 2000-2006. The main hypothesis tested is that the small market size, trade conditions, costs of production and local business conditions are the main drivers of outward FDI. In order to examine the effects of these factors, the fixed effects estimation technique is employed using variables that measure income, trade, infrastructure, labour market conditions and economic stability. Proxies for the institutional environment such as bureacracy, corruption, investment risk are also used to reflect both the political and economic push factors on FDI. The preliminary findings reveal that outward FDI from developing countries increases with foreign competition in the domestic market augmented by inward FDI. As government stability, investment profile and bureaucracy quality in the home country improves, outflows of capital decreases. In other words, developing country transnational corporations are formed as a result of escape response from the economic and political conditions in the home countries.
    Keywords: outward FDI; push factors; developing countries
    JEL: F23 C23 F21
    Date: 2009–06
  6. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk)
    Abstract: The goal of this article is to investigate the role of product variety and changes in the product variety in the patter of exports of Poland a middle-sized open economy in the second phase of economic transition to a benchmark group of countries – EU15. The analysis covers the period 1999-2006 and is carried out on highly disaggregated trade data. In the analysis we utilize both simple index of variety of products as well as an index of relative variety of products. Attention is given to the scope and structure of intra-industry trade. The overall product variety in exports to EU15 as measured by simple product counts is found to have decreased while relative product variety in comparison to EU15 Member States remained at roughly unchanged level. Furthermore we investigate the link between the changes in export variety and the growth of TFP in Polish manufacturing industry sectors. The conclusions are drawn from dynamic panel data model controlling for several features suggested by the literature of the subject. The results are rather intriguing and need further robustness tests.
    Keywords: product variety, productivity, horizontal differentiation, system GMM estimator
    JEL: F11 F12 F14 C23
    Date: 2009–10
  7. By: Libman, Alexander
    Abstract: The paper considers the problem of the integration of markets in Central Asia as a main factor of economic modernization. It first identifies the potential channels of reduction of transaction costs barriers between countries (“models of integration”). Second, it looks at the emergence of these channels, and identifies two main puzzles: success of centralization in individual countries vs. failing international cooperation among them and successful informal cooperation of companies and trade networks vs. deficits of intergovernmental concerted actions. Third, it looks at the impact of the relative success of emerging models of market integration for the balance of power in Central Asia.
    Keywords: Central Asia; regionalization; regionalism; decentralization
    JEL: F15 P26
    Date: 2009–10
  8. By: PERJU, Genoveva Elena
    Abstract: The vector space model facilitates a very useful representation of the strategic interaction in trade because it is possible to incorporate both symmetric and asymmetric features of the players. This paper characterizes the Nash solution of the non-cooperative international trade game in the orthogonal vector space. We have used the standard properties of the Nash solution to determine if the non-cooperative action-reaction trade policy space should be written in terms of 'import-import' or 'import-export' quotas as strongest punishment. The trade policy space defined by import-export' quotas is not a Nash solution of the non-cooperative game but an improvement in the disagreement set. We show the positive correlation between import and export quotas using data on trade relations between EU-15, Romania, Hungary and Bulgaria for wine sector during 1995-2005. In our model the outcome of the non-cooperative trade is autarky. Retaliation is played when countries restrict their imports to one third of the national optimum.
    Keywords: asymmetries; quotas; non-cooperative game; disagreement points;Nash solution
    JEL: F14 F51 C72
    Date: 2009–06–15

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