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on Transition Economics |
| By: | Fariha Kamal; Mary E. Lovely |
| Abstract: | China’s WTO accession offers a rare opportunity to observe multinationals’ response to changes in property rights in a developing country. WTO accession reduced incentives for joint ventures while reducing constraints on wholly owned foreign subsidiaries. Concomitant with these changes was a more liberal investment environment for indigenous investors. An adaptation of Feenstra and Hanson’s (2005) property rights model suggests that higher the productivity and value added of the joint venture, but the lower its domestic sales share, the more likely the venture is to be become wholly foreign owned following liberalization. Theory also suggests that an enterprise with lower productivity but higher value added and domestic sales will be more likely to switch from a joint venture to wholly domestic owned. Using newly created enterprise-level panel data on equity joint ventures and changes in registration type following China’s WTO accession, we find evidence consistent with the property rights theory. More highly productive firms with higher value added and lower domestic sales shares are more likely to become wholly foreign owned, while less productive firms focused on the Chinese market are more likely to become wholly domestic owned rather than remain joint ventures. In addition to highlighting the importance of incomplete contracts and property rights in the international organization of production, these results support the view that external commitment to liberalization through WTO accession influences multinational and indigenous firms’ behavior. |
| Keywords: | property rights; incomplete contracts; ownership; WTO; China |
| JEL: | F23 L1 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-05&r=tra |
| By: | Tilman Brück; Damir Esenaliev |
| Abstract: | We investigate long-term trends in the intergenerational transmission of education in a low income country undergoing a transition from socialism to a market economy. We draw on evidence from Kyrgyzstan using data from three household surveys collected in 1993, 1998 and 2011. We find that Kyrgyzstan, like Eastern European middle income transition economies, generally maintained high educational mobility, comparable to the levels during Soviet times. However, we find that the younger cohorts, who were exposed to the transition during their school years, experienced a rapid decline in educational mobility. We also document that gender differences in schooling and educational mobility, found among older-aged individuals, disappeared in the younger population. |
| Keywords: | intergenerational mobility, educational attainment, gender, transition economy, Kyrgyzstan, Central Asia |
| JEL: | J62 P36 I25 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1284&r=tra |
| By: | Voskoboynikov, Ilya B. (Groningen University) |
| Abstract: | Russia is an important part of the world economy both now and in the past. Indeed, one would expect an abundance of studies on Russian economic development. In the past, growth and performance in planned economies vis-à-vis the Western world did attract much attention. These types of studies contributed to two revolutions of development thinking, which are the ?big push? approach based on success of Soviet industrialization in 1930-s and the unexpected collapse of the Soviet Union in 1991. However, recent performance of the Russian economy is less considered while much could be learned from studying the post-Soviet economic development. The key obstacle to the research in case of Russia is data availability. Detailed industrial data of labour, capital and output from early 1990-s onwards is not available both in the official statistics and in the literature. The present paper addresses this gap, providing detailed description of the newly developed dataset, which covers 34 industries in NACE 1.0 classification in 1995-2009. The paper also reports results of output growth rates decomposition into contributions of labour, capital and productivity (industrial growth accounting). Using more detailed data and better theoretical foundation it shows that the contribution of capital to economic growth in Russia is much more substantial that it has previously been reported in the literature until recently. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugggd:gd-123&r=tra |
| By: | Humpert, Stephan |
| Abstract: | Recent studies on life satisfaction or well-being focus on transition countries. These countries are the Central Eastern European and Baltic states (CEE) and the Commonwealth of Independent States (CIS). The half of the CEE countries are meanwhile members of the European Union (EU). Using the year 2008 of the European Values Study 2010 (EVS), I use simple OLS regressions for life satisfaction, as well as satisfaction with government and the job. Individual characteristics are in line with global well-being results. I find no evidence that Eastern European EU member countries behave different then other transition countries. But there are a some differences between the countries concerning governmental quality and job satisfaction. |
| Keywords: | Subjective Well-Being, Transition, Central Eastern European and Baltic states, Commonwealth of Independent States |
| JEL: | D60 I31 O5 |
| Date: | 2013–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45449&r=tra |
| By: | James Alm (Department of Economics, Tulane University); Yongzheng Liu (Department of Economics, Andrew Young School of Policy Studies, Georgia State University) |
| Abstract: | China enacted a rural tax reform – the "Tax-for-Fee Reform" (TFR) – in the late 1990s. A crucial but unanswered question is whether this reform improved farmers' welfare in rural areas. This paper uses village-level survey data from the Chinese Household Income Project in order to examine the effect of the TFR on farmers' direct and indirect welfare. We find no evidence that the direct welfare effects improved farmer's net income. In contrast, the reform appears to have reduced the villages' financing capacity, and hence to have lowered their overall expenditures. These indirect effects have had significant negative impacts on farmers' welfare. |
| Keywords: | tax-for-fee reform, inequality, rural China |
| JEL: | H7 I2 I3 O1 O5 P3 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1305&r=tra |
| By: | James Alm (Department of Economics, Tulane University); Yongzheng Liu (Department of Economics, Andrew Young School of Policy Studies, Georgia State University) |
| Abstract: | In the late 1990s, China enacted a rural tax reform known as the "Tax-for-Fee Reform" (TFR), largely driven by a desire to address farmers' complaints about their perception of a heavy and regressive tax burden. This paper examines the impact of the TFR on inequality in rural villages in China. Our results suggest an effective role of the TFR in reducing inequality within villages. Its impact on a consumption-based measure of inequality took effect immediately; its impact on per capita household income inequality took somewhat longer. Our results also suggest that it is "rich" and/or "coastal" villages that exhibited a significant reduction of inequality from the TFR, while "poor" and/or "inland" villages experienced no significant changes in inequality from the reform. |
| Keywords: | tax-for-fee reform, inequality, rural China |
| JEL: | H7 I2 I3 O1 O5 P3 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1304&r=tra |
| By: | Huanxiu GUO; Mary-Françoise RENARD |
| Abstract: | Since 2003, a grass-roots movement of New Rural Reconstruction (NRR) has emerged in China to experience alternative model of rural development. The movement adopts a particular approach for rural development on basis of rural social and cultural reconstruction. In order to understand this social approach, we investigate an original NRR experiment in a poor village of south China, where organic farming is promoted by means of basketball game. An in-depth household survey is conducted to qualitatively analyze this social approach and derive intuitive hypothesis of extended social network for empirical test. With a panel structure dataset collected by the survey, we quantitatively identify the causal effect of social network by exploiting the endogeneity of social network formation. Our identification result provides micro evidence for a large social multiplier effect in the diffusion of organic farming, whereas it is negative for organic experts. Also, our results highlight the role of women, education and labor force for the development of organic farming. On basis of these results, we conclude that organic farming is suitable but challenging for small villages in China, while social activity is a good lever to achieve farmers' collective action for its large diffusion. |
| Keywords: | New rural reconstruction; Social network; Organic farming; China. D71, O33, Q55 |
| JEL: | Q55 O33 D71 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1423&r=tra |
| By: | Chao Li (University of Waikato); John Gibson (University of Waikato) |
| Abstract: | The large literature on regional inequality in China is hampered by incomplete evidence on price dispersion across space, making it hard to distinguish real and nominal inequality. The two main methods used to calculate spatial deflators have been to price a national basket of goods and services across China’s different regions or else to estimate a food Engel curve and define the deflator as that needed for nominally similar households to have the same food budget shares in all regions. Neither approach is convincing with the data available in China. Moreover, a focus on tradable goods like food may be misplaced because of the emerging literature on the rapid convergence of traded goods prices within China that contrasts with earlier claims of fragmented internal markets. In a setting where traded goods prices converge rapidly, the main source of price dispersion across space should come from non-traded items, and especially from housing given the fixity of land. In this paper we use newly available data on dwelling sales in urban China to develop spatially-disaggregated indices of house prices, which are then used as spatial deflators for both provinces and core urban districts. These new deflators complement existing approaches that have relied more on traded goods prices, and are used to re-examine the evidence on the level of regional inequality. Around one-quarter of the apparent spatial inequality disappears once account is taken of cost-of-living differences. |
| Keywords: | housing; inequality; prices; spatial; China |
| JEL: | E31 O15 R31 |
| Date: | 2013–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:13/06&r=tra |
| By: | Zhang, Fan |
| Abstract: | The aggregate manufacturing energy intensity of 28 countries in Eastern Europe and Central Asia had declined by 35 percent during 1998-2008. This study reveals strong evidence of convergence: less efficient countries improved more rapidly and the cross-country variance in energy productivity narrowed over time. An index decomposition analysis indicates that energy intensities declined largely because of more efficient energy use rather than shifts from energy intensive to less intensive manufacturing activities. Income growth and energy price increases were the main drivers of the convergence. They dominated the impact of trade, which led to specialization in energy intensive industries. |
| Keywords: | Energy Production and Transportation,Environment and Energy Efficiency,Energy and Environment,Energy Demand,Climate Change Economics |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6387&r=tra |
| By: | Khan, Muhammad; Kebewar, mazen; Nenovsky, Nikolay |
| Abstract: | In the late 90's, after severe financial and economic crisis, accompanied by inflation and exchange rate instability, Eastern Europe emerged into two groups of countries with radically contrasting monetary regimes (Currency Boards and Inflation targeting). The task of our study is to compare econometrically the performance of these two regimes in terms of the relationship between inflation, output growth, nominal and real uncertainties from 2000 till now. In other words, we test the hypothesis of non-neutrality of monetary and exchange rate regimes with respect to these connections. In a whole, the empirical results do not allow us to judge which monetary regime is more appropriate and reasonable to assume. EU enlargement is one of the possible explanations for the numbing of the differences and the lack of coherence between the two regimes in terms of inflation, growth and their uncertainties |
| Keywords: | Inflation, inflation uncertainty, real uncertainty, monetary regimes, Eastern Europe |
| JEL: | C22 C51 C52 E0 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45523&r=tra |
| By: | Jérôme Héricourt; Sandra Poncet |
| Abstract: | This paper studies how firm-level export performance is affected by Real Exchange Rate (RER) volatility and investigates whether this effect depends on existing financial constraints. Our empirical analysis relies on export data for more than 100,000 Chinese exporters over the period 2000-2006. We confirm a trade-deterring effect of RER volatility. We find that the value exported by firms, as well as their probability of entering new export markets, decrease for destinations with higher exchange rate volatility and that this effect is magnified for financially vulnerable firms. As expected, financial development does seem to dampen this negative impact, especially on the intensive margin of export. These results provide microfounded evidence that financial constraints may play a key role in determining the macro impact of RER volatility on real outcomes. |
| Keywords: | Exchange rate volatility, financial development, exports |
| JEL: | F1 F31 L25 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2013:i:112&r=tra |
| By: | Frantisek Brazdik |
| Abstract: | This work presents an extension of a small open economy DSGE model allowing the transition toward a monetary policy regime aimed at exchange rate stability to be described. The model is estimated using the Bayesian technique to fit the properties of the Czech economy. In the scenarios assessed, the monetary authority announces and changes its policy so that it is focused solely on stabilizing the nominal exchange rate after a specific transition period is over. Four representative forms of monetary policy are followed to evaluate their properties over the announced transition period. Welfare loss functions assessing macroeconomic stability are defined, allowing the implications of the transition period regime choice for macroeconomic stability to be assessed. As these experiments show, exchange rate stabilization over the transition period does not deliver the lowest welfare loss. Under the assumptions taken, the strict inflation-targeting regime is identified as the best-performing regime for short transition periods. However, it can be concluded that for longer transition periods the monetary policy regime should respond to changes in the exchange rate. |
| Keywords: | monetary policy change, new Keynesian models, small open economy. |
| JEL: | E17 E31 E52 E58 E61 F02 F41 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2013/02&r=tra |
| By: | Natalia Nehrebecka; Aneta Maria Dzik (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | The paper presents a model assigning a bankruptcy probability to a company, developed on the basis of individual data from balance sheets and income statements of Polish companies, collected by Central Statistical Office of Poland in the 2001 – 2010 period. Determinants for warning signals for bankruptcies were examined together with the possibilities of early identification of such signals. The research was based on a logistic regression performed on categorized variables transformed using a weight of evidence approach. Scoring methods were used to create an indicator for grading the companies in the case of bankruptcies. In the forecasting model of a possible bankruptcy in a year's horizon the highest weight was assigned to the indicator for the ability to cover financial costs which explained the company's ability to meet the interest payments and capital costs. Indebtedness, share of cash reserves in assets and sales’ revenues were considered in forecasting bankruptcies information regarding liquidity. Taking into account the direction of sales, the specialized exporters were least probable to go bankrupt. In the more generalized model which accounts for the macroeconomic situation the most important was the indicator for the ability to pay off debt. In the model forecasting bankruptcies three-years in advance - the early warning model - no dominant indicator was found. Weights of 20% were assigned to the indicators of liquidity, current assets turnover and the return on sales. |
| Keywords: | firm survival, micro-data, Polish companies, scoring methods |
| JEL: | L11 L25 G33 M13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2013-08&r=tra |
| By: | Krasnopjorovs, Olegs |
| Abstract: | Uneven economic growth during the recent years raise the question whether any factor of economic growth aside economic cycle fluctuations exists in Latvia. The objective of the Doctoral Thesis is, to assess the factors of economic growth in Latvia using econometric modelling techniques, and to solve various problems that arise when such techniques are used in Latvia's case. The Doctoral Thesis has identified the main factor of economic growth in Latvia – fixed capital accumulation. Although every euro of public investments on average contributes to the GDP growth at least as much as the euro of private investments, fixed capital accumulation in the private sector is the primary source of economic growth owing to its larger amount and faster growth. The positive impact of fixed capital accumulation on the average labour productivity level in the country is both direct (increasing capital to labour ratio) and indirect (allowing to use more productive technologies). It is fixed capital accumulation that was the main factor that determined the convergences process of Latvia's average income and labour productivity level to the respective indicator in the EU-15 (countries that entered EU before 2004). The Doctoral Thesis has identified the role of other factors of economic growth in Latvia as well as in other EU countries: labour, human capital and natural resource capacity in a country; changes of economic structure; world technical progress and country backwardness in respect to the world production frontier; regional aspects. The Doctoral Thesis showed that results of the research depend crucially on selection of a particular method, statistical data source and assumptions. Therefore, a considerable part of the research is devoted to the methodological features of statistical data as well as to the check of result stability in respect to alternative methods and assumptions. |
| Keywords: | economic growth, production function, non-parametric methods, growth accounting, real convergence |
| JEL: | C14 E22 O47 |
| Date: | 2013–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45500&r=tra |
| By: | Brian Fabo; Martin Kahanec |
| Abstract: | This paper studies the migration response of the youth from new EU member states to disparate conditions in an enlarged European Union at the onset of the Great Recession. We use the Eurobarometer data and probabilistic econometric models to identify the key drivers of the intention to work in another member state of European Economic Area (EEA) and their expected duration. We find that migration intentions are high among those not married and among males with children, but both categories are also overrepresented among people with only temporary as opposed to long-term or permanent migration plans. Whereas age affects migration intentions negatively, education has no effect on whether working abroad is envisaged. However, conditional on envisaging to work abroad, completion of education (if after 16th birthday) is associated with long-term (at least five years), but not permanent, migration plans. Finally, we find that socio-demographic variables explain about as much variation of migration intentions as self-reported push and pull factors and migration constraints. |
| Keywords: | EU labor markets, migration, youth, EU enlargement, labor mobility, free movement of workers, transitional arrangements, new member states, European Union |
| JEL: | F22 J61 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cel:dpaper:6&r=tra |
| By: | Rustam Jamilov; Balázs Égert |
| Abstract: | This paper analyses the interest rate pass-through for five economies of the Caucasus – Armenia, Azerbaijan, Georgia, Kazakhstan, and Russia. Employing an autoregressive distributed lag (ARDL) specification to monthly data, we find that the interest rate pass-through is systematically incomplete and sluggish, probably due to macroeconomic instability and low banking sector competition. It is not clear whether pass-through has improved over time and asymmetric adjustment is found to characterize the pass-through only occasionally. Overall, our results show a considerable degree of cross-country heterogeneity in the size and speed of the pass-through. |
| Keywords: | Interest Rate Pass-Through; Asymmetric Adjustment; Caucasus |
| JEL: | E43 E52 N25 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2013-9&r=tra |