nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒07‒28
thirty papers chosen by
J. David Brown
United States Census Bureau

  1. Legal Corruption, Politically Connected Corporate Governance and Firm Performance By Domadenik, Polona; Prašnikar, Janez; Svejnar, Jan
  2. Radicalism versus Gradualism: A Systematic Review of the Transition Strategy Debate By Iwasaki, Ichiro; Suzuki, Taku
  3. Does Money Buy Credit? Firm-Level Evidence on Bribery and Bank Debt By Zuzana Fungácová; Anna Kochanova; Laurent Weill
  4. The Gradients of Power: Evidence from the Chinese Housing Market By Hanming Fang; Quanlin Gu; Li-An Zhou
  5. Are exporting firms always a good hedge against currency risk? Evidence from Central and Eastern European Countries By M. FRÖMMEL; M. LUETJE
  6. The innovation process of a privately-owned enterprise and a state-owned enterprise in China By Kang, Byeongwoo
  7. Understanding Financial Inclusion in China By Zuzana Fungácová; Laurent Weill
  8. Foregign Direct Investment and Regional Economic Growth in Russia: An Econometric Assessment By Iwasaki, Ichiro; Suganuma, Keiko
  9. Internationalization of the Renminbi: The Role of Trade Settlement By Joseph E. Gagnon; Kent Troutman
  10. China’s CO2 Emissions from Power Generating Stations – A First Exploration By Limin Du; Aoife Hanley; Katrin Rehdanz
  11. Returns to Schooling for Urban Residents and Migrants in China: New IV Estimates and a Comprehensive Investigation By Chris SAKELLARIOU; Fang ZHENG
  12. Green-to-Grey China: Determinants and Forecasts of its Green Growth By You, Jing; Huang, Yongfu
  13. The socioeconomic drivers of China's primary PM2.5 emissions By Dabo Guan; Xin Su; Qiang Zhang; Glen Peters; Zhu Liu; Yu Lei; Kebin He
  14. Mismeasurement in Pay-for-Performance: Evidence from an Intervention to Reduce Health Care Spending in China By Bingxiao Wu
  15. The modeling of the economic development on the basis of an extended Solow-Swan growth model with the inclusion of spatial aspect By Beata Bal-Domanska; Michal Bernard Pietrzak
  16. Jobs and Kids: Female Employment and Fertility in China By Fang, Hai; Eggleston, Karen N.; Rizzo, John A.; Zeckhauser, Richard Jay
  17. Hong Kong: A Bridge Connecting Mainland China and the International Market By Zhenxi CHEN; Jan F. KIVIET; Weihong Huang
  18. The Public Procurement System: A Business Sector Perspective By Jelena Budak; Edo Rajh
  19. Оценка догоняющего развития на уровне стран и регионов: методический комментарий By Zaytsev, Alexander
  20. Forecasting Chinese GDP Growth with Mixed Frequency Data: Which Indicators to Look at? By Heiner Mikosch; Ying Zhang
  21. Conspicuous Consumption in the United States and China By Jinkins, David
  22. The absorption of EU Structural and Cohesion Funds in Romania: international comparisons and macroeconomic impact By Zaman, Gheorghe; Georgescu, George
  23. SME Internalisation Index (SMINI) Based on the Sample of the Visegrad Countries By Bartha, Zoltán; S. Gubik, Andrea
  24. The Impact of Monetary Policy and Exchange Rate Shocks in Poland: Evidence from a Time-Varying VAR By Arratibel, Olga; Michaelis, Henrike
  25. Microfinance in Armenia: Sector characteristics and adaptation strategies By Knar Khachatryan; Emma Avetisyan; Frédéric Teulon
  26. Redefining the Modifiable Areal Unit Problem within spatial econometrics, the case of the aggregation problem. By Michal Bernard Pietrzak
  27. The application of spatial taxonomic measure of development (pTMD) in analysis of the labour market By Michal Bernard Pietrzak
  28. Mountains on the move: recent trends in national and EU-wide income dynamics in old and new EU Member States By Tim Goedemé; Diego Collado; Leen Meeusen
  29. Republic of Moldova: 2014 Article IV Consultation and First Post-Program Monitoring Discussions-Staff Report; Press Release; and Statement by the Executive Director for the Republic of Moldova By International Monetary Fund. European Dept.
  30. Ex-post evaluation of the additionality of Clean Development Mechanism afforestation projects in Tanzania, Uganda and Moldova By Mark Purdon; Razack Lokina

  1. By: Domadenik, Polona (University of Ljubljana); Prašnikar, Janez (University of Ljubljana); Svejnar, Jan (Columbia University)
    Abstract: In this paper we present and test a theory of how political corruption, found in many transition and emerging market economies, affects corporate governance and productive efficiency of firms. Our model predicts that underdeveloped democratic institutions that do not punish political corruption result in political connectedness of firms that in turn has a negative effect on performance. We test this prediction on an almost complete population of Slovenian joint stock companies with 100 or more employees. Using the supervisory board structure, together with balance sheet and income statement data for 2000-2010, we show that a higher share of politically connected supervisory board members leads to lower productivity.
    Keywords: corruption, corporate governance, productivity, politicians, state owned enterprises
    JEL: D2 D21 D73 G34 L32
    Date: 2014–07
  2. By: Iwasaki, Ichiro; Suzuki, Taku
    Abstract: Academic debate on a transition strategy for former socialist economies continues even 25 years after the collapse of the communism in Central and Eastern Europe and the former Soviet Union. In this paper, through a systematic review of 135 preceding studies, we present an overall picture of the debate and examine the relationship between the debate attitudes and the literature attributes in related studies. We found that the radicalists maintain a consistent debate attitude from the viewpoints of time speed and policy sequence of economic transition, while the debate attitude of the gradualists is more diversified. We also found that there is another group of researchers that stays within the framework of the radicalism-versus-gradualism debate while at the same time keeping at arm's length from both the radicalists and the gradualists. In addition, our cross tabulation analysis and regression estimation of qualitative selection models provide interesting findings on the relationship between the debate attitudes and the literature attributes.
    Keywords: transition strategy debate, radicalism, gradualism, shock therapy, big-bang, systematic review
    JEL: O20 O57 P20 P30 P52
    Date: 2014–07
  3. By: Zuzana Fungácová (Bank of Finland); Anna Kochanova (Max Planck Institute for Research on Collective Goods); Laurent Weill (LaRGE Research Center, Université de Strasbourg)
    Abstract: This study examines how bribery influences bank debt ratios for a large sample of firms in 14 transition countries. We combine information on bribery practices from the BEEPS survey with firm-level accounting data from the Amadeus database. Bribery is measured by the frequency of extra unofficial payments to officials to “get things done”. We find that bribery is positively related to firms’ total bank debt ratios, which provides evidence that bribing bank officials facilitates firms’ access to bank loans. This impact varies with the maturity of the bank debt, as bribery contributes to higher short-term bank debt ratios but lower long-term bank debt ratios. Finally, we find that the institutional characteristics of the banking industry influence the relation between bribery and firms’ bank debt ratios. Higher levels of financial development constrain the positive effects of bribery, whereas larger market shares of state-owned banks have the opposite effect. The presence of foreign banks also affects the impact of bribery, although this effect depends on the maturity of firms’ bank debt.
    Keywords: bank lending, bribery, corruption, Eastern Europe
    JEL: G32 K4 P2
    Date: 2014
  4. By: Hanming Fang; Quanlin Gu; Li-An Zhou
    Abstract: Using a large, unique dataset on the Chinese housing market, we propose to measure corruption using the price differences paid by bureaucrat buyers and non-bureaucrat buyers in the housing market. We find that the housing price paid by bureaucrat buyers is on average 1.05 percentage points lower than non-bureaucrat buyers, after controlling for a full set of characteristics of buyers, houses and mortgage loans. More interestingly, we find that the bureaucrat price discounts exhibit interesting gradients with respect to their hierarchical ranks, the criticality of their government agencies to real estate developers, and geography. We argue that the bureaucrat price discounts and the gradients of these discounts are unlikely to be driven by alternative explanations, thus they are evidence of corruption and measures of the market value of government power.
    JEL: D73 H1 O18
    Date: 2014–07
  5. By: M. FRÖMMEL; M. LUETJE (-)
    Abstract: This paper analyzes the exchange rate exposure of exporting firms in (the so far rarely addressed) largest Eastern European transition economies, i.e. Russia and three EU accession countries (CEEC-3). It also controls for possible effects of different exchange rate regimes. Substantially improving the results from the existing literature we find for more than 80% of firms in our sample a significant exchange rate exposure. However, the magnitude and direction of firms’ exposure depends on the particular exchange rate and clearly differs between Russia and the CEEC-3. We find that share prices increase with a depreciation of the domestic currency and only against the US Dollar in Russia, but decrease with a depreciation and only against the Euro in the CEEC-3. Such substantial differences may result from a differing dominance of exposure channels in the respective economies, such as the countryspecific export structure and foreign debt. Finally, the switch from a pegged to a flexible exchange rate regime appears to be less important for exposure.
    Keywords: Exchange Rate Exposure, Transition Economies, Central and Eastern Europe, International Finance
    JEL: F3 G12 G15
    Date: 2014–02
  6. By: Kang, Byeongwoo
    Abstract: This study compares the innovation process of a privately-owned enterprise and a state-owned enterprise in China using their patent data. Huawei and ZTE were selected for this study because they experienced the same historical environment in the same industry from the same region in China leaving their owner types as their critical difference. This study investigates the difference in the innovation process in R&D between a privately-owned and a state-owned enterprise by analyzing (1) domestic and international patent application pattern, (2) co-application and co-applicants, (3) knowledge accumulation inside Huawei and ZTE, and (4) knowledge spillover to domestic and foreign firms.
    Keywords: China, Business enterprises, Government enterprises, Telecommunication, Research & development, Technological innovations, Patent data, Privately-owned enterprise, State-owned enterprise
    JEL: L25 L96 O31
    Date: 2014–07
  7. By: Zuzana Fungácová (Bank of Finland); Laurent Weill (LaRGE Research Center, Université de Strasbourg)
    Abstract: We use data from the World Bank Global Findex database for 2011 to analyze financial inclusion in China, including comparisons with the other BRICS countries. We find a high level of financial inclusion in China manifested by greater use of formal account and formal saving than in the other BRICS. Financial exclusion, i.e. not having a formal account, is mainly voluntary. The use of formal credit is however less frequent in China than in the other BRICS. Borrowing through family or friends is the most common way of obtaining credit in all the BRICS countries, but other channels for borrowing are not very commonly used by individuals in China. We find that higher income, better education, being a man, and being older are associated with greater use of formal accounts and formal credit in China. Income and education influence the use of alternative sources of borrowing. Overall financial inclusion does not constitute a major problem in China, but such limited use of formal credit can create a challenge for further economic development.
    Keywords: financial inclusion, financial institutions, China
    JEL: G21 O16 P34
    Date: 2014
  8. By: Iwasaki, Ichiro; Suganuma, Keiko
    Abstract: In this paper, we estimate the growth-enhancing effect of foreign direct investment (FDI) in Russian regions, paying special attention to the country’s investment boom and the remarkable regional gaps in terms of cumulative direct investments in and after 2003. We also examine possible synergistic effects between FDI and local R&D potential to test the absorptive capacity hypothesis. Our estimation results strongly suggest the remarkable role of FDI in the regional economic growth in Russia. In addition, we found that the positive effect of FDI on growth is not limited to the regions that received a relatively large amount of foreign capital. Furthermore, we detected a surprisingly robust and positive synergistic effect between FDI and local R&D potential, indicating that the absorptive capability is essential for linking FDI and regional economic development in Russia.
    Keywords: foreign direct investment (FDI), regional economic growth, R&D potential, absorptive capacity hypothesis, Russia
    JEL: F21 O11 P25 P33 R11
    Date: 2014–06
  9. By: Joseph E. Gagnon (Peterson Institute for International Economics); Kent Troutman (Peterson Institute for International Economics)
    Abstract: The renminbi (RMB) is not yet an international currency that could challenge the position of the dollar or the euro, but it is heading in that direction. Chinese officials support the limited goal of increasing usage of the RMB in international transactions, but they do not publicly advocate full reserve-currency status and free convertibility that such status would require. Yet international use of the RMB is an important element of China's reform agenda. China has announced the opening of offshore RMB centers in Hong Kong, Singapore, Taipei, London, Frankfurt, Paris, and Luxembourg, to the delight of offshore investors eager to invest in the RMB, which has not depreciated significantly against the dollar since 1994 and is widely viewed as having further room for appreciation given China's strong economic fundamentals. The ability of Chinese exporters and importers to make and accept payments in RMB is helping to drive the growth of offshore RMB markets. The excess of settlements in RMB by Chinese importers over RMB settlement by Chinese exporters leads to growing volumes of RMB deposits offshore. But the RMB cannot become a true international currency until Chinese authorities drop their strict limits on capital flows between China and the rest of the world.
    Date: 2014–05
  10. By: Limin Du; Aoife Hanley; Katrin Rehdanz
    Abstract: Our analysis is the first of its kind to explore patterns of subsidization and CO2 emissions in China’s electricity producing sector. Applying data for all power plants across China and controlling for the age, capacity and location of generating stations, we find that plants attracting a higher government subsidy are also worryingly the plants generating a disproportionate share of CO2 emissions. This distortion is incongruent with China’s aspiration for a greener economy but may be eliminated if China delivers on its November 2013 announcement to review many industry subsidies on its way to a fully-fledged market economy (Bloomberg News, 28.02.2014)
    Keywords: CO2 emissions, China, energy sector, plant-level data
    JEL: Q53 Q48
    Date: 2014–06
  11. By: Chris SAKELLARIOU (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.); Fang ZHENG (Southwestern University of Finance and Economics, China)
    Abstract: This paper uses a new dataset, the 2009 Rural Urban Migration in China (RUMiC) to estimate returns to schooling in China using an instrumental variable (IV) methodology. After identifying a set of instruments, we conduct comprehensive validity and relevance testing of different combinations of instruments as well as robustness analysis of our estimates for rural to urban migrants and urban residents in China. We find that our estimates are in a fairly tight band for all four sub-samples examined (urban men, urban women, migrant men and migrant women). Estimates for men range from about 9.5% for urban workers to about 10-10.5% for migrant workers and are slightly higher than the corresponding estimates for women, which range from 7.5% for female urban workers to 8-9.5% for female migrant workers. Thus, private returns to education in urban China in 2009 were substantial and of similar magnitude to those for other transition countries, as well as to worldwide and developing country averages. We also find that the attenuation bias due to measurement error is generally large and more important in the migrant sample compared to the urban sample.
    Keywords: Returns to Schooling, Instrumental Variables, Rural-to-Urban Migrants, China
    JEL: I21
    Date: 2014–07
  12. By: You, Jing; Huang, Yongfu
    Abstract: This paper investigates the determinants China’s green growth and its pathways in the future. We use the OECD conceptual framework for green growth to measure green growth rates for 30 provinces over the period 1998-2011. By estimating a spatial dynamic panel model at provincial level, we find that China has experienced green growth, but with slower speed in the sample period. The average green growth rate is forecast to decline first and then fluctuate around zero over the next two decades. There appears to be a conditional convergence in provincial green growth and positive spatial influence across neighboring areas, yielding a cap of the country’s level of green development in the future. Mass innovation financed by the government and green structural reforms achieved at firm level are likely to stimulate green growth, while political shocks in terms of reappointment of provincial officials could retard China’s progress to a green economy.
    Keywords: Green growth, spatial dynamic panel model, forecasting, China
    JEL: C33 O10 O13 O53
    Date: 2013–12–19
  13. By: Dabo Guan; Xin Su; Qiang Zhang; Glen Peters; Zhu Liu; Yu Lei; Kebin He
    Abstract: Primary PM2.5�emissions contributed significantly to poor air quality in China. We present an interdisciplinary study to measure the magnitudes of socioeconomic factors in driving primary PM2.5�emission changes in China between 1997–2010, by using a regional emission inventory as input into an environmentally extended input–output framework and applying structural decomposition analysis. Our results show that China's significant efficiency gains fully offset emissions growth triggered by economic growth and other drivers. Capital formation is the largest final demand category in contributing annual PM2.5�emissions, but the associated emission level is steadily declining. Exports is the only final demand category that drives emission growth between 1997–2010. The production of exports led to emissions of 638 thousand tonnes of PM2.5, half of the EU27 annual total, and six times that of Germany. Embodied emissions in Chinese exports are largely driven by consumption in OECD countries.
  14. By: Bingxiao Wu (Rutgers University)
    Abstract: This paper examines how physicians in China respond to a pay-for-performance scheme that mismeasures performance. In 2005, China imposed a policy that penalizes hospitals with high drug sale percentage in the total revenue, with the intent to decrease drug expenditure. Using a unique patient-level data from a large Chinese hospital, I find that physicians responded not by decreasing drug prescription, but by increasing non-drug services, especially diagnostic tests. There is no significant impact on length of stay. The overall effect was to increase total expenditures. This finding is consistent with the inducement hypothesis as physicians in China may receive under-the-counter commission for prescribing certain drugs. I also find that increased non-drug expenditures were concentrated among insured patients, suggesting that physicians have stronger incentives to act in the patients’ interests than in the interests of the third-party payer.
    Keywords: pay-for-performance, physician incentives, drug prescription, China’s health care system
    JEL: I11 I18 M52
    Date: 2014–06–10
  15. By: Beata Bal-Domanska (Wroc³aw University of Economics, Poland); Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland)
    Abstract: The objective of the article is to identify and evaluate spatial relations in terms of economic determinants for the regions of Central and Eastern European countries (in accordance with Eurostat methodology NUTS-2 stands for the corresponding level) having applied the construction of an augmented, neoclassical Mankiw-Romer-Weil growth model. The study covered the period of three years: 2000, 2005 and 2010. The obtained results confirmed the significance of spatial relations, in the evaluation of relations combining growth factors, for the level of economic growth. The statistically significant impact, however, was observed only in case of the factor illustrating human capital.
    Keywords: augmented Mankiw-Romer-Weil growth model, spatial econometrics, Central and Eastern European regions
    JEL: C21 O11 R11
    Date: 2014–03
  16. By: Fang, Hai; Eggleston, Karen N.; Rizzo, John A.; Zeckhauser, Richard Jay
    Abstract: Data on 2,355 married women from the 2006 China Health and Nutrition Survey are used to study how female employment affects fertility in China. China has deep concerns with both population size and female employment, so the relationship between the two should be better understood. Causality flows in both directions. A conceptual model shows how employment prospects affect fertility. Then a well-validated instrumental variable isolates this effect. Female employment reduces a married woman’s preferred number of children by 0.35 on average and her actual number by 0.50. Ramifications for China’s one-child policy are discussed.
    Date: 2013
  17. By: Zhenxi CHEN (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.); Jan F. KIVIET (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.); Weihong Huang (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.)
    Abstract: Chow et al. (2011) apply three time-varying parameter methods to investigate the relationship between the stock markets of Shanghai and New York and find that the mutual influence between the two markets has increased since 2002. We reconsider their approaches and find that two suffer from parameter underidentification and all three from underspecification of the parameter variation. We include Hong Kong in an analysis based on standard and partial correlations over a running window in order to depict the change in the mutual relationships between these three markets. It is found that the observed increasing co-movement between Shanghai and New York is mainly due to the channel of Hong Kong. So Hong Kong appears to connect mainland China with the global market.
    Keywords: China; Co-movement, Globalization; Specification analysis, Stock markets
    JEL: C29 C58 G14
    Date: 2014–06
  18. By: Jelena Budak (The Institute of Economics, Zagreb); Edo Rajh (The Institute of Economics, Zagreb)
    Abstract: This study empirically evaluates the public procurement system in Croatia, a transition country and a new EU member state. The research is based on empirical evidence collected by surveying a large sample of companies. It investigates how businesses as actors in the public procurement tenders evaluate the system and what their perceived and experienced views are on the various components of public procurement. The baseline model borrows from the literature by including companies’ characteristics in terms of company size and sector of business operations. Furthermore, it assumes that there are significant differences in attitudes and ratings among companies that have participated in public procurement as direct suppliers compared to companies that have been indirectly involved as subcontractors. The business opinion on the public procurement system procedures and regulations has been assessed as well, providing insights into the business perceptions on main public procurement principles: accountability, effectiveness, value for money, integrity and achieving the EU standards. Special attention has been dedicated to the assessment of corruption risks in public procurement. The evidence for Croatia reveals that in spite of the EU standards introduced there are still, at least from the point of view of companies, irregularities and lack of trust in the national public procurement system.
    Keywords: public procurement, survey, Croatia, business attitudes
    JEL: D22 H83 K20 L51
    Date: 2014–03
  19. By: Zaytsev, Alexander
    Abstract: The author shows that different approaches to income comparisons both on country and regional levels may lead to conflicting conclusions concerning the catching-up. It is argued that current PPPs (Instead of constant PPPs) give more reliable picture of per capita GDP convergence process on country level. Based on the case of Russian regions it is showed that different ways of converting incomes into spatially consistent prices also lead to significantly different results. The need of computing (current) regional PPPs is emphasized.
    Keywords: income convergence, catching-up, interregional inequality, regional income, PPP
    JEL: E31 N30 O47 O57 R11
    Date: 2014–05–08
  20. By: Heiner Mikosch (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Ying Zhang (Partners Group AG, Baar, Switzerland)
    Abstract: Building on a mixed data sampling (MIDAS) model we evaluate the predictive power of a variety of monthly macroeconomic indicators for forecasting quarterly Chinese GDP growth. We iterate the evaluation over forecast horizons from 370 days to 1 day prior to GDP release and track the release days of the indicators so as to only use information which is actually available at the respective day of forecast. This procedure allows us to detect how useful a specific indicator is at a specific forecast horizon relative to other indicators. Despite being published with an (additional) lag of one month the OECD leading indicator outperforms the leading indicators published by the Conference Board and by Goldman Sachs. Albeit being smaller in terms of market volume, the Shenzhen Composite Stock Exchange Index outperforms the Shanghai Composite Stock Exchange Index and several Hong Kong Stock Exchange indices. Consumer price in flation is especially valuable at forecast horizons of 11 to 7 months. The reserve requirement ratio for small banks proves to be a robust predictor at forecast horizons of 9 to 5 months, whereas the big banks reserve requirement ratio and the prime lending rate have lost their leading properties since 2009. Industrial production can be quite valuable for now- or even forecasting, but only if it is released shortly after the end of a month. Neither monthly retail sales, investment, trade, electricity usage, freight traffic nor the manufacturing purchasing managers' index of the Chinese National Bureau of Statistics help much for now- or forecasting. Our results might be relevant for experts who need to know which indicator releases are really valuable for predicting quarterly Chinese GDP growth, and which indicator releases have less predictive content.
    Keywords: Forecasting, mixed frequency data, MIDAS, China, GDP growth
    JEL: C53 E27
    Date: 2014–07
  21. By: Jinkins, David (Pennsylvania State University)
    Abstract: I develop a model of conspicuous consumption to empirically measure the importance of peer beliefs to Americans and Chinese. In the model, a consumer cares not only about the direct utility she receives from consumption, but also about the way her consumption pattern affects her peer group's belief about her well-being. I estimate the model on household budget surveys. According to model estimates, a Chinese consumer cares 20% more than an American consumer about peer beliefs. The absolute size of the conspicuous consumption motive in both countries is relatively small. I use the estimated model to evaluate the welfare effect of the 1990-2002 American luxury tax on automobiles. The luxury tax benefited nearly all Americans a small amount, but hurt the small fraction of consumers who love automobiles the most.
    Keywords: behavioral economics, conspicuous consumption, applied microeconomics
    JEL: D12
    Date: 2014–07
  22. By: Zaman, Gheorghe; Georgescu, George
    Abstract: The financial execution of EU allocations for the programming period 2007-2013 has shown a SCF absorption rate of only 27% in the case of Romania. The study reveals that, compared to selected EU Member States, most of them CEE countries, this represents the lowest level of absorption rate. The analysis of this last one position has highlighted causes related to the system of European funds management and accessing, common or specific to different stages and levels, but also a series of outer factors, mainly the legislative barriers and the global crisis persistent effects. Because of the lack of satisfactory assessments of the real SCF impact by using econometric models and simulations, the study suggests addressing this issue by studying the relationship between SCF and relevant macroeconomic indicators. Even Romania stands for a net beneficiary position relative to the EU budget, the macroeconomic impact of SCF has not been significant. The amount of 5.1 billion EUR reimbursed to Romania, cumulated during the period 2007-2013 represented only 2% of the GFCF and 0.6% of the GDP. It was found that the main macroeconomic indicators in terms of employment, foreign investments, external debt and public debt have deteriorated over the period, the absorption of SCF having not the strength to counterbalance these negative trends, due mainly to the persistence of the crisis effects. As concerns the exercise 2014-2020, the lessons learned from the previous programming period, along with addressing Romania’s economic vulnerabilities and under favorable circumstances of the international context, a significant improvement of SCF absorption rate is expected, increasing also their macroeconomic impact.
    Keywords: Cohesion Policy; EU allocations vs. EU reimbursements; pay rate; absorption rate; EU funds macroeconomic impact
    JEL: E22 F15 F36 F43 O19
    Date: 2014–05–28
  23. By: Bartha, Zoltán; S. Gubik, Andrea
    Abstract: The goal of the chapter is to develop an index (Small and Medium-Sized Enterprise Internationalisation Index – SMINI) to measure the degree of internationalisation in the SME sector, and to uncover its most important influencing factors. The index was calculated from a data set obtained from a questionnaire conducted among 1,124 firms from the Visegrad (V4) countries, comprised of 270 Polish, 597 Czech, 113 Hungarian and 144 Slovak firms. The relationship between the index value and the influencing factors was also tested using the same dataset. The influencing factors were chosen based on a literature review. We found that the factors suggested by the literature (company size, company age, ownership structure, innovation activity, network participation and sectorial structure) have a significant effect on the SMINI, but the strength of relationship is either weak or weak to moderate. A multiway ANOVA analysis revealed that three of our variables – firm size, family ownership and innovation – have an 11.8% combined effect on the SMINI.
    Keywords: internationalisation, small and medium-sized enterprises, degree of internationalisation
    JEL: F23 L25 M16
    Date: 2014–06–27
  24. By: Arratibel, Olga; Michaelis, Henrike
    Abstract: This paper follows the Bayesian time-varying VAR approach with stochastic volatility developed by Primiceri (2005), to analyse whether the reaction of output and prices to interest rate and exchange rate shocks has changed across time (1996-2012) in the Polish economy. The empirical findings show that: (1) output appears more responsive to an interest rate shock at the beginning of our sample. Since 2000, absorbing this shock has become less costly in terms of output, notwithstanding some reversal since the beginning of the global financial crisis. The exchange rate shock also has a time-varying effect on output. From 1996 to 2000, output seems to decline, whereas for periods between 2000 and 2008 it has a positive significant effect. (2) Consumer prices appear more responsive to an interest rate shock during the first half of our sample, when Poland experienced high inflation. The impact of an exchange rate shock on prices seems to slightly decrease across time.
    Keywords: Bayesian time-varying parameter VAR; monetary policy transmission; exchange rate passthrough
    JEL: C30 E44 E52 F41
    Date: 2013–12
  25. By: Knar Khachatryan; Emma Avetisyan; Frédéric Teulon
    Abstract: The microfinance sector is relatively new in Armenia, and has shown significant increase over the last decade. We designed a qualitative research to explore the main characteristic and adaptation strategies of the microfinance sector in this country. Our findings indicate that the emergence of MFIs was subject to offering a complementary effort in filing the gap in the financial services industry. Its main objective was to address the increasing unemployment and poverty resulted from transitional shock. The microfinance market is segmented with different programs serving different populations. We found range of microfinance services, unequal coverage in terms of geography and of business sectors, revenues, unequal VAT treatment between commercial banks and MFIs, regulated Microfinance operations, and lack of cooperation within the Microfinance sector and government support as main problems of the sector development.
    Keywords: Microfinance (MFI), adaptation strategy, poverty alleviation, developing economies, not for-profit firms.
    Date: 2014–07–15
  26. By: Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland)
    Abstract: The paper focuses on the issue of the aggregation problem which is frequently discussed within spatial econometrics. Aggregation problem is one of two aspects of the modifiable areal unit problem (MAUP). The aggregation problem is connected with the volatility of the obtained results occurred when various compositions of territorial units for the same aggregation scale were applied. The objective of the present paper is considering the redefinition of aggregation problem and showing positive solution of the aggregation problem based on the empirical example of determining agricultural macroregions. In the article the aggregation problem was defined as a problem of establishment a particular composition of territorial units at a selected aggregation scale in a such a way that is remains in the quasi composition of regions within the undertaken research problem. The paper also presented the procedure for determining agricultural macroregions where the analysis of the spatial volatility of the agrarian structure and the current knowledge on the agriculture in Poland were applied. In addition, the paper considered the final areal interpretation problem connected with the incorrect determination of the area in relation to which final conclusions are drawn. The problem was presented based on the example of the establishment of the average concentration of the area of agricultural land in Poland with the use of the Gini index calculated for districts. The paper emphasised that ignoring the final areal interpretation problem in spatial analyses may lead to an apparent identification of the modifiable areal unit problem.
    Keywords: spatial econometrics, modifiable areal unit problem, scale problem, aggregation problem
    JEL: C01 C15 C21
    Date: 2014–01
  27. By: Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland)
    Abstract: The theme of the paper is focused on the application of spatial taxonomic measure of development (pTMR) while analysing the labour market in Poland. The need for the use of a spatial taxonomic measure of development is related to the fact that most economic phenomena are characterized by positive spatial dependence. This necessitates the inclusion of this dependence in spatial economic analyses. The article analyses the labour market in 66 subregions (NUTS 3) in 2012. The study allowed us to assess the situation on the labour market and identify the trends in its development.
    Keywords: regional development, numeric taxonomy, Taxonomic Measure of Development, spatial econometrics, labour market
    JEL: C21 J11 J64 O11 R11 R23
    Date: 2014–03
  28. By: Tim Goedemé; Diego Collado; Leen Meeusen
    Abstract: In European poverty research, poverty is usually measured with a poverty line defined as a percentage of the national median income. However, for grasping trends in social cohesion in the European Union (EU), and identifying options and pitfalls for social policy initiatives at the EU level, EU-wide income differences are at least as important as national income differences. Therefore, in this paper we document recent trends in national and EU-wide income poverty dynamics. We analyse to what extent household incomes have converged in the EU and how this has impacted upon poverty dynamics using both national and EU-wide poverty lines, before and during the current economic crisis. We pay particular attention to disentangling the contribution of both ‘old’ and ‘new’ EU Member States to EU-wide poverty dynamics. For doing so, we make use of four waves of EU-SILC data (2005-2011), the EU reference source for information on income and living conditions in Europe. We find that poverty dynamics using national and EU-wide poverty lines have evolved very differently in the period 2005-2011. Whereas national poverty stagnated during 2005-2009, mainly due to substantial increases in median incomes, EU-wide poverty substantially decreased in the same period. In contrast, although income poverty has increased between EU-SILC 2009 and EU-SILC 2011 when measured with national poverty lines, the crisis seems to have halted, but not (yet) substantially reversed the convergence trend of the lowest incomes in the EU towards the EU-wide median income. Finally, we find that when the new Member States joined the EU in 2004, poverty measured with a pan-European poverty threshold was predominantly a problem of the Eastern European EU Member States, whereas by the end of the period EU-wide poverty is at least as much a problem of low incomes of part of the population living in the EU15.
    Keywords: poverty, inequality, convergence, divergence, Europe, EU-SILC, social cohesion, EU
    JEL: D31 O52 I32
    Date: 2014–07
  29. By: International Monetary Fund. European Dept.
    Abstract: KEY ISSUES Context: Moldova largely achieved the main objectives of the combined ECF/EFF supported program that expired on April 30, 2013. The economy has strongly recovered from the drought-related contraction in 2012 but will slow down in 2014. Key risks to the near-term outlook relate to financial stability, fiscal policy slippages in the run up to the 2014 parliamentary elections, a further slowdown in activity in main trading partners, and intensification of geopolitical tensions. Financial sector policies: Corporate governance in the banking sector is a major concern. In line with FSAP recommendations, significant weaknesses in the legal and regulatory frameworks must be urgently addressed to ensure stability and soundness of the financial sector. Fiscal policy: Moldova has achieved a substantial degree of fiscal consolidation in recent years, but this trend is now reversing. Resisting pre-election pressures for selective spending increases and returning to the path of fiscal consolidation would reduce reliance on exceptionally-high donor support. Structural fiscal reforms would help safeguard sustainability. Monetary and exchange rate policy: Monetary policy has been successful in maintaining inflation within the NBM’s target range. Going forward, the NBM needs to remain ready to adopt a tightening bias if inflationary pressures start emerging. There is room to strengthen the inflation targeting regime. Structural reforms: The implementation of structural reforms outlined in the National Development Strategy (NDS) Moldova 2020—especially in the business environment, physical infrastructure, and human resources development areas—would help boost potential growth and reduce poverty.
  30. By: Mark Purdon; Razack Lokina
    Abstract: This study presents findings from a systematic comparative research effort to investigation the additionality claims of CDM afforestation projects in Tanzania, Uganda and Moldova.Using what we refer to as an ex-post comparative baseline approach that accounts for how project financing and background economic conditions evolve over a CDM project’s implementation and crediting periods, we demonstrate that the projects in Uganda and Moldova are very likely to be fully additional while only approximately one-quarter of carbon credits resulting from the Tanzania project are genuine. The conditions of additionality can change significantly over the course of a CDM project in a way that undermines project environmental integrity because the CDM rules do not accommodate changing baseline conditions. Rather, current CDM rules allow initial baseline conditions to be frozen over a project’s crediting period. We recommend that a reformed CDM, REDD, NAMA or other new market mechanism adopt some of the elements of our approach including use of comparative performance benchmarks, an additionality risk management tool and engaging donors in the development of “ODA-baselines” for climate mitigation projects which combine carbon finance and development assistance.
    Date: 2014–02

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