nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒05‒07
ten papers chosen by
J. David Brown
Heriot-Watt University

  1. Innovation Activities and Competitiveness: Empirical Evidence on the Behaviour of Firms in the New EU Member States and Candidate Countries By Iraj Hashi; Nebojsa Stojcic; Shqiponja Telhaj
  2. Motivations and strategies for a real revaluation of the Yuan By Dai, Meixing
  3. BMI changes in Russian adults: the role of lifestyles and spousal relationships By Huffman, Sonya K.
  4. Rebalancing Growth in China: An International Perspective By Agnes Benassy-Quere; Benjamin Carton; Ludovic Gauvin
  5. China's Rising Demand for "Green Cities": Evidence from Cross-City Real Estate Price Hedonics By Siqi Zheng; Jing Cao; Matthew E. Kahn
  6. A decomposition of China's productivity through calibration of an endogenous growth model By Luckstead, Jeff; Choi, Seung Mo; Devadoss, Stephen; Mittelhammer, Ron C.
  7. Changing economic structures and impacts of shocks — evidence from a DSGE model for China By Mehrotra, Aaron; Nuutilainen, Riikka; Pääkkönen, Jenni
  8. Diagnosing development bottlenecks : China and India By Li, Wei; Mengistae, Taye; Xu, Lixin Colin
  9. Education outcomes, school governance and parents'demand for accountability : evidence from Albania By Serra, Danila; Barr, Abigail; Packard, Truman
  10. Innovating like China: a theory of stage-dependent intellectual property rights By Chu, Angus C.; Cozzi, Guido; Galli, Silvia

  1. By: Iraj Hashi; Nebojsa Stojcic; Shqiponja Telhaj
    Abstract: This paper aims to explore the factors influencing the ability of firms to compete in globalised markets. The Austrian and evolutionary economics and the endogeneous growth literature highlight the role of innovation activities in enabling firms to compete more effectively - and expand their market share. On the basis of these theories, and using a large panel of firms from several Central and East European Countries (CEECs), this paper attempts to identify the factors and forces which determine the ability of firms to compete in conditions of transition. The competitiveness of firms, measured by their market share, is postulated to depend on indicators of firms' innovation behaviour such as improvements in cost-efficiency, labour productivity and investment in new machinery and equipment as well as characteristics of firms and their environment such as location, experience, technological intensity of their industries and the intensity of competition. To control for the dynamic nature of competitiveness and the potential endogeneity of its determinants, and to distinguish between short and long run effects of firm behaviour, a dynamic panel methodology is employed. The results indicate that the competitiveness of firms in transition economies is enhanced with improvements in their cost efficiency, productivity of labour, investment and their previous business experience while stronger competition has a negative impact on it.
    Keywords: competitiveness, restructuring, transition economies, market share, dynamic panel analysis
    JEL: O31
    Date: 2011–04
  2. By: Dai, Meixing
    Abstract: Most Western economists and policy makers agree that the Yuan is significantly undervalued and push the Chinese government for a large nominal revaluation of the Yuan. This paper, while surveying recent research on Chinese exchange rate policy, gives some new insights into this issue. Notably, this paper defends that China is not solely responsible for the Yuan’s undervaluation, the Chinese central bank cannot optimally invest an increasing amount of foreign currency reserves, and the Yuan’s nominal revaluation is not the only way to resolve the problem. After having analyzed the advantages and disadvantages of a nominal versus a real revaluation of the Yuan for the Chinese economy, I advocate and analyze, besides a modest nominal revaluation, a multitude of alternative policies to achieve a complete revaluation of the Yuan in real terms, which allows absorbing external disequilibrium while laying down the foundation for the long-term growth of the Chinese economy.
    Keywords: Renminbi (RMB); revaluation of the Yuan; foreign exchange reserves; external disequilibrium; measures of macroeconomic adjustment.
    JEL: F4 E2 F3 E5 E6
    Date: 2011–04–21
  3. By: Huffman, Sonya K.
    Keywords: BMI, Russia, lifestyle, Consumer/Household Economics, Health Economics and Policy,
    Date: 2011
  4. By: Agnes Benassy-Quere; Benjamin Carton; Ludovic Gauvin
    Abstract: Based on simulations of an original DGE model of the US, Chinese and Euro area economies with financial frictions and various monetary regimes, the paper shows that the contribution of China in global rebalancing should primarily rely on structural policies aiming at reducing aggregate savings in China. The role of the exchange-rate regime would be minor under standard monetary policies, although more important if monetary policies in advanced countries are constrained, as they are today. Finally, relying only on a change in China’s monetary regime (without structural reforms) could end up in delaying rather than accelerating the rebalancing, depending on China’s policy regarding accumulated reserves.
    Keywords: Global imbalances; exchange rate regimes; capital controls; China
    JEL: F32 F42 F47
    Date: 2011–03
  5. By: Siqi Zheng; Jing Cao; Matthew E. Kahn
    Abstract: With the decline of the traditional hukou system, migrants in China have a broad set of cities to choose from. Within an open system of cities, compensating differentials theory predicts that local real estate prices will reflect the marginal valuation of non-market local public goods. More polluted cities will feature lower real estate prices. But, local pollution may be caused by booming local industries. To address such endogeneity concerns, we estimate hedonic regressions using an instrumental variable strategy based on “imports” of pollution from nearby sources. By documenting the importance of spatial emissions patterns, our study highlights how real estate prices in one city are affected by Pigouvian externalities originating in another location. On average, a 10% decrease in imported neighbor pollution is associated with a 1.8% increase in local home prices.
    JEL: Q53 R31
    Date: 2011–04
  6. By: Luckstead, Jeff; Choi, Seung Mo; Devadoss, Stephen; Mittelhammer, Ron C.
    Keywords: China, IST, human capital, International Development, o30,
    Date: 2011
  7. By: Mehrotra, Aaron (BOFIT); Nuutilainen, Riikka (BOFIT); Pääkkönen, Jenni (BOFIT)
    Abstract: We construct a small-scale dynamic stochastic general equilibrium (DSGE) model that features price rigidities, habit formation in consumption and costs in capital adjustment, and calibrate the model with data for the Chinese economy. Our interest centers on the impact of technology and monetary policy shocks for different structures of the Chinese economy. In particular, we evaluate how a rebalancing of the economy from investment-led to consumption-led growth would affect the economic dynamics after a shock occurs. Our findings suggest that a rebalancing would reduce the volatility of the real economy in the event of a technology shock, which provides support for policies aiming to increase the consumption share in China.
    Keywords: DSGE; rebalancing; monetary policy shocks; technology shocks; China
    JEL: E52 E60
    Date: 2011–04–28
  8. By: Li, Wei; Mengistae, Taye; Xu, Lixin Colin
    Abstract: Although it had a a lower income level than India in 1980, China's 2006 per capita gross domestic product stands more than twice that of India's. This paper investigates the role of the business environment in explaining China's productivity advantage using recent firm-level survey data. The analysis finds that China has better infrastructure, more skilled workers, and more labor-hiring flexibility than India, but a worse access to finance and higher regulatory burden. Infrastructure appears to be a key constraint for India: it lags significantly behind China, yet it has important indirect effects for the effectiveness of labor flexibility. Labor flexibility is also likely a major constraint for India, as evident in the predominance of small firms, the importance of firm size in accounting for India's disadvantage in productivity, and the complementarity of proxies of labor flexibility with infrastructure and access to finance. Interestingly, regulatory uncertainty has adverse effects in India but not in China. The empirical analysis suggests that it is important to consider country-specific growth bottlenecks and the indirect effects of policy reforms.
    Keywords: Environmental Economics&Policies,Labor Policies,Labor Markets,Banks&Banking Reform,E-Business
    Date: 2011–04–01
  9. By: Serra, Danila; Barr, Abigail; Packard, Truman
    Abstract: The extent to which teachers and school directors are held to account may play a central role in determining education outcomes, particularly in developing and transition countries where institutional deficiencies can distort incentives. This paper investigates the relationship between an expanded set of school inputs, including proxies for the functionality of"top-down"and"bottom-up"accountability systems, and education outputs in Albanian primary schools. The authors use data generated by an original survey of 180 nationally representative schools. The analysis shows a strong negative correlation between measures of top-down accountability and students'rates of grade repetition and failure in final examinations, and a strong positive correlation between measures of top-down accountability and students'excellence in math. Bottom-up accountability measures are correlated to various education outputs, although they tend lose statistical significance once parent characteristics, school resources and top-down accountability indicators are considered. An in-depth analysis of participatory accountability within the schools focuses on parents'willingness to hold teachers to account. Here, the survey data are combined with data from lab-type experiments conducted with parents and teachers in the schools. In general, the survey data highlight problems of limited parental involvement and lack of information about participatory accountability structures. The experiments indicate that the lack of parental participation in the school accountability system is owing to information constraints and weak institutions that allow parent class representatives to be appointed by teachers rather than elected by parents.
    Keywords: Tertiary Education,Education For All,Primary Education,Teaching and Learning,Secondary Education
    Date: 2011–04–01
  10. By: Chu, Angus C.; Cozzi, Guido; Galli, Silvia
    Abstract: Inspired by the Chinese experience, we develop a Schumpeterian growth model of distance to frontier in which economic growth in the developing country is driven by domestic innovation as well as imitation and transfer of foreign technologies through foreign direct investment. We show that optimal IPR protection is stage-dependent. At an early stage of development, the country implements weak IPR protection to facilitate imitation. At a later stage of development, the country implements strong IPR protection to encourage domestic innovation. Finally, we provide empirical evidence that supports this theoretical finding.
    Keywords: economic growth; stage-dependent intellectual property rights
    JEL: O34 O31 O40
    Date: 2011–04

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