nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒02‒15
twelve papers chosen by
J. David Brown
IZA (Institute for the Study of Labor)

  1. Changing patterns of export of goods versus macroeconomic competitiveness. A comparative analysis for East-Central European countries in the period 2000-2011. By Lechman, Ewa
  2. Breaking the “Iron Rice Bowl” and precautionary swings: evidence from Chinese state-owned enterprises reform By He, Hui; Huang, Feng; Liu, Zheng; Zhu, Dongming
  3. SPACs with focus on China By Shachmurove, Yochanan; Vulanovic, Milos
  4. Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves By Emi Nakamura; Jón Steinsson; Miao Liu
  5. The Long-Term Effects of Protestant Activities in China By Chen, Yuyu; Wang, Hui; Yan, Se
  6. The inner structure of pyramid and capital structure: Evidence from China By Su, Kun
  7. Закон Оукена, парадокс занятости и влияние безработицы на экономику СССР и России. By BLINOV, Sergey
  8. Structure, Innovations and Performance of the Czech Dairy Value Chain By Bošková, Iveta; Ratinger, Tomáš
  9. Communist party membership and bribe paying in transitional economies By Timothy Hinks; Artjoms Ivlevs
  10. Productivity gaps along the milk chain in Romania – comparisons with the EU-27 member states By Grodea, Mariana
  11. The relationships between urban and rural in regional development policies of Romania By Ungureanu, George; Brezuleanu, Stejarel; Stanciu, Mihai; Brezuleanu, Carmen O.; Boghita, Eduard
  12. Social Spending and Household Welfare: Evidence from Azerbaijan By Ramiz Rahmanov

  1. By: Lechman, Ewa
    Abstract: The paper discusses existing links between changing patterns of export of goods broken down by technology-intensity versus macroeconomic competitiveness. The study covers nine East-Central European economies: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovak Republic, in the time span 2000-2011. We hypothesize on discovering strong, positive and statistically significant relationship between flows of export of high-tech and ICTs manufactures goods, and level of macroeconomic competitiveness (approximated by Global Competitiveness Index – GCI, see: World Economic Forum). Our methodological approach relies on elaboration of country`s individual export patterns with regard to industries of different technology-intensity, and statistical analysis between macroeconomic GCI variable and variables identifying shares in total export of certain industries. Reversely to what was initially expected, our empirical results do not seem to support the hypothesis on statistically positive links between growing shares of high-tech and ICT manufactures industries in total value of export versus Global Competitiveness Index, in analyzed countries.
    Keywords: competitiveness, export, technology-intensity, comparative analysis
    JEL: F1 F14
    Date: 2014–02
  2. By: He, Hui (Shanghai University of Finance and Economics); Huang, Feng (Shanghai University of Finance and Economics); Liu, Zheng (Federal Reserve Bank of San Francisco); Zhu, Dongming (Shanghai University of Finance and Economics)
    Abstract: We use China’s large-scale reform of state-owned enterprises (SOE) in the late 1990s as a natural experiment to identify and quantify the importance of precautionary savings for wealth accumulation. Before the reform, SOE workers enjoyed the same job security as government employees. After the reform, a cumulative of over 35 million SOE workers have been laid off, although government employees kept their “iron rice bowl.” The change in unemployment risks for SOE workers relative to that of government employees before and after the reform provides a clean identification of income uncertainty that helps us estimate the importance of precautionary savings. In our estimation, we correct a self-selection bias in occupational choices and we disentangle the effects of uncertainty from pessimistic outlook. We obtain evidence that precautionary savings contribute to about one-third of the wealth accumulations for SOE workers between 1995 and 2002. Precautionary savings motive is thus an important factor that drives the observed rising Chinese saving rate.
    Keywords: Precautionary saving; uncertainty; structural change; self-selection bias; permanent income hypothesis; difference-in-difference methods
    JEL: C20 E21 P31
    Date: 2014–01
  3. By: Shachmurove, Yochanan; Vulanovic, Milos
    Abstract: In this study, we examine characteristics of Specified Purpose Acquisition Companies (SPACs) used as a financing tool for companies from China in period 2004-2011. We offer the evidence that, similarly to evidence from studies on reverse mergers focusing on China, SPACs that focus on China are not different in their characteristics from other SPACs. We test for the performance of the SPACs focused on China and show that their performance is not inferior to the performance of other SPACs. On the contrary, an investment in the equally weighted portfolio of SPACs with focus on China provides higher absolute return than an investment in the equally weighted portfolio of other SPACs. This evidence establishes that, on average, SPACs focused on China are as equally a valid investment choice as any other SPAC.
    Keywords: SPAC, Specified Purpose Acquisition Companies, China, M&A, Blank Checks
    JEL: G00 G1 G15 G3 G32 G34 G39
    Date: 2014–02–09
  4. By: Emi Nakamura; Jón Steinsson; Miao Liu
    Abstract: China has experienced remarkably stable growth and inflation in recent years according to official statistics. We construct alternative estimates using detailed information on Chinese household purchasing patterns. As households become richer, a smaller fraction of total expenditures are spent on necessities such as grain and a larger fraction on luxuries such as eating out. We use systematic discrepancies between cross-sectional and time-series Engel curves to construct alternative estimates of Chinese growth and inflation. Our estimates suggest that official statistics present a smoothed version of reality. Official inflation rose in the 2000's, but our estimates indicate that true inflation was still higher and consumption growth was overstated over this period. In contrast, inflation was overstated and growth understated during the low-inflation 1990's. Similar patterns emerge from the data whether we base our estimates on major categories such as food or clothing as a fraction of total expenditures or subcategories such as grain as a fraction of food expenditures or garments as a fraction of clothing expenditures.
    JEL: D12 E21 E31 O11
    Date: 2014–02
  5. By: Chen, Yuyu; Wang, Hui; Yan, Se
    Abstract: Does culture, and in particular religion, exert an independent causal effect on long-term economic growth, or do culture and religion merely reflect the latter? We explore this issue by studying the case of Protestantism in China during the late nineteenth and early twentieth centuries. Combining county-level data on Protestant presence in 1920 and socioeconomic indicators in 2000, we find that the spread of Protestantism has generated significant positive effects in long-term economic growth, educational development, and health care outcomes. To better understand whether the relationship is causal, we exploit the fact that missionaries purposefully undertook disaster relief work to gain the trust of the local people. Thus, we use the frequency of historical disasters as an instrument for Protestant distribution. Our IV results confirm and enhance our OLS results. When we further investigate the transmission channels over the long historical period between 1920 and 2000, we find that although improvements in education and health care outcomes account for a sizable portion of the total effects of missionaries’ past activities on today’s economic outcomes, Protestant activities may have also contributed to long-term economic growth through other channels, such as through transformed social values. If so, then a significant amount of China’s growth since 1978 is the result not just of sudden institutional changes but of human capital and social values acquired over a longer historical period.
    Keywords: Protestantism, Economic Growth, Education, Health Care, China
    JEL: I25 N15 N35 O11 O43 Z12
    Date: 2014–01–29
  6. By: Su, Kun
    Abstract: This paper examines the relationship between capital structure and the inner structure of pyramid in an emerging market economy country. The author uses firm-level panel data of Chinese listed companies to analyze the influence of the inner structure of pyramid on capital structure and the differences between different institutional environments of that influence deeply. His results show that the longer the layers of pyramid structure, the stronger the leverage effect of pyramid structure, as well as the ultimate controllers' motivation to expand debt financing will be. So the layers of pyramid structure have a significantly positive effect on capital structure. However, the chains of pyramid structure have no significant effects on capital structure. Compared with the areas with poor institutional environment, in the areas with better institutional environment, the effects of the layers of pyramid structure on corporate capital structure is relatively small. --
    Keywords: pyramid structure,institutional environment,capital structure,agent chain
    JEL: G32 G38
    Date: 2014
  7. By: BLINOV, Sergey
    Abstract: For effective economic growth, intentional “creation” of unemployment is required to be followed up by its «elimination». From Okun’s law one can infer an interesting corollary: growing unemployment without reducing GDP increases the economy’s potential. This corollary can be proved theoretically (unlike Okun’s law which is an empirical law). There were two causes of the USSR’s economic slowdown on the eve of its breakup. One of them was a shortage of labor which is identical to lack of unemployment. However strange it may seem, but the economic problems of modern Russia have the same root cause.
    Keywords: employment; Okun’s law; economic growth; productivity
    JEL: E24 J01 J08 N14
    Date: 2014–02–10
  8. By: Bošková, Iveta; Ratinger, Tomáš
    Abstract: The effective knowledge transfer and innovation activities in the agri-food supply chain may push all producers in the vertical to improve their competitiveness while saving resources. In the paper the innovation activities and knowledge transfer in the dairy value chain in the Czech Republic are examined in order to assess the potential for enhancing sustainable dairy production. A particular attention is given to the collaboration with R&D organisations and other important agents. Concurrently the role of the structural changes is considered. The methodological approach builds on the concept of the sectoral system of innovation. Based on statistical figures and face to face interviews the increasing dynamics in the innovation process is observed, however, farmers and processors are in their innovation activities disconnected and their collaboration with research institutions and other companies is rather low. The main innovation objectives as well as drivers and barriers of the collaboration are specified.
    Keywords: innovation system, dairy farms, dairy processing, Agribusiness, O31, Q13, Q16,
    Date: 2014
  9. By: Timothy Hinks (University of the West of England, Bristol); Artjoms Ivlevs (University of the West of England, Bristol)
    Abstract: Using data on 30 post-socialist countries this paper provides evidence that individuals with some association with the Communist Party before 1991 are more likely to bribe twenty years after the collapse of socialism and that inherited norms of bribery from Communist Party members explains this finding.
    Keywords: Communist party membership, social norms, institutional, corruption, transition economies
    Date: 2014–01–01
  10. By: Grodea, Mariana
    Abstract: Taking into consideration the new Common Agricultural Policy (2014 -2020, for the milk sector, which will have as main component the milk quota removal after 2014, the present paper makes a comparative analysis of the indicators from the milk chain links (agriculture, processing, trade, consumption) from Romania and the EU-27 member states in the period 2009-2012, in order to reveal the performance level and Romania’s position among these European countries, as well as the modalities to narrow the productivity gaps along the Romanian milk chain compared to the European Union, having in view the domestic supply improvement and meeting the consumers’ needs. In this context, an investigation was made by each link in the chain, at the level of milk production, raw milk collection for processing, milk processing, distribution and consumption, in close connection with milk quality and price evolution; certain variants and measures were designed to narrow the gaps of productivity and institutional organization of the milk chain in Romania.
    Keywords: cow herds, milk production, dairy cow farm size, prices, quality
    JEL: Q1
    Date: 2013–11–21
  11. By: Ungureanu, George; Brezuleanu, Stejarel; Stanciu, Mihai; Brezuleanu, Carmen O.; Boghita, Eduard
    Abstract: This paper attempts to provide an updated diagnosis of regional development in Romania and assess its global implications on the diversification of the rural economy and create jobs. The subject of the study includes theoretical treatment of the regional development management system problems and characteristics of the phenomena studied, directed and coordinated with the help of contemporary management. During/In our research we chose to analyze: - problematic regions and regional development - evolution of the concept of European regional policy, in chapter I opted for a historical perspective, due to the numerous events that contributed to the emergence and development of this type of policy, - how to implement regional policy with structural instruments, - the manner in which Romania has prepared for accessing structural instruments and implementation of European regional policy. The object studied a multitude of issues, and can be analyzed from several perspectives: historical (evolution over time), legal (implications on sovereignty or national policy implementation), economic and social (impact of this type of policy in a given territory), management (given complex system programming and administration policy and its measures).
    Keywords: urban, rural, implementation, management system, development, Agribusiness,
    Date: 2014
  12. By: Ramiz Rahmanov (Central Bank of the Republic of Azerbaijan)
    Abstract: We measure the response of household consumption of different income groups to social spending during the 2002-2012 period using the aggregated Household Budget Survey Data. We find that households respond more strongly to changes in pensions than to changes in allowances and in-kind transfers. The very weak response of households to changes in allowances and in-kind transfers, both of which are transitory income, is consistent with the permanent income hypothesis. The estimates of pension elasticities suggest that the response of the low income group to changes in pensions is the strongest, whereas the response of the middle income group is the weakest. We further find that, in aggregate, households of all income groups do not exhibit habit persistence.
    Keywords: social spending, consumption, permanent income hypothesis, welfare, Azerbaijan
    JEL: E21 E61 H24 H55 I31
    Date: 2014–02–11

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