nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒06‒11
eleven papers chosen by
J. David Brown
Heriot-Watt University

  1. Elite Political Instability and Economic Growth: An Empirical Evidence from the Baltic States By Ladislava Grochová; Tomáš Otáhal
  2. State-led technological development: A case of China's nanotechnology development By Huang, Can; Wu, Yilin
  3. The Elephant in the "Green Room": China and the Doha Round By Aaditya Mattoo; Francis Ng; Arvind Subramanian
  4. Executive Board: The Russian Experience By Iwasaki, Ichiro
  5. Fundraising Behaviors of Listed Companies in Vietnam: An Estimation of the Influence of Government Ownership By Okuda, Hidenobu; Nhung, Lai Thi Phuong
  6. The Nested Variable Model of FDI Spillover Effects Estimation Using Hungarian Panel Data By Iwasaki, Ichiro; Csizmadia, Péter; Illéssy, Miklós; Makó, Csaba; Szanyi, Miklós
  7. After ten years the Russian crisis how IMF intervention might be evaluated? By Sulimierska, Malgorzata
  8. Determinants of the Dinar-Euro Nominal Exchange Rate By Milan Nedeljkovic; Branko Urosevic
  9. Business Cycle Similarity Measuring in the Eurozone Member and Candidate Countries: an Alternative Approach By Petr Rozmahel; Nikola Najman
  10. Market Size, Competitiveness and Technological Frontier - the Impact of Trade Integration with the UE on Productivity in Polish Manufacturing Sectors By Aleksandra Parteka; Joanna Wolszczak-Derlacz
  11. Time and frequency domain in the business cycle structure By Jitka Poměnková; Roman Maršálek

  1. By: Ladislava Grochová (Department of Economics, FBE MENDELU in Brno); Tomáš Otáhal (Department of Economics, FBE MENDELU in Brno)
    Abstract: Did the EU pressure improve legal enforcement in the Czech and Slovak Republics? The paper analyzes the current state of the Czech and Slovak quality of legal enforcement in a context of the European Union accession. We looked at different kinds of corruption indicator data, such as statistics of revealed and clarified malfeasance connected with corruption per 100 capita and the composite indexes. These indicators suggest that the quality of the legal enforcement in the Czech and Slovak Republics has not improved after joining the European Union. More precisely, it can be argued that in spite of implementation of anti-corruption public policies proposed by EU institutions, perceived corruption of public officials has remained the same, which means that trustworthiness of legal enforcement responsible for deterrence and reduction of corruption remained the same as well. Therefore, in order to improve the quality of the legal enforcement, reduction of barriers to entry and deeper legal reforms is suggested.
    Keywords: Anti-corruption public policy, corruption, Czech Republic, EU accession, Slovak Republic
    JEL: D74 K42 P3
    Date: 2011–04
  2. By: Huang, Can (UNU-MERIT, and Maastricht University); Wu, Yilin (Center for Applied Statistic and School of Statistics, Renmin University of China)
    Abstract: We analyze the nanotechnology patent applications filed in China from 1998 to 2008 and find that the extraordinary nanotechnology development in China has been primarily promoted by the public sector but not driven by industry and market force. This finding implies that developing countries such as China with public research capacity and commitment to technological development can make rapid progress in basic research of emerging technologies, but it remains uncertain whether and when local industry can benefit from public R&D investment to actively develop indigenous innovation.
    Keywords: New Technologies, Nanotechnology, Asia, China, R&D, Patents, State-led R&D, Innovation, R&D Investment
    JEL: O14 O33 O38
    Date: 2011
  3. By: Aaditya Mattoo (World Bank); Francis Ng (World Bank); Arvind Subramanian (Peterson Institute for International Economics)
    Abstract: China's global economic dominance has changed the dynamic of the Doha Round of multilateral trade negotiations, which has been languishing for nearly 10 years. Whereas earlier lack of enthusiasm from the private sector debilitated Doha, today fear of competition from a dominant China inhibits progress. Progress now hinges critically on greater market opening not in services or agriculture but in manufacturing, where China is a large supplier to all the major markets, and its presence has grown significantly over the course of the Doha Round negotiations. China looms especially large in the markets of major trading partners in sectors where protection is greatest. China's share in these sectors in Japan is over 70 percent, in Korea over 60 percent, in Brazil about 55 percent, in the United States, Canada, and the European Union about 50 percent each. Liberalization under the Doha agenda, especially in the politically charged, high-tariff sectors, is increasingly about other countries opening their markets to Chinese exports. China has achieved trade dominance to a large extent through its successful growth strategy, but the problem is the strong political perception that China's export success has been achieved, and continues to be sustained, in part by an undervalued exchange rate. It seems unlikely and politically unrealistic to expect China's trading partners to open further their markets to China when China is perceived as de facto (via the undervalued exchange rate) imposing an import tariff and export subsidy not just in selected manufacturing sectors but across the board. Unless Chinese currency policy changes significantly, and unless there can be credible checks on the use of such policies in the future, concern will remain in many countries, both industrial and emerging-market, about the increased competition from China that liberalization under Doha might unleash. Instead of blaming one another for the current impasse, countries need to confront Chinese trade dominance to revive Doha or look beyond it.
    Date: 2011–05
  4. By: Iwasaki, Ichiro
    Abstract: In this paper, using a unique dataset of joint-stock companies, we empirically examine the determinants of the choice and size of the collective executive board, a core element of the multi-tier board system of Russian firms. Our empirical evidence strongly suggests that the need of company executives for a collective management system is a key driver for the formation of a collective executive board, while outside investors are generally indifferent toward its adoption as a means to strengthening the monitoring and control functions over top management. We also found that Russian firms in the pursuit of the internationalization of their business activities tend to avoid the establishment of a collective executive board, which is a diverse corporate organ from the viewpoint of the international standard of corporate governance systems.
    Keywords: executive board, multi-tier board system, corporate governance, strategic management, Russia
    JEL: G34 K22 L22 P31 P34
    Date: 2011–05
  5. By: Okuda, Hidenobu; Nhung, Lai Thi Phuong
    Abstract: This study investigates the capital structure and investment activities of listed companies on the Hanoi Securities Exchange and the Ho Chi Minh Securities Exchange in Vietnam. Estimation analysis using panel data covering the four-year period 2006-2009 revealed the following results. (1) Standard corporate financing theories such as trade-off theory and agency cost theory could be appropriate for explaining the capital structure of listed companies in Vietnam. (2) Compared to the fundraising activities of the companies analyzed by Nguyen (2006) and Biger et al. (2008), the fundraising activities of the listed companies were better explained by standard agency cost theory. (3) There are differences between the determinants of long-term fundraising and short-term fundraising of listed companies in Vietnam. (4) The fundraising determinants of state-controlled companies are different from those of other companies; state-controlled companies have an advantage in tapping external debt funds, and their incentive to reduce their tax payments by debt financing is weaker. (5) The companies listed on the Ho Chi Minh Securities Exchange depended less on debt financing than those listed on the Hanoi Securities Exchange. (6) Listed companies in Vietnam face weak incentives to reduce their tax payments by debt financing because the effective corporate tax rate is low. These results imply that the economic reforms (“Doi Moi”) implemented by the Vietnamese government, which aims to create an economic system based on market mechanisms, have achieved some of their goals in terms of fund mobilization and corporate financing. However, our estimation study illustrates several limitations of economic reforms, such as the opaque relationship between state-controlled companies and government banks, financial restrictions on investment activities, and inactive investment of companies that are state-controlled or listed on the Ho Chi Minh Securities Exchange.
    Keywords: Corporate Finance, Capital Structure, Transition Economy, Vietnam
    JEL: G32 G34 G38
    Date: 2011–03
  6. By: Iwasaki, Ichiro; Csizmadia, Péter; Illéssy, Miklós; Makó, Csaba; Szanyi, Miklós
    Abstract: A new empirical model is presented in this paper with respect to the productivity spillover effects of foreign direct investment (FDI) by focusing on the multi-layered structure of industrial classifications. In this model, the market presence of horizontal FDI in a host country is expressed using multiple spillover variables with a nested structure corresponding to the aggregated level of industrial classification. Using large-scale firm-level data from Hungary, we estimated the nested variable model and verified horizontal FDI spillover effects that cannot be captured with the conventional model having a single horizontal variable.
    Keywords: foreign direct investment, multinational enterprise, technology and knowledge spillover, nested variable model, Hungary
    JEL: D24 F21 F23 L16 L60 L80 O19 P23
    Date: 2011–05
  7. By: Sulimierska, Malgorzata
    Abstract: The ongoing global financial crisis has become prominently visible since September 2008. This crisis affected the whole world and enhanced the importance of policy implementation to mitigate financial crises in future. Many academics blamed insufficient domestic regulation as the reason of crises, others pointed to the lack of overseas financial regulation and inappropriate actions by international organizations, such as the IMF and World Bank. This whole discussion encouraged to look back and analyzed a previous crisis in smallest countries such as Russia. This paper evidently shows the inefficiency of IMF policy during the Russia Crisis in 1998 by implementing a new monetary balance-of-payment model in Russian data. This model identified the role of macroeconomic fundamentals and international economic policy implications on the likelihood and the timing of the currency crisis in Russia. For the period from December 1995 to December 1998 it was found that, the increase in domestic credit growth gradually undermined confidence in the fixed exchange rate regime. The most dangerous point was at the end of 1998, when the collapse probability was above 90 percent. This result ambiguously questioned the IMF’s July packet 1998 and proved the political aspects of this financial help.
    Keywords: currency crisis; financial liberalization; sudden-stops; monetary balance-of-payment model; Russian crisis; IMF’s policy
    JEL: F40 E58 E40
    Date: 2011–04–29
  8. By: Milan Nedeljkovic (National Bank of Serbia); Branko Urosevic (National Bank of Serbia)
    Abstract: This paper studies drivers of daily dynamics of the nominal dinar-euro exchange rate from September 2006 to June 2010. Using a novel semiparametric approach we are able to incorporate the evidence of nonlinearities under very weak assumptions on the underlying data generating process. We identify several factors influencing daily exchange rate returns whose importance varies over time. In the period preceeding the financial crisis, information in past returns, changes in households’ foreign currency savings and banks' net purchases of foreign currency are the most significant factors. From September 2008 onwards other factors related to changes in country's risk and the information processing in the market gain importance. NBS interventions are found to be effective with a time delay.
    Keywords: Foreign exchange market, Partially linear model, Kernel estimation
    JEL: F31 C14 G18
    Date: 2011–05
  9. By: Petr Rozmahel (Research Centre, FBE MENDELU in Brno); Nikola Najman (Department of Economics, FBE MENDELU in Brno)
    Abstract: The article sheds some light on the process of measuring business cycle similarity and points out the fact that contemporary studies usually simplify this problem by measuring a simple correlation of cyclical development in GDP. The main goal is to assess the level of business cycle similarity in selected Eurozone member and candidate countries using the Concordance index. The Concordance index embodies an alternative and rarely used approach to measuring the similarity of business cycles. The article also includes a comparison of the Concordance index technique with traditional correlation methods. The results show that the Czech Republic belongs to the states with relatively high level of concordance comparing to the other Eurozone member and candidate countries. Accordingly, the measure of business cycle concordance should not serve as an argument for slowing down of the monetary integration process in the Czech Republic. The resultant concordance measures also give an evidence of relatively low level of the business cycle similarity of Slovak economy and the Eurozone, which might imply a possibly higher risk of the asymmetric shock occurrence in Slovakia.
    Keywords: business cycle, concordance index, correlation analysis, optimum currency area
    JEL: E32 F41
    Date: 2011–04
  10. By: Aleksandra Parteka (Gdansk University of Technology, Faculty of Management and Economics); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Faculty of Management and Economics)
    Abstract: This paper addresses the relationship between growth of relative productivity in Polish manufacturing sectors and forces stemming from trade integration with the EU. We look at the productivity growth from the perspective of relations between Polish manufacturing sectors and the foreign ones, focusing on partner countries from the enlarged EU. Empirical analysis is based on sector level bilateral data concerning both domestic (Polish) and foreign market characteristics and degree of openness in the period 1995-2006. Main results indicate that, both in the short and long run, growth in domestic openness (independently on the direction of trade flows) exert positive effect on growth of relative productivity in Poland, while the opposite impact is exhibited by foreign openness. In addition, expansion in relative size of Polish sectors versus foreign ones is also among positive determinants of domestic labour productivity growth. The results suggest that domestic openness and market size effects have stimulated movement of Polish sectors towards the technological frontier with respect to the partner countries from the EU.
    Keywords: labour productivity, trade, integration
    JEL: F14 F15 F16
    Date: 2011
  11. By: Jitka Poměnková (Department of Finance, FBE MENDELU in Brno); Roman Maršálek (Department of Radio Electronics, Faculty of Electrical Engineering and Communication, Brno University of Technology)
    Abstract: The paper deals with identification of cyclical behaviour of business cycle from time and frequency domain perspectives. Herewith, commonly used methods for obtaining growth business cycle are investigated – the first order difference, the unobserved component models, regression curves and filtration using Baxter-King and Christiano-Fitzgerald band-pass filters as well as Hodrick-Prescott high-pass filter. In the case of time domain analysis identification of cycle lengths is based on dating process of the growth business cycle. For this reason, methods such right and left variant of naive techniques as well as Bry-Boschan algorithm are applied. In the case frequency domain analysis of cyclical structure trough spectrum estimate via periodogram and autoregressive process with optimum lag are suggested. Results from both domain approaches are compared. On their bases recommendation for cyclical structure identification of growth business cycle of the transition economy type (the Czech Republic) are formulated. In the context of the time domain analysis evaluation of unity results of de-trending techniques from identification turning point points of view is attached. All analyses are done on the quarterly data of the gross domestic product, the total industry excluding construction, the gross capital formation in the period 1996/Q1-2008/Q4 and on the final consumption expenditure in the period 1995/Q1-2008/Q4.
    Keywords: spectrum, business cycle, transition economy, frequency domain, time domain
    JEL: E32 C16 C5 C6
    Date: 2011–04

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