nep-tra New Economics Papers
on Transition Economics
Issue of 2016‒08‒28
fifteen papers chosen by
J. David Brown
United States Census Bureau

  1. State-Owned Enterprise in China: Reform, Performance, and Prospects By Gary Jefferson
  2. Understanding the Experiences of Relocatees During Forced Relocation in Chinese Urban Restructuring By Li, Xin; van Ham, Maarten; Kleinhans, Reinout
  3. Career Breaks after Childbirth: The Impact of Family Leave Reforms in the Czech Republic By Bicakova, Alena; Kaliskova, Klara
  4. Difficulties in international travelling for residents of areas with undefined political status. Case study: Crimea By Constantin, Ștefan
  5. Did FDI Really Cause Chinese Economic Growth? A Meta-Analysis By Philip Gunby; Yinghua Jin; W. Robert Reed
  6. China in the Middle-Income Trap? By Glawe, Linda; Wagner, Helmut
  7. What drives foreign direct investment into post-communist economies? By Salahodjaev, Raufhon; Yuldashev, Oybek; Omanbayev, Bekhzod
  8. Public Debt and Private Firm Funding. Evidence from Chinese Cities. By Yi Huang; Marco Pagano; Ugo Panizza
  9. Informal Employment in China: Trends, Patterns and Determinants of Entry By Liang, Zhe; Appleton, Simon; Song, Lina
  10. The emergence of patronage state in Central Europe. The case of FDI-related policies in Hungary By Miklos Szanyi
  11. The persistence of air pollution in four mega-cities of China By Luis Alberiko Gil-Alaña; Carlos Pestana Barros; Zhongfei Chen
  12. Insurance and reinsurance risk management in Albania By Heralda, Jahollari
  13. Evaluating Regional Emissions Trading Pilot Schemes in China’s Two Provinces and Five Cities By Wang, Huizhi
  14. The Impending Long March of the Chinese Economy By Harashima, Taiji
  15. Neoliberalization and the Changing Roles of Stakeholders in State-Led Shantytown Redevelopment in Shenyang City, China By Li, Xin; Kleinhans, Reinout; van Ham, Maarten

  1. By: Gary Jefferson (Brandeis University)
    Abstract: State-owned enterprise reform in China has travelled a long and uneven road. Arguably, its key driver has been the introduction of competition across China’s transforming economy, both the surge of new forms of domestic ownership and the ever-expanding access to technology and business methods from abroad. By highlighting the public good character of China’s SOEs, this paper underscores the importance of a clear Coasian assignment of property rights and reduced transaction costs. The paper then reviews the three stages of the reform of China’s state sector over the past 30 years, drawing on the literature that describes the intentions, achievements, and shortcomings of China’s reform program. Finally, the paper reviews the 2015 reform guidelines and the recent literature assessing these guidelines, including the intent of the guidelines to clearly distinguish between the public service and commercial mission of individual SOEs, so that the latter SOEs can be more rigorously accountable to corporate fiduciary responsibilities.
    Date: 2016–08
  2. By: Li, Xin (Delft University of Technology); van Ham, Maarten (Delft University of Technology); Kleinhans, Reinout (Delft University of Technology)
    Abstract: Despite the massive forced relocation of residents during urban restructuring in China, there are no systematic studies on how residents undergo the process. Most studies concerning urban restructuring in China directly equate forced relocation with displacement, which has a negative connotation. This negative view overlooks the multifaceted effects of forced relocation on relocatees. This paper aims to develop a critical understanding of the forced relocation of residents during urban restructuring in China. It takes forced relocation to be a process with changing contents over time, and as a specific type of residential mobility that occurs in the context of urban restructuring. This paper presents a conceptual model that includes different stages and contexts to analyse the experiences of relocatees during forced relocation. It divides the process of forced relocation into three stages – the pre-demolition stage, the transitional stage and the post-relocation stage – and investigates the social, economic, physical, psychological and behavioural dimensions of the experiences of relocatees at the macro and micro levels. We argue that forced relocation in urban China is not necessarily equivalent to displacement. Studying the experiences of relocatees from the household and residential mobility perspectives reveals the dynamic, variable and complex nature of forced relocation.
    Keywords: experience of relocatees, forced relocation, urban restructuring, displacement, residential mobility, China
    JEL: O18 R23
    Date: 2016–08
  3. By: Bicakova, Alena (CERGE-EI); Kaliskova, Klara (CERGE-EI)
    Abstract: The Czech Republic is a country with a strong attachment of women to the labor market, but with one of the longest paid family leaves, which is often followed by a spell of unemployment. Using a difference-in-differences methodology, we study the impact of two reforms of the duration of the parental allowance on the labor market status of mothers 2 to 7 years after childbirth. While the 1995 reform prolonged the allowance from 3 to 4 years, the 2008 reform allowed some parents to shorten the duration of the allowance to only 2 or 3 years with an equivalent total monetary amount. The impact of the reforms on the length of women's career breaks following childbirth is substantial.
    Keywords: family leave, female labor supply, unemployment, policy evaluation
    JEL: J13 J18 J22
    Date: 2016–08
  4. By: Constantin, Ștefan
    Abstract: In March 2014 a change took place on Europe's political map. The Crimean Peninsula became part of Russia, switching sovereignty after more than 20 years during which it was part of Ukraine. This took place following a Russian military intervention and a referendum. A majority of the world's countries however, do not recognize the Russian control of Crimea and still consider it a part of Ukraine, rendering the territory an area with undefined political status. Shortly after the sovereignty change, the region and its population started experiencing all kinds of hardships. An often neglected type of hardship Crimeans are experiencing is the difficulty of obtaining visas. Following the referendum, many diplomatic missions in Russia have instituted a policy of not issuing visas to residents of Crimea who apply with Russian-issued documents. This article shall make a summary of EU and Schengen countries' positions regarding this issue, as these are the biggest groups of countries that requires both Russians and Ukrainians to obtain visas before travelling there. This research was made mostly directly, by requesting each country's diplomatic mission in Moscow to give an official position. The research had the purpose of verifying the information that certain countries do issue visas to Crimeans with Russian documents and also to give a more general and complex picture on the matter of visas for residents of Crimea. This theme is important as a policy of not issuing visas has significant repercussions on the region's economy and on the freedom of movement of its citizens.
    Keywords: Crimea, tourism, visas, restrictions, diplomatic missions
    JEL: F51 F59 L83
    Date: 2016–02
  5. By: Philip Gunby (University of Canterbury); Yinghua Jin; W. Robert Reed (University of Canterbury)
    Abstract: Foreign direct investment (FDI) has been linked to economic growth in a number of countries. Productivity spillovers at the firm level have been identified as a key element in the process by which FDI stimulates economic growth. Moreover, there is evidence of FDI-related productivity spillovers in China. Whether these spillovers have been of sufficient size to affect growth at the aggregate level, however, is an empirical question. We apply meta-analysis to the corresponding empirical literature to find an answer. Our main finding is that the effect of FDI on Chinese economic growth is much smaller than one would expect from a naïve aggregation of existing estimates. Publication bias and a profusion of estimates based on less preferred study and sample characteristics have served to inflate observed estimates. Once these effects are accounted for, the estimated effect of FDI on Chinese economic growth is reduced to statistical insignificance. This suggests that the cause(s) of the Chinese “economic miracle†likely lie elsewhere.
    Keywords: Meta-analysis, FDI, China, economic growth
    JEL: O11 O53 F21
    Date: 2016–07–26
  6. By: Glawe, Linda; Wagner, Helmut
    Abstract: Over the last decade, a growing body of literature dealing with the phenomenon of the “middle-income trap” (MIT) has emerged. The term MIT usually refers to countries that have experienced rapid growth and thus reached the status of a middle-income country (MIC) in a considerably short amount of time, but have not been able to further catch up to the group of high-income economies. Especially, since the beginning growth slowdown of the Chinese economy in 2011, there has been rising concern that China is or will also be confronted with such a trap. This paper analyzes the Chinese MIT situation taking into account both the (absolute and relative) empirical MIT definitions and MIT triggering factors identified in the literature. We not only survey the recent literature, but also make our own MIT forecasts and analyze under which conditions China could be caught in an MIT.
    Keywords: middle-income trap; China; economic growth; economic development; human capital; export structure; total factor productivity
    JEL: O10 O40 O47 O53
    Date: 2016–08–26
  7. By: Salahodjaev, Raufhon; Yuldashev, Oybek; Omanbayev, Bekhzod
    Abstract: This study explores the factors that attract foreign direct investment (FDI) in Post-Communist countries. To do so, for the first time in the extant literature on ex-communist countries, we use panel data over the period 1990-2015. The key findings are as follows: (a) the rate of return and enrollment in education and cost of fuel are negatively associated with FDI inflows to Post-Communist countries; and (b) there is a positive link between FDI inflows to the region and stability of political regime and rule of law; (c) our estimates further confirm the market seeking hypothesis for the nature of FDI to the Post-Communist countries.
    Keywords: FDI; determinants; Post-Communist; rule of law; democracy; market seeking.
    JEL: F2
    Date: 2016–08–22
  8. By: Yi Huang (The Graduate Institute, Geneva); Marco Pagano (University of Naples Federico II, CSEF, EIEF, CEPR, and ECGI); Ugo Panizza (The Graduate Institute, Geneva, and CEPR)
    Abstract: In China local public debt issuance between 2006 and 2013 crowded out investment by private manufacturing firms by tightening their funding constraints, while it did not affect state-owned and foreign fi rms. Using novel data for local public debt issuance, we establish this result in three ways. First, local public debt is inversely correlated with the city-level investment ratio of domestic private manufacturing firms. Instrumental variable regressions indicate that this link is causal. Second, local public debt has a larger negative effect on investment by private firms in industries more dependent on external funding. Finally, in cities with high government debt, firm-level investment is more sensitive to internal funding, also when this sensitivity is estimated jointly with the firm's likelihood of being credit-constrained. Altogether, these results suggest that, by curtailing private investment, the massive public debt issuance associated with the post-2008 fiscal stimulus sapped long-term growth prospects in China.
    Date: 2016
  9. By: Liang, Zhe (University of Nottingham); Appleton, Simon (University of Nottingham); Song, Lina (University of Nottingham)
    Abstract: We empirically deconstruct informal employment in China into private business owners and casual workers without job contracts. Survey data from 2007 and 2013 document a rise in informal employment to the point where it exceeds formal employment, potentially an unintended consequence of the 2008 New Labour Contract Law. Compared with formal employees and business owners, casual workers report the lowest monetary and subjective wellbeing although business owners work longer hours with less social protection. Descriptive statistics and multivariate modelling reveal formal employees tend to have more favoured characteristics, often being educated, male, healthy and able bodied. Casual workers are more likely to have the characteristics of vulnerable groups, so the growth of casual employment is particularly concerning. There are indications that running small business is not always a sign of vulnerability and it may provide job flexibility for those with dependents to care for.
    Keywords: informal employment, determinants, human capital, China
    JEL: D03 J46 O15 P23 P36
    Date: 2016–08
  10. By: Miklos Szanyi (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: Despite of profound development success of Central European economies of the past 25 years Hungarian and Polish governments have started openly query the applicability of various elements of the “competition state”. They took measures to curtail the activity of multinational firms that have played important role in the successful modernization process of the region. The paper makes an attempt to explain the rationale of this policy using political economy approach. It defines economic policy changes as shifts in the power relations of national elites. It is highlighted that the selective advantage and punishment measures taken are labelled economic patriotism. Yet, economic patriotism is interpreted in this paper as the application of covert discrimination policies applied for the benefit of spatially defined interest groups. The discussed policies are targeted rather at closely defined companies. They are therefore not regarded as tools of economic patriotism but rather of state clientism, or a departure from competition state towards patronage state.
    Keywords: multinational companies, economic patriotism, elites, patronage state
    JEL: D72 H82 P16 P31
    Date: 2016–08
  11. By: Luis Alberiko Gil-Alaña; Carlos Pestana Barros; Zhongfei Chen
    Abstract: This paper analyses long range fractional dependence of China pollution in four major cities, namely Beijing, Shangai, Guangzhou and Shenzhen from September 28 of 2013 to December 12 of 2015. Unit roots hypotheses are tested by using fractional integration methods using both uncorrelated and autocorrelated errors. The results reveal that the pollution is persistent, meaning that it will continue until strong anti-pollution measures are adopted. Policy implication is derived.
    Keywords: Chinese cities, pollution, unit roots, AR
    JEL: C22 O11
    Date: 2016–02
  12. By: Heralda, Jahollari
    Abstract: Risk management in insurance and reinsurance companies is a very important element, which enables the organization to meet its obligations to customers and to survive in the market place. In order to be managed properly, the risk must be first identified correctly. The damage must be assessed carefully and using efficient methods, for the evaluation to be more realistic. This paper is the result of the use of several methods. Besides the theoretical and narration aspects, the paper also relies on the comparative method, as it addresses the practices followed by the Member States as well as Albania, a country that has recently adopted a new law, aiming to align its legislation with the acquis communautaire. The study shows that the Albanian legislation provides the necessary guarantees to ensure that companies will manage risk in the best way possible and will create all the necessary structures for this purpose. In this regard, we can say that the alignment with the acquis communautaire has been successfully accomplished.
    Keywords: risk, risk management, insurance, reinsurance, analysis, law, alignment
    JEL: K20
    Date: 2016–02
  13. By: Wang, Huizhi
    Abstract: With the highest energy use and greenhouse gas emissions around the world, China has begun to adopt comprehensive approaches to control its CO2 emissions and fight climate change. China has committed to reduce its carbon intensity by 40% to 45% compared to 2005 levels by 2020. In 2011, China initiated the development of seven regional carbon trading scheme (ETS) pilots in two provinces (Guangdong and Hubei) and five cities (Beijing, Tianjin, Shanghai, Chongqing and Shenzhen) and has embarked on an ambitious pathway for establishing a national carbon market in 2017. This paper provides an overview and analysis of China’s carbon emission trading market. A background and design characters of China’s seven ETS pilots are introduced. Market performance and compliance are summarized. Linkage existed in China’s carbon emission trading market is identified.
    Keywords: China, emissions trading schemes, performance, China, emissions trading schemes, performance
    Date: 2016–01
  14. By: Harashima, Taiji
    Abstract: The Chinese economy is currently faced with the difficult problems of slowing economic growth and huge overcapacity. China is struggling to adapt to a “new normal.” Here, I examine the mechanism of why China is faced with these problems and some potential future paths of the Chinese economy. China does not have a socialist, socialist market, or market-oriented economy. Rather, it has a “state-driven economy” and that has deviated far from the saddle path to the steady state. The model of a state-driven economy constructed in this paper indicates that it is highly likely that China will proceed along a long-running transition path with low or no growth, but it is also very likely that China will excessively build up its military.
    Keywords: The Chinese economy; Transition; Economic growth; Overcapacity; Pareto inefficiency
    JEL: O40 O53 P20
    Date: 2016–08–26
  15. By: Li, Xin (Delft University of Technology); Kleinhans, Reinout (Delft University of Technology); van Ham, Maarten (Delft University of Technology)
    Abstract: Neoliberal politics in China have changed the roles of, and the interrelationships between, the state, the market and society in urban restructuring. Since 2008, the central state has initiated the Shantytown Redevelopment Projects (SRPs) to improve the living conditions of low-income residents. Between 2008 and 2012, about 12.6 million households were involved in these national SRPs, and forced to move as their dwellings were demolished. This paper investigates how different stakeholders perceive and interact with each other in the state-led SRPs in Shenyang City in Northeast China. Through in-depth interviews with a range of stakeholders and analysis of policy documentation on SRPs, we find that there is a complex interplay between centralization, decentralization, marginalization of market forces, and the empowerment of residents in SRPs. The central government has replaced local governments in the initiation of redevelopment projects in disadvantaged neighbourhoods. District-level governments have replaced developers and municipal governments in land expropriation. Developers have become marginalized in SRPs and residents have become more empowered in the land expropriation taking place in urban redevelopment.
    Keywords: Shantytown redevelopment, neoliberalization, governance, demolition, China
    JEL: O18 R23
    Date: 2016–08

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