nep-tra New Economics Papers
on Transition Economics
Issue of 2010‒03‒13
fourteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Macedonia’s Accession to the EU and the Labor Market: What Can Be Learned from the New Member States? By Lehmann, Hartmut
  2. The Demographic Transformation of Post-Socialist Countries By Brainerd, Elizabeth
  3. The Long Road to Normalcy By Popov, Vladimir
  4. Monetary and Exchange Rate Regimes Changes: The Cases of Poland, Czech Republic, Slovakia and Republic of Serbia By Kosta Josifidis; Jean-Pierre Allegret; Emilija Beker Pucar
  5. Accession Incentives for Institutional Change in Post-Socialist Countries – Cross-Section and Country Evidence from NATO Enlargement By Rainer Schweickert; Jonas Kauschke; Hanno Heitmann
  6. Optimisation of Central Asian and Eurasian Inter-Continental Land Transport Corridors By Emerson, Michael; Vinokurov , Evgeny
  7. Trade, instititutions and export specialization. By Crabbé, Karen; Beine, Michel
  8. Is it really different? Patterns of regionalization in the post-Soviet Central Asia By Libman, Alexander; Vinokurov, Evgeny
  9. Standardization Strategy of China, Achievements and Challenges By Wang Ping; Wang Yiyi; John Hill
  10. Tiny, Poor, Landlocked, Indebted, but Growing: Lessons for Late Reforming Transition Economies from Laos By Kelly Bird; Hal Hill
  11. The Determinants of the Fundraising Structure of Listed Companies in Vietnam: Estimation of the Effects of Government Ownership By Hidenobu Okuda; Lai Thi Phuong Nhung
  12. Financial Crisis, Trade Finance, and SMEs: Case of Central Asia By Pasadilla, Gloria O.
  13. Technical Change and Total Factor Productivity Growth: The Case of Chinese Provinces By Almas Heshmati; Subal C. Kumbhakar
  14. Firm-Level Corruption in Vietnam By Rand, John; Tarp, Finn

  1. By: Lehmann, Hartmut (University of Bologna)
    Abstract: The paper was produced as a background paper on labor issues for the UNDP study "Convergence to the European Union: Challenges and Opportunities." It first looks at the issue of how the labor market institutions of an acceding country like Macedonia should be shaped to further the integration of the acceding economy into the European economic space. The successes and the failures of the labor market reform efforts of the new member states are discussed to give some guidance to the discussion. Second, we briefly discuss the assistance programs provided by the European commission to help candidate states in this reform process. Macedonia is the country in Europe with one of the highest unemployment rates and a very large incidence of long-term unemployment. A third area of discussion in the paper is, therefore, the development and implementation of passive and active labor market policies that guarantee an equitable and efficient use of governmental resources given the stylized facts of Macedonian unemployment.
    Keywords: European Union, accession, labor market institutions, labor market reform, labor market policies, high and persistent unemployment, Macedonia
    JEL: J08 J20 J24 J26 J30 J48 P23
    Date: 2010–02
  2. By: Brainerd, Elizabeth
    Abstract: The formerly socialist countries of Eastern Europe and the former Soviet Union have experienced a remarkable demographic transformation in the past twenty years. On many dimensions of fertility and family formation, much of the region now looks like Western Europe—below-replacement fertility rates, rising age at first marriage and first birth, and high and increasing out-of-wedlock birthrates, characterize many countries formerly distinguished by replacement-level fertility and early, near-universal marriage and childbearing. The other facet of this demographic transformation is nearly unprecedented changes in adult mortality rates. An upsurge of cardiovascular and external cause mortality caused a massive premature loss of life among working-age men in the former Soviet Union in the 1990s. In contrast, cardiovascular mortality has fallen at a rapid rate across Eastern Europe since 1989. This study discusses the dimensions and most likely causes of these demographic changes and assesses the possible consequences of the changing fertility and mortality patterns. Much remains unknown about the underlying reasons for the demographic transformation of the region; directions for future research in this area are discussed.
    Keywords: fertility; marriage; mortality; transitional economies
    Date: 2010
  3. By: Popov, Vladimir
    Abstract: The goal of this study is to reveal the long-term trajectory of Russian economic development and to make predictions for the future. The study starts with a much discussed question: why Russia did worse economically during transition than most other countries in Europe and Asia? It is argued that it was partly caused by objective circumstances before transition (distortions in industrial structure and in trade patterns accumulated during the era of central planning), but mostly by the weakening of the institutional capacity of the state during transition.
    Keywords: Economic transition, institutional trajectories, Russia, China
    Date: 2010
  4. By: Kosta Josifidis (University of Novi Sad, Serbia; Faculty of Economics in Subotica, Department of European Economics and Business, Novi Sad); Jean-Pierre Allegret (Universit 0064e Nice Sophia-Antipolis (France)); Emilija Beker Pucar (University of Novi Sad, Serbia; Faculty of Economics in Subotica, Department of European Economics and Business, Novi Sad)
    Abstract: The paper explores (former) transition economies, Poland, Czech Republic, Slovakia and the Republic of Serbia, concerning abandonment of the exchange rate targeting and fixed exchange rate regimes and movement toward explicit/implicit inflation targeting and flexible exchange rate regimes. The paper identifies different subperiods concerning crucial monetary and exchange rate regimes, and tracks the changes of specific monetary transmission channels i.e exchange rate channel, interest rate channel, indirect and direct influences to the exchange rate, with variance decomposition of VAR/VEC model. The empirical results indicate that Polish monetary strategy toward higher monetary and exchange rate flexibility has been performed smoothly, gradually and planned, compared to the Slovak and, especially, Czech case. The comparison of three former transition economies with the Serbian case indicate strong and persistent exchange rate pass-through, low interest rate pass-through, significant indirect and direct influence to the exchange rate as potential obstacles for successful inflation targeting in the Republic of Serbia.
    Keywords: Exchange rate targeting, Inflation targeting, Intermediate exchange rate regimes, Monetary transmission channels
    JEL: E42 E52 F41
    Date: 2009–03
  5. By: Rainer Schweickert; Jonas Kauschke; Hanno Heitmann
    Abstract: This paper analyses the transformative power of NATO accession that gains in importance due to the enlargement fatigue of the EU, the EU’s rather weak neighbourhood incentives and the increasing importance of regional security as an incentive for compliance with the institutional standards of democracy and market economy. Econometric cross-country evidence from a hazard model reveals that the entry into NATO’s accession process is mainly driven by neighbourhood and strategic effects rather than foregoing institutional reforms in a candidate-country. While strategic interests also dominated the accession process of Macedonia initially, the case study results reveal the central role of the switch in NATO’s strategy from strategic interest only to a more balanced consideration of institutional reforms, which ‘turned Macedonia around’ in terms of institutional development. Clearly, after this turning point marked by the Ohrid agreement, the effectiveness of NATO’s accession conditionality could be revealed. The switch in NATO’s strategy, rather enforced externally than the result of a well structured debate among NATO members, is of special relevance for the peaceful transition of other post-socialist countries, e.g. Ukraine and Georgia
    Keywords: NATO Enlargement, Democratization, Institutions, Transition, Conflict, FYR Macedonia
    JEL: F59 P30 O19
    Date: 2010–02
  6. By: Emerson, Michael; Vinokurov , Evgeny
    Abstract: There is at present an overlapping but inadequately coordinated combination of strategic inter-continental transport corridors or axes stretching across the EuraAsian landmass, centered on or around Central Asia. There are three such initiatives - from the EU, China and China and the Asian Development Bank, and the EuraAsian Economic Community. This paper reviews these several strategic transport maps, and makes some proposals for their coordination and rationalisation. The EU Central Asia strategy does not so far pay much attention to these questions. However the EU’s own initiatives (the Pan-European Axes and the Traceca programme) are in need of updating and revision, and updating to take into account major investments now being made by the other parties. In particular the case is made for a “Central EuraAsian Corridor” for rail and road that would reach from Central Europe across Ukraine and Southern Russia into West Kazakhstan, and thence to the East Kazakh border with China, and thus joining up with and completing the West China-West Europe corridor promoted by the Asian Development Bank. There should also be a North-South corridor that would cross over this Central EuraAsian Corridor in West Kazakhstan and lead down to the Middle East and South Asia. These adaptations of existing plan could become an exemplary case of cooperation between Central Asia and all the major economic powers of the Eurasian landmass.
    Keywords: Eurasia; transport infrastructure; transport corridors; EU Wider Neighbourhood
    JEL: F15 R40
    Date: 2009–12
  7. By: Crabbé, Karen; Beine, Michel
    Abstract: This paper studies whether trade integration between the EU15 and Central Europe has led to more export specialization in Central Europe. Moreover, we analyze the impact of institutional reforms in Central Europe on export specialization. The empirical analysis is set up for thirteen Central European countries over the period 1989-2000. Our results indicate that a reduction in tariffs between EU15 and Central Europe led to increased export specialization in Central Europe. In addition to trade integration, we show that institutional reforms and in particular enterprise reforms contributed to export specialization.
    Keywords: trade integration; tariffs; Herfindahl index; exports; institutions;
    Date: 2009–03–24
  8. By: Libman, Alexander; Vinokurov, Evgeny
    Abstract: While the regional economic integration in the former Soviet Union turns out to be highly inefficient, there appears to be a stronger interest to the regionalism in smaller groups of more homogenous and geographically connected countries of the region, specifically, Central Asia. This paper attempts to understand whether the preconditions for the regional integration in Central Asia are indeed better than in the CIS in general. Using a new dataset of the System of Indicators of Eurasian Integration of the Eurasian Development Bank, it finds that although the economic links between the Central Asian countries are more pronounced than between that of the CIS in several key areas, this advantage has been disappearing fast over the last decade. In addition, the trend of economic integration of Central Asia seems to strongly correlate with that of the CIS in general, while Russia persists as the dominant gravitation pole for all of Central Asia. Currently Central Asia should be treated as a sub-region of the post-Soviet world rather than a definite integration region. On the other hand, however, we find that Kazakhstan emerges as a new center for regional integration, which can bear some potential for regionalism in Central Asia.
    Keywords: regionalization; economic integration; post-Soviet space; Central Asia
    JEL: F15 F13 P27
    Date: 2010–02
  9. By: Wang Ping (CNIS); Wang Yiyi (CNIS); John Hill (Pennsylvania State University)
    Abstract: This paper explores China’s standardization strategy after entering WTO and the standardization strategy’s current status quo and its roles in economic development and innovation system construction in China. Through the analysis of the achievements of the Study on the Strategy of Technical Standards Project of the Ministry of Science and Technology (MOST) and the standardization strategies or plans established by governments at all levels, it concludes that the skeleton for standardization strategy thinking has been formed, a real standardization strategy has been established and implemented, and addresses achievements and current challenges.
    Date: 2010–01
  10. By: Kelly Bird; Hal Hill
    Abstract: There are few countries where ‘initial conditions’ are as unfavourable as those of Laos. It is a very poor, least developed country. It is landlocked, sharing its international borders with five neighbours. It has the world’s highest per capita stock of unexploded ordinance, a legacy of the Indo China war. It has yet to recover from the loss of most of its entrepreneurial class and over half of its tertiary educated population in the aftermath of that war. It is heavily indebted, with substantial Soviet era obligations still outstanding. Its institutions are weak and property rights ill defined. Yet, its reform efforts over the past two decades have been largely successful, with accelerating growth and the beginnings of a relatively smooth transition from plan to market. Our examination of the Lao reform program and the subsequent outcomes suggests that, contrary to some of the prevailing pessimism, late-comers can engage with the international economy, providing their reforms are reasonably effective and credible. Neighbourhood effects have obviously been supportive in the Lao case, but their importance should not be over-stated.
    Keywords: Laos, latecomers, economic reform, plan to market, transition economies, landlocked states
    JEL: O53 P30
    Date: 2010
  11. By: Hidenobu Okuda; Lai Thi Phuong Nhung
    Abstract: This study investigates the factors determining the debt-ratios of listed companies on the Hanoi and Ho Chi Minh stock exchange markets. Estimation analysis using panel data covering the three-year period from 2006 to 2008 reveals the following results. (1) The debt-ratios of listed companies may be well explained by adjusted Modigliani and Miller theory combined with agency cost theory. (2) In order to borrow long-term outside funds, the ability to provide collateral is very important, even for qualified and listed companies. (3) Government controlled companies have weak incentives to save corporate tax payments by using debt financing. (4) In term of long-term fundraising, government controlled companies are perceived to present less risk than other companies. (5) In the determinants of fundraising, there is almost no difference in the determinants of fundraising between companies listed on the Ho Chi Minh stock exchange and those on the Hanoi stock exchange. (6) Compared to the fundraising activities of small- and medium-sized companies analyzed by Nguyen (2006) and Biger et al. (2008), those of listed companies could be better explained by using standard corporate financing theory. These observations suggest several policy implications. (1) Economic reform (Doi Moi) policies have successfully built up market based corporate financing systems for listed companies in Vietnam; however, (2) the protection of outside creditors should be further enhanced, as should be the disclosure of corporate information. (3) Further liberalization and privatization of the banking sector is urgently needed.
    Keywords: Corporate Finance, Capital Structure, Transition Economy, Vietnam
    JEL: G32 G34 G38
    Date: 2010–02
  12. By: Pasadilla, Gloria O. (Asian Development Bank Institute)
    Abstract: This paper surveys studies of the importance of Central Asian small- and medium-sized enterprises (SME) in the economy and their experience during the Russian financial crisis. It also uses survey data from the European Bank for Reconstruction and Development’s Business Environment and Enterprise Performance Surveys to infer noteworthy characteristics, features, and dependencies on financing of Central Asian SMEs and, consequently, derive the potential impact of the crisis on the sector. The paper also assesses government support for SMEs and the necessary market reforms that will give a boost to the sector’s development in the region.
    Keywords: smes; central asia; financial policies; financial development; small- and medium-sized enterprises
    JEL: E44 G18 G28 G38
    Date: 2010–01–25
  13. By: Almas Heshmati; Subal C. Kumbhakar (TEMEP, School of Industrial and Management Engineering College of Engineering, Seoul National University)
    Abstract: In the literature technical change is mostly assumed to be exogenous and specified as a function of time. However, some exogenous external factors other than time can also affect technical change. In this paper we model technical change via time trend (purely external non-economic) as well as other exogenous (external economic) factors (technology shifters). We define technology index based on the external economic factors which are indicators of ¡®technology¡¯. Thus our definition of production function is amended to accommodate everal technology shifters which are not separable from the traditional inputs. That is, these technology shifters allow for non-neutral shift in the production function. In doing so we are able to decompose technical change (a component of TFP change) into two parts. One part is driven by time (manna from heaven) and the other part is related to producer specific external economic factors. These exogenous technology shifters are aggregated (via hedonic aggregator functions) into several groups (technology indices) for parsimonious parametric specification. The empirical model uses panel data on Chinese provinces. We identify a number of key technology shifters and their effect on technical change and TFP growth of provinces.
    Keywords: technical change, total factor productivity growth, technology indicator, technology shifter, Chinese provinces
    JEL: C33 C43 D24 O18 O47
    Date: 2010–02
  14. By: Rand, John; Tarp, Finn
    Abstract: This paper uses a unique panel dataset on firm-level corruption. It contains quantitative information on bribe payments by a sample of formal and informal Vietnamese firms. We show that bribe incidence is highly associated with firm-level differences in (i) visibility, (ii) sunk costs, (iii) ability to pay, and (iv) level of interaction with public officials. Moreover, when informal firms become formal the probability of paying bribes increases. Becoming formal is also associated with a revenue growth premium that is not driven by self-selection of well-performing firms. On average, this premium outweighs the additional bribe cost of formalization. Formalization embodies net benefits in spite of the growth hampering effects of bribes.
    Keywords: firm performance, corruption, Vietnam
    Date: 2010

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