nep-tra New Economics Papers
on Transition Economics
Issue of 2010‒04‒24
fourteen papers chosen by
J. David Brown
Heriot-Watt University

  1. The Rise of Obesity in Transition Economies: Theory and Evidence from the Russian Longitudinal Monitoring Survey By Sonya K Huffman; Marian Rizov
  2. The Causes of Corruption: Evidence from China By Bin Dong; Benno Torgler
  3. The Consequences of Corruption: Evidence from China By Bin Dong; Benno Torgler
  4. The trend of the Gini coefficient of China By Jiandong Chen; Dai Dai; Ming Pu; Wenxuan Hou; Qiaobin Feng
  5. Foreign direct investment and innovation in Central and eastern Europe : evidence from Estonia By Masso, Jaan; Roolaht, Tõnu; Varblane, Urmas
  6. Drivers of Poverty Reduction in Lagging Regions: Evidence from Rural Western China By Christiaensen, Luc, Demery, Lionel and Kuhl, Jesper
  7. Migration and Urban Poverty and Inequality in China By Park, Albert; Wang, Dewen
  8. Employed Unemployed? On Shadow Employment During Transition By Joanna Tyrowicz; Stanisław Cichocki
  9. Earnings inequality and the informal economy: evidence from Serbia By Peter Sanfey; Gorana Krstic
  10. Crisis influence on the strategies of Russian MNC's By Laptev, Jury V.
  11. Foreign Direct Investment and Civil Rights:  Testing Decreasing Returns to Civil Rights By Ponce, Aldo
  13. Competition in Health Care By Baranov, Igor N.
  14. Environmental Governance in Hungary - Rural Development Policies and Social Learning during the Implementation of EU Agri-Environmental Policies - A Case Study By Guszt v Nemes

  1. By: Sonya K Huffman; Marian Rizov
    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 health and demand for inputs in the health production function.
    Keywords: health, obesity, transition economies, Russia
    Date: 2010
  2. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: In this study we explore in detail the causes of corruption in China using two different sets of data at the regional level (provinces and cities). We observe that regions with more anti-corruption efforts, histories of British rule, higher openness, more access to media and relatively higher wages of government employees are markedly less corrupt; while social heterogeneity, regulation, abundance of resource and state-owned enterprises substantially breed regional corruption. Moreover, fiscal decentralization is discovered to depress corruption significantly, while administrative decentralization fosters local corruption. We also find that there is currently a positive relationship between corruption and economic development in China that is mainly driven by the transition to a market economy.
    Keywords: Corruption; China; Government; Decentralization; Deterrence; Social Heterogenity
    JEL: D73 H11 K42
    Date: 2010–03–25
  3. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: With complementary Chinese data sets and alternative corruption measures, we explore the consequences of corruption. Adopting a novel approach we provide evidence that corruption can have both, positive and negative effects, on economic development. The overall impact of corruption might be the balance of the two simultaneous effects within a specific institutional environment (“grease the wheels†and “sand the wheelsâ€). Corruption is observed to considerably increase income inequality in China. We also find that corruption strongly reduces tax revenue. Looking at things from an expenditure point of view we observe that corruption significantly decreases government spending on education, R&D and public health in China. We also observe that regional corruption significantly reduces inbound foreign direct investment in Chinese regions, which indicates that the pollution haven hypothesis may not hold in China. This finding sheds a new light on the “China puzzle†that China is the largest developing host of FDI while it is appears to be very corrupt. Finally we observe that corruption substantially aggravates pollution probably through loosening environment regulation, and that it modifies the effects of trade openness and FDI on the stringency of environmental policy in a manner opposite to that observed in literature to date.
    Keywords: Corruption; China; Government; Economic Development; Inequality;
    JEL: D72 H11 K42
    Date: 2010–03–25
  4. By: Jiandong Chen; Dai Dai; Ming Pu; Wenxuan Hou; Qiaobin Feng
    Abstract: A literature review indicates that the main problem in calculating the Gini coefficient of Chinese residents’ income is the shortcomings of the data sources. Though many studies have tried to overcome these limitations through decomposing the nationwide Gini ratio by urban and rural areas, the final results have been underestimated, due to the overlap term or residual in the decomposition. This paper analyses the effects of the overlap term on calculating the overall Gini coefficient through a statistical approach, and estimates Chinese Gini ratios since economic reform and open door policies were adopted. Based on decomposing the Chinese Gini coefficient from 1978 to 2006, the authors find that the key factor of income inequality comes from income disparity between rural and urban inhabitants. The authors investigate the features of this income inequality between rural and urban areas. Furthermore, statistical approaches are employed to evaluate the effects of the development of urbanisation and rural-to-urban average income on the income inequality of the whole nation. The results show that accelerating the pace of urbanisation is the key issue to improving Chinese income disparity. On the basis of the above analysis, the paper proposes related policies for policy-makers.
    Date: 2010
  5. By: Masso, Jaan; Roolaht, Tõnu; Varblane, Urmas
    Abstract: A growing literature is trying to analyse the productivity gap between domestic and foreign firms with differences in innovation indicators. In our paper we analyse the relationship between inward and outward FDI at either company or industry level and the innovation behaviour of companies in Estonia. We use company-level data from three waves of the Community Innovation Surveys, which are combined with financial data from the Estonian Business Register and FDI data from the balance of payments statistics. For the analysis we apply a structural model involving equations on innovation expenditure, innovation outcome and productivity, and also innovation accounting and propensity score matching approaches. Our results show that the higher innovation output of foreign owned companies vanishes after various company characteristics are controlled for, but there were significant differences in innovation inputs such as the higher use of knowledge sourcing and the lower importance of various impeding factors. Outward investment has a positive influence on innovativeness among both domestic and foreign owned companies
    Keywords: innovation, internationalisation, foreign direct investments, catching-up countries
    JEL: F10 F23 O30
    Date: 2010–04–14
  6. By: Christiaensen, Luc, Demery, Lionel and Kuhl, Jesper
    Abstract: Using 2000-04 panel data this study analyses the pathways rural households followed out of poverty in two lagging provinces of China, Inner Mongolia and Gansu. Rising labour productivity in agriculture has been key, and still holds much promise. Labour mobility has also been important in Gansu. So far, rural diversification has not proven to contribute much to poverty reduction. Income transfers and agricultural tax abolishment have helped at the margin. Overall, the findings highlight that the scope for reducing poverty in lagging rural regions is often substantial in agriculture, also in countries where non-agriculture drives overall growth.
    Keywords: agriculture, migration, rural nonfarm employment, lagging region, poverty
    Date: 2010
  7. By: Park, Albert (University of Oxford); Wang, Dewen (Chinese Academy of Social Sciences)
    Abstract: Using data from recent surveys of migrants and local residents in 10 cities in 2005, this paper examines how migration influences measurements of urban poverty and inequality in China, and also compares how other indicators of well-being differ for migrants and local residents. Contrary to previous studies that report that the income poverty rate of migrant households is 1.5 times that of local resident households, we find relatively small differences in the poverty rates of migrants and local residents. Although the hourly wages of migrants are much lower than those of local residents, migrant workers work longer hours and have lower dependency ratios and higher labor force participation rates. Including migrants increases somewhat measures of urban income inequality. Significant differences between migrants and local residents are found for non-income welfare indicators such as housing conditions and access to social insurance programs.
    Keywords: migration, urban, poverty, inequality, social protection, China
    JEL: J61 O15
    Date: 2010–04
  8. By: Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland; Rimini Center for Economic Analysis); Stanisław Cichocki (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)
    Abstract: Unregistered employment poses two types of challenges to the researchers: (i) reliably evaluating the wage differential between formally and informally employed and (ii) accounting for the push and pull factors in general and the effects of business cycle in particular. We address the former with the use of propensity score matching and analyse the evolution of the estimated average compensations and the differentials with reference to GDP and unemployment fluctuations. Using 13 years of quarterly labour force survey data from Poland on de iure unemployed but de facto employed individuals we find, that in-the-shadow compensations tend to be higher and procyclical. We also find considerable distributional heterogeneity.
    Keywords: undeclared employment, propensity score matching, transition
    JEL: O17 J22 P37
    Date: 2010
  9. By: Peter Sanfey (European Bank for Reconstruction and Development); Gorana Krstic (University of Belgrade)
    Abstract: We analyse the extent and evolution of informality and inequality in the Serbian labour market between 2002 and 2007, using data from the Living Standard Measurement Surveys (LSMS). Two surprising results emerge. First, the level of informal employment has risen significantly over the period, despite strong economic growth and the introduction of a range of market-oriented reforms. Second, the level of inequality in earnings seems to have remained more or less constant over the period, in contrast to the experience of other countries at a similar stage of transition. We show that informal employees earn significantly less than those in the formal sector, controlling for a range of other variables, and informality plays an increasingly important role in explaining earnings inequality.
    Keywords: Informal economy; inequality; Serbia
    JEL: J3 J4 P2
    Date: 2010–03
  10. By: Laptev, Jury V.
    Abstract: The crisis made Russian MNE's change their development strategies. The paper considers pre-crisis conditions of Russian MNE's development, the way the crisis influenced their status, the search for a new model of development. The hypotheses of the companies’ problems depth connection to the intensity of their participation in M&A processes are tested along with the specifics of private companies' and partially state-owned companies’ reaction on the crisis. Executive summary is available at pp. 25.
    Keywords: Crisis, Russian MNC’s,
    Date: 2010
  11. By: Ponce, Aldo
    Abstract: In this paper, I examine the effectiveness of improvements in political and civil rights for attracting foreign direct investment flows (FDI) into democracies. I contend that advances in the quality of democracy – specifically those concerning civil rights – present positive but decreasing marginal returns in attracting FDI inflows. I empirically prove this proposition by using panel data regressions within the Latin American and Eastern European contexts from periods following their democratization (1991-2003).
    Keywords: foreign direct investment; civil rights; democratization; developing nations; Latin America; Eastern Europe
    JEL: K12 K00 F21 K11 K31 P52
    Date: 2010–03–15
  12. By: Bui Trinh (National Account Department - General statistical Office)
    Abstract: In recent years, Vietnam has modernized its economic policies. Positive results include an economic growth rate averaging more than 7% per annum, increased foreign investment and improved living standards for its citizens. Having moved from a traditional socialist model to a market-based system, trade is now a major economic priority of the Vietnamese Government. The study is a contribution to a new line of trade theory arguing that good trade policy depends on many factors. By using effective rate of protection (ERP) concept, the study provides analysis of the current tariff structure from 2005 to 2009 in order to estimate the structural change of ERP by goods sectors, and the impact of trade barriers (through tariff) on the Vietnam’s economy. Vietnam’s 2007 competitive and non-competitive input-output tables are the main database used. Economic indicators like ERP, OM (output multipliers) and BL (backward linkage) calculated from the I/O model are used to assess the effectiveness of industries. The relevant policies on trade Vietnam are then suggested.
    Keywords: Trade, tariff, protection, effective rate of protection, competitive input-output table, non-competitive input-output table, output multiplier, backward linkage, and effectiveness.
    Date: 2010
  13. By: Baranov, Igor N.
    Abstract: This policy paper highlights key theoretical issues related to the possibility of competition in provision of health care services and provides their illustrations for Russian health care system. Executive summary is available at pp. 48.
    Keywords: competition, health care,
    Date: 2010
  14. By: Guszt v Nemes (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: The Rural Development Regulation (RDR) within the Common Agricultural Policy (CAP), as an exemplary manifestation of the New Rural Development Paradigm, has achieved significant results. Nevertheless, it has increasingly become liable to institutional complexity and central control in an emerging system - discussed as 'the project state' or 'projectified world' in recent literature. The intersection of different institutional realities (European, domestic, regional, local, sectoral, spatial, etc.) and the resulting institutional bricolage is inevitably contested. The dispute is even more apparent in CEE countries, where multi-level governance is problematic and the New Paradigm has good possibilities, but little tradition. This case study of the implementation of the Hungarian Agri-Environmental Programme (HAEP) intends to illustrate how a disfunctioning project state (clientalism, insufficient bureaucracy, direct political influence) can distort the implementation of rural development policies. We found that the design and the implementation of the programme (HAEP) was subjected to ongoing political influence and the power struggle of three main mindsets, representing different lobbies: the agriculturalists, the green-minded and the accountability-minded actors. As a consequence, the main emphasis remains on the distribution of financial resources, thus original objectives (environmental protection and effective social learning) are not fulfilled. The case study is part of my ongoing research "Local Development Policies in a European Project State - A Systemic Analysis of Institutional Bricolage" supported by an NFM-OTKA grant.
    Keywords: social learning, environmental governance, agri-environmental policies, CAP, EU policies, environmental protection, project state, evaluation
    JEL: D73 D74 D78 H83 J18 Q00 Q01 Q18 Q19 Q51 Q56 Q58 Y80
    Date: 2010–04

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