nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒12‒19
twenty papers chosen by
J. David Brown
United States Census Bureau

  1. The Productivity Consequences of Political Turnover: Firm-Level Evidence from Ukraine's Orange Revolution By Earle, John S.; Gehlbach, Scott
  2. An Economic Strategy to Save Ukraine By Anders Aslund
  3. Are the Economic Sanctions against Russia Effective? By Konstantin Kholodilin; Dirk Ulbricht; Georg Wagner
  4. Price Discrimination and Pricing to Market Behavior of Black Sea Region Wheat Exporters By Gafarova, Gulmira; Perekhozuk, Oleksandr; Glauben, Thomas
  5. The Local Government Crisis 2007-2014: When China's Financial Management Faltered By Leo F. Goodstadt
  6. Growth Surprises and Synchronized Slowdowns in Emerging Markets––An Empirical Investigation By Ghada Fayad; Roberto Perrelli
  7. Urbanization, Nutrition Transition, and Obesity: Evidence from China By Zhou, Song; Awokuse, Titus
  8. Effect of Relative Price Changes of Top Principle Crops on Farm Land Allocation in Post-Soviet Russia: Do Prices Matter? By Vorotnikova, Ekaterina; Asci, Serhat; Seale, James
  9. Economic, social and institutional factors in the growth of agri-food sector in Europe By Anonymous; Chmieliński, Paweł; Wigier, Marek
  10. Modernising Russia's cattle and dairy sectors under WTO conditions: Insights from East Germany By Petrick, Martin
  11. Employment policy implementation mechanisms in China By Zeng, Xiangquan
  12. Should income inequality be reduced and who should benefit ? redistributive preferences in Europe and Central Asia By Cojocaru, Alexandru; Diagne, Mame Fatou
  13. "As Rare as a Panda": How Facial Attractiveness, Gender, and Occupation Affect Interview Callbacks at Chinese Firms By Maurer-Fazio, Margaret; Lei, Lei
  14. An analysis of conditions and the state of development of the agri-food clusters in Poland By Figiel, Szczepan; Kuberska, Dominika; Kufel, Justyna
  15. Has China’s Domestic Food Price Become More Stable? An Investigation Based on a Structural Break Regime Switching Model By LU, Jie; Tang, Zhong; Lin, Yujie; Zhu, Xinkai; Liu, Wenyong
  16. Assessing the Design of Three Pilot Programs for Carbon Trading in China By Munnings, Clayton; Morgenstern, Richard; Wang, Zhongmin; Liu, Xu
  17. Energy poverty and solid fuels use in rural China: Analysis based on national population census By Xin Tang; Hua Liao
  18. Intra-industry trade between CESEE countries and the EU15 By Dautovic, Ernest; Orszaghova, Lucia; Schudel, Willem
  19. Gravity model analysis: robust evidence from the Czech Republic and corruption matching By Michal Paulus; Eva Michalíková
  20. Monetary Policy Effectiveness in China: Evidence from a FAVAR Model By John Fernald; Mark M. Spiegel; Eric T. Swanson

  1. By: Earle, John S. (George Mason University); Gehlbach, Scott (University of Wisconsin-Madison)
    Abstract: We examine the impact of political turnover on economic performance in a setting of largely unanticipated political change and profoundly weak institutions: the 2004 Orange Revolution in Ukraine. Exploiting census-type panel data on over 7,000 manufacturing enterprises, we find that the productivity of firms in the regions most supportive of Viktor Yushchenko increased by more than 15 percentage points in the three years following his election, relative to that in the most anti-Yushchenko regions. We conclude that this effect is driven primarily by particularistic rather than general economic policies that disproportionately increased output among large enterprises, government suppliers, and private enterprises – three types of firms that had much to gain or lose from turnover at the national level. Our results demonstrate that political turnover in the context of weak institutions can have substantial distributional effects that are reflected in economic productivity.
    Keywords: political connections, firm behavior, voting, transition
    JEL: H32 D72 P26
    Date: 2014–09
  2. By: Anders Aslund (Peterson Institute for International Economics)
    Abstract: Ukraine has experienced a year of unprecedented political, economic, and military turmoil. The combination of Russian military aggression in the east and a legacy of destructive policies leading to pervasive corruption has plunged the country into an existential crisis. The West, meanwhile, has been largely paralyzed with uncertainty over how to assist Ukraine without reviving Cold War hostilities. Yet all is not lost for Ukraine. The successful elections of President Petro Poroshenko in May and a new parliament in October offer an opportunity for economic reform, despite the continuing military threat. The window of opportunity is likely to be brief, however. The new government will have to act fast and hard on many fronts to succeed. Åslund lays out the strategy.
    Date: 2014–11
  3. By: Konstantin Kholodilin; Dirk Ulbricht; Georg Wagner
    Abstract: The introduced sanctions against Russia, which at the moment are on a level of travel bans and asset freezes against a limited group of individuals and firms, are unlikely to trigger a profound change in Russian foreign policy. This can primarily be attributed to the fact that the economic impact of the sanctions is rather low. However, the current political tensions have had an impact on financial and non-financial indicators, including a possibly persistent effect on government bond yields.
    Date: 2014
  4. By: Gafarova, Gulmira; Perekhozuk, Oleksandr; Glauben, Thomas
    Abstract: As a result of some recent changes in the international wheat market, market shares of leading wheat exporters have recently altered. The Black Sea region countries – Kazakhstan, Russia and Ukraine (KRU) – have become important wheat exporters, since they implemented substantial restructuring in total agricultural production, consumption and trade in the 1990s, and subsequently achieved a massive increase in grain production during the 2000s. Consequently, the pricing behaviour of these countries has become a key issue. By applying the pricing-to-market model to annual wheat exports, this study analyses the price discriminating behaviour of the KRU exporters in foreign markets during 1996-2012. The results demonstrate that even though the KRU countries are able to exercise price discrimination in different importing countries, they usually face perfect competition in most destinations.
    Keywords: fixed-effects model, price discrimination, pricing-to-market, wheat export, Crop Production/Industries, Demand and Price Analysis,
    Date: 2014–09
  5. By: Leo F. Goodstadt (Hong Kong Institute for Monetary Research and Hong Kong Institute for the Humanities and Social Sciences and University of Dublin)
    Abstract: This paper investigates why China's leaders were unable to halt the mounting crisis in funding local government from 2009. The analysis traces a long history of co-option of the banking system by local officials. The national leadership was obstructed in monitoring and controlling the escalating dependence on banks to fund local administrations because of a long-standing failure to reform key legal, fiscal and administrative systems. The ideological reluctance to implement reforms in land ownership fostered an unauthorised and often unlawful symbiosis between local officials, property developers and bank executives. The paper argues that the Government's plans for restructuring local government finances through the use of bond flotations in particular will face considerable delay.
    Keywords: China, Local Government, Banking, Financial Crisis, Land Ownership, Reforms
    Date: 2014–10
  6. By: Ghada Fayad; Roberto Perrelli
    Abstract: Output growth has slowed in several emerging markets since 2011—a remarkable feature for a non-crisis period in EMs. Such synchronized slowdowns were largely unanticipated by scholars and forecasters alike. In this paper we attempt to shed light on the main drivers of growth surprises and synchronized slowdowns in emerging markets post-global financial crisis. We find that lower trading partner demand was a key external factor in explaining these events during 2011–13, and that changes in external financing conditions have yet to play a role in EMs’ growth. On the domestic front, the withdrawal of the fiscal stimulus put in place right after the Lehman collapse is a relevant aspect in these episodes, compounding the effect of the weaker external demand. Idiosyncratic factors, such as structural bottlenecks with the potential to impair growth in a more lasting fashion, also seem to partly explain these events, as reflected in the larger residuals found in regression-based estimates for certain countries.
    Keywords: Economic growth;Emerging markets;China;Fiscal stimulus;Demand;Terms of trade;Emerging market; growth surprises; growth deceleration; trading partners' demand
    Date: 2014–09–17
  7. By: Zhou, Song; Awokuse, Titus
    Abstract: This paper explores the effects of urbanization on nutrition transition and obesity. Taking adult individuals from the China Health and Nutrition Survey (CHNS), from the year 1989 to 2009, this study confirms the hypothesis that rising urbanization has positive effects on the obesity level. Also, the results reveal a nutrition transition towards a dietary pattern of more fat and protein intake in China. Particularly, evidence from the gender difference indicates that the effect of urbanization, along with the factors as education and income, on obesity is more pronounced for females than males.
    Keywords: Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,
  8. By: Vorotnikova, Ekaterina; Asci, Serhat; Seale, James
    Abstract: After the collapse of the Soviet Union in 1991, Russian economy was on the way to becoming more market-based. While the broadening of market forces in Russian agriculture seems plausible, there is little empirical evidence to support the proportion that land allocation decision among grains and oil-seeds are in large determined by output prices for the crops. The crops are wheat, barley, oats, corn, rye, soybeans, rapeseed, and sunflower. In this chapter, a land allocation model developed recently by Vorotnikova, Asci and Seale (2013) is fit to post-Soviet data to determine if output prices for grains and oil-seeds significantly affect land allocation among these crops and by what magnitudes. We look at the effect of the relative export price changes on allocation of land among top eight top crops in agricultural production for Russia during the years 1992 to 2012. We have determined that most price responsive acreages are those of 1) soybeans, 2) corn, 3) sunflower, 4) wheat, 5) rye, 6) barley, and 7) other. Overall, we can conclude that Russian agriculture has become price responsive when it comes to the land allocation.
    Keywords: Post-Soviet Union agriculture, land allocation, price responsiveness, Crop Production/Industries, Land Economics/Use, Production Economics,
    Date: 2014–05–28
  9. By: Anonymous; Chmieliński, Paweł; Wigier, Marek
    Abstract: Institutional restrictions concerning growth and development of Polish farms. The Russian agricultural sector and WTO: advantages and disadvantages. Policy and economic rent as sources of agricultural producer’s income. An analysis of current economic problems and development factors in agriculture facing Ukraine. The assessment of quality and price competition strategies in Polish trade of agri-food products. The dynamic of agrifood systems and institutional impacts on Romanian vegetable producers. The status and development perspectives of the agricultural production sector of the Republic of Belarus. Would equal direct payments in the EU be fair? Impact of the CAP support measures on the agricultural sector in Lithuania. Economic and managerial analysis of the effect of human capital on the growth of horticulture sector in Bulgaria. Agriculture and rural development – the case of Norway. Agricultural policy supporting the structural development of farms and other rural enterprises in Finland. Economic crisis in rural areas of the Czech Republic and Slovakia. Clusters development in terms of building competitive advantages of an agricultural sector in transition countries. Sustainability of individual farms based on farm accountancy data and survey of respondents from Wielkopolskie Voivodeship. Development factors and elements of a farm management system in France. The impact of CAP on agriculture in the opinion of farmers. Regional restructuring and modernization of Bulgarian dairy sector after the accession to the EU. Trade arragements and their impact on food sector development in Balcan region countries candidate countries. Modelling the factors of human resources management in the horticulture sector in Bulgaria. Change of Productivity in German Dairy Farms. Structural and market changes in the Hungarian fruit industry. Social and economic assumptions of employment increase in fruit and vegetable sector of Slovakia.
    Keywords: economics, sociology, fruit industry, employment, CAP, agricultural policy, human capital, Agricultural and Food Policy, International Relations/Trade, Labor and Human Capital,
    Date: 2013
  10. By: Petrick, Martin
    Abstract: How to revitalise the cattle and dairy sectors under the WTO commitments has emerged as a major policy challenge for the Russian government. This article raises the question whether livestock recovery in East Germany does provide any insights that could be of value to current policy makers in Russia. Similar to Russia, livestock numbers plummeted in the first years after the end of central planning. Unlike in Russia, milk output per cow increased spectacularly and almost doubled in a period of 20 years. It is argued that reforms of the institutional environment of agriculture were at least as important for this outcome as the generous availability of funding. Incentives set by financial aid were sometimes unintended, inconsistent, and led to misallocations that were costly to correct later on. More recent capital subsidies were inefficient in reaching any of the manifold goals they were hoped to achieve. While the Russian government may face little difficulty in dressing up its investment subsidies to make them look like green box compatible, the structural elements of the EU's Common Agricultural Policy are regarded as a poor guide for policy reform.
    Abstract: Die Wiederbelebung der Rinder- und Milchproduktion unter den Bedingungen der WTO Verpflichtungen zählt derzeit zu den wichtigen politischen Herausforderungen der russischen Regierung. Dieser Beitrag wirft die Frage auf, ob die Entwicklung der Tierbestände in Ostdeutschland Erfahrungen bereithält, die für die politischen Entscheidungsträger in Russland von Nutzen sein können. Ähnlich wie in Russland brach der Tierbestand in den ersten Jahren nach dem Ende der Planwirtschaft massiv ein. Anders als in Russland stieg die Milchleistung je Kuh binnen weniger Jahre jedoch spektakulär an und verdoppelte sich in einem Zeitraum von 20 Jahren nahezu. Der Beitrag argumentiert, dass Reformen der institutionellen Rahmenbedingungen für die Landwirtschaft mindestens ebenso verantwortlich für dieses Ergebnis waren wie die großzügige finanzielle Unterstützung durch staatliche Mittel. Die finanziellen Hilfen setzten teilweise unbeabsichtigte oder widersprüchliche Anreize, die mitunter zu nur schwer korrigierbaren Fehlallokationen führten. Die in letzter Zeit gewährten Kapitalsubventionen erreichten die vielen mit ihnen verbundenen Ziele nur sehr ineffizient. Während die russische Regierung mit vermutlich nur geringem Aufwand ihre Investitionsförderung als "Green Box"-kompatibel darstellen kann, betrachtet dieser Artikel die strukturpolitischen Maßnahmen der Gemeinsamen Agrarpolitik (GAP) als schlechtes Vorbild für politische Reformen.
    Keywords: Agricultural policy,investment aid,East Germany,livestock sector,WTO
    JEL: P52 Q14 Q17
    Date: 2014
  11. By: Zeng, Xiangquan
    Abstract: The paper discusses the NEPs implementation mechanism in China.
    Keywords: employment policy, promotion of employment, national plan, public finance, evaluation, China, politique de l'emploi, promotion de l'emploi, plan national, finances publiques, évaluation, Chine, política de empleo, fomento del empleo, plan nacional, hacienda pública, evaluación, China
    Date: 2014
  12. By: Cojocaru, Alexandru; Diagne, Mame Fatou
    Abstract: This paper examines support for reducing inequality and for income redistribution to specific groups in Europe and Central Asia. The paper uses the Life in Transition Survey to analyze cross-country differences in redistributive preferences and the determinants of individual-level differences in such preferences. The analysis tests for various possible motivations, such as self-interest, beliefs about the fairness of the income-generating process, past social mobility experience, or expectations of future social mobility. Fewer people wanted to reduce the gap between the rich and the poor in 2010 than in 2006 in transition countries. Support for redistribution toward specific groups is highest for the disabled and the elderly, but there is high heterogeneity across countries in support for various redistributive policies, as well as in the alignment between average beliefs and actual policies. The empirical analysis confirms the importance of beliefs about fairness in influencing redistributive preferences, together with self-interest and past and expected social mobility in European Union member states (Western European and new member states), but only to a limited extent in the non-European Union member state group of transition countries. Regarding redistribution to specific groups, self-interest appears to be an important motivation for support for the elderly and families with children, whereas values and beliefs are important drivers of support for the working poor and the unemployed. Although framing matters, the results are broadly robust to alternative measures of support for reducing inequality.
    Keywords: Rural Poverty Reduction,Inequality,Services&Transfers to Poor,Poverty Impact Evaluation,Gender and Law
    Date: 2014–11–01
  13. By: Maurer-Fazio, Margaret (Bates College); Lei, Lei (Liberty Mutual Insurance)
    Abstract: This study explores how both gender and facial attractiveness affect job candidates' chances of obtaining interviews in China's dynamic Internet job board labor market. It examines how discrimination based on these attributes varies over occupation, location, and firms' ownership type and size. We employ a resume (correspondence) audit methodology. We establish the facial attractiveness of candidate photos via an online survey. 24,192 applications are submitted to 12,096 job postings across four occupations in 6 Chinese cities. We find sizable differences in the interview callback rates of attractive and unattractive job candidates. Job candidates with unattractive faces need to put in 33% more applications than their attractive counterparts to obtain the same number of interview callbacks. Women are preferred to men in three of our four occupations. Women on average need to put in only 91% as many applications as men to obtain the same number of interview callbacks.
    Keywords: beauty, gender, field experiments, discrimination, Chinese firms, hiring, facial attractiveness, internet job boards, resume correspondence audit study
    JEL: C93 J71 J23 O53
    Date: 2014–10
  14. By: Figiel, Szczepan; Kuberska, Dominika; Kufel, Justyna
    Abstract: The economic substance of the cluster concept. Key conditions for the emergence and development of agri-food clusters in Poland. Identification and spatial distribution of agri-food clusters. Examples of global agri-food clusters.
    Keywords: cluster, agri-food cluster, global cluster, Agribusiness,
    Date: 2014
  15. By: LU, Jie; Tang, Zhong; Lin, Yujie; Zhu, Xinkai; Liu, Wenyong
    Abstract: The stability of grain prices relates closely to the development of China’s economy, social stability and quality of Chinese people’s life. However, with the gradual openness of China’s grain market and series of newly-issued China’s grain policies, the volatility characteristics of China’s grain price may experience some structural changes and whether it becomes more stable still remains controversial. In this paper, we investigate the fluctuation characteristics of some main grain prices during the past two decades by using Structural Break Regime Switching Model and the Structural Break Model. We find that China’s grain price has become more stable since 2004 with narrowing low and high growth regimes. The implementation of Minimum Purchasing Price Policy and the semi-separation of domestic and international grain markets may explain part of the reasons for the stabilization.
    Keywords: Agricultural and Food Policy,
    Date: 2014
  16. By: Munnings, Clayton (Resources for the Future); Morgenstern, Richard (Resources for the Future); Wang, Zhongmin (Resources for the Future); Liu, Xu
    Abstract: China started seven carbon cap-and-trade pilot programs in order to inform the development of a future national cap-and-trade market. This paper assesses the design of three of the longer-running cap-and-trade pilot programs in Guangdong, Shanghai and Shenzhen. Based on extensive stakeholder interviews and a detailed literature review we formulate a series of recommendations to improve the design of these three pilots, including: strengthening the legal foundations for the cap-and-trade pilots, incorporating achievement of goals established by the cap-and-trade pilots into the performance reviews of participating government officials and executives of state-owned entities, further clarifying the cap-setting process, increasing the transparency of the cap, reducing or eliminating within-compliance period adjustments to enterprise-level allowance allocation, gradually moving away from free allocation toward auctioning, reforming enforcement policy, and adopting a symmetric safety valve to manage prices. By making these recommendations, we hope to shed light on ways that Chinese regulators might adapt cap and trade, a fundamentally market-based tool, to China's economy that has many non-market features.
    Keywords: emissions trading, carbon, China
    JEL: Q48 Q54 Q58
    Date: 2014–10–16
  17. By: Xin Tang; Hua Liao
    Abstract: China has basically achieved ubiquity of electricity access in rural areas during the latest three decades. However, solid fuels are still widely used in the rural areas, which is currently the main issue impinging upon energy poverty in China. There about 490 million rural residents in China using solid fuels for cooking. Based on national population census data, this research evaluates the current situation and long-term trend of solid fuel use for cooking in rural China. Firstly, over three-fourths of all rural households depend on solid fuels to meet their cooking demand, whilst in urban area and township this figure is as low as 8 % and 36 % respectively. Secondly, solid fuel use was linked closely to rural household income, i.e., those regions with low per capita household income use more solid fuel. Furthermore, rural households using solid fuel declined by 17 percent from 2000 to 2010, albeit with some significant regional differences. Finally, the proportion of rural residents using clean fuels remained low, and the proportion using gas remained nearly constant over last 10 years in many provinces. Improving access to affordable and reliable energy services for cooking remains a great challenge China need to address.
    Keywords: Energy Poverty, Solid Fuels, Cooking, Population Census, Rural Households, China
    JEL: Q40
    Date: 2014–05
  18. By: Dautovic, Ernest; Orszaghova, Lucia; Schudel, Willem
    Abstract: The rapid increase in intra-industry trade (IIT) between the EU15 and Central, Eastern and South-Eastern European (CESEE) countries after the collapse of the Soviet Union indicates a structural change in the nature of trade in CESEE and a new process of transition and real convergence to the EU. Using a product-level trade flows database and employing linear and non-linear panel data specifications, this paper assesses the determinants of intra-industry trade between the EU15 as the main trading block and CESEE, which are further divided into the ‘new’ EU member states (NMS) and the EU candidate countries and potential candidates (CCPC). The analysis highlights the importance of intra-industry trade in terms of achieving real convergence. The paper finds that there exist some common factors driving IIT across the sample, such as the corporate tax rate, the flexibility of exchange rate regimes and the quality of political institutions. However, the determinants of IIT between NMS and EU15 countries deviate considerably from those between CCPC and EU15 countries. JEL Classification: F14, F15, F10
    Keywords: Central and Eastern Europe, convergence criteria, economic integration, emerging Europe, EU candidate countries, horizontal IIT, intra-industry trade, panel data, real convergence, South-Eastern Europe, transition, vertical IIT, Western Balkan
    Date: 2014–08
  19. By: Michal Paulus (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic); Eva Michalíková (Brno University of technoglogy, Brno and Anglo-American University, Prague)
    Abstract: The results generally confirm that Czech trade is oriented towards European countries and determined primarily by key economic factors of domestic and foreign GDP. The institutional variables remain largely insignificant, except corruption due tothe counterintuitive result that a higher corruption level in partner country should boost mutual trade. We interpret this finding as a result of “corruption matching”. The exclusion of outliers (LTS) significantly increases R-square and extends the number of significant determining factors (e.g. population or other institutional variables). The outliers, according to the LTS, are composed mainly of African, Asia and South or Central America states.
    Keywords: Czech Republic, export, gravity model, fixed effects, LSDV, least trimmed squares
    JEL: C13 C23 F10 F12 F14
    Date: 2014–09
  20. By: John Fernald; Mark M. Spiegel; Eric T. Swanson
    Abstract: We use a broad set of Chinese economic indicators and a dynamic factor model framework to estimate Chinese economic activity and inflation as latent variables. We incorporate these latent variables into a factor-augmented vector autoregression (FAVAR) to estimate the effects of Chinese monetary policy on the Chinese economy. A FAVAR approach is particularly well-suited to this analysis due to concerns about Chinese data quality, a lack of a long history for many series, and the rapid institutional and structural changes that China has undergone. We find that increases in bank reserve requirements reduce economic activity and inflation, consistent with previous studies. In contrast to much of the literature, however, we find that central-bank-determined changes in Chinese interest rates also have substantial impacts on economic activity and inflation, while other measures of changes in credit conditions, such as shocks to M2 or lending levels, do not once other policy variables are taken into account. Overall, our results indicate that the monetary policy transmission channels in China have moved closer to those of Western market economies.
    JEL: C38 E43 E52
    Date: 2014–09

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