nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒05‒30
eleven papers chosen by
J. David Brown
Heriot-Watt University

  1. The Value of Business Networks in Emerging Economies: An Analysis of Firms' External Financing Opportunities By Owolabi, Oluwarotimi; Pal, Sarmistha
  2. How Far is the East? Educational Performance in Eastern Europe By Alina Botezat; Ruben R. Seiberlich
  3. Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe By Juan Carlos Cuestas; Karsten Steahr
  4. China's economic growth engine: The likely types of hardware failure, software failure and power supply failure By Woo, Wing Thye
  5. Channels of Interprovincial Risk Sharing in China By Julan Du; Qing He; Oliver M. Rui
  6. Business Society and Corporate Social Responsibility: Comparative analysis in Russia and Japan By Satoshi Mizobata
  7. Institutional change in market-liberal state capitalism. An integrative perspective on the development of the private business sector in China By ten Brink, Tobias
  8. Impacts of Household Credit on Education and Healthcare Spending by the Poor in Peri-urban Areas in Vietnam By Tinh Doan; John Gibson; Mark Holmes
  9. Is Globalization Inevitable in the Marxian Paradigm? By Ramirez, Miguel D.
  10. Do exports cause growth? Some evidence for the new EU members By Oscar Bajo-Rubio; Carmen Díaz-Roldán
  11. Funding a New Bridge in Rural Vietnam: A field experiment on conditional cooperation and default contributions By Carlsson, Fredrik; Johansson-Stenman, Olof; Pham Khanh, Nam

  1. By: Owolabi, Oluwarotimi (Brunel University); Pal, Sarmistha (Brunel University)
    Abstract: The paper argues that networked firms are likely to have an advantage in securing external finance in countries with weak legal and judicial institutions since it helps financial institutions to minimize the underlying agency costs of lending. An analysis of recent BEEPS data from fifteen Central and Eastern European (CEE) countries lends some support to this hypothesis. Even after controlling for other factors, firms affiliated to business associations are more likely to secure bank finance. Importance of being associated with business networks is particularly evident among firms who borrow from private domestic and foreign banks, as these new banks attempt to minimize costs of adverse selection. Networking however discriminates against the small and medium sized firms' access to bank loans in the CEE regions. Results are robust in both single cross-section and panel data analyses.
    Keywords: business networks, agency costs, external firm financing, bank loans, transition economies, endogeneity
    JEL: G21 G30 L14 M20 P21
    Date: 2011–05
  2. By: Alina Botezat (Department of Economics, Al. I. Cuza University of Iasi, Rumänien); Ruben R. Seiberlich (Department of Economics, University of Konstanz, Germany)
    Abstract: When the Soviet Union collapsed a transition process started in Eastern Europe. This included a number of reforms to adapt the educational system to the new requirements of the job market. To assess the educational systems in Eastern Europe, this paper takes a look at the gap in PISA test scores between different countries. Using PISA 2006 data we disentangle the effects that explain the gap between Finland, the best performing country, and seven Eastern European countries, as well as, between Eastern European countries. The methodology applied in this paper is a semiparametric version of the threefold Blinder-Oaxaca decomposition, an approach which is not yet used in the research regarding the differences in school outcomes. Our results show that in all cases the differences in characteristics does not explain much of the gap. The return effect is the driving force of the differences in test scores. Under our identifying assumption, our results therefore indicate that the PISA test score gap can mainly be attributed to the different efficiency of school systems and are not due to better characteristics of students in a particular country. Furthermore, we provide evidence that the gap is smaller for better students indicating that, especially for poor performing students, the efficiency of Eastern European schools is behind the efficiency of Finnish schools.
    Keywords: PISA, test score gap, decomposition, semiparametric, propensity score matching
    JEL: J24 I21 C14
    Date: 2011–05–22
  3. By: Juan Carlos Cuestas (Department of Economics, The University of Sheffield); Karsten Steahr
    Abstract: This paper analyses the time series properties of the fiscal balance in the 10 EU countries from Central and Eastern Europe. The persistence of shocks in the variable has been analysed by means of unit root tests that account for the possibility of non-linearities and structural changes. The results of the linear and non-linear unit root tests find only mild evidence in favour of the stationarity hypothesis, with asymmetric effects present in a few cases. After controlling for structural changes in the data generation process, the results point to stochastic stationarity of the series. Thus, in spite relatively steady headline figures, the public balance processes exhibit substantial instability in the EU countries from Central and Eastern Europe.
    Keywords: Unit roots, structural breaks, budget balance, EU
    JEL: C32 E24
    Date: 2011–05
  4. By: Woo, Wing Thye (BOFIT)
    Abstract: The 6th Plenum of the 16th Central Committee of the Communist Party of China (CPC) concluded on October 11, 2006, with the commitment to establish a harmonious society by 2020. The obvious implication from this commitment is that the present major social, economic and political trends are not leading to a harmonious society or, at least, not leading to a harmonious society fast enough. Analytically, if the Chinese economy is depicted as a speeding car, there are three classes of failures (a) a hardware failure from the breakdown of an economic mechanism, a development that is analogous to the collapse of the chassis of the car; (b) a software failure from a flaw in governance that creates frequent widespread social disorders that disrupt production economy-wide and discourage private investment, a situation similar to a car crash that resulted from a fight among the people inside the speeding car; and (c) a power supply failure from hitting either a natural limit or an externally-imposed limit, a situation that is akin, respectively, to the car running out of gas or to the car smashing into a barrier erected by an outsider. For hardware failure we discuss the possible weakening of China's fiscal position generated by the repeated recapitalization of the state banks. For software failure, we discuss possible social disorder caused by outmoded governance. And for power supply failure, we discuss the possible trade disputes from China’s chronic trade imbalances and the physical constraints posed by China’s rapidly deteriorating natural environment.
    Keywords: China; growth; banks; environment
    JEL: O43 O53 P48
    Date: 2011–05–26
  5. By: Julan Du (The Chinese University of Hong Kong); Qing He (Renmin University of China and Hong Kong Institute for Monetary Research); Oliver M. Rui (The Chinese University of Hong Kong and Hong Kong Institute for Monetary Research)
    Abstract: This paper decomposes consumption risk sharing among provinces in China over the 1980-2007 period. We find that 9.4 percent of the shocks to gross provincial product are smoothed by the interprovincial fiscal transfer system. This system also cushions a relatively large fraction of the province-specific shocks in the coastal provinces of China. Using a variety of indicators, we explore non-fiscal channels of consumption risk sharing. We find that the migration of rural labor to urban areas and the remittance of migrant wages play important roles in promoting interprovincial consumption risk sharing in the inland provinces of China. In contrast, the extent of risk sharing through financial intermediaries and the capital markets is very limited. These factors have resulted in a low degree of risk sharing among Chinese provinces, especially over the last decade.
    Keywords: Consumption Risk Sharing, Chinese Economy, Fiscal System, Credit Markets, Remittance
    JEL: O16 O53 R11
    Date: 2011–04
  6. By: Satoshi Mizobata (Institute of Economic Research, Kyoto University)
    Abstract: Comparative analysis of CSR allows characterizing both corporate society and market institutions. Even though transition economies have backwardness of corporate governance institutions and include premature CSR, Russian CSR, paradoxically speaking, can be regarded as hyper one, and specific stakeholders have played a decisive role in its establishment. The present paper empirically and descriptively analyzed evolution of the contemporary Russian CSR and described its characteristics. Observations made show that market-type changes are obvious in Russia, companies try to adapt to the market changes, but at the same time, the historical inertia is quite strong. Moreover, through a comparison of CSR in Russia and Japan it was proved that a certain type of hybrid CSR exists in both countries, due to the existence of path-dependence institutions and a new impact of globalization.
    Keywords: Corporate social responsibility (CSR), comparison, corporate governance, public policy, stakeholder, Russia, capitalism
    JEL: J24 M10 M14 P12 P31 P5
    Date: 2011–05
  7. By: ten Brink, Tobias
    Abstract: This paper shows that a more accurate depiction of the development of China's private sector is gained by considering the complex interaction between bottom-up and topdown processes. First, the paper analyzes the general characteristics of Chinese capitalism to help understand and classify the gradual institutional change in the enterprise sector. Second, it draws on insights from comparative political economy and new approaches in political science to introduce the strategy of 'wearing a red hat,' an empirical phenomenon that provides a framework for the emergence from the 1980s of China's private sector. This section also examines the closely interwoven relationships between private companies and the party-state that have taken place since the 1990s. Third, the paper indicates that focusing on state/capital relationships at different administrational levels contributes to a better understanding of China's private sector. It concludes that the development and success of the new private enterprises, which remained closely linked to the state, enabled the ruling elite to form and consolidate a hegemonic project that provided relative societal coherence on the often bumpy road to reform. -- Dieser Artikel zeigt auf, dass ein Blick auf die komplexen Interaktionen zwischen 'Bottom- up'- und 'Top-down'-Prozessen ein präziseres Bild der Entwicklung des Privatsektors in China liefert. Dabei hilft erstens eine Analyse von grundlegenden Merkmalen des chinesischen Kapitalismus, um den graduellen institutionellen Wandel im Unternehmenssektor verstehen beziehungsweise einordnen zu können. Unter Bezugnahme auf die Vergleichende Politische Ökonomie und neuere politikwissenschaftliche Ansätze werden, zweitens, die empirischen Phänomene des 'wearing a red hat' in der Entstehungsphase des Privatsektors ab den 1980ern sowie der seitdem eng verknüpften Beziehungen zwischen Privatunternehmen und dem Parteistaat eingeführt. Drittens wird erörtert, dass ein Fokus auf die engen Beziehungen zwischen Staat und Kapital auf verschiedenen administrativen Ebenen zu einem besseren Verständnis des chinesischen Privatsektors beiträgt. Wie abschließend festgehalten wird, ermöglichte die Entwicklung und der Erfolg der neuen privaten, jedoch weiterhin eng mit dem Staat verbundenen Unternehmen es der Machtelite, ein hegemoniales Projekt zu formieren und aufrechtzuerhalten, das dem holprigen Reformweg eine relative gesellschaftliche Stabilität verlieh.
    Date: 2011
  8. By: Tinh Doan (University of Waikato); John Gibson (University of Waikato); Mark Holmes (University of Waikato)
    Abstract: There is debate about whether microfinance has positive impacts on education and health for borrowing households in developing countries. To provide evidence for this debate we use a new survey designed to meet the conditions for propensity score matching (PSM) and examine the impact of household credit on education and healthcare spending by the poor in peri-urban areas of Ho Chi Minh City, Vietnam. In addition to matching statistically identical non-borrowers with borrowers, our estimates also control for household pre-treatment income and assets, which may be associated with unobservable factors affecting both credit participation and the outcomes of interest. The PSM estimates of binary treatment effect show significant and positive impacts of borrowing on education and healthcare spending. However, multiple ordered treatment effect estimates reveal that only formal credit has significant and positive impacts on education and healthcare spending, while informal credit has insignificant impacts on the spending.
    Keywords: matching; education and healthcare spending; household credit; the poor; peri-urban; Vietnam
    JEL: C14 C21 H81
    Date: 2011–05–23
  9. By: Ramirez, Miguel D. (Trinity College, Hartford, CT)
    Abstract: This paper examines Marx's views on globalization and its supposed inevitability, and contends that they underwent a substantial evolution and revision after the publication of the Communist Manifesto. In the case of China, a prime example of the Asiatic mode of production, Marx even doubted whether globalization (capitalism) would ever be able to accomplish its historical mission of developing the forces of production and creating the material conditions for a higher mode of production, viz., Communism. While in the Russian case, he seriously entertained the notion that it could bypass the hardships and vicissitudes of capitalism and forge its own unique path to socialism. If accepted, this interpretation represents a serious challenge to the universality and validity of Marx's materialist conception of history.
    JEL: B10 B14 B24
    Date: 2011–05
  10. By: Oscar Bajo-Rubio (Universidad de Castilla-La Mancha); Carmen Díaz-Roldán (Universidad de Castilla-La Mancha)
    Abstract: In this paper, we analyze the relationship between international trade and economic growth, from the point of view of one of the most traditional hypothesis within this field, namely, the export-led growth hypothesis. To this end, we apply Grangercausality tests, in a cointegration framework, to data on exports and GDP of the eight CEECs that became members of the EU in 2004.
    Keywords: Economic growth, Exports, Transition countries
    JEL: F41 F43 O40
    Date: 2011–05
  11. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Pham Khanh, Nam (Faculty of Development Economics, University of Ho Chi Minh City)
    Abstract: The ability to provide public goods is essential for economic and social development, yet there is very limited empirical evidence regarding contributions to a real local public good in developing countries. This paper analyzes a field experiment where 200 households in rural Vietnam could make real contributions to an archetypical public good, a bridge. In particular, we study the role of two kinds of social influence: i) conditional cooperation, i.e., that people may be more willing to cooperate if others do, and ii) the effects of the default alternative, i.e., that people are influenced by the default alternative presented to them in the choice situation. We find significant and substantial effects of both kinds of influence. For example, by either giving the subjects the additional information that one of the most common contributions by others is 100,000 dong (a relatively low contribution) or introducing a zero-contribution default alternative, the average contribution decreases by about 20% compared to the baseline case.
    Keywords: voluntary contribution; local public goods; social influence; default contribution; conditional cooperation; field experiment
    JEL: C93 Q50
    Date: 2011–05–19

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