nep-tra New Economics Papers
on Transition Economics
Issue of 2013‒06‒30
fourteen papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Essays on banking and finance in China. By Lu, L.
  2. Food safety control system of Chinese eel exports and its challenges By Mori, Romio; Nabeshima, Kaoru; Yamada, Nanae
  3. Key features of the first phase of the national cluster program in Russia By Evgeniy Kutsenko; Dirk Meissner
  4. The microstructure of China's government bond market By Jennie Bai; Michael Fleming; Casidhe Horan
  5. Long-Run Fiscal Multiplier for Autonomous Prefectures in China By Yingxin Shi; Mototsugu Fukushige
  6. China’s financial linkages with Asia and the global financial crisis By Reuven Glick; Michael Hutchison
  7. The Dragon and the Elephant on the way to Italy By Valeria Gattai
  8. The Japanese and Chinese models of industrial organisation : fighting for supremacy in the Vietnamese motorcycle industry By Fujita, Mai
  9. Cooperation under Democracy and Authoritarian Norms By Björn Vollan; Yexin Zhou; Andreas Landmann; Biliang Hu; Carsten Herrmann-Pillath
  10. User innovation - empirical evidence from Russia By Anna Zaytseva; Olga Shuvalova; Dirk Meissner
  11. The ReLOC project : method report for implementing a cross-border company survey in Germany and the Czech Republic By Hecht, Veronika; Litzel, Nicole; Schäffler, Johannes
  12. Knowledge intensive business services as generators of innovations By Marina Doroshenko; Ian Miles; Dmitri Vinogradov
  13. Gender Differences in Earnings and Labor Supply in Early Career: Evidence from Kosovo's School-to-Work Transition Survey By Pastore, Francesco; Sattar, Sarosh; Tiongson, Erwin R.
  14. China and Global Macroeconomic Interdependence By Rod TYERS

  1. By: Lu, L. (Tilburg University)
    Abstract: Abstract: The Chinese economy has grown at a spectacular speed during the past three decades while the financial system is not well developed in China. On the one hand, the informal financing channels, i.e. borrowing from family members, friends, moneylenders, trade credit, etc., may provide proper financing for the firms in China. On the other hand, the increasing intensity of banking competition may also enhance the access to finance in China. Chapter 1 introduces the Chinese economy; Chapter 2 shows the effect of trade credit on the export in China; Chapter 3 shows the effect of informal finance on the microenterprises in rural China; Chapter 4 shows the effect of co-funding on the growth of private firms in China; Chapter 5 shows the effect of the banking competition on alleviating the credit constraints of Chinese SMEs. The thesis basically supports the enhancing role of informal finance and the necessity of increasing the banking competition in China.
    Date: 2013
  2. By: Mori, Romio; Nabeshima, Kaoru; Yamada, Nanae
    Abstract: This paper analyzes factors associated with the rejection of products at ports of importer countries and remedial actions taken by producers in China. As an example, it uses one of the most competitive agro-food products of China: live and processed eels. This paper provides an overview of eel production and trade trends in China. In addition, it identifies the causes of port rejection of Chinese eel products as veterinary drug residues by examining the detailed case studies of export firms and the countermeasures taken by the government and firms.
    Keywords: China, Aquaculture, International trade, Exports, Quality control, Eels, Agro-food trade, Food safety, Port rejection
    JEL: F23 L66 Q13 Q17 Q18
    Date: 2013–05
  3. By: Evgeniy Kutsenko (Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics); Dirk Meissner (Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics)
    Abstract: Cluster policy is recognized as one of the pivotal elements of state-of-art innovation policy. State support for clusters helps to take into account regional peculiarities and engage the most innovative local actors into the process of innovation policy drafting and implementation. Cluster development stimulates trust building and enhances knowledge spillovers among different organizations in the region. Finally the cluster approach makes innovation policy more systemic by coordinating measures aimed to support different actors (large companies, SMEs, universities, venture funds) towards comprehensive efforts linking the most perspective localized industries (ecosystems). The development of clusters has been determined as one of the priorities of the Strategy of Innovative Development of the Russian Federation for the period to 2020 which was confirmed end 2010. In the framework of this Strategy the first national cluster program was launched in 2012. The paper is devoted to the detailed description of the background of the national cluster program in Russia and its first phase – the selection of the pilot innovative clusters – which was implemented last year. Special attention is given to the comparison of planned design of the Russian cluster program with such widely known cluster programs as the BioRegio, InnoRegio and Les poles de competitivite. The similarities and peculiarities of the Russian program have been defined that allowed to identify several most significant areas for improvement.
    Keywords: Clusters, knowledge spillovers, cluster policy, innovation policy.
    JEL: O14 O17 O25 O38 O43 P16 R11 R53
    Date: 2013
  4. By: Jennie Bai; Michael Fleming; Casidhe Horan
    Abstract: Although China now has one of the largest government bond markets in the world, the market has received relatively little attention and analysis. We describe the history and structure of the market and assess its functioning. We find that trading in individual bonds was historically sparse but has increased markedly in recent years. We find also that certain announcements of macroeconomic news, such as China’s producer price index (PPI) and manufacturing purchasing managers’ index (PMI), have significant effects on yields, even when such yields are measured at a daily level. Despite the increased activity in the market, we are able to reject the null hypothesis of market efficiency under two different tests for four of the most actively traded bonds.
    Keywords: Government securities ; Rate of return ; Financial markets ; China
    Date: 2013
  5. By: Yingxin Shi (Department of Economics & Management, Dalian Nationalities University); Mototsugu Fukushige (Graduate School of Economics, Osaka University)
    Abstract: We overcome the problems of data availability and investigate the fiscal multipliers in autonomous prefectures in China. We first estimate the long-run elasticity of gross regional production with respect to fiscal expenditure in autonomous prefectures, using autoregressive distributed lag models. The estimated long-run elasticity is much less than unity, however, and the estimated fiscal multipliers for prefectures are between 0.61 and 4.93, with an average of 1.93. These results indicate that additional fiscal expenditure is still effective in increasing local income and promoting economic growth for most of the autonomous prefectures.
    Keywords: Fiscal Multiplier; Autonomous Prefecture; China; autoregressive distributed lag model
    JEL: O11 E62 H72
    Date: 2013–06
  6. By: Reuven Glick; Michael Hutchison
    Abstract: This paper presents empirical evidence on asset market linkages between China and Asia and how these linkages have shifted during and after the global financial crisis of 2008-2009. We find only weak cross-country linkages in longer-term interest rates, but much stronger linkages in equity markets. This finding is consistent with the greater development and liberalization of equity markets relative to bond markets in China, as well as increasing business and trade linkages in the region. We also find that the strength of the correlation of equity prices changes between China and other Asia countries increased markedly during the crisis and has remained high in recent years. We attribute this development to greater “attentiveness” of international investors to China’s role as a source and destination of equity finance during the crisis rather than to any greater financial deepening and liberalization, as China did not implement any major policy measures during this period. By contrast, the transmission of U.S. equity returns to Asian countries decreased after the crisis.
    Keywords: Global Financial Crisis, 2008-2009 ; China
    Date: 2013
  7. By: Valeria Gattai
    Abstract: This paper provides original evidence about Chinese and Indian Outward Direct Investment in Italy. Firm-level data have been collected through survey interviews involving the whole population of Dragon and Elephant multinationals. With a response rate of 80%, we draw a detailed profile of the parent companies and investigate their main drivers, entry modes, and satisfaction with the local operations.
    Keywords: outward direct investment, India, China, Italy
    JEL: F23 O53
    Date: 2013–06
  8. By: Fujita, Mai
    Abstract: This paper explores the consequences of the emerging rivalry between Japanese and Chinese manufacturers. It focuses specifically on industrial organisation, one of the key factors that underlie the competitiveness of manufacturing industries. The question to be asked is what happens when distinctive models of industrial organisation, coming from Japan and China, clash in a developing country. An in-depth longitudinal analysis of the Vietnamese motorcycle industry adopting a modified version of the global value chain governance theory shows that a decade-long industrial transformation resulted in organisational diversity. The implications of the analysis for the literature on industrial organisation are discussed.
    Keywords: Vietnam, China, Japan, Motorcycles, Industrial policy, International competition, Industrial organisation, Motorcycle industry
    JEL: L10 L22 L62
    Date: 2013–06
  9. By: Björn Vollan; Yexin Zhou; Andreas Landmann; Biliang Hu; Carsten Herrmann-Pillath
    Abstract: There is ample evidence for a “democracy premium”. Laws that have been implemented via election lead to a more cooperative behavior compared to a top-down approach. This has been observed using field data and laboratory experiments. We present evidence from Chinese students and workers who participated in public goods experiments and a value survey. We find a premium for top-down rule implementation stemming from people with stronger individual values for obeying authorities. When participants have values for obeying authorities, they even conform to non-preferred rule. Our findings provide strong evidence that the efficiency of political institutions depends on societal norms.
    Keywords: Deterrent effect of legal sanctions, expressive law, authoritarian norms, public goods, democratic voting, China
    JEL: A13 C92 D02 D72 H41
    Date: 2013–06
  10. By: Anna Zaytseva (Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics); Olga Shuvalova (Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics); Dirk Meissner (Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics)
    Abstract: Innovations are commonly seen as resulting from the commercialization of new ideas and technological goods by dedicated organizations, especially firms. This conception is reflected in a producer-oriented approach to science, technology and innovation policy-making (STI). However a new understanding of the role of users within innovation processes is gradually taking shape, with profound policy implications. User innovations are often not based on technological improvement or R&D and remain largely under-estimated. Although there are many case studies of user innovators at the industry level, the role of users is not captured by general statistics on innovation. Up to now the only exception is the empirical evidence-based study of user innovation carried out in the UK in 2009. Recently it was complemented by empirical data from the USA and Japan. The present article aims to contribute to closing the gap of empirical data on user engagement into innovation activities at cross-country level. The analysis is based on the results from a national survey carried out in Russia in 2011. The findings contribute to the better understanding of user innovators profile and of the factors which underpin user innovator activities in the context of emerging economies. The article is organized as follows. The first section reviews the relevant literature on the user innovation concept and the main features of user innovations as compared to producer-generated innovations, as well as on the measurement of user innovators. The second section presents the research methodology and the main empirical results. Finally, the paper discusses some of main analytical and policy implications of the empirical findings.
    Keywords: User Innovation, Innovation Sources, Open Innovation, Innovation Management, Demand Driven Innovation.
    JEL: L21 M10 M14 M31 O21 O32 O33
    Date: 2013
  11. By: Hecht, Veronika (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Litzel, Nicole (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Schäffler, Johannes (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Economic integration typically goes along with a disintegration of production through outsourcing and offshoring. The consequences of foreign direct investments (FDI) especially for the labour market are an issue of ongoing debate. The countries of origin fear job losses. However, a range of models and studies show that the productivity gains lead to job growth at the domestic plants. Therefore, the direction of the consolidated effect is an open research question. Further topics discussed concern the impact on different qualification groups, their wage levels, job volatility and task structures in companies both in the country of origin and in the target country. The discussion is even more eager where high-wage countries share a common border with low-wage countries. So far, linked international firm-level data to study these effects on both sides of a border are missing. The IAB in cooperation with Czech research partners constructs a cross-border data set by conducting an empirical research project on the interface between old and new EU member states. It focuses on German direct investment in the Czech Republic and is conceived as a data collection by a large number of face-to- face interviews. The survey covers both countries entirely and involves the German parent companies and their Czech subsidiaries as the two treatment groups, complemented by Czech firms in purely Czech ownership and German companies with no FDI at all. For the four groups specific questionnaires were developed which are closely interlinked and allow comparative analyses, but do not neglect differences of neither the characteristics of the two survey groups nor the national (labour market) particularities. The method report presents the questions which arose through a cross-border company survey and the solutions found. The process of the implementation is described, focussing on the creation of the database as well as on the questionnaire development." (Author's abstract, IAB-Doku) ((en))
    Date: 2013–06–24
  12. By: Marina Doroshenko (Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics); Ian Miles (University of Manchester, Research Laboratory for Economics of Innovation, Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics); Dmitri Vinogradov (Essex Business School, University of Essex)
    Abstract: Knowledge Intensive Business Services (KIBS) are widely argued to be important actors in innovation systems. They are active both innovating themselves, and by providing their clients with important knowledge and learning opportunities. This study uses survey data to investigate the mechanisms of knowledge transfer and innovativeness improvement through the provision of KIBS. The empirical core of the paper is a set of Russian surveys of KIBS and their clients: KIBS are a fairly new phenomenon in Russia, so this provides an opportunity to contrast KIBS supplier-client relationships featuring more and less experienced customers. Many of the KIBS firms’ services are highly tailored to customer specificities, and we consider how far this is minor customisation and how far novel products (and thus potentially product innovations) are involved. These services typically involve KIBS consumers into a coproduction process, where both the formal supplier and the formal user of the service are engaged together in service production. Knowledge transfers through learning-by-doing in such cases affect customers' propensity to innovate and improve their absorptive capacity. The paper concludes that the generation of innovations through KIBS may well be a self-sustaining process. In this process, service providers are incentivised to engage in service innovations by more innovative customers’ demand for highly individualised services. In turn, the process stimulates the innovativeness of customers, as they engage in learning-by-doing through coproduction.
    Keywords: service innovations, customised service production, knowledge-intensive business services (KIBS), knowledge spill-over, learning-by-doing.
    JEL: D83 L84 O32
    Date: 2013
  13. By: Pastore, Francesco (University of Naples II); Sattar, Sarosh (World Bank); Tiongson, Erwin R. (World Bank)
    Abstract: Very little is known about gender wage disparities in Kosovo and, to date, nothing is known about how such wage disparities evolve over time, particularly during the first few years spent by young workers in the labor market. More generally, not much is known about gender wage gaps in early career worldwide, a period which is perceived to be an important determinant of the overall gender wage disparity. This paper analyzes data from the School-to-Work Transition (SWT) survey, an unusual survey conducted by the ILO between 2004 and 2006 in eight countries, including Kosovo, that documents the labor market experiences of the youngest age segment in the labor force (age 15–25 years). The results of the analysis suggest that, on average, women have lower education attainment than men but this educational disparity is masked among the sample of employed men and women who tend to be well-educated. The consequences of this dramatic segmentation of labor market participation are striking. On average, there is little or no gender wage gap. The results of the Juhn et al. (1993) decomposition analysis reveals that gender wage differences are almost entirely driven by differences in characteristics (rather than either the returns to those characteristics or the residual). The greater average educational attainment of employed women, among other characteristics, tends to fully offset the gender wage gap. Not surprisingly, the returns to women's education among employed women are low because there is little variation in educational attainment among the sample of well-educated employed women. When the analysis controls for sample selection bias and heterogeneity, the returns to women's education rise, confirming the lower productivity-related characteristics of non-employed women compared to employed women. The relatively small sample constrains a fuller analysis of the emergence of the gender wage gap, which, according to a small but growing international literature, typically materializes during childbearing years.
    Keywords: gender wage gap and dynamics, early labor market outcomes, school-to-work transitions, earnings equations, decomposition analysis, Balkans area, Kosovo
    JEL: I21 J13 J15 J16 J24 J31 J7 P30
    Date: 2013–06
  14. By: Rod TYERS
    Abstract: China’s economy is now a member of the small group of large economic regions that interact strategically over macroeconomic policy. Critics see it as having developed at the expense of both investment and employment in the US, Europe and Japan while proponents emphasise improvements in their terms of trade and reductions to the cost of financing that stem from China’s supply of light manufactures, its demand for Western capital and luxury goods and its high saving. Insights into the international implications of China’s growth and saving are here derived from a simple global general equilibrium model that embodies elemental short run macroeconomic behaviour. The model emphasises bilateral linkages via both trade and investment and so helps clarify the international effects of both China’s expansion, its high saving and of the new “inward focus†of its macroeconomic policy regime. Foreign worker displacement and slow investment emerge as the key consequences of China’s growth for the other large economies and its turn inward could indeed stimulate a resurgence of employment and investment there.
    Keywords: China, Macroeconomic modelling, Macroeconomic coordination
    Date: 2013–05

This nep-tra issue is ©2013 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.