nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒04‒17
seventeen papers chosen by
J. David Brown
Heriot-Watt University

  1. The Polish growth miracle: outcome of persistent reform efforts By H. Lehmann
  2. What Can Arab Countries Learn From Post-communist Transition? By Marek Dabrowski
  3. Transition in the MENA Region: Challenges, Opportunities and Prospects By Vladimir Gligorov; Peter Havlik; Sandor Richter; Hermine Vidovic
  4. Technological Innovation in New European Union Markets By Ainura Uzagalieva; Evžen Kočenda; Antonio Menezes
  5. Equitable access to land as a means of poverty reduction in rural china By Hao, Yan
  6. Regional Disparity in Health and Health Care in China By Hong Wang; Licheng Zhang; Heng-fu Zou
  7. Financial development and economic growth in Poland in transition: causality analysis By Gurgul, Henryk; Łukasz , Lach
  8. Designing Intergovernmental Transfers in Russia: A Simulation Study By Tao Zhang; Heng-fu Zou
  9. Toward a More Efficient and Innovative Electricity Sector in Russia By Douglas Cooke; Alexander Antonyuk; Isabel Murray
  10. The Czech Republic: Self-inflicted pain By Leon Podkaminer
  11. Initial reforms and dynamics of transition By Ariane TICHIT MINISCLOUX; Solenne TANGUY
  12. Capital Controls with International Reserve Accumulation: Can this Be Optimal ? By Philippe Bacchetta; Kenza Benhima; Yannick Kalantzis
  13. Bulgaria: Heading for a downturn? By Anton Mihailov
  14. Azerbaijan Transport Sector 2011 By Irina Tochitskaya
  15. Land fragmentation, cropland abandonment, and land market operation in Albania By Deininger, Klaus; Savastano, Sara; Carletto, Calogero
  16. Nominal effective exchange rate neutrality: the case of Macedonia By Josheski, Dushko; Lazarov, Darko
  17. A New Institutional Economics Perspective on Trademarks. Rebuilding Post Conflict Zones in Sierra Leone and Croatia By Ghafele, Roya; Gibert, Benjamin

  1. By: H. Lehmann
    Abstract: Since the beginning of transition in 1990 from a centrally planned to a market oriented economy, the performance of Poland’s economy has been outstanding if we take GDP growth as our measure. In our opinion it is not specific reforms that can explain this performance but the radical (“big bang”) reforms at the beginning of transition in conjunction with persistent efforts during the two decades by all governments, no matter what their political orientation, to keep on a reform path. Reforming a centrally planned economy that has very serious macroeconomic disequilibria implies reforms that can be done immediately but also structural or systemic reforms that require years to implement. Both types of reforms will be discussed. In a democratic context reforms can only be undertaken in a sustained way if a majority of voters favours such reform efforts. Even when reform-friendly governments were voted out of office in the Polish case, the new governments in Poland never reversed reforms undertaken by the previous government. This continuous reform stance over two decades is the main cause of the Polish growth miracle. The reasons for the ability of Polish policy makers to pursue economic and administrative reforms in spite of short-run costs to large sections of society will be discussed extensively
    JEL: D78 J40 P20 P26
    Date: 2012–04
  2. By: Marek Dabrowski
    Abstract: More than a year has passed since the beginning of the political uprising against the authoritarian regimes in the Arab world. But, as demonstrated by the recent dramatic developments in Syria, the process is far from over. Meanwhile nations which have already freed themselves from their authoritarian rulers (Tunisia, Egypt, Libya and Yemen), must decide where to go and how to manage their political and economic changes. To a lesser extent, a similar challenge is being faced by those constitutional monarchies (like Morocco or Jordan) which accelerated reforms in order to avoid political destabilization. Many politicians and experts, especially those from Central and Eastern Europe, suggest their Arab colleagues learn from the experience of the postcommunist transition of the early 1990s. However, while learning from others is always a useful exercise, the geopolitical and socio-economic context of the Arab revolution seems to be different, in many respects, from that of former Soviet bloc countries more than twenty years ago.
    Keywords: Post-communist transition and development issues, Eastern Europe, Caucasus and Central Asia, Middle East and North Africa
    Date: 2012–04
  3. By: Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Sandor Richter (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper discusses the transition agenda and provides the key economic characteristics of selected Middle East and North Africa countries (MENA) in comparison with selected Central, East and Southeast European countries (CESEE). We intend to identify some regularities in transition processes and to draw policy lessons for MENA countries. Among the key challenges facing the MENA region are job creation, fighting corruption, public sector reforms and trade diversification; the way towards a functioning market economy should not necessarily be as long and controversial as in the CESEE. MENA countries had been implementing market-oriented reforms for more than a decade. Together with free trade agreements concluded with the EU, these reforms have contributed to an increase of FDI inflows. Still, MENA countries have been lagging behind in terms of export performance, competitiveness and restructuring. Numerous impediments to trade and FDI in the MENA region need to be overcome, yet the transition will not require a radical overhaul of the existing system. The sine qua non condition is to achieve high per capita GDP growth. There is no guarantee for success – as illustrated by the experience of CESEE. Moreover, the current global crisis makes policy implementation not easier. If anything, future scenarios must reckon with a slow process of improvements and many backlashes. Transitions and sustainable reforms need to be anchored in a supportive international environment. In the case of many CESEE countries, the EU provided such an anchor. In the case of MENA, such a strong anchor is missing. A newly designed international involvement and especially the strengthened role of the EU will play a crucial role. A comprehensive EU-MENA trade agreement, possibly with an intra-MENA (and Turkey) Customs Union arrangement, would be beneficial to both MENA and the EU.
    Keywords: transition, integration, foreign trade, FDI, labour market
    JEL: E24 F13 F53 O2 O43 O57 P52
    Date: 2012–01
  4. By: Ainura Uzagalieva (Centre of Applied Economics Studies of the Atlantic at the Department of Economics and Management, the University of the Azores, Portugal); Evžen Kočenda; Antonio Menezes
    Abstract: We analyze the role of innovation in the technological development of four new EU members: the Czech Republic, Hungary, Poland and Slovakia. For that purpose, we use a novel approach by modeling the empirical relationship between intra-industrial bilateral trade flows, which proxy the level of technological progress, and innovation expenditures within the context of a gravity model with a set of appropriate instrumental variables to account for the potential endogeneity of innovation to trade. We show that innovation efforts in high-tech industries exhibit a strong effect on the technological progress of the region and they are closely linked to foreign direct investment and multinationals. As foreign-owned subsidiaries become a part of the innovation systems and industrial structure of the host country they promote overall technological growth in the region.
    Keywords: foreign direct investment, innovation, imitation, international trade, European Union
    JEL: C51 F14 F21 O31
    Date: 2012–03
  5. By: Hao, Yan
    Abstract: In China, as in many developing countries, poverty is primarily a rural phenomenon. Considerable efforts have been made over the last few decades to reduce poverty in China's rural areas; and indeed, the poverty rate in these areas has fallen from 30.7% in 1978 to 3.8% in 2009. This paper begins with a review of ancient Chinese texts on the importance of equitable access to land. In an agrarian economy, the issue of land distribution is critical not only to a country's economic prosperity but also to its political survival. After reviewing the achievements and failures of the Communist government's land policy introduced in the 1950s, I discuss the household contract system launched by the government in the early 1980s. Under the new system, the formerly collectively owned farmland was contracted out equally to villagers on a household basis, who hold the land in quasiprivate ownership. The policy ensuring farmers' equal access to land has profound political, economic, and social implications in today's China. Given the well-documented correlation between landlessness and rural poverty, the role of land security in reducing poverty in rural China should not be underestimated. However, this policy alone cannot eliminate poverty completely. Even when families are equally granted a piece of land, they may still suffer from poverty if the land cannot produce enough food or generate sufficient income. I enumerate a number of on-going anti-poverty programs at national and local level that supplement the policy on equitable access to land. While these supplementary programs are indeed important, China's experience shows that equitable access to land is an especially effective means to combat rural poverty. --
    Keywords: China,rural poverty,poverty reduction,Communist government,land policy,land distribution,developing countries
    JEL: I38 P25 R52
    Date: 2011
  6. By: Hong Wang (Yale University); Licheng Zhang (Beijing University); Heng-fu Zou (The World Bank)
    Abstract: One major critique of the Chinese economic reform focuses on disparities in development. This study examines the recent trends in the disparities in health and health care resources across the provinces. This study also examines the relationship between health status, health care resources, and socioeconomic status. A panel data from "All China Data" and China Health Statistic Yearbooks is used in this study. These data include health status, health care resources, and socioeconomic status variables at the provincial level from 1980 to 2003. Index of disparity was used as the indicator for measuring regional disparity in health and health care resources. A fixed effect model was used to estimate the relationships between health status and health care resources and their potential determinants. The results of this study show that the disparities in maternal mortality, number of beds, and number of doctors increased and then declined in most recent years. However, the values of their indexes of disparity in 2002 are still higher than their values in 1985. Therefore the disparities in health status and health care resources across the provinces increased after the economic reform. The results of this study also suggest that socioeconomic status has significant association with health status and health care resources. The association between socioeconomic indicators and health status and health care resources varies in different economic zones.
    Date: 2012
  7. By: Gurgul, Henryk; Łukasz , Lach
    Abstract: The economic literature suggests that the efficient allocation of resources by the financial system speeds up economic development and reduces poverty. However, there are economists who find financial development to be the result of economic growth. This study examines causal relationship between economic growth and financial development in Poland on the basis of quarterly data for the period Q1 2000 – Q4 2009. The empirical research was performed in two variants: bank– and stock market–oriented approaches. The results suggest causality running from the development of the stock market to economic growth and from economic growth to the development of the banking sector. This implies that the direction of causality strongly depends on which particular area of the financial sector is considered. Empirical results were found to be robust both to the type of common variable applied and the specification of testing procedure, which clearly validates major conclusions of this paper.
    Keywords: financial development; economic growth; transition economies; Granger causality
    JEL: C32 O16 E44
    Date: 2011–09–10
  8. By: Tao Zhang (Public Economics Division, Policy Research Department, The World Bank); Heng-fu Zou (Public Economics Division, Policy Research Department, The World Bank)
    Date: 2012
  9. By: Douglas Cooke; Alexander Antonyuk; Isabel Murray
    Abstract: Russia is in the process of one of the most ambitious electricity sector reforms ever undertaken, reflecting the importance of an efficient and reliable electricity sector for promoting economic activity, growth and community prosperity. However, the outcome remains uncertain at this stage. Electricity reform is entering a critical phase in Russia. Hence, the IEA is updating its original work [Russian Electricity Reform: Emerging Challenges and Opportunities, see]. <P>The new study will outline trends and progress since 2005, and will examine the key remaining challenges drawing on the experience of IEA member countries to inform the analysis as appropriate. It is being undertaken in consultation with key Russian stakeholders to ensure the analysis reflects a sound, evidence-based understanding of the key issues. <P>This paper outlines some key issues and preliminary views emerging from IEA analysis and consultations to date, and is provided to facilitate more effective consultation and dialogue with key stakeholders. The IEA would welcome comments on the issues and questions raised in this document, or any other observations stakeholders may wish to raise that may be of relevance to this study. <P>Please forward any written comments in English or Russian to Comments would be gratefully received before close of business, Monday 30 April 2012. <P>Any other questions in relation to this project should be directed to Douglas Cooke, Project Leader ( or Isabel Murray, Russia Programme Manager (
    Date: 2012–03–23
  10. By: Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Should the euro area continue to ‘muddle through’ and thus avoid deep recession in 2012, the Czech economy would escape recession as well. But its growth in 2012 will be depressed by the stubborn attempts to meet the fiscal targets, no matter what. A euro area recovery in 2013 and beyond would naturally (by way of stronger demand for imports) help speed up growth in the Czech Republic. In addition, the fiscal consolidation measures will by then become less intense (also because of the next regular parliamentary elections to be held in 2014). Good financial standing of the banking and corporate sectors, relatively low level of household debt, combined with competent policy of the Czech National Bank (determined to keep a very relaxed policy even in face of temporary hikes in inflation) should, by then, help accelerate growth – first of investments and then of private consumption and overall GDP.
    Date: 2012–03
  11. By: Ariane TICHIT MINISCLOUX (Centre d'Etudes et de Recherches sur le Développement International); Solenne TANGUY
    Abstract: This article analyses the impact on the labor market of the transition from a state-controlled economy towards a market economy. We consider a dynamic matching-model with a declining and an emerging competitive sector. We show that there are two opposite strategies in the move towards a market economy: a massive decrease in employment or a small decrease in employment in the non-competitive sector. We find that the transition is achieved faster with a big reduction in state employment than with a small one. Surprisingly, the end of transition is also characterized by lower unemployment when there are massive layoffs - because in the short run, the high unemployment implied by the massive decrease makes job creation in the competitive sector more profitable. In fact, this seems to have been the way chosen by most of the CEECs.
    Keywords: Unemployment, Matching models, transitional economies
    Date: 2012
  12. By: Philippe Bacchetta; Kenza Benhima; Yannick Kalantzis
    Abstract: Motivated by the Chinese experience, we analyze a semi-open economy where the central bank has access to international capital markets, but the private sector has not. This enables the central bank to choose an interest rate different from the international rate. We examine the optimal policy of the central bank by modelling it as a Ramsey planner who can choose the level of domestic public debt and of international reserves. The central bank can improve savings opportunities of credit-constrained consumers modelled as in Woodford (1990). We find that in a steady state it is optimal for the central bank to replicate the open economy, i.e., to issue debt financed by the accumulation of reserves so that the domestic interest rate equals the foreign rate. When the economy is in transition, however, a rapidly growing economy has a higher welfare without capital mobility and the optimal interest rate differs from the international rate. We argue that the domestic interest rate should be temporarily above the international rate. We also find that capital controls can still help reach the first best when the planner has more fiscal instruments.
    Keywords: reserve accumulation; capital controls; Ramsey planner; credit constraints
    JEL: E58 F36 F41
    Date: 2011–12
  13. By: Anton Mihailov
    Abstract: In Bulgaria, GDP increased by 1.6% in 2011 but economic activity was weakening in the final months. While the export performance for the year as a whole was robust, sluggish domestic demand was a drag on economic growth. The process of macroeconomic rebalancing in 2011 was accompanied by a net outflow of financial resources. Short-term prospects have deteriorated and the economy is likely to stagnate in 2012.
    Date: 2012–03
  14. By: Irina Tochitskaya
    Abstract: The report evaluates progress achieved in implementation of structural reforms of the transport sector in Azerbaijan in the following subsectors: railways, road transport and roads, air transport and airports, maritime transport and ports. It presents standardized and qualitative indicators that assess the level of the transport sector reforms in three areas: 1) commercialization and privatization, 2) tariff policy, and 3) institutional and regulatory changes. The aggregated index is calculated on the basis of the 21 indicators that reflects the status of the reforms in each sector at a period under review.
    Keywords: Transportation analysis, Transition economies, Reform
    JEL: L91 L92 L93 R4 O18 P21
    Date: 2012
  15. By: Deininger, Klaus; Savastano, Sara; Carletto, Calogero
    Abstract: Albania's radical farmland distribution is credited with averting an economic crisis and social unrest during the transition. But many believe it led to a holding structure too fragmented to be efficient, and that public efforts to consolidate plots are needed to lay the foundation for greater rural productivity. This paper uses farm-level data from the 2005 Albania Living Standards Measurement Survey to explore this quantitatively. The analysis finds no support for the argument that fragmentation reduces productivity. However, producers fail to utilize about 10 percent of the country's productive land, and, in the majority of cases, this land has been idle for at least five years. Farmers quote inefficiently-small plots as the reason for this in few cases, casting doubt on the scope for land consolidation to solve this issue. Instead, the data are consistent with the notion of land market imperfections, which can be traced to gaps in the legal and policy framework, as well as inefficiencies in registry operations, leading to land abandonment on a large scale. To maintain the productive potential of Albania's rural economy and, if and when needed, the ability to conduct consolidation in a cost-effective and sustainable manner, it will be critical to complement the emphasis on consolidation with an effort to address those gaps and inefficiencies on a priority basis.
    Keywords: Banks&Banking Reform,Rural Development Knowledge&Information Systems,Rural Land Policies for Poverty Reduction,Land Use and Policies,Municipal Housing and Land
    Date: 2012–04–01
  16. By: Josheski, Dushko; Lazarov, Darko
    Abstract: This paper uses quarterly data on Macedonian nominal effective exchange rate for the time period 1992 to 2009 along with six other variables to investigate the nominal effective exchange rate neutrality. SVAR and Impulse response functions had been used to prove the hypothesis. Empirical evidence in this paper supports the nominal exchange rate neutrality in the case of Macedonia.
    Keywords: NEER; SVAR; Impulse response functions
    JEL: F31
    Date: 2012–04–10
  17. By: Ghafele, Roya; Gibert, Benjamin
    Abstract: This paper evaluates the role of collective trademarks in enhancing the ability of tourism clusters to stimulate economic growth, local ownership and innovative governance. Illustrating how intellectual property (IP) law can be leveraged to achieve this, we offer a new economic rationale for trademarks in the context of tourism. Two post-conflict case studies of Sierra Leone and Croatia provide a crash test for this approach. By emphasizing the role of law, institutions and infrastructure in stimulating tourism in post-conflict zones, this paper echoes new institutional economics perspectives that highlight the impact of legal structure on development. Despite widespread acknowledgement of the cluster attributes of tourism, the role of tourism and clustering in regional development policy is seldom addressed. To our knowledge, the role of collective trademarks in strengthening tourism clusters has not been investigated.
    Keywords: collective trademarks; intellectual property; clusters; new institutional economics; tourism management; governance
    JEL: O34 O43 O31
    Date: 2012–04

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