nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒07‒02
thirteen papers chosen by
J. David Brown
Heriot-Watt University

  1. Entrepreneurship and Cities: Evidence from the Post-communist World By Maksim Belitski; Julia Korosteleva
  2. Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe By Yuko Kinoshita
  3. How Far Has China's Urbanization Come? (Japanese) By MENG Jianjun
  4. MNE’s Regional Location Choice - A Comparative Perspective on East Germany, the Czech Republic and Poland By Andrea Gauselmann; Philipp Marek; J. P. Angenendt
  5. Credit Market Imperfection and Sectoral Asymmetry of Chinese Business Cycle By Yuanyan Sophia Zhang
  6. Infrastructure investment opportunities in the New EU Member States: the role of regional policies By Silvia Vignetti; Emanuela Sirtori
  7. Critical review of cluster mapping studies in Poland By Tomasz Brodzicki
  8. Related Variety, Global Connectivity and Institutional Embeddedness: Internet Development in Beijing and Shanghai Compared By Jun Zhang
  9. What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics By Yu-Fu Chen; Michael Funke; Aaron Mehrotra
  10. Public Expenditures on Education and Health in the Kyrgyz Republic before and during the Global Crisis By Roman Mogilevsky
  11. Is There a Beijing Consensus on International Macroeconomic Policy By Graham Bird; Alex Mandilaras; Helen Popper
  12. External Monetary Shocks and Monetary Integration: Evidence from the Bulgarian Currency Board By Minea, Alexandru; Rault, Christophe
  13. Considerents Concerning the Romanian Emigrants' Options By Fitiu, Avram; Merce, Emilian; Sabau, Marius Mircea

  1. By: Maksim Belitski (Brunel University); Julia Korosteleva (University College London)
    Abstract: This paper investigates the variation in entrepreneurship across cities of the Commonwealth of Independent States during 1995-2008, utilising a unique dataset and employing the System Generalised Method of Moments technique. Our findings suggest that banking reform facilitates entrepreneurship, whereas the size of the state discourages it. Our results confirm a U-shaped relationship between per-capita income and entrepreneurship. We also find that cities with higher concentration of universities are likely to have higher entrepreneurial entry. This provides some evidence for the importance of agglomeration economies in terms of higher concentration of knowledge which may lead to intensified exchange of ideas driving knowledge-based entrepreneurship in the region.
    Keywords: Entrepreneurship, small business, urbanisation, transition, CIS Urban Audit
    Date: 2011–06–24
  2. By: Yuko Kinoshita
    Abstract: In the run up to the global crisis, countries in Central Eastern and Southeastern Europe attracted large capital inflows and some of them built up large external imbalances. This paper investigates whether these imbalances are linked to the sectoral composition of FDI. It shows that FDI in the tradable sectors leads to an improvement of the external balance. We also find that the countries with large market size, good infrastructure, greater trade integration, and educated labor force are more likely to receive more FDI in the tradable sectors.
    Date: 2011–05–31
  3. By: MENG Jianjun
    Abstract: Currently, China is urbanizing its population at an unprecedented pace in human history. China's urbanization rate is expected to reach to 50% in 2010, reflecting that China has entered into a society of urban majority. In consideration of the massive surplus in the labor force in rural areas, the process of urbanization in China is far from complete and will continue over the next two decades. Under the effects of a unique "household registration system" and the rapidly evolving labor market, China's urbanization is facing more challenges than its predecessors of developed countries and its peers of developing countries. With the signs of frequent manpower shortages and rising labor costs in coastal regions in recent years, China's labor market has been deemed to pass the Lewisian turning point. Although the rapid economic growth and population aging are shaping the labor market in China, the household registration system still constitutes a barrier for the more efficient allocation of its labor force. This paper will examine the urbanization process in China and propose relevant new policies and systems to reconcile with the country's demographic trends and economic growth.
    Date: 2011–06
  4. By: Andrea Gauselmann; Philipp Marek; J. P. Angenendt
    Abstract: The focus of this article is the empirical identification of factors influencing Foreign Direct Investment (FDI) in transition economies on a regional level (NUTS 2). The analysis is designed as benchmark between three neighboring post-communist regions, i.e. East Germany, the Czech Republic and Poland. Their different transition paths have not only resulted in economic differences. We can also observe today that the importance of pull factors for FDI varies significantly across the regions. This analysis shows that in comparison with Poland and the Czech Republic, East Germany’s major benefit is its purchasing power, its geographical proximity to West European markets, and its modern infrastructure. Furthermore, the analysis suggests that intra-industry linkages such as specialization and agglomeration economies are relevant factors for the location decision of foreign investors. This result can help to explain the regional divergence of FDI streams in transition economies.
    Keywords: multinational enterprises, international business, regional economic activity: growth, development, and changes, discrete choice
    JEL: F23 R11 C25
    Date: 2011–06
  5. By: Yuanyan Sophia Zhang
    Abstract: This paper analyzes the role of credit market imperfection and sectoral asymmetry as a means through which shocks to the real economy are propagated and amplified. Drawing on firm-level data to calibrate the model, our simulations capture two key stylized facts of the Chinese economy: that credit constraints are more binding in nontradable sectors than in tradable industries and that output volatility is much greater in China than in industrial economies. We find that the driving force behind our simulation results is strongly related to the non-uniform nature of credit market imperfections in China and their implications for resource allocation and the way in which the economy reacts to shocks. Correctly capturing these macro-financial interactions are essential to understand the dynamic behavior of the Chinese economy.
    Keywords: Business cycles , China , Credit , Economic models ,
    Date: 2011–05–23
  6. By: Silvia Vignetti (Centre for Industrial Studies (CSIL)); Emanuela Sirtori (Centre for Industrial Studies (CSIL))
    Abstract: Infrastructure development is a priority on policy agendas in the EU and worldwide, because of the very high investment needs in basic infrastructure, especially in lagging behind regions and countries. The paper provides a descriptive analysis of the infrastructural gaps in EU transition economies at national and, as far as possible, regional level for some infrastructure sectors: transport, telecommunication, environment and energy. The analysis suggests that, on average, internal divergences in the infrastructures’ endowment are present between the urbanised capital cities regions and the peripheral and rural areas, in all the Member States; yet, the density and quality of such endowment is significantly higher in the Western countries and limited in the Eastern ones.
    Keywords: Infrastructure, regional policy, EU new member states
    JEL: H54 O18 R11 R58
    Date: 2010–03–15
  7. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk)
    Abstract: The concept of industrial cluster has become one of the most prominent ones both in theoretical discussions, policy making and actual business. It is generally believed that under certain conditions, efficiently performing cluster through positive externalities can become an engine of regional development. Due to potential market imperfections public intervention is frequently required. The concept has gained significance in Eastern and Central European Countries including Poland. Sound cluster-based policy requires a detailed identification of dominant cluster as well as embryonic clusters. In the past few years at the central level of Poland and at the level of some of its provinces (eg. Pomerania, Mazovia, Opole, Silesia) cluster-mapping exercises were performed as part of an effort to modify/inform regional development strategies. Apart from several domestic studies an analysis by an international team for the European Commission for the whole area of Central and Eastern Europe was carried out. The present paper critically reviews the aforementioned studies identifying major methodological bottlenecks. It seems that more emphasis should be placed on the issue of co-location of both vertically related industrial sectors as well as horizontal agglomeration. Spatial autocorrelation should also be included. Appropriate level of sectoral as well as spatial disaggregation of data is of outmost importance.
    Keywords: industrial concentration, cluster, cluster-based policy, statistical cluster mapping
    JEL: B41 C81 R12 R30
    Date: 2010–08
  8. By: Jun Zhang
    Abstract: This paper contributes to the Evolutionary Economic Geography literature by employing the conceptualization of Ôrelated varietyÕ to compare the emerging internet industry in ChinaÕs two largest city-regions: Beijing and Shanghai. Official website registration records, Alexa internet traffic counts, venture capital investment data and information gathered through interviews with internet entrepreneurs were combined to develop the analysis. The findings confirm that the replication and diversification of related variety play a leading role in shaping the locational dynamics of an emerging industry. However, the localized nature of new firm formation should not be taken for granted as transnational entrepreneurship and venture capital are playing an increasingly salient role. The contrasting experience of internet evolution in these two Chinese city-regions also suggests that a regionÕs enduring political-institutional embeddedness significantly influences the generation and evolution of their related variety.
    Keywords: related variety, institutions, connectivity, Internet, China
    JEL: B25 B52 L25 L26 L52 L86 O18 O53 P25 R00 R11
    Date: 2011–06
  9. By: Yu-Fu Chen (University of Dundee); Michael Funke (Hamburg University and Hong Kong Institute for Monetary Research); Aaron Mehrotra (Bank of Finland)
    Abstract: This paper adds to the literature on wealth effects on consumption by disentangling house price effects on consumption for mainland China. In a stochastic modelling framework, the riskiness, rate of increase and persistence of house price movements have different implications for the consumption/housing ratio. We exploit the geographical variation in property prices by using a quarterly city-level panel dataset for the period 1998Q1 - 2009Q4 and rely on a panel error correction model. Overall, the results suggest a significant long run impact of property prices on consumption. They also broadly confirm the predictions from the theoretical model.
    Keywords: Consumption, House Prices, China, Panel Data
    JEL: E21 R31 C23 O53
    Date: 2011–05
  10. By: Roman Mogilevsky
    Abstract: This paper analyses the public finance performance and the dynamics of government expenditures on education and health in the Kyrgyz Republic in 2007- 2010, when the country was hit by the global economic crisis and then by an internal political crisis in 2010. Despite these crisis conditions, public health expenditures have increased substantially. In education, recurrent expenditures have been protected, while capital investments have been cut dramatically. Both sectors suffer from chronic under-financing, which results in an insufficient quality of services. The country’s fiscal situation in the medium-term is going to be difficult, so efficiency-oriented reforms need to be implemented in health care and especially in education in order to sustain the development of these critical services in Kyrgyzstan.
    Keywords: Fiscal policy, Kyrgyzstan, Education financing, Health financing, Global economic crisis
    JEL: E62 H50 H51 H52 I18 I22
    Date: 2011
  11. By: Graham Bird (University of Surrey and Claremont McKenna College); Alex Mandilaras (University of Surrey); Helen Popper (Santa Clara University)
    Abstract: Some commentators have claimed that there is a growing Beijing Consensus among emerging and developing economies concerning the merits of ChinaÕs economic policies. Within an analytical framework provided by the well known international trilemma, this paper investigates the empirical evidence concerning this claim with specific reference to the adoption of international macroeconomic policies. We document ChinaÕs high degree of exchange rate stability and monetary independence and low degree of financial openness. We then find that there are substantial differences between what China does and what is done in other emerging and developing economies. While we discover some regional and inter-temporal variations, there seems to be little or no support for the existence of a Beijing Consensus on international macroeconomic pol- icy. The proximity of ChinaÕs policies to those in the rest of the developing world may increase in the future; but this is may reflect changes in China rather than elsewhere.
    Keywords: Trilemma, China
    JEL: F3 F4 O1 O2
    Date: 2011–06
  12. By: Minea, Alexandru (CERDI, University of Auvergne); Rault, Christophe (University of Orléans)
    Abstract: Starting July the 1st 1997, Bulgaria adopted a Currency Board (CB) monetary system. This paper aims at investigating if the adoption of the CB monetary system, which involves the cost of loosing monetary autonomy, has provided a relatively better (with respect to other CEEC) monetary integration of Bulgaria with the European Monetary Union (EMU). Since Bulgarian monetary variables are endogenous under a CB, we focus on the ECB and FED interest rates as the main sources on monetary volatility. First, we find that ECB shocks are more rapidly absorbed and have less significant impact of domestic variables, with respect to other external monetary shocks (FED rate changes). Second, the responses of Bulgarian variables following changes in the ECB interest rate present lower persistence and significance, with respect to what the previous literature emphasized for other CEEC with monetary autonomy. This latter result still holds when accounting for different sources of cross-country heterogeneity outlined in the literature, thus supporting that the adoption of the CB may have worked as a rather good device in terms of integration of Bulgaria into the EMU.
    Keywords: currency board, Bulgaria, monetary shocks, ECB interest rate, FED interest rate
    JEL: E42 E52
    Date: 2011–06
  13. By: Fitiu, Avram; Merce, Emilian; Sabau, Marius Mircea
    Abstract: The aim of this work is to assess the emigrants' opinions from the rural area of Salaj county, North-West Romania, related to some behaviour related items. In this rural dominated area mostly work capable inhabitants are temporary emigrating in EU countries. They are attracted especially by the higher incomes these countries are able to assure. Their life level, preferred work countries and reasons of leaving and returning in the home country were considered in this representative 471-research questionnaires which conclusions are presented below
    Keywords: home country; intentions; opinions; incomes; reasons; Emigration
    Date: 2010–07–05

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.
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