nep-tra New Economics Papers
on Transition Economics
Issue of 2010‒06‒04
twelve papers chosen by
J. David Brown
Heriot-Watt University

  1. How Do Chinese Industries Benefit from FDI Spillovers? By ITO Banri; YASHIRO Naomitsu; XU Zhaoyuan; CHEN Xiaohong; WAKASUGI Ryuhei
  2. Inflation in the New EU Countries from Central and Eastern Europe : Theories and panel data estimations By Karsten Staehr
  3. Socio-indicators related to social perception of reforms in the public health system.The romanian case By Matei, Ani; Savulescu, Carmen
  4. Female Employment and Fertility in Rural China By Fang, Hai; Eggleston, Karen N.; Rizzo, John A.; Zeckhauser, Richard
  5. Structural Change in Transition Economies: Does Foreign Aid Matter? By Fardmanesh, Mohsen; Tan, Li
  6. Does Emigration Benefit the Stayers? The EU Enlargement as a Natural Experiment. Evidence from Lithuania By Benjamin;
  7. Crude Oil Price shocks to Emerging Markets: Evaluating the BRICs Case By Khan, Salman
  8. Relationship between Czech and European developed stock markets: DCC MVGARCH analysis By Michael Princ
  9. Study on Agrarian Contracts in Bulgaria By Bachev, Hrabrin
  10. Optimal Farm Size under an Uncertain Land Market: the Case of Kyrgyz Republic By Sara Savastano; Pasquale Lucio Scandizzo
  11. Eco-governance in Bulgarian Agriculture By Bachev, Hrabrin
  12. Toward Electric Cars and Clean Coal: A Comparative Analysis of Strategies and Strategy-Making in the U.S. and China By Burgelman, Robert A.; Grove, Andrew S.

  1. By: ITO Banri; YASHIRO Naomitsu; XU Zhaoyuan; CHEN Xiaohong; WAKASUGI Ryuhei
    Abstract: Recently, Foreign Invested Enterprises (FIEs) in China have increased their investment in not only production activity but also R&D activity. This paper examines the impact of spillovers from their activities on two types of innovations by Chinese domestic firms: Total Factor Productivity (TFP) and invention patent application, using comprehensive industry and province-level data. We evaluate such spillovers according to FIEs' ownership structure, the origin of foreign funds, and the type of their activity: R&D, and production. We find an interesting asymmetry between spillovers to TFP and patent application; however, although we do not find significant intra-industry spillovers from FIEs, which is in line with previous studies, we find robust inter-industries spillover on TFP. We also find substantial intra-industry spillovers promoting invention patent application but no evidence of inter-industries spillovers. Furthermore, whereas spillovers from FIEs to Chinese firmsf TFP stem from their production activities, the source of spillovers to invention patent application is mostly through their R&D activity. Our findings indicate a need for multi-dimensional evaluation on the role of FDI in developing countries.
    Date: 2010–05
  2. By: Karsten Staehr
    Abstract: This paper seeks to identify factors driving consumer price inflation in the new EU member countries from Central and Eastern Europe. Different theories are discussed, including some of particular importance to economies experiencing high economic growth and rapid structural change. The explanatory power of the theories is tested using panel data estimations based on annual data from 1997 to 2007. Convergence- related factors, including the Balassa-Samuelson and the Bhagwati capital-deepening effects, are important drivers of inflation. Import inflation and, by implication, exchange rate developments have an important impact, while the exchange rate regime is unimportant. Higher government debt and larger revenues are associated with higher inflation. The cyclical position as measured by unemployment, employment changes or the current account balance is found to affect inflation. Food price shocks have large but short-lived effects, while energy price shocks have longer-lasting effects on the inflation rate. Multicollinearity across the explanatory variables makes it difficult to identify the effect of each individual factor
    Keywords: inflation, inflation theories, real and nominal convergence, inflation determinants
    JEL: E31 E42 E63 P24
    Date: 2010–05–26
  3. By: Matei, Ani; Savulescu, Carmen
    Abstract: The paper approaches the social perception of the reform in the public health system through statistic modelling and analyses. Based upon the general framework of the European and international activities on improving the public health policies, the structure of the first part of the paper comprises the description of the health security models, analyses for Central and Eastern European countries, SWOT analysis on the health system in Romania. The socio indicators are empirically described, taking into consideration the measurement of the medical staff opinion on the quality of the reform process.
    Keywords: models of public health systems; social perception; socio indicators; empirical analysis
    JEL: H51 I18 A14
    Date: 2010–04–15
  4. By: Fang, Hai (U CO, Denver); Eggleston, Karen N. (Walter H Shorenstein Asia-Pacific Research Center, Stanford U); Rizzo, John A. (Stony Brook U, SUNY); Zeckhauser, Richard (Harvard U)
    Abstract: Data on 2,288 married women from the 2006 China Health and Nutrition Survey are deployed to study how off-farm female employment affects fertility. Such employment reduces a married woman's actual number of children by 0.64, her preferred number by 0.48, and her probability of having more than one child by 54.8 percent. Causality flows in both directions; hence, we use well validated instrumental variables to estimate employment status. China has deep concerns with both female employment and population size. Moreover, female employment is growing quickly. Hence, its implications for fertility must be understood. Ramifications for China's one-child policy are discussed.
    JEL: J13 J18 O15
    Date: 2010–03
  5. By: Fardmanesh, Mohsen (Temple University); Tan, Li (American International Group, New York, NY)
    Abstract: This paper addresses whether the initial declines in the manufacturing and real wages in transition economies were anything unexpected to justify policy reversal, and whether the "often-recommended" foreign aid would have helped them curb these declines in any significant way. It answers these questions with the help of a two-sector three-factor small open economy model and simulation exercises. It concludes that, given the relative price distortions and the market disequilibria that transition economies inherited from their planning era, the initial declines in their manufacturing and real wages are to be mostly expected. Foreign aid, whose impact is noticeable only when it is in excess of 5% of GDP, does not curb the decline in their real wages in any measurable way and exacerbates the decline in their manufacturing by a few percent.
    JEL: R20
    Date: 2009–12
  6. By: Benjamin (Institute for International Integration Studies, Trinity College Dublin);
    Abstract: The eastern enlargement of the European Union in 2004 triggered a large flow of migrant workers from the new member states to the UK and Ireland. This paper analyzes the impact of this migration wave on the real wages in the source countries. I consider the case of Lithuania, which had the highest share of emigrants relative to its workforce among all ten new member states. Using data from the Lithuanian Household Budget Survey and the Irish Census, I find that emigration had a significant positive effect on the wages of men who stayed in the country, but no such effect is visible for women. A percentage point increase in the emigration rate increases the real wage of men on average by 1\%. Several robustness checks confirm this result.
    Keywords: Emigration, EU Enlargement, Labor Mobility
    JEL: F22 J61 R23
    Date: 2009–01
  7. By: Khan, Salman
    Abstract: In this paper we investigate the relationship between the crude oil and the stock market in terms of returns and volatility-spillover for the BRIC countries by using cointegration and the VECM-MGARCH technique. The results reveal that the oil and the market returns are cointegrated in all the markets. The results from VECM indicate stable, bidirectional, long-run relationship between oil prices and market returns while short-run linkages were found to be absent in all the cases except Russia where it significantly affects the BRENT prices. In terms of shock transmission and volatility spillover, the relationship is significant and bidirectional in all the cases. The analyses conclude that BRIC countries stock markets are highly integrated with the oil market.
    Keywords: Multivariate GARCH; Cointegration; Oil Price; Stock markets; VECM
    JEL: O16 C22 Q4
    Date: 2010–04–30
  8. By: Michael Princ (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The study concentrates on an analysis of the Czech stock market performed by an application of DCC MV GARCH model of Engle (2002). Data sample including years from 1994 to 2009 is represented by daily returns of Prague Stock Exchange index and other 11 major stock indices. There is found an existence of increasing trend in conditional correlations among a whole European region. The trend reveals breakpoints splitting a data series into three phases of development. The analysis includes a composition of returns adjusted by exchange rates capturing a point of view of global investors. The Czech Koruna exchange rate effects in a conjunction with equity returns are identified as a possible risk aversion instrument. Granger causality concept is added in order to find a development of data flow directions in a perspective of the Czech market. Results show that unidirectional influence of foreign markets affecting Czech market occurs in data series.
    Keywords: stock market integration, multivariate analysis, dynamic modelling, conditional correlation
    JEL: C32 E44 G14 G15 F36
    Date: 2010–05
  9. By: Bachev, Hrabrin
    Abstract: This paper suggests a holistic framework for analysis of agrarian contracts and investigates the contractual structure in transitional Bulgarian agriculture. Firstly, it incorporates the interdisciplinary New Institutional and Transaction Costs Economics (combining Economics, Organization, Law, Sociology, Behavioral and Political Sciences) and describes major mechanisms of governance of agrarian activity – institutional environment, market competition, private, collective and public order; and defines features of agrarian sale-purchase, lease, employment, service, loan, insurance and coalition contracts; and identifies technological, institutional, behavioral, dimensional, and transaction costs factors for contractual choice and specifies effective modes for contractual arrangements in agriculture; and determines the effective boundaries and sustainability of farm and agrarian organizations. Secondly, it analyzes the post-communist institutional and organizational modernization of Bulgarian agriculture, and assesses the efficiency of various modes for governing of land supply, and labor supply, and service supply, and inputs supply, and finance supply, and insurance supply, and marketing of output in different type of farms.
    Keywords: mechanisms of governance; contract management; type of agrarian contracts; factors and efficiency of contractual choice; economic boundaries and sustainability of farm; transitional agriculture; Bulgaria
    JEL: L11 M55 J54 L14 M31 D71 Q13 L23 Q15 J33 D21 K12 Q12 D23 J43 O17 M51 L22
    Date: 2010–05–20
  10. By: Sara Savastano (Faculty of Economics, University of Rome "Tor Vergata"); Pasquale Lucio Scandizzo (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: The paper illustrates a theoretical model of real option value applied to the problem of land development. Making use of the 1998-2001 Kyrgyz Household Budget Survey, we show that when the hypothesis of decreasing return to scale holds, the relation between the threshold value of revenue per hectare and the amount of land cultivated is positive. In addition to that, the relation between the threshold and the amount of land owned is positive in the case of continuous supply of land and negative when there is discontinuous supply of land. The direct consequence is that, in the first case, smaller farms will be more willing to rent land and exercise the option where, in the second case, larger farms will exercise first. The results corroborate the findings of the theoretical model and suggest three main conclusions: (i) the combination of uncertainty and irreversibility is a significant factor in the land development decisions, (ii) farmers’ behaviour is consistent with the continuous profit maximization model, (iii) farming unit revenue tends to be positively related to farm size, once uncertainty is properly accounted for.
    Keywords: Option value theory, Farm size, Uncertainty, irreversibility.
    JEL: O13 Q12 Q15 Q18
    Date: 2010–05–28
  11. By: Bachev, Hrabrin
    Abstract: This paper presents the evolution of diverse modes of environmental management in Bulgarian agriculture, and assesses their efficiency and likely prospects of development. First, it analyzes the pace of development and the impact(s) on individual behavior of the major modes of environmental governance - institutional environment (distribution and enforcement of property, user, trading etc. rights and rules); private and collective modes (diverse private initiatives, and contractual and organizational arrangements); market modes (various decentralized initiatives governed by “free” market price movements and market competition); public modes (different forms of Government, community, international etc. intervention). Second, it assesses the impact(s) of dominating system of governance on the state of environment and identifies major eco-challenges, conflicts and risks – increased competition for natural resources, degradation and contamination of farmland, pollution of surface and ground waters, loss of biodiversity, deterioration of (agro)eco-systems services etc. Third, it projects likely evolution of environmental management in the specific “Bulgarian” economic, institutional and natural environment, and estimates its probable effect on environmental security, and suggests recommendations for institutional modernization and public policies improvement.
    Keywords: environmental management; market; private; public and hybrid modes; Bulgarian agriculture
    JEL: Q50 Q28 Q24 Q25 Q57 Q18 Q38 Q26 Q34 Q13 Q15 Q58
    Date: 2010–05–26
  12. By: Burgelman, Robert A. (Stanford University); Grove, Andrew S. (Intel Corporation)
    Abstract: The Bass seminars at the Stanford University Graduate School of Business offer faculty and small groups of students the opportunity to interact in highly focused and intense ways on research topics of common interest. Our S373 Bass seminar "Strategic Thinking in Action--in Business and Beyond," has focused in the last several years on the energy situation facing the United States. The fall 2009 seminar focused on the development and adoption of the electric car and clean coal technologies in the U.S. and China. Together with the seminar participants we wanted to study the current strategies of both countries for dealing with these two issues, and we also wanted to study how they approach the strategy-making process. This research paper describes the results.
    Date: 2010–02

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