nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒01‒23
eleven papers chosen by
J. David Brown
Heriot-Watt University

  1. Media and Political Persuasion: Evidence from Russia By Ruben Enikolopov; Maria Petrova; Ekaterina Zhuravskaya
  2. Evolution of the Chinese Rural-Urban Migrant Labor Market from 2002 to 2007 By Qu, Zhaopeng (Frank); Zhao, Zhong
  3. Ownership concentration, institutional development and firm performance in Central and Eastern Europe By Balsmeier, Benjamin; Czarnitzki, Dirk
  4. Technology Transfer to Vietnam for Process Innovation through Engineer Exchanges under China plus One Strategy, Firm-level Evidence By Tomohiro Machikita; Chi Binh Truong Thi; Yasushi Ueki
  5. Determinants of Profit Reinvestment by Small Businesses in Emerging Economies By Sugato Chakravarty; Meifang Xiang
  6. History Matters: China and Global Governance By Wendy Dobson
  7. The Impact of Price Regulations on Regional Welfare and Agricultural Productivity in China By Selim, Sheikh
  8. Oil price influence on Russian macroeconomic indicators By Olga Podkorytova; Tatyana Chigvintseva
  9. Investigation of cointegration of oil prices and Russian market indices By Alexander Alexeev
  10. The coincident and the leading business cycle indicators for Poland By Rafał Woźniak
  11. Do macroeconomic factors matter for stock returns? Evidence from estimating a multifactor model on the Croatian market By Dubravka Benaković; Petra Posedel

  1. By: Ruben Enikolopov (New Economic School (Moscow)); Maria Petrova (New Economic School (Moscow)); Ekaterina Zhuravskaya (Paris School of Economics and New Economic School)
    Abstract: This paper compares electoral outcomes of 1999 parliamentary elections in Russia among geographical areas with differential access to the only independent from the government national TV channel. It was available to three-quarters of Russia’s population and its signal availability was idiosyncratic conditional on observables. Independent TV decreased aggregate vote for the government party by 8.9 percentage points, increased the combined vote for major opposition parties by 6.3 percentage points, and decreased turnout by 3.8 percentage points. The probability of voting for opposition parties increased for individuals who watched independent TV even controlling for voting intentions measured one month before elections.
    JEL: J0 D0 H0
    Date: 2010–12
  2. By: Qu, Zhaopeng (Frank) (Beijing Normal University); Zhao, Zhong (Renmin University of China)
    Abstract: The paper studies the dynamic change of the migrant labor market in China from 2002 to 2007 using two comparable data sets. Our focus is on the rural-urban migration decision, the wage structure of migrants, the urban labor market segmentation between migrants and urban natives, and the changes of these aspects from 2002 to 2007. We find that prior migration experience is a key factor for the migration decision of rural household members, and its importance keeps increasing from 2002 to 2007. Our results show that there is a significant increase in wages among both migrants and urban natives over this 5-year period, but migrants have enjoyed faster wage growth, and most of the increase of wages among migrants can be attributed to the increase of returns to their characteristics. We also find evidence suggesting convergence of urban labor markets for migrants and for urban natives during this 5-year period.
    Keywords: rural-urban migration, labor market, wage structure, migration decision, segmentation, China
    JEL: J21 J61 O15
    Date: 2011–01
  3. By: Balsmeier, Benjamin; Czarnitzki, Dirk
    Abstract: This paper analyzes the relationship of ownership concentration and firm performance in the context of different institutional environments in 28 Central and Eastern European transition economies. Using the BEEPS data for the period from 2002 to 2009 we find an inverted u-shaped relation of ownership concentration and firm performance for those firms that operate in non-EU-member countries as well as those firms that are situated in less developed legal systems according to Freedom House ratings. We interpret these findings as evidence for a classic agency problem in the lower part of the ownership concentration distribution that is dominated by a 'private benefits of control' problem with rising ownership concentration. --
    Keywords: corporate governance,firm growth,transition economies,ownership concentration
    JEL: G32 L25 O16 P31
    Date: 2010
  4. By: Tomohiro Machikita (Institute of Developing Economies (IDE/JETRO), Japan); Chi Binh Truong Thi (Institute for Industry Policy and Strategy, Vietnam); Yasushi Ueki (Bangkok Research Center, IDE/JETRO, Thailand)
    Abstract: Increasing wages in coastal areas and the risk of Yuan appreciation in China will encourage firms in China to adopt China plus One strategy. More firms establish plants in Vietnam to take advantage of supporting industries in China and hedge China risk. Hanoi and its surrounding region will be one of the main destinations for FDIs into manufacturing sectors. Although Vietnam can provide cheap labor forces, firms in Vietnam do not have sufficient technological and managerial capabilities to participate in international production networks. International technology transfer is needed for Vietnam to achieve international business standards. This paper presents firm-level evidence on process innovation through technology transfer to firms in Hanoi. We emphasize engineer exchanges as a channel of technology transfer. A case study of Japanese firm invested from China to establish a plant in Hanoi is also introduced to complement the empirical result.
    Date: 2011
  5. By: Sugato Chakravarty (Purdue University); Meifang Xiang (University of Wisconsin, Whitewater)
    Abstract: We investigate the cross-country key factors of profit reinvestment decisions, using data compiled by the World Bank from over 7,000 businesses in 36 countries. We find that, compared to the security of property rights, it is a firm’s access to external financing that plays a significant role in a firm’s reinvestment decision in emerging economies. The extent of private ownership and the level of competition faced by firms are additional significant factors correlated with the reinvestment decision. Furthermore, we uncover a firm size effect in that the above factors driving firm reinvestment decision appears to impact small firms more than the relatively larger firms. Our findings complement, as well as build on, those from China and a few Eastern European countries.
    Keywords: Reinvestment,investment,external financing, property rights,private ownership, competition
    JEL: G21 D82 O16
    Date: 2011–01
  6. By: Wendy Dobson (University of Toronto)
    Abstract: This paper focuses on the two-way relationship between China and the international economic system. China’s embrace of the global institutions and their rules and norms helped guide its spectacular economic growth and integration into the world economy. China’s impact on the global economic order is still an open question, however. Its sheer size and dynamism makes it a force to be reckoned with. So far its influence has been largely constructive but recent signs of assertiveness raise questions about the future. History matters to the answer. Memories of both historical pre-eminence and humiliation drive nationalism and assertiveness at the same time that China identifies with developing countries as a counterbalance rather than as a leader or enforcer of the global norms and rules. The paper evaluates China’s role in the regional and global economic institutions by applying this criterion of economic cooperation: is China willing to modify national policies in recognition of international economic interdependence? The evidence presented is mixed reflecting the complexities of China’s modernization and re-emergence. China actively supports the order in some forums, shows passivity in others yet in still others increasingly asserts its own interests regardless of the global rules. The paper draws conclusions and future implications of this new ‘normal’.
    Date: 2011–01
  7. By: Selim, Sheikh (Cardiff Business School)
    Abstract: The nineties' agricultural reform in China that was aimed at deregulating the agricultural market eventually resulted in a huge drop in agricultural production and a high rate of inflation in agricultural prices; this apparently motivated the government to take over the control of agricultural prices in 1998. We examine how and to what extent this reform affected the productivity and welfare of grain farmers in China at the regional level. We find that the price regulation that destroyed the incentive to exert more effort adversely affected the growth in agricultural productivity but contributed to the growth in farmers. welfare. Although the price regulations resulted in short term improvement in welfare across all the regions, for the long run such regulations can result in larger drop in agricultural production because of its negative impact on incentives to produce more.
    Keywords: China; Welfare; TFP; Agriculture; Grain Production
    JEL: N55 O13 O53 Q12
    Date: 2011–01
  8. By: Olga Podkorytova (Department of Economics, European University at St. Petersburg; St. Petersburg State University); Tatyana Chigvintseva (Department of Economics, European University at St. Petersburg)
    Abstract: We investigate macroeconomics effects of an oil price in Russia in 2000-2010. We find long-run relations associating the oil price, the GDP, the CPI and the interbank interest rate.
    Keywords: oil price, GDP, CPI, macroeconomics, econometrics, cointegration
    JEL: C32 O13 E3
    Date: 2010–10–15
  9. By: Alexander Alexeev (Department of Economics, European University at St. Petersburg)
    Abstract: We perform an econometric analysis of cointegration of the Brent oil price and general and industrial indices of the RTS and MICEX stock exchanges. Positive relation between the oil price and the MICEX industrial index for an oil sector. It is interesting to note that a cointegration between the oil price and industrial RTS index is not detected. A cointegration between the oil price and the general indices is found both for the RTS and the MICEX, and in both cases it is positive. This result differs from those obtained earlier by researchers for other countries where negative influence of the oil price on financial markets was obtained.
    Keywords: oil price, stock index, econometrics, cointegration
    JEL: C32 O13 E3
    Date: 2010–09–28
  10. By: Rafał Woźniak (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)
    Abstract: In the paper, two indicators, the coincident and the leading indicator, are proposed to represent the aggregated economic activity in Poland. The indicators are constructed with stochastic cycle and trend model. Not only does the presented approach solve the problem of existence of stochastic trends in the observed series, but it also allows to account for a different data span of each series in dataset.
    Keywords: business cycles, leading indicators, coincident indicators, dynamic factor model, stochastic cycle, stochastic trend
    JEL: C32 E32
    Date: 2011
  11. By: Dubravka Benaković; Petra Posedel
    Abstract: Factor models observe the sensitivity of an asset return as a function of one or more factors. This paper analyzes returns on fourteen stocks of the Croatian capital market in the period from January 2004 to October 2009 using inflation, industrial production, interest rates, market index and oil prices as factors. Both the direction and strength of the relation between the change in factors and returns are investigated. The analyses included fourteen stocks and their sensitivities to factors were estimated. The results show that the market index has the largest statistical significance for all stocks and a positive relation to returns. Interest rates, oil prices and industrial production also marked a positive relation to returns, while inflation had a negative influence. Furthermore, cross-sectional regression with the estimated sensitivities used as independent variables and returns in each month as dependent variables is performed. This analysis resulted in time series of risk premiums for each factor. The most important factor affecting stock prices proved to be the market index, which had a positive risk premium. A statistically significant factor in 2004 and 2008 was also inflation, marking a negative risk premium in 2004 and a positive one in 2008. The remaining three factors have not shown as significant.
    Keywords: factor models, risk premium, stock returns, estimated sensitivities, regression analysis
    JEL: C22 E22 G12
    Date: 2010–12–16

This nep-tra issue is ©2011 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.