nep-tra New Economics Papers
on Transition Economics
Issue of 2015‒12‒08
thirty papers chosen by
J. David Brown
United States Census Bureau

  1. The systemic roots of Russia’s recession By Marek Dabrowski
  2. Slower Growth and Vulnerability to Recession: Updating China’s Global Impact By Rod Tyers
  3. Parametric and Non-Parametric Cost Efficiency Benchmarking of Water Utilities in Russia By Ilya A. Dolmatov; Vladimir V. Dvorkin
  4. Cross-Regional Variations in the Level of Entrepreneurial Activity in Russia by Type of Motivation: Determining Factors By Alexander Chepurenko; Olga Obraztsova; Vladimir Elakhovsky
  5. China’s Capital Stock Series by Region and Sector By Yanrui Wu
  6. Shifts of Distortion and Corruption over Local Political Cycles in China By Shawn Chen
  7. Why Does the Government Fail to Improve the Living Conditions of Migrant Workers in Shanghai? Reflections on the Policies and the Implementations of Public Rental Housing under Neoliberalism By Yang Shen
  8. Energy efficiency of China's industry sector: An adjusted network DEA-based decomposition analysis By Yingnan Liu; Ke Wang
  9. Social Entrepreneurship in Russia: Key Players and Development Potentiality By Alena I. Nefedova
  10. Identifying Competition Neutrality of SOEs in China By WATANABE Mariko
  11. Left Behind but Doing Good? Civic Engagement in Two Post-Socialist Countries By Nikolova, Milena; Roman, Monica; Zimmermann, Klaus F.
  12. New Urbanisation under Globalisation and the Social Implications in China By Biliang Hu; Chunlai Chen
  13. Testing the Predictability of Consumption Growth: Evidence from China By Liping Gao; Hyeongwoo Kim
  14. The network-based economy in Vietnam By Quang Truong
  15. Exploring the geography of China's airport networks: a hybrid complex-network approach By Zhengbin Dong; Wenjie Wu
  16. Quality Screening and Trade Intermediaries: Evidence from China By Sandra Poncet; Meina Xu
  17. Neutralising the Advantages of State-Owned Enterprises for a Fair Playing Field By NGUYEN Anh Tuan
  18. China's Seasonal Influenza Vaccination Policy in a Post-Health Care Reform Era By Ningzhen Ruan; Thao Nguyen; Kellynn Khor
  20. Trade, Migration and Regional Income Differences: Evidence from China By Xiaodong Zhu; Trevor Tombe
  21. Making China the transition to a low-carbon economy: Key challenges and responses By ZhongXiang Zhang
  22. China's Investment Rate: Implications and Data Reliability By Holz, Carsten A.
  23. China's Capital Flight: Pre- and Post-Crisis Experiences By Yin-Wong Cheung; Frank Westermann; Sven Steinkamp
  24. The Political Economy of Mental Health in Vietnam: Key Lessons for Countries in Transition By Kelley Lee; Rebecca Zappelli; Elliot M. Goldner; Nguyen Cong Vu; Kitty K. Corbett; Jill Murphy
  25. Non-Keynesian Savings of Russians By Dmitrii Timofeev
  26. Post-Privatisation Corporate Performance in Poland. Evidence from Companies Privatized in 2008-2011 By Barbara B³aszczyk; Wiktor Patena
  27. How Travelers Use Online and Social Media Channels to Make Hotel Choice Decisions. A Comparative Study of Russian Federation and American Tourists’ Online Consumer Behavior By Sergey P. Kazakov; Marina D. Predvoditeleva
  28. Where Have China’s State Monopolies Gone? By Paul Hubbard
  29. Участието на България в Политиката за развитие на Европейския съюз By Marinov, Eduard
  30. Is the price elasticity of demand for coal in China increasing? By Paul J. Burke; Hua Liao

  1. By: Marek Dabrowski
    Abstract: Highlights - The Russian economy grew rapidly between 2000 and 2007, but growth decelerated after the 2008-09 global financial crisis, and since mid-2014 Russia has moved into recession. A number of short-term factors have caused recession - lower oil prices, the conflict with Ukraine, European Union and United States sanctions against Russia and Russian counter-sanctions. However Russia's negative output trends have deeper structural and institutional roots. They can be tracked back about a decade to when previous market-reform policies started to be reversed in favour of dirigisme, leading to further deterioration of the business and investment climate. Russia must address its short-term problems, but in the medium-to-long term it must deal with its fundamental structural and institutional disadvantages - oil and commodity dependence and an unfriendly business and investment climate underpinned by poor governance. Compared to many other commodity producers, Russia is better placed to diversify its economy, mostly due to its excellent human capital. Ruble depreciation makes this task easier. 1. From growth slowdown to GDP decline Recession in Russia has become a fact. Seasonally adjusted quarterly GDP peaked in the second quarter of 2014 and then started declining. In the third and fourth quarters of 2014, the pace of decline was very slow (Figure 1) and therefore growth for 2014 overall remained positive (+0.6 percent, Figure 2). However, the first half of 2015 brought an acceleration of the negative trend. Real GDP declined by 2.2 percent in Q1 2015 and by 4.6 percent in Q2 2015, compared to the respective quarters of 2014. Recession was no surprise. Figure 2 shows that after the global financial crisis of 2008-09 Russian growth did not resume its pre-crisis pattern. From 2010-12 growth was muted but reasonable, with annual GDP growth of 5.4 percent, 4.3 percent and 3.4 percent respectively (although from a low level in 2009). However, already in 2013 – well before the conflict with Ukraine and resulting international sanctions, and the oil-price decline – there was economic stagnation. To understand the causes of the trend of declining growth, we must look at the history of the Russian transition and its partial reversal. Figure 1 - Russian quarterly GDP in 2008 prices, billion rubles, seasonally adjusted, 2007-15 Source - Bruegel based on Rosstat, http -// Figure 2 - Annual dynamics of real GDP in Russia, in percent, 1991-2014 Source - Bruegel based on Gaidar Institute for Economic Policy, Moscow, http -// 2. The first turning point - the Yukos crackdown Russia was never a star reformer. Its economic transition in the 1990s was long and painful (see Figure 2) because of the complicated legacy of the Soviet system (structural distortions, macroeconomic imbalances and the absence of market institutions) and because of insufficient political support for radical, market-oriented reforms (Dabrowski et al, 2004). Nevertheless, at the beginning of the new millennium, those reforms started to bear fruit. In 1999, the Russian economy entered a phase of post-transition growth recovery, which accelerated in the subsequent years on the back of increasing oil prices. Furthermore, the first years of Vladimir Putin’s presidency (2000-03) brought completion of many overdue reforms, such as land reform, simplification of the tax system (the flat 13 percent personal income tax rate), elimination of fiscal imbalances, continuing privatisation, limited opening to foreign investors, deregulation and adoption of several pieces of market-oriented legislation. At that time, Russia could be considered a country that completed its basic transition agenda and managed to build a market economy based on private ownership, even if several distortions and imperfections continued to exist. The turning point came in 2003 with politically motivated crackdown on the largest Russian private company, Yukos (its assets were subsequently taken over by the state-owned Rosneft). As result, the private sector share of GDP decreased from 70 to 65 percent between 2004 and 2005[1]. In the following years, this trend of state takeover continued, especially in the oil and gas industry. For example, in 2005 Gazprom acquired the private oil company Sibneft, which was transformed into Gazprom’s daughter company Gazprom Neft. The activities of foreign oil and gas firms were marginalised. The best-known case was the downsizing of the shares held by Shell, Mitsubishi and Mitsui in the Sakhalin-2 project in favour of Gazprom (Sprenger, 2010). Figure 3 - Russia - Freedom House Nations in Transit selected scores, 1999-2015 Source - Bruegel based on http -// and http -// Note - Each indicator is ranked 1 to 7, with 1 meaning freedom and democracy and 7 meaning consolidated authoritarian regime. The Democracy Score summarises sectoral scores. While the Yukos takeover did not stop investment and growth immediately, it initiated Russia's gradual departure from market-oriented reforms towards the building of a sort of hybrid system that is heavily controlled and dominated by the state bureaucracy and the ruling elite.
    Date: 2015–10
  2. By: Rod Tyers (Business School, University of Western Australia)
    Abstract: Central to the global impacts of China’s emergence has been its structural imbalance (its excess product supply and excess saving), but this has diminished considerably in the transition years since 2010. These imbalances are now reversed as its consumption expands faster than its GDP and so the global implications are qualitatively different. Moreover, higher income, slower growth, and therefore increasing similarity with the advanced economies, implies that consumer and business confidence are now more central to performance, rendering recession possible, and more likely as the growth slowdown raises the intensity of the domestic spotlight on political performance. The international effects of the transition and a possible recession are here quantified using a global macro model with national portfolio rebalancing. The transition to consumption-led growth is shown to foster employment abroad, particularly in the US, while a major Chinese recession is shown to be damaging to the advanced economies and particularly to the US, the more so if China’s policy response is expansionary and includes floating the RMB.
    Date: 2015
  3. By: Ilya A. Dolmatov (National Research University Higher School of Economics); Vladimir V. Dvorkin (National Research University Higher School of Economics)
    Abstract: The activities of the water companies in Russia are regulated in order to overcome market failures caused by regional monopolization, information asymmetries and the need to find a balance between the interests of consumers and company objectives for its normal functioning and development. In the Russian Federation, the regulator uses the outdated and inefficient cost method, which deprives the company an incentive to reduce their own costs. However, Russian regulator is in active discussion about the transition to modern long-term management regulation practices in order to increase companies’ efficiency, which in the framework of the regulation defines the future of the company's profits. Russian regulator should take more active steps to encourage regulated companies to increase efficiency and productivity. Solution is to move to using benchmarking, which allows to identify sources of companies’ inefficiency to assess the validity of the established tariffs. This study presents the first attempt to implement benchmarking methods used by the world's leading regulators to determine the cost efficiency of companies and improve their potential. The authors tested a parametric (COLS) and non-parametric (DEA) methods to assess the performance of companies with different technical and economic characteristics more accurately. The study makes a number of recommendations for the specification of the model, assessing its sensitivity to the changes in samples. The authors concluded that the model based on COLS is of high quality and resistance to changing of sample while assessing the technical efficiency. However, a similar statement for DEA models is unfair, since the inclusion in the analysis of either too large or too small companies does not lead to plausible results. On the other hand, DEA allowed to assess not only the technical efficiency of companies but also the allocative one. In general, the authors have shown that the potential for increasing the efficiency of Russian water supply companies is large enough, and the regulator is necessary to accelerate the transition to incentive regulation in order to increase efficiency in the sector.
    Keywords: Benchmarking; Efficiency; Incentive regulation, Water Utilities, DEA, COLS
    JEL: L95 D42 C60
    Date: 2015
  4. By: Alexander Chepurenko (National Research University Higher School of Economics); Olga Obraztsova (Russian State Social University); Vladimir Elakhovsky (National Research University Higher School of Economics)
    Abstract: The paper deals with the difference in the share of opportunity-based early entrepreneurs among regions in Russia, which is an important indicator of the ‘quality’ of the entrepreneurial activity. We invent an index called the share of opportunity-based early entrepreneurs (SOBE) which is defined as the number of nascent entrepreneurs and new business owners who are driven by the search for new opportunities and towards the realization of their own values when starting-up and developing their businesses. It is shown that the differences in SOBE levels among Russian regions are statistically significant; cross-regional differences in the SOBE level reflect a certain set of regional social and economic factors right away or with an one-year or two-year lag; they may depend on the tempo of changes in a certain set of factors related to social and economic development in given regions. Among the confirmed hypotheses are the following: a successive growth of private investment in the regional economy as well as a stable increase of real wages of employed population are factors that decrease a region’s SOBE level; moreover, the higher the population’s access to PC and Internet at home, the higher is the related region’s SOBE level. The empirical part is based on the survey designed by the Higher School of Economics which was conducted in 2011 in 79 regions of Russia with a sample of 56 900 respondents. The survey is representative for the structure of the adult population in each of the surveyed regions
    Keywords: entrepreneurial activity, entrepreneurial motivation, regional economy, entrepreneurship in Russia
    JEL: L26 R11
    Date: 2015
  5. By: Yanrui Wu (Business School, University of Western Australia)
    Abstract: The lack of capital stock statistics for empirical research of the Chinese economy has for a long time been one of the major impediments in the profession. Professor Gregory Chow is one of the pioneers who attempted to deal with this matter. His seminal paper on China’s capital formation and economic growth was published in 1993 (Chow 1993). Since then many authors have estimated their own capital stock data series. However, most authors have focused on investigations at the national level and their findings are not without controversies. In particular, few studies have provided estimates of capital stock for China’s regional economies. This paper adds to the existing literature in several ways. First, it presents a critical review of the methods and findings in the existing literature. Second, it proposes an alternative approach to estimate China’s capital stock series by region as well as across three economic sectors (agriculture, industry and services). Finally, preliminary analyses of the derived capital stock statistics are conducted to examine growth, disparity and convergence in China’s regional economies.
    Date: 2015
  6. By: Shawn Chen (Business School, University of Western Australia)
    Abstract: Do corrupt firms create negative externality and hurt less corrupt ones? I answer this question by exploring cross-industry distribution of taxation, credit, and corruption over local political cycles in China. It is known that capital-intensive firms are more likely to be corrupt. The paper argues that preferential treatment in taxation or credit allocation towards corrupt firms must result in detrimental treatment against others when governments face resource constraints, and that corruption is generally conducted through political network that expands and shrinks over political cycles. Using the variation in turnover of secretaries of the Chinese Communist Party in 275 prefectures between 2000 and 2007, I find that, as the tenure of the secretaries increases, enforcement of both VAT and corporate income tax as well as access to credit all change in favour of capital-intensive industries but to the detriment of labour-intensive counterparts. I then use the firm-level Entertainment and Travel Cost (ETC) as a proxy of corruption and find that the variation of cross-industry distribution of ETC over secretaries' tenure is in line with the variation in taxation and credit allocation. The finding suggests that corruption may not reduce overall distortions in the economy but only shifts distortions across economic agents.
    Date: 2015
  7. By: Yang Shen
    Abstract: How to get affordable housing is the primary concern of many peasant migrants working in Shanghai. Although the central government has issued a series of policies regarding migrant housing in recent years, they are merely rhetoric and incapable to meet migrant workers' needs. This article aims to interrogate why the public housing policy cannot solve migrant housing problems and what neoliberalism means in housing provision. It is argued that the neoliberal approaches embedded in public rental housing implementation show that the government prioritises public rental housing for the middle class, which is considered important to the economy, and ignores the others. The prioritisation gives rise to the failure of providing affordable housing to peasant migrant workers. Living in safe and affordable housing is vital to their well-being and the sustainable economic growth in urban China. Policy advice is addressed in the conclusion.
    Keywords: public housing policies;peasant migrant workers;participant observation;neoliberalism;China
    Date: 2015–01–28
  8. By: Yingnan Liu; Ke Wang
    Abstract: The process of energy conservation and emission reduction in China requires the specific and accurate evaluation of the energy efficiency of the industry sector because this sector accounts for 70 percent of China¡¯s total energy consumption. Previous studies have used a ¡°black box¡± data envelopment analysis (DEA) model to obtain the energy efficiency without considering the inner structure of the industry sector. However, differences in the properties of energy utilization (final consumption or intermediate conversion) in different industry departments may lead to bias in energy efficiency measures under such ¡°black box¡± evaluation structures. Using the network DEA model and efficiency decomposition technique, this study proposes an adjusted energy efficiency evaluation model that can characterize the inner structure and associated energy utilization properties of the industry sector so as to avoid evaluation bias. By separating the energy-producing department and energy-consuming department, this adjusted evaluation model was then applied to evaluate the energy efficiency of China¡¯s provincial industry sector.
    Keywords: Energy consumption, Energy conversion, Structure decomposition
    JEL: Q58 Q40
    Date: 2015–01–02
  9. By: Alena I. Nefedova (National Research University Higher School of Economics)
    Abstract: This article presents an overview of different approaches to the definition of social entrepreneurship and contains the findings of a survey on the process of its development in Russia. Whereas this type of business is institutionalized in the economy of the U.S. and certain European nations, where special laws are developed for it and significant tax benefits are afforded in certain cases, it is in its initial state in Russian society. Its development in the Russian economy will largely depend on the actions taken by the key players in the emerging organizational field and not solely on socio-economic and historical conditions. A series of expert interviews at the first study stage resulted in identification of the key players, in particular, ‘Our Future’ – the foundation for regional social programs that served as the monopolistic source of financial support for social entrepreneurship during the study. To find out what social entrepreneurship model is taking shape in Russia, 186 applications completed by different organizations seeking social entrepreneurship financing support were reviewed. The applications were made during a three year period of the Foundation’s business. The review suggested that the Foundation mostly backs up those social programs capable of becoming independent from external financial sources
    Keywords: social entrepreneurship, organizational field, non-profit entities, new institutionalism
    JEL: L26
    Date: 2015
  10. By: WATANABE Mariko
    Abstract: This paper attempts to identify competition neutrality of state-owned enterprises (SOEs) in three consumer electronics industries in China. First, I draw a benefit-price indifference curve at the mode of consumer surplus for each year, and a benefit-price supply curve by manufacturers and ownership types based on the demand estimates for the color TV (CTV), mobile phone, and air conditioning industries in the 2000s. These exercises indicate heterogeneous situations of market neutrality of SOEs in the Chinese consumer electronics industries. The air conditioning market shows a clear positive relationship between benefit and price for all ownership types. At the same time, no clear correlation between ownership and strategies focusing on price or benefit is observed. On the other hand, SOEs and privately-owned enterprises (POEs) in CTV and mobile phone markets concentrate their products based on lower prices and lower benefit area, namely, cost advantage strategies. Ownership type and strategies appear to have a correlation. Furthermore, prices become independent to the level of benefit for local firms. These tendencies are clearly observed in the price-benefit supply curve of the two markets. A simple model of differentiated competition with one agent committing predatory pricing in expropriating soft financial constraint shows that the price set by the rivals of a soft constrained firm is independent to the benefit.
    Date: 2015–11
  11. By: Nikolova, Milena (IZA); Roman, Monica (Bucharest University of Economic Studies); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The fall of socialism in Central and Eastern Europe restored ordinary citizens' rights and freedoms and ended their political and social isolation. While the freedom of movement was quickly embraced, civil society revival lagged due to the eroded civic norms, declining social capital, and worsening economic conditions. In this paper, we examine the link between the out-migration of relatives and friends and the pro-social behavior of the left behinds in two post-socialist countries – Bulgaria and Romania – the EU's poorest, unhappiest, and among the most corrupt members. We show that having close contacts abroad is consistently positively associated with civic engagement and that the cultural transmission of norms from abroad could be driving the results. Specifically, the strength of the civic engagement culture of the family or friend's destination matters for the pro-social behavior of respondents in the home countries. Our results imply that the emigration of family and friends may have positive but previously undocumented consequences for the individuals and communities left behind in Bulgaria and Romania. Given civil society's role for development in post-socialist Europe and the socio-economic and institutional challenges that Bulgaria and Romania face compared with the rest of the EU, understanding the channels fostering civil society and well-being are important for national and EU policymakers.
    Keywords: international migration, left behind, civic engagement, social remittances, post-socialism
    JEL: I30 I31 F22 P30 Z10
    Date: 2015–11
  12. By: Biliang Hu; Chunlai Chen
    Abstract: China launched a new urbanisation programme for the period of 2014–2020. The new urbanisation programme will produce positive impacts on China's social and economic development through focusing on integrated urban and rural development, creating city clusters and promoting sustainable urban development. However, the new urbanisation programme may also bring some new social and economic problems, like widening the gap in urban development between different regions in China, leading to the formation of a new urban poor class, based on the current design and implementation. To minimise the negative effect, we suggest to better deal with the relationships between market and government and between economic and social development in the process of urbanisation. We argue that the key is to allow the market to determine the flows of capital, land and people in the process of urbanisation so as to achieve a sustainable development of China's urbanisation.
    Keywords: urbanisation;globalisation;rural–urban migration;sustainable development;China
    Date: 2015–01–05
  13. By: Liping Gao; Hyeongwoo Kim
    Abstract: Chow (1985, 2010, 2011) reports indirect evidence in favor of the permanent income hypothesis using time series observations in China. We revisit this issue by evaluating direct measures of the predictability of consumption growth in China during the post-economic reform regime (1978-2009) as well as the postwar US data for comparison. Our in-sample analysis provides strong evidence against the PIH for both countries. Out-of-sample forecast exercises show that consumption changes are highly predictable, which sharply contrasts the implication of Chow (1985, 2010, 2011).
    Keywords: Permanent Income Hypothesis; Consumption; Diebold-Mariano-West Statistic
    JEL: E21 E27
    Date: 2015–12
  14. By: Quang Truong (Maastricht School of Management)
    Abstract: After two decades of GPD high growth in the 1991-2010, Vietnam is currently entering a declining phase. The on-going developments would virtually nullify all achievements the country has previously achieved and deny the CPV’s promise to transform Vietnam into an industrialized country in 2020. The ‘ideology vs reality’ dilemma facing Vietnam today is generally held as the main block holding back the momentum Doi moi campaign initially generated growth, but has prevented the country jump starting and accelerating economic growth toward a more qualitative and sustainable development phase. This is because of the CPV continued insistence on building ‘a market economy with socialist orientation’. The ‘socialist’ model of development, typically of a state capitalist or network-based economy, which favors SOEs as the ‘pillars’ of the economy with all the privileges and protection attached to it, has drained the country’s resources and prevented the private sector from joining the market and the development process on an equal footing. Instead, it has created and nurtured a breeding ground for corruption, cronyism, favoritism and nepotism that leaves little room for private innovation, efficient production and effective management so that Vietnamese products can compete and grow sustainably in international markets. What Vietnam really needs to come out of the dire situation of today and to become more sustainable is a development-oriented market economy and a public administration for development, if the country was to keep pace with development in the region, let alone in the world. Furthermore, a check-and-balance mechanism is needed to allow the participation of a more active civil society to counter the excessive abuse of power brought about by the corrupted network that has caused severe threats the economic sustainability of the country.
    Keywords: Vietnam, development model, network-based economy, cronyism, corruption, civil society
    Date: 2015–12
  15. By: Zhengbin Dong; Wenjie Wu
    Abstract: Air networks are normal examples of transportation systems among ubiquitous big data networks in the dynamic nature. This is particularly the case in developing countries with rapid airport network expansions. This paper explores the structure and evolution of the trunk airport network of China (ANC) in major years during 1980s-2000s. We generalise the complex network approach developed in existing studies and further test for statistical properties of weighted network characteristics by using pair-wise traffic flows. The spatiotemporal decomposition of network metric plots and the visualization maps leads to a rich harvest of stylized ANC structures: (i) national hub-and-spoke patterns surrounding mega-cities; (ii) regional broker patterns surrounding Kunming and Urumqi, and (iii) local heterogeneous disparity patterns in isolated geographical cities, such as Lhasa, Lijiang, Huangshan, etc. These findings have important implications towards understanding the geo-political and economic forces at stake in shaping China's urban systems.
    Keywords: airport system; complex network; regional development; China
    JEL: O18 P25 R12
    Date: 2015–03
  16. By: Sandra Poncet; Meina Xu
    Abstract: We examine the quality-screening role played by intermediaries in international trade, exploiting export data at the product level for Chinese exporters. We uncover substantial heterogeneity among intermediaries, and distinguish two kinds: generalized and specialized intermediaries. We find strong evidence of a quality-verification role for specialized intermediaries: they are more prevalent in products with greater quality dispersion among local exporters and export goods of higher quality than do generalized intermediaries. Our results suggest that specialized intermediaries have the capacity to reduce the incidence of quality problems.
    Keywords: Intermediaries;International Trade;Quality screening;Product differentiation;China
    JEL: F13 F14 O25 R11
    Date: 2015–10
  17. By: NGUYEN Anh Tuan (LNT & Partners, Viet Nam)
    Abstract: Despite Vietnamese competition authorities’ attempts to control state monopolies in domestic markets during the last 10 year of establishment, this appears to be the key challenge of Vietnamese competition regime. In the process of transitioning from a centrally planned economy to a market economy, the State-owned enterprises (SOEs) sector is perceived as a means to ensure the socialist orientation of the economy as well as preserve national economic goals. For these purposes, SOEs have been offered several advantages ranging from tangible incentives to latent conveniences over the privately owned enterprises. In this context, competition laws and policies should be able to neutralise the advantages of SOEs to level the playing field or else it would be used a shield to protect SOEs from their private rivals. This paper looks into the issues with the SOE sector in the context of Viet Nam’s political economy and identifies the factors inhibiting the country’s effort to control State monopolies in the last 10 years of competition law enforcement. It provides commentaries on the implementation of competition laws and policies in Viet Nam from the perspective of economic integration, particularly the on-going negotiation Trans-Pacific Partnership.
    Keywords: antitrust, competition law, competition policy, competitive neutrality, developing countries, public enterprises, political economy, industrial policy, SOEs, State monopoly, TPP, Viet Nam.
    JEL: K21 L12 L32 L44 L52 L93 L96
    Date: 2015–11
  18. By: Ningzhen Ruan; Thao Nguyen; Kellynn Khor
    Abstract: Vaccination is recognised as one of the most effective ways to combat seasonal influenza—a disease that exerts significant social and economic costs, yet is often neglected by policy-makers and the vaccine target population in developing countries. The situation in China is no exception with seasonal influenza vaccine remaining as a class II vaccine and being financed by citizens' out-of-pocket payments. The different cultural backgrounds, climate patterns and living standards across China further complicate the policymaking process of developing national level policy guidelines. Nevertheless, China's recent health care reform that focuses on preventive care, elderly care and equitable health care access has motivated policy-makers at the local level to formulate policies facilitating seasonal influenza vaccination provision. This article seeks to understand this process at the city level under China's current economic transition background, and aims to identify policy experiences that may be applicable for the larger Asia-Pacific region.
    Keywords: China;public health policy;health care reform;seasonal influenza;vaccination
    Date: 2015–05–28
  19. By: Shawn Chen (Business School, University of Western Australia)
    Abstract: The paper studies dispersion in the effective VAT rate, a directly measurable dis-tortion, across manufacturing firms in China and assesses its impact on aggregate production efficiency through mis-allocation from 2000 to 2007. Using a structural model based on Hsieh and Klenow (2009), I find that a revenue-neutral tax reform which eliminates the dispersion in VAT rates alone produces a gain in aggregate TFP in the order of 7.9% of GDP on average in the period from 2000 to 2007.
    Date: 2015
  20. By: Xiaodong Zhu (University of Toronto); Trevor Tombe (University of Calgary)
    Abstract: International trade is closely related to within-country trade and migration. To study these interrelationships, we develop a novel general equilibrium model of internal and external trade with migration, featuring both trade and migration frictions. We estimate these frictions using unique data on China's trade and migration; the costs are high, but declined after 2000. We quantify the consequences of lower trade costs (international and internal) and migration costs on welfare, internal migration, and regional income differences. External trade liberalization increases China's trade, but only modestly increases welfare while increasing regional income differences. Internal trade liberalization has large welfare gains and reduces regional income differences. Migration cost reductions dramatically increase migration and lower regional income differences but -- surprisingly -- only modestly increase trade and aggregate welfare, mainly because the migration costs remain very high. In a counterfactual exercise in which we lower the migration costs in China to the levels similar to those in the US, we find very large increases in both trade and aggregate welfare. Our results suggest internal reforms dominate external trade liberalization as a source of aggregate welfare gains and improvements in regional income inequality.
    Date: 2015
  21. By: ZhongXiang Zhang (College of Management and Economics, Tianjin University)
    Abstract: China has realized that for its own sake and from the international community’s perspective, it cannot afford to continue along the conventional path of encouraging economic growth at the expense of the environment. Accordingly, the country has placed ecological goals at the same level of priority as policies on economic, political, cultural and social development. Specifically, to meet the grand goal involves not only capping China’s nationwide coal consumption to let it peak before 2020 and carbon emissions peak around 2030, but also putting in place a variety of flagship programs and initiatives, prices and policies. This paper argues that the 2030 carbon emissions peak goal is ambitious but achievable and concludes by arguing why China’s anti-pollution outcomes this time might be different from the previous ones.
    Keywords: low-carbon economy; carbon emissions peaks; coal consumption; carbon pricing; energy prices; resource tax reform; renewable energy; China
    JEL: H23 P28 Q42 Q43 Q48 Q53 Q54 Q58
    Date: 2015–11
  22. By: Holz, Carsten A.
    Abstract: For the past nearly forty years, China has experienced average annual real GDP growth of close to ten percent, much of it driven by investment and capital accumulation. By 2014, gross capital formation had reached 46 percent of aggregate expenditures. This paper documents the role of investment in driving economic growth in China, questions how much longer China can sustain a relatively high investment rate, and examines the arguments that have been offered for an impending drastic reduction in investment. The quality of the investment statistics and of the gross fixed capital formation statistics (the latter as part of the national income and product accounts) is assessed; these data are potentially problematic with no easy way for researchers to improve the data. The paper finally makes the point that investment in China remains broad-based across all economic sectors, with little specialization in sight; the size of the Chinese economy would appear to allow comprehensive development across all economic sectors. At the same time, the relative size of foreign investment in China has become negligible and the China growth story thus has become a domestic one.
    Keywords: investment rate, capital-output ratio, ICOR, national investment strategy, economic growth
    JEL: E1 E22 E6 O11 O53
    Date: 2015–11–26
  23. By: Yin-Wong Cheung (City University of Hong Kong); Frank Westermann (Universitaet Osnabrueck); Sven Steinkamp (Universitaet Osnabrueck)
    Abstract: Abstract: We study China’s illicit capital flow and document a change in its pattern. Specifically, we observe that China’s capital flight, especially the one measured by trade misinvoicing, exhibits a weakened response in the post-2007 period to the covered interest disparity, which is a theoretical determinant of capital flight. Further analyses indicate that the post-2007 behavior is influenced by quantitative easing and other factors including exchange rate variability, capital control policy and trade frictions. Our study confirms that China’s capital flight pattern and its determinants are affected by the crisis event. Further, both the canonical and additional explanatory variables have different effects on different measures of capital flight. These results highlight the challenges of managing China’s capital flight, which requires information on the period and the type of capital flight that the policy authorities would like to target.
    Keywords: World Bank Residual Method; Trade Misinvoicing; Quantitative Easing; Capital Controls; Covered Interest Disparity
    JEL: F3 F32 G15
    Date: 2015–11–25
  24. By: Kelley Lee; Rebecca Zappelli; Elliot M. Goldner; Nguyen Cong Vu; Kitty K. Corbett; Jill Murphy
    Abstract: Among low- and middle-income countries, there is evidence that populations experiencing rapid political and economic transition have particularly high burdens of disease and disability from mental health conditions. This paper undertakes a political economy analysis of mental health in Vietnam to enhance knowledge translation, notably how both explicit and tacit knowledge can be used to promote evidence-based policy making. It argues that Vietnam's experience illustrates the need to better understand, not only how transition transforms societies, but how it impacts on the mental health needs and care of populations. The political economy of transition in Vietnam has so far given highest priority to economic growth through integration with the world economy and public sector reform. There is a need to recognise that transition in Vietnam poses both a potential threat to the care of people with mental health needs, and an opportunity to develop mental health services appropriate to local contexts.
    Keywords: Vietnam;mental health;globalisation;political economy;knowledge translation
    Date: 2015–03–28
  25. By: Dmitrii Timofeev (National Research University Higher School)
    Abstract: The Russian recession of 2014-2015 began with a run on the ruble and a rise in the rate of inflation, the precise opposite of a Western-type deflationary slump combined with money hoarding. Does this mean that Russians need different micro-model to describe savings and consumption behavior? This study shows that the workhorse log-linearized rational SDF formula with the CRRA utility function still provides a good explanation for the behavior of Russian consumers. It explains dollarization, domestic equity market avoidance, preference for real estate, and, most importantly, a wary attitude towards the ruble. Expectations derived from past and interactive preferences lock the Russian economy in a state of steadfast distrust in the ruble as prone to inflation. At present, one should not expect a Keynesian-type deflationary cycle in Russia. The next recession is likely to be inflationary, requiring monetary tightening. This reasoning is generalized for other emerging countries. A free-floating currency and inflation targeting do not ensure an easy path for countries with recent experiences of high inflation
    Keywords: savings, monetary policy, business cycle, recession, Russia, Euler equation, CCAPM, stochastic discount factor
    JEL: G11 G18 P24 E31 D91
    Date: 2015
  26. By: Barbara B³aszczyk; Wiktor Patena
    Abstract: The 2008-2011 Polish privatization plan assumed that 740 enterprises would be privatized. The outcome of the plan implementation was 582 privatized companies, which is 78.64% of the initial plan. The Polish government assumed privatization’ revenue at the level of 54 billion PLN. Global financial situation and some privatization problems allowed reaching 44.02 billion PLN level, which was 81% of the planned value. The authors drew a broad picture of the privatization process and investigated the performance of 59 privatized companies, eventually focusing on a deeper analysis of three companies., and the United Kingdom, could collect up to 50% more revenue if they applied a unified tax on all consumption.
    Keywords: Private sector development, innovation and knowledge-based economy, Eastern Europe, Caucasus and Central Asia, privatization
    JEL: G38 H27 L3
    Date: 2015
  27. By: Sergey P. Kazakov (National Research University Higher School of Economics); Marina D. Predvoditeleva (National Research University Higher School of Economics)
    Abstract: Over the last decades, the global hospitality and tourism (or H&T) industry has undergone dramatic changes. Among the factors stimulating the growth of the H&T industry, the spread of information and communication technologies (ICTs) and social media should be emphasized. The same trends characterize the Russian H&T industry as well. However, despite the significant role of social media in the Russian H&T industry, there is still a lack of understanding of Russian H&T customers’ behavior. The current study aims to fill this gap and demonstrates how Russian travelers use social media to make hotel choice decisions and share their experiences on social media after their travel is completed. In order to deliver a more thorough revealing of Russian travel consumers’ peculiarities and to discover if there is Russian uniqueness, the online behavior of American and Russian travelers is compared in this paper.
    Keywords: hospitality industry, social media, ICT, customers’ behavior, Russia.
    JEL: M16
    Date: 2015
  28. By: Paul Hubbard (Crawford School, ANU)
    Abstract: If China’s economy is an example of ‘state-capitalism’, then its large, state-owned enterprises (SOEs) could be expected to monopolise key sectors. But previous estimates of industrial concentration using the Herfindahl-Hirschman Index (HHI) have suggested that the level of industrial concentration – and therefore the potential for the abuse of monopoly power – is very low. These studies have significantly underestimated HHI, since they do not consolidate subsidiary enterprises in Chinese survey data into larger business groups, or according to ultimate ownership. After making these adjustments, a measure of potential HHI shows that large state monopolies remain in oil and gas, electricity, tobacco and, potentially, automobiles. In particular, SOEs supervised by the central government are heavily invested in potentially concentrated industries. But aggregate profits of the state sector are driven more by the portfolio distribution of assets between resources, manufacturing and utilities, rather than industrial concentration within sectors.
    Keywords: Chinese economy, industrial concentration, state-owned enterprises
    JEL: L1 L3 L4 L6
    Date: 2015–11
  29. By: Marinov, Eduard
    Abstract: The policy for cooperation with developing countries is new to Bulgaria as in the course of the transition over the past two decades assistance to these countries could not be a foreign policy priority for obvious reasons. On the other hand, relations between Bulgaria and many of these countries in the decades before left a lasting mark in many of them, contributing to their economic development. The implementation of Bulgaria's transition from the status of a recipient of international aid into a donor makes it necessary a special attention to be paid to the many issues in this regard because of the specific commitments arising from the country’s new status especially regarding its participation in the EU development policy. The report presents briefly the main features of international development cooperation and then discusses the development policy of the EU. The main focus is on Bulgaria's participation in it as liabilities, results achieved and opportunities.
    Keywords: cooperation for development, EU development policy, Development aid, Official development aid
    JEL: O10 O19 O20
    Date: 2015–11
  30. By: Paul J. Burke; Hua Liao
    Abstract: China's dependence on coal is a major contributor to local and global environmental problems. In this paper we estimate the price elasticity of demand for coal in China using a panel of province-level data for 1998-2012. We find that provincial coal demand has become increasingly price elastic. As of 2012 we estimate that this elasticity was in the range -0.3 to -0.7 in point estimate terms when responses over two years are considered. The results imply that China's coal market is becoming more suited to price-based approaches to reducing emissions. The elimination of coal consumption subsidies could reduce national coal use and related emissions by around 2%.
    Keywords: coal, price elasticity, demand, China, provincial
    JEL: Q58 Q40
    Date: 2015–10–01

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