nep-tra New Economics Papers
on Transition Economics
Issue of 2011‒12‒13
thirty-six papers chosen by
J. David Brown
Heriot-Watt University

  1. Sizing It Up: Labor Migration Lessons of the EU Enlargement to 27 By Constant, Amelie F.
  2. Long Shadows of History: Persecution in Central Europe and Its Labor Market Consequences By Myck, Michal; Bohacek, Radim
  3. Productivity growth and ownership change in China: 1998-2007 By Liu, Jing; Cao, Shutao
  4. Is Optimization an Opportunity? An Assessment of the Impact of Class Size and School Size on the Performance of Ukrainian Secondary Schools By Tom Coupe; Anna Olefir; Juan Diego Alonso
  5. The Effectiveness of Preferential Trade Liberalization in Central and Eastern Europe By Jan Hagemejer; Andrzej Cieślik
  6. The Organization of European Multinationals By Marin, Dalia; Rousová, Linda
  7. Regional Capital Mobility in China: 1978-2006 By Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.; Lai, Jennifer T.
  8. Regional Determinants of MNE's Location Choice in Transition Economies By Andrea Gauselmann; Philipp Marek
  9. Effects of Financial Liberalization and Political Connection on Listed Chinese Firms’ Financing Constraints By Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.
  10. New Evidence on the Role of Regional Clusters and Convergence in China (1952-2008) By María Jesus Herrerias; Javier Ordóñez
  11. Is the Chinese Stock Market Really Efficient By Yan, Isabel K.; Chong, Terence; Lam, Tau-Hing
  12. China's Western Development Strategy: Policies, Effects and Prospects By Lu, Zheng; Deng, Xiang
  13. The Dynamics of Deposit Euroization in European Post-transition Countries: Evidence from Threshold VAR By Marina Tkalec
  14. 160 characters for change: China's mobile urban-rural divide By Fugazzola, Caterina
  15. How Does Education Affect the Earnings Distribution in Urban China? By Wang, Le
  16. Financial liberalization and financing constraints: some evidence from panel data of listed Chinese firms By Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.
  17. The latent regulations for the TD-SCDMA development in China: Socio-technical translation process study for the third 3G standard By Chao, Fu-Cheng; Veijalainen, Jari
  18. China's Position in the Global Semiconductor Value Chain-- Still Playing Second Fiddle? By Dieter Ernst; ;
  19. Emigration and Wages: The EU Enlargement Experiment By Elsner, Benjamin
  20. Regulation of network industries in the European Union and in Central and Eastern Europe By Major, Iván; Kiss, Károly M.
  21. Who Should Beat the Costs of China's Carbon Emissions Embodied in Goods for Export? By ZhongXiang Zhang; ;
  22. Foreign banks' entry into the Russian market: motivation, entry modes and strategies By Victor Gorshkov
  23. From the General to the Specific By J. James Reade; Ulrich Volz
  24. Determinants of internal migration in Kazakhstan By Aldashev, Alisher; Dietz, Barbara
  25. The case of transition economies: what institutions matter for growth? By Azim Raimbaev
  26. Inequality and well-being in transition economies: A non-experimental test of inequality aversion By Alexandru Cojocaru
  27. You Make Us Do What We Want! The Usage of External Actors and Policy Conditionality in the European Neighborhood By Esther Ademmer
  28. Chinese Firms’ Political Connection, Ownership, and Financing Constraints By Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.
  29. Календарні ефекти та аномалії на українському фондовому ринку: теорія і практика By Petrushchak, Bohdan
  30. Evolving into a Regional Innovation System: How Governance impact on Innovation in Shenzhen and Dongguan, China? By Wenying Fu; Javier Revilla Diez; Daniel Schiller
  31. Minimum wage and export: evidence from Chinese firm-level data By Ma, Shuang; Sun, Churen; Tian, Guoqiang
  32. Implicații ale pierderii autonomiei politicii monetare asupra procesului inflaționist By Damian, Monica
  33. Credit Constraints, Heterogeneous Firms and Loan Defaults By Jarko Fidrmuc; Pavel Ciaian; d'Artis Kancs; Jan Pokrivcak
  34. Spatial construction of European family and household systems: a promising path or a blind alley? An Eastern European perspective By Mikolaj Szoltysek
  35. The Financial Crisis, Labor Market Transitions and Earnings: A Gendered Panel Data Analysis for Serbia By Blunch, Niels-Hugo; Sulla, Victor
  36. Understanding the heterogeneity of cooperation on innovation: Firm-level evidence from Europe By Martin Srholec

  1. By: Constant, Amelie F. (DIW DC, George Washington University)
    Abstract: While economists were pointing out the advantages of the EU enlargement, politicians and policymakers were raising grave concerns about the significant political and economic differences between the newcomer states (EU12) and the "old Europe" of EU15. The major point of apprehension was related to the labor markets. Visceral fear rendered more than one in two Europeans to believe that the EU enlargement contributed to job losses in their own country. Some EU15 member states opted for transitional arrangements and did not allow labor mobility from the EU12. This chapter reviews the achievements of the first five years of the EU27 and assesses and evaluates the effectiveness of the enforced policies while it identifies winner and losers. Overall, the EU enlargement did not produce any negative effects or disruptions in the labor markets of the Member States. All three agents, the migrants, the receiving countries, and the sending countries gained from labor mobility. The EU15 countries with closed door policy lost in high-skilled labor and their labor markets experienced a delayed adjustment that overlapped with the global crisis and exacerbated negativity. As self-employed labor was not under the same mobility Act, the self-employed were able to move to the country they were needed and open successful businesses. The global crisis tainted the rosy results of the enlargement and left the EU27 vulnerable to shocks.
    Keywords: labor mobility, labor policy, EU enlargement, wages, international migration, remittances
    JEL: J6 J3 F22 F24
    Date: 2011–11
  2. By: Myck, Michal (Centre for Economic Analysis, CenEA); Bohacek, Radim (CERGE-EI)
    Abstract: We analyze the extent and effects of job-related persecution under communist regimes in the Czech Republic and Poland using a representative sample of individuals aged 50+ from the Survey of Health, Ageing and Retirement in Europe. Retrospective information collected in the SHARELIFE interview offers a unique chance to relate past and current labor market outcomes to experiences of persecution reflecting the historical developments in Central Europe in the 20th century. Individual level data with details on labor market histories is matched with information on the experiences of state oppression. On-the-job persecution is found to have significant effect on job quality assessment and is strongly related to reporting of distinct periods of stress in both countries. Consequences of on-the-job persecution seem to have been much more severe and longer lasting in the Czech Republic, with significant financial effects of job loss or discrimination. This is explained by the greater degree of state control over the labour market in the former Czechoslovakia compared to Poland and different characteristics of the dissident groups in both countries.
    Keywords: labor discrimination, persecution, job satisfaction, life histories, history of Central Europe
    JEL: J71 J28 N44 I19
    Date: 2011–11
  3. By: Liu, Jing; Cao, Shutao
    Abstract: This paper studies the industry productivity dynamics in China’s manufacturing sector from 1998 to 2007, and in particular, explores to what extent the privatization of state-owned enterprises (SOEs) contributes to the aggregate productivity growth. Our results show that, though non-SOEs on average are more productive than SOEs, the average productivity growth among SOEs is greater than the privately-owned firms. Industry concentration, taxation, and credit market all account for this difference in growth between SOEs and non-SOEs. In addition, industry productivity growth is mainly attributed to the growth of non-SOEs, entry of non-SOE firms, and the exit of SOEs. However, non-SOE firms that are transformed directly from SOEs make a small but negative contribution to industry productivity growth.
    Keywords: Productivity Growth, Industry Dynamics, Ownership Change, Reallocation
    JEL: E6 D24 O4
    Date: 2011–04–15
  4. By: Tom Coupe (Kyiv School of Economics, Kyiv Economic Institute); Anna Olefir (World Bank); Juan Diego Alonso (World Bank)
    Abstract: Using a rich data set of almost the entire population of Ukrainian secondary schools, the authors estimatethe effect of school size and class size on the performance of secondary schools on Ukraine's External Independent Test. They find that larger schools tend to have somewhat better performance, both in terms of test scores and in terms of test participation. The size of this effect is relatively small, however, especially in rural areas for which the estimates are likely to be more clean estimates. Class size is found to be insignificant in most specifications and, if significant, of negligible size.
    Keywords: Tertiary Education, Secondary Education, Teaching and Learning, Education For All, Primary Education
    JEL: I28 I29
    Date: 2011–11
  5. By: Jan Hagemejer (Faculty of Economic Sciences, University of Warsaw; Economic Institute, National Bank of Poland); Andrzej Cieślik (Faculty of Economic Sciences, University of Warsaw)
    Abstract: After the collapse of communism in Central and Eastern Europe (CEE) many countries in the region radically liberalized their foreign trade regimes in the 1990s. In particular preferential trade liberalization in the CEE countries has been promoted by the European Union in the form of the association agreements that involved “vertical” trade liberalization between the EU and countries in Central and Eastern Europe. In addition to this the CEE countries liberalized trade “horizontally” among themselves in the form of sub-regional and bilateral free trade agreements. In this paper, we use the generalized gravity equation estimated on bilateral trade data for ten CEE countries during the period of 1993-2004 to evaluate the effectiveness of preferential trade liberalization in Central and Eastern Europe. We find that all forms of preferential trade liberalization positively contributed to the expansion of trade of the CEE countries but their impact was country specific.
    Keywords: bilateral trade, gravity equation, preferential trade liberalization
    JEL: F13 F15 P33
    Date: 2011
  6. By: Marin, Dalia; Rousová, Linda
    Abstract: Recent literature on international trade has established that the most productive firms become multinationals. But our data reveal a startling variation in productivity levels of foreign affiliates across the countries in Eastern Europe of the same European multinational parent firms suggesting that not all multinationals transplant their home productivity advantage to the new EU Member States and Emerging Europe. One candidate for this startling difference in productivity levels among foreign affiliates is the ability of European multinationals to transport their business model abroad. This paper examines the conditions under which European multinationals give autonomy to their subsidiaries and delegate authority to them. We also analyse the conditions under which European multinationals transplant their business model to Eastern Europe. We collect original and unique matched parent and affiliate data on the internal organization of 660 German and Austrian parent firms and 2200 of their subsidiaries in Eastern Europe including the former Soviet Union. We test the hypothesis that the ability of European multinationals to transplant their business model to foreign affiliates is determined by the organization of European multinationals on the one hand and the market environment their affiliate firms face in Eastern Europe on the other hand. We show that the business culture of parent firms accounts for about 50 percent of the variation of the organization of subsidiaries, while the market environment of subsidiaries contributes the rest.
    Keywords: International Trade and Organizations; Multinational firm with internal hierarchies; Empirical test of the theory of the firm; Technology transfer to Eastern Europe; Organizational transfer across countries
    JEL: F F23 D21 L22 O1
    Date: 2011–12
  7. By: Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.; Lai, Jennifer T.
    Abstract: We examine cross-region capital mobility in China and track how the degree of mobility has changed over time. The effects of fiscal and redistributive activities of different levels of government in China on private capital mobility are taken into account. Our results indicate that there was a significant improvement in capital mobility over time in China, particularly for private capital in the more developed regions. The central and provincial governments, via their taxation, spending, and transfers, loosen the relationship between private saving and investment and appear to promote capital mobility, particularly for less developed regions. There are considerable differences between more and less developed regions in terms of the degree of capital market integration and the improvement in capital mobility over time. The results have important policy implications on global re-balancing as well as regional development gap and risk-sharing within China.
    Keywords: Feldstein-Horioka; Chinese cross-region capital mobility; saving-investment relationship; Chinese capital market integration
    JEL: C23 C22 F21
    Date: 2011–08
  8. By: Andrea Gauselmann; Philipp Marek
    Abstract: This paper analyses the impact of agglomeration effects, labour market conditions and other determinants on the location choice of MNEs in transition economies. We compare data from 33 regions in East Germany, the Czech Republic and Poland using a conditional logit model on a sample of 4,343 subsidiaries for the time period 2000-2010. The results show that agglomeration advantages, such as sectoral specialisation, a certain economic diversity as well as a region's economic and technological performance prove to be some of the most important pull factors for FDI in transition regions. In addition, the labour market factors prove to play an important role in the location of FDI.
    Date: 2011–12–01
  9. By: Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.
    Abstract: This paper examines the impact of recent financial liberalization in China on the financing constraints of publicly-listed Chinese firms with and without politically-connected CEO/Chairman. Two continuous indices are used to measure the evolution and intensity of financial reforms: a financial liberalization index and a capital control index. The results indicate that while firms without politically-connected CEO/Chairman face significant financing constraints and politically-connected firms do not, financial liberalization has reduced the constraints for the former. Similarly, lower capital control in China’s equity market lessens credit constraints for non-connected firms. No statistically-significant impact is detected with regards to firms that have CEO/Chairman with powerful political background.
    Keywords: Financial liberalization; investments; financing constraints; political connection; Chinese firms
    JEL: G31 G18 E22 O16
    Date: 2011–02
  10. By: María Jesus Herrerias (Université de la Méditerranée Aix Marseille II, GREQAM); Javier Ordóñez (Department of Economics, Universitat Jaume I (Castellón, Spain))
    Abstract: A new panel method is applied to the case of Chinese provinces to analyze the existence of club convergence in terms of per capita income, labor productivity, capital intensity, and total factor productivity from 1952 to 2008. The advantage of this approach is that it takes into account the heterogeneity of Chinese regions in a nonlinear time-varying framework, where more attention is paid to the spatial dimension. This time-varying approach outperforms other methods used in the relevant literature for an economy in transition, such as China, that has undergone a significant transformation over the period under consideration. Our results indicate that Chinese regions have converged into clubs. However, it is observed that Heilongjiang is diverging in terms of labor productivity and capital intensity, while Liaoning and Guizhou display similar patterns in terms of labor productivity, and Shanxi and Hebei in terms of capital intensity. These results indicate that specific economic packages need to be implemented in the clusters that were identified, with special attention to those regions that show a divergence behavior, in order to guarantee the sustainability and equality of regional growth.
    Keywords: Endogenous Unit Root Test, Club Convergence, Chinese regions
    JEL: C20 O18 O40 R11
    Date: 2011
  11. By: Yan, Isabel K.; Chong, Terence; Lam, Tau-Hing
    Abstract: Groenewold et al (2004a) documented that the Chinese stock market is inefficient. In this paper, we revisit the efficiency problem of the Chinese stock market using time-series model based trading rules. Our paper distinguishes itself from previous studies in several aspects. First, while previous studies concentrate on the viability of linear forecasting techniques, we evaluate the profitability of the forecasts of the self-exciting threshold autoregressive model (SETAR), and compare it with the conventional linear AR and MA trading rules. Second, the finding of market inefficiency in earlier studies mainly rest on the statistical significance of the autocorrelation or regression coefficients. In contrast, this paper directly examines the profitability of various trading rules. Third, our sample covers an extensive period of 1991-2010. Sub-sample analysis shows that positive returns mainly concentrate in the pre-SOE reform period, suggesting that China’s stock market has become more efficient after the reform.
    Keywords: Efficient Market Hypothesis; SETAR Model; Bootstrapping; SOE reform
    JEL: G12 C22 G10
    Date: 2011–08
  12. By: Lu, Zheng; Deng, Xiang
    Abstract: China’s Western Development Strategy (WDS) has been carried out since 1999 with remarkable achievements, whereby Western China also experienced a rapid and stable development during the past decade. This paper analyzes policy actions and effects of WDS. The findings indicate that Western China’s economic development has experienced a dramatic reversion after implementation of WDS, which to a certain extent, proves that WDS has played a significant role in promoting western regions’ development. This paper also reveals some key constraints on Western China’s economic development and then offers a set of policy ideas for the next stage of Western development.
    Keywords: Western Development Strategy; Regional Policy; Policy effects; Western China
    JEL: E62 R58 R11
    Date: 2011–12–01
  13. By: Marina Tkalec (The Institute of Economics, Zagreb)
    Abstract: This paper investigates determinants of deposit euroization (DE) in twelve European post-transition economies using both linear and threshold models. Results suggest that exchange rates and interest rate differentials are important for explaining DE. Results for the two countries with the highest macroeconomic and institutional credibility and flexible exchange rate regimes, the Czech Republic and Poland, suggest no evidence of threshold effects, while for other countries threshold behavior was found. Threshold VAR results indicate depreciations have a stronger effect on DE than appreciations, while interest rate spreads widen more after exchange rate depreciations than after appreciations. Moreover, we found evidence that DE changes more strongly after interest rate differentials increase than after they decrease.
    Keywords: cointegration, deposit euroization, transition, threshold VAR
    JEL: C32 E44 E58 F31 F41
    Date: 2011–11
  14. By: Fugazzola, Caterina
    Abstract: --
    Date: 2011
  15. By: Wang, Le (University of New Hampshire)
    Abstract: China's phenomenal growth is accompanied by both relatively low level of standards of living and high inequality. It is widely believe that investing in education could be an effective strategy to promote higher standards of living as well as to reduce inequality. However, little is known about whether this belief is empirically supported. To this end, we employ a recently developed distributional approach to estimate returns to education across the whole earnings distribution in urban China during economic transition. We find that returns to education are generally more pronounced for individuals in the lower tail of the earnings distribution than for those in the upper tail, in stark contrast to the results found in developed countries. Our result implies that education indeed reduces earnings inequality while increasing individuals' earnings. We also find that the returns to education are uniformly larger for women than for men across the distribution. The results suggest the presence of added effects of education on earnings, as opposed to productivity-enhancing effects, for disadvantaged groups. Finally, we find that rates of educational return increased over time for all parts of the earnings distribution.
    Keywords: returns to education, inequality, gender gap, economic transition, instrumental variable quantile regression
    JEL: J24 J61 J31 J7 J15 C31
    Date: 2011–11
  16. By: Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.
    Abstract: This paper examines the impact of recent financial liberalization in China on the financing constraints and investment of publicly-listed Chinese firms. Two continuous indices are constructed to measure the evolution and intensity of financial reforms: a financial liberalization index and a capital control index. Dynamic panel GMM method is used to estimate firms’ financing constraints in an Euler-equation investment model. The results indicate that while smaller firms face significant financing constraints than larger firms, financial liberalization has raised the financing constraints for the latter and failed to relieve the constraints for the former. It appears financial reforms in China have subjected larger firms to greater market discipline but the reforms probably have not been profound enough to benefit smaller firms.
    Keywords: Financial liberalization; investments; financing constraints; Chinese firms
    JEL: G31 G18 E22 O16
    Date: 2011–08
  17. By: Chao, Fu-Cheng; Veijalainen, Jari
    Abstract: In this article we will investigate what kind of regulative bodies within China were formed and how they have acted. This is the principal research question. We use the TD-SCDMA development from standard definition phase to deployment as a beacon that elucidates which Actors came together to oversee regulatory actions and how they influenced the regulation decisions towards the emerging market. Because the regulative framework and processes in China appear different from those in the USA and the EU we call the Chinese approach latent regulation, This addresses the rules, principles or policies that were the actual factors or reasons formulated for most of the decision making processes during the build-up of China TD-SCDMA networks. From the methodical point of view we consider this a process of social-technical translation among actors, such as government ministries, political organizations (Communist Party of China, CPC), university professors, and the telecom industry. That is, we have not confined the analysis to the government. To understand the paths which have been taken, the sociology of translation was applied and the Actor-Network Theory (ANT) with its four steps of translation used. The Actors in the case studies shown in this research can be broadly categorized into three groups: the government related organizations /departments, the telecom operators, the telecom equipment /handset manufactures. This kind of analysis has revealed several unique hidden latent regulatory choices or decisions that were taken using this path. --
    Keywords: TD-SCDMA,Socio-Technical Translation Process,latent regulation,Chinese telecom industry
    Date: 2011
  18. By: Dieter Ernst (East-West Center); ;
    Abstract: The paper presents evidence that China still plays second fiddle in all sectors of the semiconductor industry. The global semiconductor industry critically depends on China’s market. Yet, the main drivers of China’s semiconductor consumption are foreign companies that conduct final assembly in China of electronic equipment that is sold in the US, the EU, Japan, or India. China’s semiconductor production has experienced significant growth, but it is not yet a major force in the global semiconductor industry. While recent capacity expansion means that China has newer wafer fabrication plants than its competitors, these plants use older technology (in terms of geometry and wafer size) or are second-hand plants. China’s IC design industry keeps growing rapidly, but its technological capabilities are still limited, in terms of process technology and design line-width. As for innovation, China remains a technology taker, following the established technology road map at some distance. China still has a long way to go before it can shape or at least co-shape the industry’s technology trajectory. In sum, China’s position in the Global Semiconductor Value Chain remains way behind the government’s aspirations. The global semiconductor value chain is dominated by the US, and to a lesser degree by Japan and the EU, Korea as well as Taiwan. China remains a lower-tier player, and it has a long way to go to catch up with the global leaders. Longer-term, however, there is no doubt that China’s government is committed to accelerate the development of China’s semiconductor industry. During the 12th Five-Year Plan, the focus of policy will shift away from the pursuit of capacity and output value growth toward improving R&D capabilities and competitiveness of Chinese firms.
    Date: 2011–12
  19. By: Elsner, Benjamin (Trinity College Dublin)
    Abstract: The enlargement of the European Union provides a unique opportunity to study the impact of the lifting of migration restrictions on the migrant sending countries. With EU enlargement in 2004, 1.2 million workers from Eastern Europe emigrated to the UK and Ireland. I use this emigration wave to show that emigration significantly changed the wage distribution in the sending country, in particular between young and old workers. Using a novel dataset from Lithuania, the UK and Ireland for the calibration of a structural model of labor demand, I find that over the period of five years emigration increased the wages of young workers by 6%, while it had no effect on the wages of old workers. Contrary to the immigration literature, there is no significant effect of emigration on the wage distribution between high-skilled and low-skilled workers.
    Keywords: emigration, EU enlargement, European integration, wage distribution
    JEL: F22 J31 O15 R23
    Date: 2011–11
  20. By: Major, Iván; Kiss, Károly M.
    Abstract: Cost-based pricing has dominated the regulatory regime of network industries - and first of all, the regulation of the infocommunications sector - in the European Union since the early 1990s. When privatization of network industries began in Central and Eastern Europe (CEE), one of the main stumbling blocks on the road toward privately owned telecomm companies and postal services, energy producers and distributors, and other network industries was the lack of efficient and up-to-date industry regulations. From the mid-1990s, accessing countries that later became members of the EU, and other CEE countries that are still waiting for admission swiftly adopted the regulatory framework of the European Union. The EU has been striving for market opening and liberalization in these industries; it abolished industry regulation in several segments of the market of network industries. Now it applies so-called cost-based pricing in areas where regulation is still in place. CEE countries now use the same type of regulation as the advanced member states of the EU. But the regulatory capacity of most CEE countries is still far behind of their West European counterparts. Experts of network industries advocate, and telecommunications, energy and other market regulators in various parts of the world practice, cost-based pricing for inter-firm network access services. Cost-based pricing is carried out under the assumption that the regulator has perfect information regarding the costs of producing the services. We show in this paper that - under fairly general conditions - cost-based pricing creates incentives for regulated firms not to improve their efficiency. We also show that cost-based pricing results in smaller consumer welfare than incentive regulation that takes into account the existence of information asymmetry between the regulator and the firm. A model of interconnection with adverse selection and moral hazard is presented. --
    Keywords: network industries,regulation,incentive contracts
    JEL: D8 L14 L51
    Date: 2011
  21. By: ZhongXiang Zhang (East-West Center); ;
    Abstract: China's capital-intensive, export-oriented, spectacular economic growth since launching its open-door policy and economic reforms in late 1978 not only has created jobs and has lifted millions of the Chinese people out of poverty, but also has given rise to unprecedented environmental pollution and CO2 emissions. While estimates of the embedded CO2 emissions in China's trade differ, both single country studies for China and global studies show a hefty chunk of China's CO2 emissions embedded in trade. This portion of CO2 emissions had helped to turn China into the world's largest carbon emitter, and is further widening its gap with the second largest emitter. This raises the issue of who should be responsible for this portion of emissions and bearing the carbon cost of exports. China certainly wants importers to cover some, if not all, of that costs. While China's stance is understandable, this paper has argued from a broad and balanced perspective that if this is pushed too far, it will not help to find solutions to this issue. On the contrary it can be to China's disadvantage for a number of reasons. However, aligning this responsibility with China does not necessarily suggest the sole reliance on domestic actions. In that context, the paper recommends specific actions that need to be taken internationally as well as domestically in order to effectively control the embedded CO2 emissions in China's trade.
    JEL: F18 P28 Q42 Q43 Q48 Q53 Q54 Q56 Q58
    Date: 2011–11
  22. By: Victor Gorshkov (PhD student, Graduate School of Economics, Kyoto University)
    Abstract: The present paper analyses motivation, entry modes and strategies of foreign banks entering into the Russian market. The share of foreign assets in the banking sector is gradually increasing, proving the fact that more and more foreign banks show their interest in the Russian banking sector. What lies behind this growth? The article shows that motivation for entry is similar to some other developing and transition economies (both PUSH and PULL reasons exist) and presents some peculiar features concerning the modes of entry and strategies. It is shown that recently organic strategy growth is gradually replaced by M&A.
    Keywords: foreign banks, motivation, entry modes, strategies, M&A
    Date: 2011–12
  23. By: J. James Reade; Ulrich Volz
    Abstract: This article uses automatic model selection procedures, based on the gernal-to-specific approach, to investigate inflation in China. A novelty of this article is the use of a technique called impulse indicator saturation which allows us to uncover instabilities and to specify a general model and select down to a more specific model that best explains inflation in China. By and large, our findings suggest that China has been able to insulate itself against shocks from the US, although (maybe surprisingly) monetary growth in Europe seems to have an effect. Nonetheless, the main factors impacting Chinese inflation appear to be domestic, names GDP growth and money growth.
    Keywords: Chinese inflation, dollar peg, automatic model selection procedure
    JEL: C32 E52 F33
    Date: 2011–09
  24. By: Aldashev, Alisher; Dietz, Barbara
    Abstract: In this paper we analyze the determinants of interregional migration in Kazakhstan using quarterly panel data on region to region migration in 2008–2010. To the best of our knowledge this is the first study on interregional population flows in Central Asia. We find that migration is determined by economic factors, first of all income: People are more likely to leave regions where incomes are low and more likely to move to regions with a higher income level. Furthermore, mobility is larger between more populated regions. Distance has a strong negative impact on migration, indicating high migration related costs and risks. Assuming that high migration costs are caused by poor infrastructure, investments in public and social infrastructure should facilitate regional income convergence in Kazakhstan and improve living standards in depressed regions.
    Keywords: Interregional migration; Kazakhstan; Gravity model
    JEL: P36 J61 R23
    Date: 2011–10
  25. By: Azim Raimbaev
    Abstract: There is a consensus among scholars that institutions (i.e. norms and regulations) are country specific. The paper aims to contribute to the debate by examining the type of institutions which have been the most important for growth in transition countries. It employs a new set of the institutional variables published by the World Bank against the commonly used transition index of the European Bank for Reconstruction and Development. Also, the paper tests the validity of some arguments presented in the institutional literature. As a result, it appears that among the institutional variables government effectiveness has the most significant impact on economic development of the former planned economies. However, at this stage, the classical growth factors such as investment and export turn out to be more important for growth than institutions.
    Keywords: Institutions, governance, transition economies, growth.
    JEL: O43 P21 P36
    Date: 2011–11–16
  26. By: Alexandru Cojocaru (University of Maryland)
    Abstract: This paper examines the link between inequality and individual well-being using household survey data from 27 Transition Economies, where income inequality increased considerably since 1989. A test of inequality aversion in individual preferences that draws on the Fehr and Schmidt (QJE, 1999) specification of inequality aversion is proposed, and the difficulties of implementing it in a non-experimental setting are discussed. Estimates based on this model confirm aversion to inequality both in the overall sample and in the regional sub-samples. The Gini index, on the other hand, is unable to capture this negative effect of inequality on well-being. Notably, inequality aversion is not intrinsic. Rather, it appears to be tied to a concern with the fairness of the institutions underlying the distribution of fortunes in society. The evidence is suggestive of inequality of opportunity driving attitudes toward overall inequality. Perceiving inequality to be unfair is also associated with calls for strong government involvement in redistributive policies.
    Keywords: inequality aversion, relative deprivation, subjective well-being, transition economies.
    JEL: D63 I32 P20
    Date: 2011
  27. By: Esther Ademmer
    Abstract: In academic and public debates, external actors have been considered to promote their rules most effectively in third countries in cases of high and asymmetric interdependence. Hence, high interdependence of European Neighborhood Countries (ENC) with Russia has been discussed as a major constraint to EU rule transfer. The case of migration policies, however, represents an odd one out: high degrees of interdependence of the ENC and Russia are coupled with compliance with EU rules, whereas lower degrees of interdependence correlate with shallow and selective compliance. The paper investigates the de facto impact of Russia and the EU on the implementation of the European Neighborhood Policy (ENP) in this highly interdependent policy field and argues for a change in perspective: adopting a stronger bottom-up perspective on power-based approaches of external governance cannot only account for varying compliance records, but also shows how domestic actors can use multiple external opportunity structures to promote their own agenda.
    Keywords: immigration policy; neighbourhood policy; Russia
    Date: 2011–11–23
  28. By: Yan, Isabel K.; Chan, Kenneth S.; Dang, Vinh Q.T.
    Abstract: We empirically examine some listed Chinese firms’ political connection, ownership, and financing constraints. Politically-connected firms display no financing constraints whereas firms without connection experience significant constraints. Non-connected family-controlled firms bear greater constraints than non-connected state-owned firms.
    Keywords: Political connection; investments; financing constraints; Chinese firms
    JEL: G31 G18 E22 O16
    Date: 2011–11
  29. By: Petrushchak, Bohdan
    Abstract: The theoretical aspects of calendar effects and anomalies on the Ukrainian stock market and the empirical evidence of daily, monthly and quarterly returns of PFTS-index and their volatility are examined. A strong evidence of a calendar effect i.e. December effect on Ukrainian PFTS exchange was found. It can be explained due to the cyclical character of some industries, cyclical shares and calendar character of exchange rate fluctuations.
    Keywords: Calendar effects; December effect; stock market anomalies; volatility and rate of return of PFTS-Index; self-fulfilling prophecies; cyclical shares; Календарні ефекти та аномалії фондового ринку; ефект Грудня; дохідність та волатильність індексу ПФТС; передбаченння; які самореалізуються; циклічні акції;
    JEL: G14 D84 G11 G15 G00
    Date: 2011
  30. By: Wenying Fu; Javier Revilla Diez; Daniel Schiller
    Abstract: Governance constitutes elementary supportive infrastructure for regional innovation systems. This paper extends the evolutionary lens of governance into initial industrialization phase and examines the impact of their evolution into regional innovation systems on fostering innovation activities. Drawing on the empirical substances in Shenzhen and Dongguan, China, a path-dependent nature of institutional design on supporting innovation has been discovered. The paper shows that the dirigiste globalized production system in Shenzhen in 1980s has gradually evolved to a higher level of interactive regional innovation system than the grassroots globalized production system in Dongguan, where innovation is still passively managed by global players. Finally, policy implication is discussed for the construction of regional innovation systems under different governance modalities in the initial industrialization phase.
    Keywords: ego-networks, geographical proximity, innovation performance, knowledge networks, technological relatedness
    JEL: B15 R11 R12
    Date: 2011–11
  31. By: Ma, Shuang; Sun, Churen; Tian, Guoqiang
    Abstract: This paper proposes a two-country trade equilibrium model with heterogeneous firms to investigate the influences of minimum wages and productivity on firms' exports. It shows that the influence of minimum wages on firms' exporting probability and foreign sales is negative while that of firms' productivity on their exports is positive. Econometric analysis based on the Annual Survey of Chinese Industrial Firms as well as the data of minimum wages collected ourselves from 1998 to 2007 verifies these predictions. Holding the other variables constant, if minimum wages and their productivity increase by 100%$, then the elasticity of minimum wage on firms' exporting sales is -8.6% while that of firms' productivity is 75.6%, and firms' exporting possibility decreases by 1.1%$ and increases by 1.6%$, respectively.
    Keywords: Minimum wage; heterogeneous firm; productivity; export
    JEL: F16 L25 F12
    Date: 2011–07–22
  32. By: Damian, Monica
    Abstract: The first part of the paper assesses the impact of asymmetric shocks on inflation in two new members states of the euro zone: Slovenia and Slovakia. The second part of the paper studies the issue of the inflationary process in Romania in the context of losing autonomous monetary policy after euro adoption. Minimizing the cost of losing monetary autonomy presupposes the fulfilment of the sustainable nominal and real convergence criteria. The unsynchronization of the business cycle indicates a higher probability of asymmetric shocks and thus lead to differences in inflation to the euro area, differences that will persist due to the inertial component.
    Keywords: rata inflației; politică monetară; șocuri asimetrice; zona euro
    JEL: E31 E52
    Date: 2011–11–28
  33. By: Jarko Fidrmuc; Pavel Ciaian; d'Artis Kancs; Jan Pokrivcak
    Abstract: In light of the recent financial and economic crisis the present paper analyzes the determinants of loan default. We employ a unique firm-level panel data of 700 bank loans given to small and medium sized enterprises in Slovakia between 2000 and 2005 to investigate three loan default hypothesis. Testing the Sector-Risk Hypothesis, we find that agro-food industry does not exhibit higher default rate than other sectors. Testing the Firm-Risk Hypothesis, we find that highly indebted firms are more likely to default on their loan than other firms. Testing the EU Subsidy Hypothesis we find that the newly introduced subsidy system, which is decoupled from production, provides a secure source of income and hence reduces the probability of loan default.
    Keywords: Bank credit, loan default, credit constraints, heterogeneous firms.
    JEL: G33 G21 C25 Q14
    Date: 2011–11–17
  34. By: Mikolaj Szoltysek (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This essay represents an attempt at a re-examination of the Western scientific evidence for the existence of the divergent “Eastern European family pattern.” This evidence is challenged by almost entirely unknown contributions of Eastern European scholars, revealing the stark incompatibility of the two discourses. This paper is informed to a large extent by R. Wall’s voluminous research on European household and family systems. Wall’s original observation of non-negligible spatial variation within the supposedly homogenous North-Western European marriage and family pattern is used here as a starting point to show the true diversity of familial organization in Eastern Europe, which had been placed at the other end of the spectrum of what was long believed to be a dichotomous division in European family systems. The diversity of family forms and the rhythms of their development in historical Eastern Europe presented in this literature should finally free us from a simplistic view of the continent’s familial history, and especially from the perspective implied by the notion of a “dividing line.”
    Keywords: Europe, family forms
    JEL: J1 Z0
    Date: 2011–12
  35. By: Blunch, Niels-Hugo (Washington and Lee University); Sulla, Victor (World Bank)
    Abstract: While results are starting to emerge, not much is known yet about the dynamics of the labor markets of the former Eastern economies, especially in the context of the current Financial Crisis. Arguably, this is mainly due to paucity of (panel) data. By examining labor market transitions, earnings levels, and earnings growth and their correlates using a recent panel data set for Serbia, this paper combines both of these issues. Estimation of gross transition probabilities reveals that females are disadvantaged in the Serbian labor market in terms of moving out of the two undesirable states, unemployment and economic inactivity, relative to males during the first year of the financial crisis – though males are harder hit than females in terms of the levels of unemployment. In terms of earnings, the picture is reversed, with females being worse off in terms of the levels of earnings, while they have experienced somewhat smaller earnings decreases than males (though, owing to the gender earnings gap, from a much lower base). Multinomial logit estimations of employment, unemployment, and inactivity transitions and OLS regressions of earnings and earnings growth reveal substantial gender differences related to individual, job, and firm characteristics. The overall results therefore hint at both males and females being hit in terms of employment and earnings, though in different ways. Finally, the paper discusses policy implications and provides suggestions for further research.
    Keywords: financial crisis, gender, labor market flows, transition probabilities, earnings growth, panel data, Serbia
    JEL: I31 J2 J24 J6
    Date: 2011–11
  36. By: Martin Srholec (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: Innovation is new combination of productive means that are internal or external to a firm. Arrangements to cooperate on innovation facilitate access to these external sources of knowledge. Using large micro datasets from the Third and Fourth Community Innovation Surveys in sixteen European countries, including nine new EU members, we examine the heterogeneity of relationships between various characteristics of firms, given by size, ownership or capabilities, and their propensity to cooperate on innovation with domestic as compared to foreign partners, with different types of organizations and how these patterns differ across countries. Econometric estimates of univariate, multivariate and multinomial probit (or logit) models indicate differences between domestic and foreign cooperation, but not between the various types of partners. Strong differences have been found along the level of economic development. Size of the country and openness to globalization proved relevant for explaining cooperation of firms on innovation abroad. Nevertheless, the results reveal that the context matters for interpretation of the cooperation variables themselves, because some of these arrangements may signal limited internal capabilities of firms, rather than virtuous systemic interactions, which complicates comparative studies of this data.
    Keywords: Innovation; cooperation; globalization; Community Innovation Survey; Europe.
    Date: 2011–12

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