nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒06‒18
seventeen papers chosen by
J. David Brown
Heriot-Watt University

  1. Financial Integration at Times of Financial Instability By Jan Babecky; Lubos Komarek; Zlatuse Komarkova
  2. Patent examination at the State Intellectual Property Office in China By Johannes Liegsalz; Stefan Wagner
  3. China's High-tech Exports: Myth and Reality By Yuqing Xing
  4. China’s New Demographic Challenge: From Unlimited Supply of Labour to Structural Lack of Labour Supply. Labour market and demographic scenarios: 2008-2048 By Michele Bruni
  5. Arbeitskosten, Steuerbelastung und Wettbewerbsfähigkeit in Österreich im Vergleich mit ausgewählten CEEs By Peter Havlik; Sebastian Leitner; Roman Römisch
  6. Transboundary Pollution in China: A Study of the Location Choice of Polluting Firms in Hebei Province By Chloe Duvivier; Hang Xiong
  7. An empirical estimation of Balassa – Samuelson Effect in case of Eastern European Countries By Paun, Cristian
  9. Western Balkans: Employment in the Gas and Electricity Sectors By Vasily Astrov; Mario Holzner; Sebastian Leitner; Doris Hanzl-Weiss; Hermine Vidovic; Edward Christie; Waltraut Urban
  10. Central Bank Forecasts as a Coordination Device By Jan Filacek; Branislav Saxa
  11. Behind the Eastern-Western European convergence path: the role of geography and trade liberalization By Adolfo Cristobal-Campoamor; Osiris Jorge Parcero
  12. Analiza empirică a sincronizării ciclului de afaceri şi a similarităţii şocurilor între România şi zona euro By Bojeşteanu, Elena; Manu, Ana Simona
  13. Subgroup and Shapley Value Decompositions of Multidimensional Inequality – An Application to Southeast European Countries By Robert Stehrer; Sebastian Leitner
  14. Household Credit to the Poor and its Impact on Child Schooling in Peri-urban Areas, Vietnam By Tinh Doan; John Gibson; Mark Holmes
  15. Structural changes and convergence in EU and in Adriatic-Balkans Region By Albu, Lucian-Liviu
  16. An Assessment of the Access by Romanian SMEs to Structural Funds By Gábor Hunya
  17. Who Borrows and Who May Not Repay? By Alena Bicakova; Zuzana Prelcova; Renata Pasalicova

  1. By: Jan Babecky; Lubos Komarek; Zlatuse Komarkova
    Abstract: This article analyzes the phenomenon of financial integration on both the theoretical and empirical levels, focusing primarily on assessing the impacts of the current financial crisis. In the theoretical section we first look at the definition of financial integration and summarize the benefits and costs associated with this process. We go on to examine the relationship between financial integration and financial instability, emphasizing the priority role of financial innovation. The subsequent empirical section provides an analysis of the speed and level of integration of the Czech financial market and the markets of selected inflation-targeting Central European economies (Hungary and Poland) and advanced Western European economies (Sweden and the United Kingdom) with the euro area. The results for the Czech Republic reveal that a process of increasing financial integration has been going on steadily since the end of the 1990s and also that the financial crisis caused only temporary price divergence of the Czech financial market from the euro area market.
    Keywords: Beta-convergence, financial crisis, financial integration, gamma-convergence, new EU Member States, propagation of shocks, sigma-convergence.
    JEL: C23 G12 G15
    Date: 2010–12
  2. By: Johannes Liegsalz (BMW AG); Stefan Wagner (ESMT European School of Management and Technology)
    Abstract: The number of patent applications filed at the Chinese State Intellectual Property Office SIPO grew tremendously over the last decades and the SIPO has become the world’s third largest patent office by 2009. In this paper, we provide an overview of the institutional background of patent examination in China. Moreover, we empirically analyze the determinants of the grant lags applicants have to expect at the SIPO. The multivariate duration analysis is based on the population of 443,533 patent applications filed at the SIPO between 1990 and 2002. The average grant lag is 4.71 years with considerable variation across 30 different technology areas. Interestingly, we find that Chinese applicants are able to achieve faster patent grants than their non-Chinese counterparts (even after controlling for various other determinants of grant lags). This might be an indication of a differential treatment of Chinese applicants which would be in violation of Art. 3 (National Treatment) and Art. 4 (Most-favored Nation Treatment) of TRIPS that has been signed by China in 2001.
    Keywords: patent system, patent examination, State Intellectual Property Office China, duration analysis
    Date: 2011–05–31
  3. By: Yuqing Xing (National Graduate Institute for Policy Studies)
    Abstract: China's leading position in high-tech exports is a myth created by outdated trade statistics, which are inconsistent with the trade based on global supply chains. Assembled high-tech products, made with imported key parts and components, accounted for 82% of China's high-tech exports. Current trade statistics mistakenly credit entire values of these assembled products to China, thus greatly inflate the export value. For instance, in 2009 China's export in the iPhone amounted US$4.6 billion, of which only 3.6% was the value added by Chinese workers; its annual export in laptop PC valued at US$52 billion, but assembly accounted for only 3% of the gross value. In addition, 83% of China's high-tech exports was attributed to foreign invested firms, in particular Taiwanese owned companies. Taiwan-IT companies have relocated 95% of their production/assembly capacity into and transferred mainland China to a top assembler of information and communication technology, such as laptop PCs, digital cameras and all i-products.
    Keywords: China, high-tech, value added, iPhone
    Date: 2011–06
  4. By: Michele Bruni
    Abstract: The paper focuses on the demographic and labour market consequences of the dramatic decline in fertility that has characterized China starting at the beginning of the ‘50s. It is shared opinion that a sustained decline in fertility below replacement level will provoke a decline in Total population, an even more pronounced decline in Working age population and very relevant ageing phenomena. I have recently shown that, on the contrary and coherently with empirical evidence, a decline in fertility provokes a structural lack of labour supply that determines positive migration balances and, finally, positive demographic trends. The paper applies the same approach to China with similar results. The decline in fertility, determined by the process of economic development and its impact on education and urbanization, but promoted also trough the one-child policy, will provoke a relevant and growing structural lack of labour supply, even in the hypothesis that Chinese employment growth should sharply decline. The implication is that in order to continue its road to economic growth and social development, China will have to rely on large and growing migration flows that will determine a demographic expansion. In conclusion, the decline in fertility, actively pursued to set a ceiling to population growth, will end up provoking the opposite result. The uncertainty about the age structure of the Chinese population makes it impossible to determine in which year China will start to be affected by serious labour shortages. Our scenarios do however clearly show that China will reach the Lewis turning point in the next few years and before the middle of the century will become the world largest importer of labour. Our analysis does therefore clearly suggest that any legal restriction to fertility and territorial mobility is totally unwarranted, and that China should start to consider educational and labour policies aimed to mitigate labour shortages. It also indicates the necessity to start an in depth discussion of which immigration and social integration policies could better serve the interests of China, on the light both of the experiences of other countries, and of the role that China wants to play in the international arena.
    Keywords: Demography; Labour market; Demographic and labour market scenarios; Migrations; Lewis turning point; China
    JEL: J11 F22 O15 O53
    Date: 2011–02
  5. By: Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Roman Römisch (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The study analyses in an international comparison the key characteristics and recent developments of labour costs, taxation and productivity in Austria and selected CEEs (Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia). The CEEs still enjoy sizeable cost advantages, yet the fast growth of their unit labour costs implies gradually deteriorating competitiveness. A comparison of the real purchasing power of net wages reveals a lower income disparity between Austria and CEEs. The varying overall tax burden and the composition of tax revenues in the countries concerned plays a role in investment decisions as well. ~~~~ Die vorliegende Studie analysiert in einem internationalen Vergleich die wichtigsten Merkmale der Entlohnung und Besteuerung des Faktors Arbeit, die Produktivität und andere Faktoren der Wettbewerbsfähigkeit sowie die Zusammensetzung des Steueraufkommens in Österreich (AT) und neun mittel-, ost- und südosteuropäischen Ländern (CEEs): Bulgarien, Tschechische Republik, Kroatien, Ungarn, Polen, Rumänien, Serbien, Slowenien und Slowakei. Die Studie basiert auf den aktuellsten Daten von Eurostat, nationalen Quellen der jeweiligen Länder und wiiw-Schätzungen und Berechnungen. Die Ergebnisse verdeutlichen die Komplexität der Problematik, vor allem in Bezug auf ein angestrebtes „Ranking“ der einzelnen Länder oder andere standortspezifische unternehmerische Entscheidungen.
    Keywords: labour costs, productivity, taxation, Austria, Central and Eastern Europe
    JEL: D24 D31 E24 E63 H2 J3 O52 Y1
    Date: 2011–04
  6. By: Chloe Duvivier (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Hang Xiong (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: In this paper we study whether or not transboundary pollution problems exist in China. To do so, we estimate whether, within Hebei province, polluting firms are more likely to set up in border counties than in interior ones. For this purpose, we use the lists of polluting firms published annually by the Ministry of Environmental Protection of China and by the Environmental Protection Bureau of Hebei province. To ensure the robustness of our results, several measures of the variable of interest are constructed from GIS data. The estimations of a count-data model allow us to conclude that border counties are more attractive destinations for polluting firms than counties located within the province. Moreover, it appears that this effect has strengthened over time.
    Keywords: Transboundary pollution;firm location choice;environmental regulations;China
    Date: 2011–06–07
  7. By: Paun, Cristian
    Abstract: Integration into the European Monetary Union (EMU) and adoption of Euro became a specific objective for Eastern European Countries after their accession into the European Union. This objective implies specific nominal and real economic convergence for these countries within a given period of time (Copenhagen criteria). Nominal convergence measurement is based on well-defined system of economic indicators (Maastricht and Amsterdam criteria). Real convergence refers to real economic performance of a country and it is commonly associated with GDP growth rate and productivity level. From a broader perspective, real and nominal convergence could be seen as complementary. Tensions between real and nominal convergence are tested through Balassa – Samuelson Effect. In this paper it is analyzed the evolution of nominal and real convergence based on a proposed set of indicators and it is estimated Balassa-Samuelson Effect on non-Euro countries.
    Keywords: EMU; Euro; Optimal Currency Area; Balassa Samuelson Effect
    JEL: E42 F41 F33
    Date: 2010–03–15
  8. By: Hoang Van Long; Mitsuyasu Yabe (Department of Agriculture and Resource Economics, Faculty of Agriculture, Kyushu University, Japan)
    Abstract: In Vietnam, the poor have long been assumed to be the ethnic minorities mostly living in the highlands. After more than two decades of introducing Doi moi policy into the economy, along with having enjoyed various improvements in social and economic aspects, the disparities between the majority and ethnic majorities, the lowlands and the highlands, and between regions, still have been widened. This paper aims at examining income inequality, its affecting factors in rural areas, and exploring the current situation of regional economic disparities using both development policy review and econometrics approaches. Data from Vietnam Household Living Standard Survey (VHLSS) 2008 was used in the study. The expenditure per capita was employed as the dependent variable to regress with household characteristics and resources. In addition, the regional dummy variables were employed to show the different effects from different geographic locations. The results showed that the household characteristics and resources such as education level, perennial land area, water surface area, and the accessibility to infrastructure facilities such as road, electricity and local market had positive effect on expenditure. Furthermore, the North Central Coast region showed negative impact on household expenditure. Interestingly, this finding does not absolutely follow the hypothesis and indicates that the economic development strategy and polices should be adjusted to decrease the gap among regions based on their economic advantages for balancing the economic situation of the whole country in the future
    Keywords: Inequality, Disparity, Regional Development, Rural Development, Vietnam
    JEL: M0
    Date: 2011–03
  9. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw); Edward Christie; Waltraut Urban
    Abstract: The objective of this study is to analyse employment developments in the gas and electricity sectors in seven Western Balkan Contracting Parties of the Energy Community. These are Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and Kosovo under UNSCR 1244/99. In addition, the impact of the liberalization of the respective markets is examined (quantitatively and qualitatively) and the most likely trends for the future development are identified. In more detail, the study analyses the current state of the gas and electricity sectors in the Western Balkan countries as well as the evolution of employment in these sectors and the different areas of activities by structural features. Based on results from interviews with the main stakeholders of the energy sector, it assesses the impact of liberalization and EU energy legislation on the number of jobs in the Western Balkan countries. We also examine the process of job destruction and job creation during the period of liberalization and restructuring and explore how different categories of workers are affected. Specific emphasis is given to the impact on the quality of jobs, such as changing skill requirements, improvements in work organization and working conditions.
    Keywords: Western Balkans, energy market liberalization, employment, job quality, restructuring
    JEL: J21 J24 J28 J50 L94 L95 Q4
    Date: 2011–03
  10. By: Jan Filacek; Branislav Saxa
    Abstract: Do private analysts coordinate their forecasts via central bank forecasts? In this paper, we examine private and central bank forecasts for the Czech Republic. The evolution of the standard deviation of private forecasts as well as the distance from the central bank’s forecasts are used to study whether a coordination effect exists, how it is influenced by uncertainty, and the effects of changes in central bank communication. The results suggest that private analysts coordinate their forecasts for the interest rate and inflation, while no or limited evidence exists for the exchange rate and GDP growth.
    Keywords: Central bank, coordination, forecast.
    JEL: E27 E37 E47 E58
    Date: 2010–12
  11. By: Adolfo Cristobal-Campoamor (ISET, Tbilisi); Osiris Jorge Parcero (United Arab Emirates University)
    Abstract: This paper proposes a 2-country 3-region economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the period 1990-2005. In contrast to the existing literature, which has favored technological explanations, trade liberalization is the only driving force. The model correctly predicts that in the first half of the period trade liberalization led to divergence in GDP per capita, both between the West and the East and within the East. Consistent with the data, in the second half of the period, this process was reversed and convergence became the dominant force.
    Date: 2011–05
  12. By: Bojeşteanu, Elena; Manu, Ana Simona
    Abstract: The paper aims to evaluate the degree of business cycle synchronization and similarity of economic structures between Romania and the euro zone from the perspective of European Monetary Union (EMU) integration. Despite the fact that the euro adoption can generate benefits for the Romanian economy, this process can entail major economic risks primarily related to the loss of two of the most important macroeconomic adjustment mechanisms, namely the independent monetary policy and flexible exchange rate. The cost – benefit ratio depends on the compatibility of economic structures and business cycles between Romania and the euro zone, on the importance of the idiosyncratic shocks for the Romanian macroeconomic fluctuations, on the degree commercial integration etc. According to the results of this paper, there has been significant progress related to the convergence of the Romanian business cycle with that of the euro zone, however, with regard to structural convergence, the empirical evidence reveals a widening of the gap vis-à-vis the euro area during the transition period.
    Keywords: ciclu de afaceri; şoc structural; convergenţă; zone monetare optime
    JEL: E32 E58 F33
    Date: 2011–06–06
  13. By: Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Inequality is a multidimensional phenomenon though it is often discussed along a single dimension like income. This is also the case for the various decomposition approaches of inequality indices. In this paper we study one- and multidimensional indices on inequality on data for three large Southeast European countries, Bulgaria, Romania and Serbia. We include four dimensions in our measure of multidimensional inequality: income, health, education and housing. We apply various decomposition methods to these one- and multidimensional indices. In doing so, we apply standard decomposition techniques of the mean logarithmic deviation index (I0) and decompositions based on regression analysis in conjunction with the Shapley value approach.
    Keywords: multidimensional inequality, inequality decomposition, Shapley value
    JEL: C20 D63
    Date: 2011–03
  14. By: Tinh Doan (Ministry of Economic Development); John Gibson (University of Waikato); Mark Holmes (University of Waikato)
    Abstract: This paper uses a novelty dataset of poor households in peri-urban areas in Vietnam to estimate impacts of small loans on child schooling. The Probit and Negative Binomial model estimates roughly indicate no strong evidence of the effect, especially of informal credit. Formal credit is likely to have positive impacts on child schooling, but its effect is not strong enough to be conclusive. The paper suggests that to obtain the target of sustainable poverty reduction, easing access to formal credit sources as well as exempting tuition and other school fees are necessary to keep poor children at schools longer.
    Keywords: school enrolment; education gap; probit; negative binomial model;the poor; child schooling; peri-urban; Vietnam
    JEL: C14 C21 H81
    Date: 2011–06–13
  15. By: Albu, Lucian-Liviu
    Abstract: Coming from standard economic growth theory and empirical evidences, we concentrated on the convergence process as a result of structural changes in economy. We investigate the differences among countries in EU in terms of the share in total economy of main sectors. Then, based on the spatial (empirical) distribution of such shares in EU we are proposing a model to estimate a typology of the convergence process in the European area. Taking into account the existing differences among sectors in matter of productivity, there are two versions of the model: considering the share of sectors in total employment and the share of sectors in GDP respectively. Moreover, we developed several modelling schemes that could be useful to improve the strategies oriented to achieve a real convergence in EU and further in Adriatic-Balkans region. In this way, we can obtain simulations from a country or group of countries (European Union, for example) on long term and quantifying the impact of structural changes on the convergence process. Indeed, the actual global crisis seems to influence negatively the convergence process in EU. As a rule, just new adhered countries were more affected by the actual crisis. Today all forecasts are suffering by uncertainty. Thus, further efforts must be allocated to evaluate the negative impact of actual crisis on the convergence process.
    Keywords: structural changes; convergence; stages of economic development; spatial distribution
    JEL: C13 O11 O47 E27 C31 O52
    Date: 2011–06–06
  16. By: Gábor Hunya (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Romanian SMEs can directly benefit from the Sectoral Operational Programme ‘Increase of Economic Competitiveness’ (SOP IEC) and some parts of the Regional Operational Programme (ROP) in the period 2007 2013. Research commissioned by the Directorate General for Regional Policy of the European Commission made a strategic evaluation of SMEs’ experience with these support programmes and their needs for support in general. This paper is the summary of the final report of the project carried out in the first half of 2010. In the context of the research underlying this paper, a standardized survey was implemented as an instrument for collecting primary data on the situation, the demands of and the development barriers to Romanian SMEs. The results of the survey were verified in standardized interviews and focus groups with consultants and SME administrators. The results reflect first-hand information on the problems of SMEs with the implementation of EU funds. The main findings of the project reveal that Romanian SMEs are at a rudimentary stage of skills, organization and market knowledge if compared with similar economic units in more advanced EU member states. Their development aims are rather short-term and not very complex. They lack the knowledge, expertise and staff to participate in complex tenders and in application processes. Learning by doing is, however, increasing their capacity to access external, including EU, funding. Gaps were identified between the development needs of SMEs and the design of the support programmes. The needs of SMEs to increase their competitiveness cover a whole range of areas with very diverse objectives. Weighing the identified needs of SMEs against the key areas of intervention and indicative operations of the EU support programmes, one can conclude that most needs of SMEs are covered by the two current operational programmes in one way or the other. However, the way the support package was designed and structured is deficient in supporting the development of SMEs. SMEs need more simple and transparent mechanisms which they can understand and cope with. In addition, they need the support of competent consultants.
    Keywords: SMEs, EU support programmes, Romania
    JEL: D2 G3 H7 L2 R1
    Date: 2011–01
  17. By: Alena Bicakova; Zuzana Prelcova; Renata Pasalicova
    Abstract: In this paper we use Household Budget Survey data to analyze the evolution of the household credit market in the Czech Republic over the period 2000–2008. While the share of households that borrow remained stable and below 40%, the amount of debt outstanding increased. We estimate a series of models of the determinants of borrowing. We next merge our data with the Statistics on Income and Living Conditions in 2005–2008, which contain direct information on repayment behavior, in order to test the validity of the standard debt burden measure as a predictor of default. We propose an alternative indicator – the adjusted debt burden (ADB), defined as the ratio of loan repayments to discretionary income, constructed as net income minus the living minimum (the minimum cost of living for a given household composition as set by the Czech Statistical Office), which turns out to be a superior predictor of default risk. Limited by the data, we use a fairly broad concept of default, namely, the inability to make loan repayments on time. Based on the distribution of default risk across the levels of the adjusted debt burden, we suggest that a 30% ADB threshold should be used as the definition of overindebtedness, with an average default risk of 17%. Finally, we show that overindebtedness and local economic shocks are closely related, suggesting that default risk should be always considered in the context of regional economic conditions.
    Keywords: Debt burden, household credit, regional default risk, repayment.
    JEL: D12 D14 G21 R29
    Date: 2010–12

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