nep-tra New Economics Papers
on Transition Economics
Issue of 2012‒09‒03
fifteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior By Bursztyn, Leonardo; Cantoni, Davide
  2. Economic Policy of 2009: Between Crisis and Modernization By Vladimir mau
  3. Российские финансовые институты развития: процесс становления и основные проблемы в повышении результативности By Simachev, Yuri; Kuzyk, Mikhail; Ivanov, Denis
  4. Gender Imbalance at Birth and Parents' Anxiety about Old Age in China By Yoshihiko Kadoya; Ting Yin
  5. The Human Capital Roots of the Middle Income Trap: The Case of China By Zhang, Linxiu; Yi, Hongmei; Luo, Renfu; Liu, Changfang; Rozelle, Scott
  6. To raise or not to raise? Impact assessment of Russia's incremental gas price reform By Heyndrickx, Christophe; Alexeeva-Talebi, Victoria; Tourdyeva, Natalia
  7. Credit Constraints, Quality, and Export Prices: Theory and Evidence from China By Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
  8. The link between government budget and current account in the Baltic countries By Misztal, Piotr
  9. Normative and allocation role strain: role incompatibility, outsourcing, and the transition to a second birth in Eastern and Western Germany By Liat Raz-Yurovich
  10. Are Migrants in Large Cities Underpaid? Evidence from Vietnam By Nguyen, Viet Cuong; Pham, Minh Thai
  11. Influența deficitului bugetar asupra dezvoltării economice a României By Mesea, Oana Elena
  12. The ecological price of getting rich in a green desert: A contingent valuation study in rural Southwest China By Ahlheim, Michael; Börger, Tobias; Frör, Oliver
  13. Macroeconomic Aspects of Real Exchange Rate Volatility in the Central European Countries By Mirdala, Rajmund
  14. It Takes Two to Tango: Entrepreneurship and Creativity in Troubled Times – Vietnam 2012 By Vu Dang Le Nguyen; Nancy K. Napier; Quan Hoang Vuong
  15. Business Strategy and Overcoming Lack of Market Institutions upon Entering Emerging Markets - Case Study of Heiwado's Entry into China - By Yuki Kawabata; Kumiko Nisio

  1. By: Bursztyn, Leonardo; Cantoni, Davide
    Abstract: This paper examines the impact of exposure to foreign media on the economic behavior of agents in a totalitarian regime. We study private consumption choices focusing on former East Germany, where differential access to Western television was determined by geographic features. Using data collected after the transition to a market economy, we find no evidence of a significant impact of previous exposure to Western television on aggregate consumption levels. However, exposure to Western broadcasts affects the composition of consumption, biasing choices in favor of categories of goods with high intensity of pre-reunification advertisement. The effects vanish by 1998.
    Keywords: Advertising; Communism; Consumption; East Germany; Media; Television
    JEL: D12 E21 Z10
    Date: 2012–08
  2. By: Vladimir mau (Gaidar Institute for Economic Policy)
    Abstract: This paper deals with Russia's economic policy in 2009. The author speaks about institutional stability as the main outcome of the crisis year. He provides specific features of the anti-crisis policy and outlines Russia's anti-crisis policy. The priorities of Russia's economic policy during the crisis take lengy description. The author also focuses on systemic challenges and new tasks for the countri in the coming years.
    Keywords: 2008 economic crisis, Russian economy
    JEL: P48 P26 P16
    Date: 2012
  3. By: Simachev, Yuri; Kuzyk, Mikhail; Ivanov, Denis
    Abstract: The paper tells the history of Russian financial development institutions, analyses their scope and fields of operation, discovers crucial problems and imbalances of Russian financial developenment institutions system and speculates on possible ways to its improvement.
    Keywords: Russia; financial development institutions
    JEL: O38 O32
    Date: 2012
  4. By: Yoshihiko Kadoya; Ting Yin
    Abstract: Chinese parents prefer to have sons as they depend on their sons for support in old age, according to most of the literature. This paper uses the Preference Parameters Study, which randomly interviewed individuals in six major cities in China in 2011, to present empirical evidence about the possible cause of the problematic gender imbalance at birth in China. From the dataset, this paper compares sons' and daughters' commitment to parental care from a selection of respondents who were married, aged 20-70, had at least one living parent, and had no missing answers to the interview questions. The results indicate that Chinese sons (and their wives) are more likely, compared to daughters (and their husbands), to be primary caregivers for parents. Nonetheless, parents' dependency on their children would not necessarily decrease with social security, although children with highly educated spouses appear to present an exception. The current study supports the initial claim found in literature; however, the solution to the gender imbalance at birth in China may not be the development of a social security system.
    Date: 2012–08
  5. By: Zhang, Linxiu; Yi, Hongmei; Luo, Renfu; Liu, Changfang; Rozelle, Scott
    Abstract: China, like other middle income countries, is facing the challenges of the next stage of development as its leaders seek to guide the nation into becoming a high income country. At this same point of development, however, other countries have faltered, raising the possibility of stagnation or collapse. The stagnation of growth after reaching a level of income high enough to be call “middle income” is a phenomenon which some observers call the Middle Income Trap. In this paper we explore one of the major challenges that nations, including China, must face in the transition from middle to high income: the management of inequality. In particular, we explore the possible roots of future inequality that is associated with a nation’s underinvestment in the human capital of broad segments of its population. To meet this goal we first look at several benchmarks of successful transitions from middle to high income (e.g., the case of South Korea) and not-so-successful transitions (Mexico). We then exam more systematically the characteristics of countries that have successfully transitioned (or graduated) from middle to high income (Graduates) and those that are attempting to do so now (Aspirees). With this background, we describe the challenges that China faces in the light of rising wage rates and highly unequal income distribution today. We also document the high levels of human capital inequality in China today, a harbinger of high future inequality. In discussing the sources of the human capital inequality, in addition to the structural and institutional barriers that are discouraging many students (and their parents) from staying in school to achieve the levels of learning that we believe are necessary for preparing individuals for employment in the coming decades, we also identify severe nutritional and health problems. We believe that these nutrition and health problems, unless addressed, are creating serious China’s human capital deficiencies in poor areas of rural China and locking in decades of hard-to-address inequality. The paper ends with a call for leaders in China (and countries at the same level of income of China) to launch immediately a war on poor education, health and nutrition as one step in helping such nations avoid the Middle Income Trap in the future.
    Keywords: Labor and Human Capital,
    Date: 2012–08
  6. By: Heyndrickx, Christophe; Alexeeva-Talebi, Victoria; Tourdyeva, Natalia
    Abstract: The growing momentum for gas price liberalization in Russia is increasingly constrained by fears of potentially strong adverse impact that market-based price setting principle will have on the economy. Based on a novel multi-regional, multi-sector and multi-household computable general equilibrium (CGE) model of the Russian Federation, this paper presents a simple yet a flexible framework for evaluating gas price reform. We found that the reform is feasible at low economic cost, without greater disparities in terms of increased inequity within and between country's federal districts. Large redistributive impacts can arise from specific mechanisms to recycle revenues. In terms of global environmental credentials, gas price liberalization can bring Russia on a substantially more sustainable path. The potential to foster adoption of energy efficiency measures by exploiting the revenue-recycling effect is, however, limited. --
    Keywords: regional general equilibrium model,sustainable development,natural gas pricing,Russia
    JEL: D58 H21 H22 Q48
    Date: 2012
  7. By: Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
    Abstract: This paper examines (i) the relationship between the credit constraints faced by a firm and the unit value prices of its exports, as well as (ii) the relationship between the export prices of a firm and its productivity. The paper extends Melitz's (2003) model of trade with heterogeneous firms by introducing endogenous quality, credit constraints and marketing costs. There are three key findings. First, there exists a positive relationship between firm productivity and export prices because the choice of higher-quality inputs is associated with higher productivity. Second, tighter credit constraints faced by a firm reduces its optimal prices as its choice of lower-quality inputs dominates the price distortion effect resulting from credit constraints. Third, if one adopts the alternative assumption that quality is exogenous across firms, then completely opposite results would be expected: there would be a negative relationship between prices and productivity; prices increase as firms face tighter credit constraints. An empirical analysis using Chinese bank loans data, Chinese firm-level data from the National Bureau of Statistics of China (NBSC), and Chinese customs data strongly supports the predictions of the endogenous-quality model, and confirms the existence of the quality adjustment effect: firms optimally choose lower quality when facing tighter credit constraints. Our finding of a significant impact of credit constraints on export prices indicates the prevalence of heterogeneity of product quality across firms.
    Keywords: credit constraints; credit access; credit needs; endogenous quality; export prices; quality; heterogeneous firms; productivity
    JEL: G2 D2 F1 L1
    Date: 2012–08–01
  8. By: Misztal, Piotr
    Abstract: The main aim of the article is theoretical and empirical analysis of the causal relationship between the budget balance and the current account balance in the Baltic countries (Latvia, Lithuania and Estonia) in the period 1999-2010. In the paper are used methods based on the literature study of international economics and international finance as well as econometric methods (Vector Autoregressive Model - VAR). The results of investigation clearly point at the existence of negative relationship between fiscal and current account balances in the analyzed countries. At the same time it was revealed stronger impact of the current account balance on the government balance than the impact of the government balance on the current account balance in Latvia, Lithuania and Estonia
    Keywords: government balance; current account; VAR model
    JEL: F32 F41 H6
    Date: 2012–01–03
  9. By: Liat Raz-Yurovich (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The challenges women face in reconciling their work and family responsibilities are at the heart of current explanations concerning the low fertility levels in developed countries. This study examines the role of the outsourcing of household labor and of childcare responsibilities in reducing the incompatibility of women’s roles and in increasing fertility in the two different institutional and normative contexts of Eastern and Western Germany. Using the German Socio-Economic Panel, we analyzed whether Eastern and Western German women who outsourced childcare responsibilities to formal and informal care providers in the first and in the third years after the first birth were at higher risk of having a second child. Drawing on Goode’s role strain theory, we suggest that the incompatibility of women’s roles is affected not only by allocation role strain, but also by normative role strain. Our results indicate that the outsourcing of childcare to formal providers and to grandparents reduces, rather than increases, the propensity to have a second child among Western German women, due to normative role strain. We also find a significant positive effect of the outsourcing of housework on the transition to a second birth in Germany, due to the decline in allocation role strain.
    Keywords: Germany, child care, fertility
    JEL: J1 Z0
    Date: 2012–08
  10. By: Nguyen, Viet Cuong; Pham, Minh Thai
    Abstract: This paper examine the difference in wages between migrants and non-migrants (native workers) in large cities in Vietnam. It is found that migrants receive substantially lower wages than non-migrants. The wage gap tends to be larger for older migrants. However, once observed demographic characteristics of workers are controlled, there is no difference in wages between migrants and non-migrants. The main difference in observed wages between migrants and non-migrants is explained by differences in age and education between migrants and non-migrants.
    Keywords: Migration; underpaid; decomposition; household survey; Vietnam
    JEL: E24 O15
    Date: 2012–05–16
  11. By: Mesea, Oana Elena
    Abstract: This paper empirically analyzes the impact of budget deficit on the economic development of Romania. Using the OLS estimates for quarterly series for the period from 2001 to 2011, the results of the estimates prove that there is an indirect relationship between budget deficit and economic growth of Romania. According to the best statistically significant model from the three different model tested, we reached the result that one percent rise of budget deficit gives a 1.36 percent fall in real GDP. This result sustains the neoclassical hypothesis and is against the Keynesist hypothesis or the Ricardian equivalence.
    Keywords: budget deficit; economic growth; fiscal policy; Romania
    JEL: E62 H62 H61
    Date: 2012–08–04
  12. By: Ahlheim, Michael; Börger, Tobias; Frör, Oliver
    Abstract: The cultivation of rubber trees in Xishuangbanna Prefecture in China's Yunnan Province has triggered an unprecedented economic development but it is also associated with severe environmental problems. Rubber plantations are encroaching the indigenous rainforests at a large scale and a high speed in Xishuangbanna. Many rare plant and animal species are endangered by this development, the natural water management is disturbed and even the microclimate in this region has changed over the past years. The present study aims at an assessment of these environmental costs of the economic progress in Xishuangbanna. To this end a Contingent Valuation survey is conducted to elicit local residents' willingness to pay for a reforestation program that converts existing rubber plantations back into forest. It is shown that though local people's awareness of the environmental problems caused by increasing rubber plantation is quite high their willingness to pay in order to change things is rather low. It seems that from the perspective of local residents the economic advantages of rubber cultivation outweigh the resulting environmental threats. Another explanation of the low willingness to pay stated in this survey might be the fact that many respondents consider taxes and fees already too high in China so that they are not willing to make any further contributions to whatever purpose. --
    Keywords: rubber cultivation,deforestation,contingent valuation method,environmental costs,China
    Date: 2012
  13. By: Mirdala, Rajmund
    Abstract: Exchange rate unexpected fluctuations determine economic development of countries the way quite similar to any other type of exogenous shocks. Unpredicted volatility in exchange rate short-run path affects macroeconomic performance the way that may be a subject of academic as well as economic policy discussions. Overall exposure of countries to negative implications of exchange rate volatility represents one of the areas of empirical investigations related to fixed versus flexible exchange rate dilemma. Rigorous analysis of various aspects of exchange rate fluctuations in terms of macroeconomic performance causal effects is considered to be a crucial outcome of not only exchange rate determining potential but also key information for exchange rate policy or policy decisions related to exchange rate regime shifts. In the paper we analyze macroeconomic aspects of the real exchange rate volatility in the Central European countries. VAR (vector autoregression) methodology is implemented to estimate effects of the real exchange rate fluctuations on the selected main macroeconomic indicators variability. Structural exogenous shocks are identified by applying the Cholesky decomposition of variance-covariance matrix of the reduced-form VAR residuals. Variance decomposition and impulse-response functions of selected endogenous variables to positive one standard deviation real exchange rate shock are computed for two models covering time series for two periods - 2000-2007 (model A) and 2000-2011 (model B) to determine the role of economic crises on presented results (changes in the exchange rate determining potential during the crisis period are expected to be revealed). Ordering of the endogenous variables in both models is also considered to check the robustness of the empirical results of the estimated econometric model in the selected group of countries.
    Keywords: exchange rate volatility; economic growth; economic crisis; vector autoregression; variance decomposition; impulse-response function
    JEL: C32 F32 F41
    Date: 2012–05
  14. By: Vu Dang Le Nguyen; Nancy K. Napier; Quan Hoang Vuong
    Abstract: Strikingly, most literature suggests that market competition will push firms to take creativity/innovation seriously as matter of death or survival. Using the data, we examined creativity methods (Napier and Nilsson, 2008; Napier, 2010) in conjunction with three influential cultural values – namely risk tolerance, relationship, and dependence on resources – to assess how they influence decisions of entrepreneurs.The primary objective of this study focuses on perceived values of entrepreneurship and creativity in business conducted within a turbulent environment. Our initial hypothesis is that a typical entrepreneurial process carries with it “creativity-enabling elements.” In a normal situation, when businesses focus more on optimizing their resources for commercial gains, perceptions about values of entrepreneurial creativity are usually vague. However, in difficult times and harsh competition, the difference between survival and failure may be creativity. This paper also examines many previous findings on both entrepreneurship and creativity and suggests a highly possible “organic growth” of creativity in an entrepreneurial environment and reinforcing value of entrepreneurship when creativity power is present. In other words, we see each idea reinforcing the other. We use data from a survey of sample Vietnamese firms during the chaotic economic year 2012 to learn about the ‘entrepreneurshipcreativity nexus.’ A data set of 137 responses qualified for a statistical examination was obtained from an online survey, which started on February 16 and ended May 24, 2012, sent to local entrepreneurs and corporate managers using social networks. The authors employed categorical data analysis (Agresti, 2002; Azen & Walker, 2011). Statistical analyses confirm that for business operation, the creativity and entrepreneurial spirit could hardly be separate; and, this is not only correct with entrepreneurial firm, but also well established companies. The single most important factor before business startup and during early implementation in Vietnam is what we call “connection/relationship.” However, businesspeople are increasingly aware of the need of creativity/innovation. In fact, we suggest that creativity and entrepreneurial spirit cannot be separated in entrepreneurial firms as well as established companies.
    Keywords: Creativity; Entrepreneurship; Economic Transition; Vietnam
    JEL: C42 M13 O31 P27
    Date: 2012–08
  15. By: Yuki Kawabata (International University of Japan); Kumiko Nisio (Kyoto Women's University)
    Abstract: The purpose of this study is to examine how businesses confront lack of market institutions when entering an emerging market and building and implementing a business model to realize a corporate business strategy, in addition to how those businesses respond to the lack and establish competitive superiority. The case study used in our research was Heiwado Co., Ltd., a retailer that has established stores mainly in Shiga prefecture and that started business in China's Hunan Province in 1990. This case study allowed us to confirm that lack of market institutions impart a significant impact on the success or failure of a company's entrance into an emerging market, and also that adroitly handling these restrictions allows a company to build and implement a business model with competitive superiority.
    Keywords: Business strategy, Business model, Institutional Voids, Responses
    Date: 2012–08

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