nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒04‒20
twenty papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. The Costs of Worker Displacement in Urban Labor Markets of China By Y. Ge; H. Lehmann
  2. Post-Socialist Transition and the Intergenerational Transmission of Education in Kyrgyzstan By Brück, Tilman; Esenaliev, Damir
  3. Re-Examination of the Surplus Agricultural Labour in China By Fung Kwan; Yanrui Wu; Shuaihe Zhuo
  4. Patent Citations and Knowledge Spillovers: An Analysis of Chinese Patents Registered in the US By Fei Yu; Yanrui Wu
  5. Globalization and Regional Inequality By Tsun Se Cheong; Yanrui Wu
  7. The Effects of Foreign Direct Investment on Industrial Growth: Evidence from a Regulation Change in China By Mitsuo Inada
  8. Les PME dans les politiques de soutien à l’innovation en Chine THE POSITION OF SMES WITHIN THE INNOVATION POLICY IN CHINA By Zeting LIU
  9. R&D Behaviour in Chinese Firms By Yanrui Wu
  10. Internationalization strategies of luxury firms in China: the role of design and marketing capabilities By Marco Bettiol; Maria Chiarvesio; Eleonora Di Maria; Raffaella Tabacco
  11. What Determines Inward FDI in China? --An empirical study using firm-level data By Bin Ni
  12. Inequality and Crime Rates in China By Tsun Se Cheong; Yanrui Wu
  13. The development of private farms in Vietnam By Kojin, Emi
  14. Transfert de technologie et développement de la téléphonie mobile en Chine: Le cas de Huawei TECHNOLOGY TRANSFER AND MOBILE PHONE DEVELOPMENT IN CHINA: THE CASE OF HUAWEI By Shaolong WANG
  15. Determinants for Foreign Direct Investment in the Baltic Sea Region By Nikula, Nuutti; Kotilainen, Markku
  16. Evolution of Structural Indicators. China and Regions: 1981-2010 By Jose Miguel Albala-Bertrand
  17. Mismatch on the Labour Market in the CENTROPE Region By Ludek Kouba; Petr Rozmahel
  18. The financing and growth of firms in China and India : evidence from capital markets By Didier, Tatiana; Schmukler, Sergio L.
  19. Failed and Asymmetrical Integration: Eastern Europe and the Non-financial Origins of the European Crisis By Erik S. Reinert; Rainer Kattel
  20. Cooperation, Trust, and Economic Development: An Experimental Study in China By Junyi Shen; Xiangdong Qin

  1. By: Y. Ge; H. Lehmann
    Abstract: This paper analyzes the costs of job loss in China, using unique new data from the Rural-to-Urban Migration in China (RUMIC) data set for the year 2009. We investigate conventional labor market outcomes upon displacement like the length of unemployment spells, hours worked and monthly earnings. We also analyze whether displaced workers are more likely to be in informal employment relationships or selfemployed or less happy than their non-displaced counterparts. We also look at health and psychic costs as additional outcomes. Displaced migrant workers do not encounter losses in terms of longer unemployment spells or wage penalties, while urban displaced workers incur very large costs in terms of these two outcomes. These results point to segmented urban labor markets in China. All displaced workers have an increased likelihood of being informal, while only migrants among the displaced experience a lowered incidence of self-employment. Also, health costs and psychic costs can be linked to displacement although these costs are not prevalent in a uniform fashion. Stratification of the data by gender, level of development and ownership seems important as it shows substantial heterogeneity of the costs of job loss across these dimensions.
    JEL: J64 J65 P50
    Date: 2013–04
  2. By: Brück, Tilman (SIPRI); Esenaliev, Damir (DIW Berlin)
    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: gender, educational attainment, intergenerational mobility, transition economy, Kyrgyzstan, Central Asia
    JEL: J62 P36 I25
    Date: 2013–03
  3. By: Fung Kwan (Department of Economics, University of Macau); Yanrui Wu (Business School, University of Western Australia); Shuaihe Zhuo (Department of Economics, University of Macau)
    Abstract: This paper contributes to the pool of studies of rural underemployment in China. It is devoted to the conceptualization and measurement of surplus labour. The agricultural labour requirement function is estimated by the stochastic frontier analysis (SFA) with China’s prefecture-level data. Surplus labour or inefficient labour is obtained by subtracting the required labour from the actual labour participated in agriculture. Our analysis indicates that the existing size of agricultural surplus labour in rural China is still significantly large with the continued practice of the household registration system and China’s WTO membership. However, the size has been decreasing over the last decade. We thus conclude that China is probably experiencing the second stage of the Lewis-Fei-Ranis dualistic economic framework.
    Date: 2012
  4. By: Fei Yu (Business School, University of Western Australia); Yanrui Wu (Business School, University of Western Australia)
    Abstract: This paper examines US patent citation data and analyzes how different firms in China affect knowledge spillovers. Patents granted by the US patent office to inventors located in China are collected along with their citation counts. Two kinds of patent citations, namely, citations of previous patents and those of non-patent literature, are used to measure knowledge flows. In the empirical analysis, the negative binomial and zero-inflated count models are considered. The regression results suggest the existence of heterogeneity among firms of different ownership. In terms of knowledge spillovers, US multinational corporations (MNC) perform better than those from other western countries; Taiwanese companies outperform their counterparts from Hong Kong; and Chinese private corporations contribute more than Chinese state-owned enterprises (SOEs). These results have important policy implications for the development of a knowledge-intensive economy in China.
    Date: 2013
  5. By: Tsun Se Cheong (Business School, University of Western Australia); Yanrui Wu (Business School, University of Western Australia)
    Abstract: This paper examines the impacts of globalization on intra-provincial inequality in China. The empirical analysis is based on a dataset of Chinese counties and county-level cities. It is found that foreign direct investment (FDI) and intra-provincial regional inequality are negatively correlated, whereas the relationship between international trade and regional inequality is statistically insignificant. In addition, it is shown that the level of industrialization and service development in Chinese provinces has a positive effect on intra-provincial inequality. It implies that intra-provincial regional inequality will increase as the primary sector declines. The results also show that domestic trade is negatively correlated with regional inequality, whereas the transportation infrastructure has a positive effect on inequality in the country.
    Date: 2013
  6. By: Elaine Liu (University of Houston); Shu Zhang (University of Houston)
    Abstract: This paper performs a meta-analysis to investigate how changes over time, model specifications, differences in data sets, and variable definitions could contribute to the differences in estimates of returns to education in China. The results show that approximately 10 percent of the variation can be explained by changes in labor market over time, while the other 45 percent can be explained by differences in samples used and empirical methods. Return to education has increased approximately 0.2 percentage points a year since the economic reform, and increases more quickly as the reform progresses; however, this accelerating trend has reached a stop in the last few years when the global recession hit China. We also find that returns to education for rural-to-urban migrant workers are 2.3 percentage points lower than that of urban workers. We conclude that the increasing reward for human capital accumulation over time signals that China is moving toward a well functioning labor market.
    Keywords: Returns to Education, China, Meta-Analysis
    JEL: I20 J3 O12
    Date: 2013–04–08
  7. By: Mitsuo Inada (Graduate School of Economics, Kyoto University)
    Abstract: Inward foreign direct investment (FDI) in China has been accompanied by rapid economic growth. A growing literature has emerged in recent years examining the role of FDI on Chinese economic growth. However, measuring the e?ects of FDI has been challenging, because other fac- tors which in?uence ?rms?productivity occur in parallel with FDI, and because economic growth also simultaneously attracts FDI. To address these endogeneities, this paper analyzes the e?ects of a change in the FDI regulations on the productivity growth of Chinese industries using Chinese industry-level panel data. In 2002, the Chinese government lifted its regulations on the entry of foreign a¢ liates, which has made it substantially easier for foreign ?rms to engage in FDI in a?ected industries. As a result of this regulation change, our di?erence-in-di?erences estimates show that these industries experienced signi?cantly larger increases in foreign ?rms?total sales, exports, and domestic sales. We also ?nd that this increase in FDI resulted in an increase in labor productivity and in total factor productivity (TFP) of the a?ected industries and local industries, but we do not ?nd that they experienced signi?cantly larger in?ows of FDI or productivity growth before 2002, which provides evidence against endogeneity concerns. The results above are su¢ - ciently robust to include changes in industrial tari? reduction as controls. These ?ndings suggest that the growth of foreign sales and TFP in a?ected industries is not well explained except by the e?ects of regulation changes.
    Keywords: Foreign Direct Investment; Regulation Change; Industrial Growth; Technology Spillovers; Difference-in-Differences.
    JEL: F21 O33 O38 O43
    Date: 2013–04
  8. By: Zeting LIU (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO)
    Abstract: Longtemps échappées à l’intention des pouvoirs publics, les PME chinoises sont aujourd’hui identifiées comme un enjeu important dans le Grand Bond en avant de l’innovation de la Chine. Si les études sur le système d’innovation en Chine et les grandes entreprises publiques sont abondantes, l’innovation des PME ainsi que les mesures publiques spécifiques qui leur ciblent sont toutefois relativement peu étudiées. Cette étude tente d’identifier la place des PME chinoises dans le système de recherche et productif depuis les réformes économiques et la transformation des institutions de recherche lancées en 1978 et de repositionner les PME dans les politiques d’innovation en Chine. En ce faisant, elle propose une nouvelle lecture de l’analyse de performance de l’innovation en Chine. After being ignored by the public authorities for a long time, the Chinese SMEs are nowadays identified as an important issue in China's Great Leap Forward of Innovation. While studies on the innovation system in China and large public enterprises are abundant, innovation by SMEs and the specific public measures targeting them are relatively little studied. This study attempts to identify the place of the Chinese SMEs in the research and productive system since the economic reforms and the transformation of research institutions in 1978 and to reposition the SME innovation policies in China. In this way, it proposes a new reading of the analysis of innovation performance in China.
    Keywords: system national d'innovation, PME, réforme institutionnelle, Chine
    JEL: O38 P2 O53
    Date: 2013–03
  9. By: Yanrui Wu (Business School, University of Western Australia)
    Abstract: To cope with the rising labour cost and protect the country’s deteriorating environmental conditions, Chinese policy makers have recently made a series of policy changes to promote innovation and hence the development of a knowledge-based economy in the country in the coming decades. As a result, China’s R&D spending has expanded substantially. This paper contributes to the understanding of R&D behaviour in China’s large and medium-sized firms and hence the role of Chinese firms in innovation. The latter has important implications not only for the transformation of the Chinese economy but also for the rest of the world as Chinese firms become increasingly active internationally.
    Date: 2012
  10. By: Marco Bettiol (University of Padova); Maria Chiarvesio (University of Udine); Eleonora Di Maria (University of Padova); Raffaella Tabacco (University of Udine)
    Abstract: Studies on emerging markets depicted the economic, social and institutional peculiarities of those markets by emphasizing opportunities and threats for Western companies. China in particular offers growing market chances, even for luxury firms. On the on hand, studies emphasize the global approach to markets in luxury. On the other hand, the uncertainty and cultural distance characterizing the Chinese market increase the risks of a firm's standardized strategy. The paper aims at investigating internationalization strategies of luxury firms in China by exploring the role of design and marketing capabilities, based on the case study of an Italian company - Bisazza. Results highlight the success of a global design-driven brand strategy, but also the need of adapting the distribution and product management to cope with the Chinese context.
    Date: 2013–02
  11. By: Bin Ni (PhD Candidate, Graduate School of Economics, Osaka University)
    Abstract: Using firm-level data from an Enterprise Survey of World Bank, this paper is designed to test how policy variables can affect inward foreign direct investment ("FDI") in China. After excluding the problems of sample selection and endogeneity, the result shows that investment promotion agencies (IPAs) and investment incentive zones (IIZs) have significant positive effect on absorbing FDI in China. Other factors such as sales volume and R&D also have significant impact. I also found that both IPAs and IIZs play a more important role in inviting other foreign companies to come to China than they do to Hong Kong, Macau, and Taiwan ("HMT") enterprises. The last finding is that if the city has IPA only, its promotion effect actually outweighs the city with IPA or IIZ combined; on the other hand, if the city has IPA or IIZ, then its positive effect on absorbing FDI will be larger than the city with IIZ solely.
    Keywords: Investment promotion agency, firm-level data, sample selection, China
    JEL: F21 F23
    Date: 2013–04
  12. By: Tsun Se Cheong (Business School, University of Western Australia); Yanrui Wu (Business School, University of Western Australia)
    Abstract: This paper examines the impact of intra-provincial regional inequality on crime rates in China. The results show that intra-provincial regional inequality is positively correlated with the crime rate in the regions. However, education is found to be negatively correlated with the crime rate. In addition, it is also observed in this study that regional crime rates are positively linked with the level of inflation, unemployment rate, and inequalities in consumption and employment between the rural and urban sectors.
    Date: 2013
  13. By: Kojin, Emi
    Abstract: The objective of this paper is to explore the entities that have developed private farms (trang trai) in Vietnam. Various types of private farms have emerged in the last ten years. It is noteworthy that the owners of private farms are not necessarily agricultural households but also include government officials and the urban rich. Based on data collected from the author’s field surveys in Vietnam from 2006 to 2011, the paper attempts to categorize patterns in the development of private farms and analyze their differences. The paper argues that private farms developed by agricultural households are still limited because of the difficulty of consolidating land.
    Keywords: Vietnam, Land tenure, Agriculture, Private farm, Trang trai, Business history, Agricultural household, Land market
    JEL: O13 Q12 Q15
    Date: 2013–03
  14. By: Shaolong WANG (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO)
    Abstract: La Chine est actuellement le plus grand marché de smartphones dans le monde, même plus grand que les Etats-Unis. Cela fait beaucoup de vendeurs qui luttent pour accroître leur part de marché dans le pays. Par ailleurs, de plus en plus d’entreprises chinoises investissent dans la R&D de la téléphonie mobile, notamment à la production de smartphones afin de s’introduire sur ce marché. Ce document cherche à montrer l’importance du transfert de technologies et le développement de la téléphonie mobile en Chine prenant le cas du groupe Huawei Technologies Co. Ltd. Dans la première partie, il présente l’importance du marché chinois de la téléphonie mobile et les producteurs de téléphones mobiles en Chine. La deuxième partie présente le développement de la production des téléphones mobiles et la place de Huawei en Chine. La dernière partie explique l’importance et les limites d’une stratégie de croissance fondée sur les transferts de technologie. China is nowadays the biggest smart phone market in the world, even before the US. The sellers’ competition is intensifying as they try to increase their market share in China. Moreover, an increasing number of Chinese firms decide to invest in R&D to develop new models in particular new smart phones in order to gain their place in the Chinese market. This paper attempts to show the technology transfer and the development of mobile phone in China through the case of Huawei Technologies Co. Ltd.. In the first part, it presents the size of the Chinese mobile phone market and the producers in China. The second part analyses the development of the mobile phone manufacturing sector and the position of Huawei in China. The last part explains the importance and the limits of a growth strategy based on technology transfer.
    Keywords: transfert de technologie, smartphone, Chine, Huawei
    JEL: O3 L2 L9 O53
    Date: 2013–02
  15. By: Nikula, Nuutti; Kotilainen, Markku
    Abstract: Abstract: We have defined the Baltic Sea Region as consisting of the following countries: Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, Sweden, and Russia. We investigate foreign direct investment (FDI) flows from 1995 to 2010 to these countries econometrically. We use two basic models: the first one treats aggregate FDI inflows by countries, and the second focuses on bilateral FDI flows between country pairs. Because of limitations in data availability, the second model is built for a smaller group of countries. In this model we take into account the origin country of the FDI. Our results show that macroeconomic factors such as corporate taxes are important determinants for FDI flows. We notice that these factors and their effects vary between the Baltic Sea Region countries. Foreign trade with the investing country is also a statistically significant determinant for FDI, i.e. the countries that have trade with each other also invest in each other. On the other hand distance between countries doesn’t explain FDI flows. Institutional factors such as EU membership or a common currency are not statistically significant in our estimations but this could be because of data limitations and because of the fact that these changes in countries’ international status are incorporated in the other variables and are also foreseen by the investors.
    Keywords: Foreign direct investment (FDI), Baltic Sea Region, Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, Sweden, Russia
    JEL: F21 F23 F13 F15
    Date: 2013–04–04
  16. By: Jose Miguel Albala-Bertrand (Queen Mary, University of London)
    Abstract: This paper deals with some structural indicators and their evolution, in China and regions, over the period 1981-2010. We first produce estimates of the optimal productivities of incremental capital and the optimal incremental income elasticity of capital by means of a linear programming exercise. We then produce an accounting growth decomposition to assess the changes in the contribution of capital productivity, capital intensity and labour participation to the growth rate of output per capita. Finally, we combine an accounting growth decomposition with a standard production function, growth accounting, decomposition to assess both the contribution of both capital productivity and capital intensity to total factor productivity (TFP). We also show in an appendix the difference in the TFP growth contribution when marginal elasticities are assumed variable over time and when scale returns are assumed increasing rather than constant. Our main conclusion is that capital intensity, rather than capital productivity or labour participation, has been the main growth contributor. But this does not mean that quantity in itself, rather than quality, is behind such growth, as total factor productivity, which is significantly more than engineering technical change, has been relatively important over the period.
    Keywords: Structural indicators, Incremental capital productivity, Growth decomposition, Optimal consistency method (OCM), Total factor productivity (TFP)
    JEL: O4 B4 E2
    Date: 2013–04
  17. By: Ludek Kouba (Department of Economics, Faculty of Business and Economics, Mendel University in Brno); Petr Rozmahel (Research Centre, Faculty of Business and Economics, Mendel University in Brno)
    Abstract: The CENTROPE region covers eight regions in four countries: Austria, the Czech Republic, Hungary and Slovakia. Considering the situation on the labour market in CENTROPE, it is necessary to emphasize a high level of heterogeneity. Theoretically, it provides a potential for cross-border cooperation. In this text, we focus on skill mismatch and regional mismatch that contribute significantly to unemployment within CENTROPE. The main aim of this paper is to determine what proportion of unemployment in selected occupations could be avoided if the unemployed were perfectly mobile across CENTROPE regions. Our analysis is based on a unique dataset, the so-called Labour Market Monitoring Tool in CENTROPE that is a joint project of Mendel University and the CENTROPE Office Czech Republic. As a result, we have identified occupation with a high, medium and low potential for commuting within CENTROPE. The identification of these occupations was executed by two ways of calculation: the Potential percentage of unemployed reduction and the Mismatch index.
    Keywords: mismatch unemploymnet, mismatch index, regional labour market, CENTROPE
    JEL: J6 J2 R23
    Date: 2013–04
  18. By: Didier, Tatiana; Schmukler, Sergio L.
    Abstract: This paper studies the extent to which firms in China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and firm performance, it finds that the expansion of financial market activity since the 1990s has been more limited than what the aggregate figures suggest. Relatively few firms raise capital. Even fewer firms capture the bulk of the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, they are typically larger and grow faster. The differences between users and non-users exist before the capital raising activity, are associated with the probability of raising capital, and become more accentuated afterward. The distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in firm size among listed firms.
    Keywords: Debt Markets,Microfinance,Economic Theory&Research,Access to Finance,Banks&Banking Reform
    Date: 2013–04–01
  19. By: Erik S. Reinert; Rainer Kattel
    Abstract: This chapter argues that the crisis in the Baltic countries can be properly understood only in the context of the dramatic de-industrialization and structural change that took place in these countries, and other Eastern European economies, following the fall of the Berlin Wall. It is argued that with the Eastern enlargement, climaxing in 2004 with formally admitting Eastern European economies into the Union, the European Union gradu-ally abandoned its previous strategy of symmetrical integration . based on principles surviving from the Post World War II era, inspired by Fried-rich List . integrating the region�s economies into a structurally asym-metrical relationship that has common elements with colonialism. Once the real-estate bubbles collapsed, this underlying structural weakness became evident, causing wage collapse and outward migration. We show that the Eastern enlargement . along with financial architecture of the euro zone . also undermined the success of previous waves of enlarge-ments, particularly that of Spain. In the Baltic countries the effect of the crisis was, as could be expected, a massive redistribution of income: wages as a percentage of GDP (the share of �the 99 per cent�) plum-meted by some 6 percentage points while profits and rents (the share of �the one per cent�) rose correspondingly. We also discuss whether the Estonian case actually deserves to be called an .internal devaluation�, and indicate that what apparently dampened the crisis were not local policy initiatives but forces external to the region. The chapter also presents two different scenarios from the crisis in the 1930s . the US and the German ones . and asks if this crisis is likely to follow the US or the German pat-tern of income distribution. It is argued that the pattern likely to be fol-lowed is the German rather than the US one, which in the present context is likely to produce a long crisis and at worst make EU wage reductions permanent.
    Date: 2013–04
  20. By: Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Xiangdong Qin (School of Economics, Shanghai Jiao Tong University, China)
    Abstract: Many previous empirical studies have suggested that cooperation and trust affect economic growth. However, the precise relationship between trust and cooperation (i.e., whether trust leads to cooperation or cooperation leads to trust) remains unclear and it is not known how the level of economic development affects the level of cooperation and trust. Using a combination of public goods experiment, gambling game experiment, and trust game experiment, we investigate the links among cooperation, trust, and economic development in four regions of China. Our results suggest that first, there is a U-shaped or V-shaped relationship between cooperation and economic development; second, on the one hand, cooperation leads to trust, and on the other hand, more cooperative behavior may be created by rewarding trusting behavior; and third, men are more cooperative and trusting than women. Furthermore, we find that the widely used 'GSS trust' question from the General Social Survey (GSS) does not predict either cooperation or trust, whereas the questions 'GSS fair' and 'GSS help' have weak predictive power for trusting behavior but not for cooperative behavior.
    Keywords: Cooperation, Trust, Economic development, Experiment, China
    JEL: C91 H41 I32
    Date: 2013–04

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