nep-tra New Economics Papers
on Transition Economics
Issue of 2016‒10‒09
thirteen papers chosen by
J. David Brown
United States Census Bureau

  1. Do Financial Frictions Explain Chinese Firms’ Saving and Misallocation By Xu Tian; Dan Lu; Yan Bai
  2. Effects of Labor Reallocation on Productivity and Inequality: Insights from Studies on Transition By Tyrowicz, Joanna; Van der Velde, Lucas; Svejnar, Jan
  3. Overview of the Macedonian Policy Analysis Model (MAKPAM) By Tibor Hledik; Sultanija Bojceva-Terzijan; Biljana Jovanovic; Rilind Kabashi
  4. Earnings among Nine Ethnic Minorities and the Han Majority in China's Cities By Gustafsson, Björn Anders; Yang, Xiuna
  5. On Chinese stock markets: How have they evolved along time? By Cano Berlanga, Sebastian; Giménez Gómez, José M. (José Manuel)
  6. Does working abroad affect political opinions? Evidence from Moldova By Ruxanda Berlinschi
  7. University Revenue within a New Structure of Resources By Elena A. Nikolayenko; Liudmila M. Filatova
  8. Entrepreneurial Human and Social Capital in Small Businesses in Vietnam - An Extended Analysis - By Souksavanh VIXATHEP; Nobuaki MATSUNAGA
  9. Investor taxation, firm heterogeneity and capital structure choice By Haring, Magdalena; Niemann, Rainer; Rünger, Silke
  10. Spatial patterns of manufacturing clusters in Vietnam By Gokan, Toshitaka; Kuroiwa, Ikuo; Nakajima, Kentaro; Sakata, Shozo
  11. The effect of input-trade liberalization on nonfarm and farm labour participation in rural Vietnam By Hoang Xuan Trung; Luca Tiberti
  12. Political Rents of European Farmers in the Sustainable Development Paradigm. International, national and regional perspective By Czyżewski, Bazyli
  13. Post-crisis foreign trade trends and policies on the periphery of the European Union - comparison of the Iberian, Baltic and Central European region By Andrea Elteto; Katalin Antaloczy

  1. By: Xu Tian (University of Rochester); Dan Lu (the University of Rochester); Yan Bai (University of Rochester)
    Abstract: This paper uses Chinese firm-level data to quantify financial frictions in China and asks to what extent they can explain firms’ saving and capital misallocation. We first document features of the data, in terms of firm dynamics and financing. Relatively smaller firms have lower leverage, face higher interest rates and operate with a higher marginal product of capital. We then develop a heterogeneous-firm model with two types of financial frictions, default risk and a fixed cost of issuing loans. We estimate the model using evidence on the firm size distribution and financing patterns and find that financial frictions can explain aggregate firm saving, the co-movement between saving and investment across firms, and around 60 percent of the dispersion in the marginal product of capital (MPK). The endogenous financial frictions, however, generate a negative MPK-size relationship, which has important implications for total factor productivity losses.
    Date: 2016
  2. By: Tyrowicz, Joanna (Warsaw University); Van der Velde, Lucas (Warsaw University); Svejnar, Jan (Columbia University)
    Abstract: From a theoretical perspective the link between the speed and scope of rapid labor reallocation and productivity growth or income inequality is ambiguous. Do reallocations with more flows tend to produce higher productivity growth? Does such a link appear at the expense of higher income inequality? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, i.e. the economic transition from a centrally planned to a market-oriented economy in Central and Eastern Europe. We have collected over 450 estimates of job flows from the literature and used these inputs to estimate the short-run and long-run relationship between labor market flows, labor productivity and income inequality. We apply the tools typical for a meta-analysis to verify the empirical regularities between labor flows and productivity growth as well as income inequality. Our findings suggest only weak and short term links with productivity, driven predominantly by business cycles. However, data reveal a strong pattern for income inequality in the short-run - more churning during reallocation is associated with a level effect towards increased Gini indices.
    Keywords: transition, job creation, job destruction, worker flows, unemployment
    JEL: D21 D24 D92 G21
    Date: 2016–09
  3. By: Tibor Hledik (Czech National Bank); Sultanija Bojceva-Terzijan (National Bank of the Republic of Macedonia); Biljana Jovanovic (National Bank of the Republic of Macedonia); Rilind Kabashi (National Bank of the Republic of Macedonia)
    Abstract: This paper describes the Macedonian Policy Analysis Model (MAKPAM), which is used at the National Bank of the Republic of Macedonia (NBRM) for medium term macroeconomic forecasting and policy analysis. The MAKPAM is a medium scale, New Keynesian gap model that incorporates the key characteristics of the Macedonian economy: a small open economy with a fixed exchange rate regime. This model outlines the transmission mechanism of the monetary policy in the Macedonian economy, and it helps to quantify the reaction of the economy to various shocks. Since 2008, the MAKPAM model has gradually become an important block of the macroeconomic forecasting system of the NBRM. The model is therefore an important analytic tool for supporting the monetary policy decision-making of the NBRM.
    Keywords: New Keynesian, forecasting, monetary policy, Macedonia
    JEL: C53 E47 E12
    Date: 2016–09
  4. By: Gustafsson, Björn Anders (University of Gothenburg); Yang, Xiuna (China Development Research Foundation)
    Abstract: This paper asks if economic growth and steps towards a market economy have affected earnings gaps between the Han and nine large urban ethnic minorities: Zhuang, Hui, Manchurian, Tujia, Uighur, Miao, Tibetan, Mongol and Korean. It also asks how earnings premiums and earnings penalties have changed for the nine ethnic minorities. For the analysis we use a subsample of the 2005 China's Inter-Census Survey. We find examples of three different changes over time in earnings premiums and earnings penalties: One ethnic minority for whom the development has been more favourable than for the Han majority; a second category in which development has been similar; and a third category for which development has been unfavourable. We conclude from the analysis that it can be misleading to infer the experience of one ethnic minority from that of another.
    Keywords: earnings, ethnic minorities, Uighur, Tibetan, Korean
    JEL: J15 J31 J71 P23
    Date: 2016–09
  5. By: Cano Berlanga, Sebastian; Giménez Gómez, José M. (José Manuel)
    Abstract: China is the largest emerging capital market with a unique setup: it issues simultaneously both (i) Class A shares addressed to Chinese domestic investors, and (ii) Class B Shares addressed to foreign investors. After Chinese stock resumed the operation, they feature dramatic fluctuations due to policy changes and over-speculative activity of individual investors. This paper aims to analyse the evolution of both the Shanghai A and B Markets through a Markov-Switching asymmetric GARCH in four different time frames. Keywords: China stock market; Markov-Switching asymmetric GARCH; volatility
    Keywords: Mercats financers -- Xina, 336 - Finances. Banca. Moneda. Borsa,
    Date: 2016
  6. By: Ruxanda Berlinschi
    Abstract: This paper investigates the effects of work experience abroad on political opinions using survey data from Moldova, a former soviet republic caught in an ideological battle between Russia and the West, with high emigration rates to both destinations. Contrarily to studies conducted in Africa or Latin America, we find no effect of past migration on democratic participation or on critical governance assessment. Likewise, no effect is found on domestic policy preferences. The one dimension strongly associated with migration experience is geopolitical preference, whereby return migrants from former Soviet countries are more likely to support closer ties with Russia, while return migrants from Western countries show higher support for EU integration, controlling for economic, demographic and ethnic confounding factors. For identification, we instrument individual migration with district level migrant networks. IV regressions show that only work experience in Western countries affects geopolitical preferences.
    Keywords: return migration, political opinions, Moldova, survey data
    Date: 2016
  7. By: Elena A. Nikolayenko (National Research University Higher School of Economics); Liudmila M. Filatova (National Research University Higher School of Economics)
    Abstract: Market reform in Russia has had a positive impact on economic sectors and has generally led to higher production quality. However, the education sector (especially professional training) has been an exception. Although education reform was undertaken with the goal of modernization, the general level of value added in the education sector has not grown in the past four years. This article examines changes in higher education under the new configuration of resources based on the income structure of universities located in the Central Federal District (CFD). The results evidence a change in financial support from different income sources and in cost structures at university level. These are the result of higher education reform and university support programs aimed at enhancing the academic and research capacity of the leading Russian universities and developing a competitive national education system. This paper reveals trends in the financing of higher education institutions using statistical and economic analysis, comparing the income structures of different groups of universities and their cost structures. Analysing the dynamics of the aggregate indicators, we study cost structures considering university priorities to increase teaching staff salaries and income from their research and development projects. The study assesses the implications of increasing regional university differentiation in terms of funding and income sources, which lead, considering the commitment to increase the faculty’s salaries, to a shortage of funds for the maintenance of property. These circumstances force the universities to make considerable efforts to find extra-budgetary funding sources in a situation of shrinking effective demand, which jeopardises the development opportunities for a large proportion of regional universities
    Keywords: higher education resources, number of employees with higher education, value added in education, income structure
    JEL: H52 I22 I23
    Date: 2016
  8. By: Souksavanh VIXATHEP (Graduate School of Economics, Kyoto University); Nobuaki MATSUNAGA (Graduate School of International Cooperation Studies, Kobe University)
    Abstract: Entrepreneurship is viewed as an important mechanism for economic development. It helps entrepreneurs overcome most of the constraints in businesses, encourages innovation, and contributes to employment generation and welfare improvement. The paper addresses the issue of entrepreneurial contribution to economic development at the micro level in Vietnam. The study examines the impact of entrepreneurial human capital on firm's performance (value added, total factor productivity (TFP)) in micro and small enterprises (MSEs). The analysis reveals that owner's formal education (up to upper secondary education) contributes to enhancement of firm value added and TFP in micro businesses. Entrepreneur's technical specialization, including advanced vocational training, university and post-graduate education, enhances performance of small enterprises, but shows some sign of over-education for micro businesses. Accumulated entrepreneurial experience, in form of occupation and self-employment experience, proves crucial for firm performance. Geographical advantages favoring MSEs located in the major metropolitan areas and sectoral advantages favoring 'trade and services' prove to be significant. The findings highlight the importance of human capital in nurturing entrepreneurship and fostering economic development at the micro-level.
    Keywords: entrepreneurship; human capital; social capital; small business; Vietnam
    JEL: C01 D22 L26
    Date: 2015–04
  9. By: Haring, Magdalena; Niemann, Rainer; Rünger, Silke
    Abstract: In this paper we analyze the effect of investor level taxes, firm-specific ownership structure and firm-specific payout policy on firms' capital structure choice. Our analysis is based on data for 10,983 firms from 13 Central and Eastern European (CEE) countries over the time period 2002-2012. Our results show a significant impact of the net tax benefit of debt on the debt ratio of firms. Ignoring firm heterogeneity, an increase in the net tax benefit of debt by 10 percentage points leads to an increase in the debt ratio of 2.49 percentage points. Taking into account investor-level taxation and firm heterogenity, an increase in the net tax benefit of debt of 10 percentage points leads to an increase in the debt ratio of only 1.27 percentage points, if the firm's largest individual domestic owner has more than 50% of the shares. If all individual domestic owners together have more than 50% of the shares, an increase in the net tax benefit of debt of 10 percentage points leads to a negligible increase in the debt ratio of 0.05 percentage points.
    JEL: G32 H24 H25 H32
    Date: 2016
  10. By: Gokan, Toshitaka; Kuroiwa, Ikuo; Nakajima, Kentaro; Sakata, Shozo
    Abstract: The formation of industrial clusters is critical for sustained economic growth. We identify the manufacturing clusters in Vietnam, using the Mori and Smith (2013) method, which indicates the spatial pattern of industrial agglomerations using the global extent (GE) and local density (LD) indices. Spatial pattern identification is extremely helpful because industrial clusters are often spread over a wide geographical area and the GE and LD indices—along with cluster mapping—display how the respective clusters fit into specific spatial patterns.
    Keywords: Manufacturing industries, Industrial structure, Industrial agglomeration, Cluster analysis, Vietnam
    JEL: L60 R12 R14
    Date: 2016–08
  11. By: Hoang Xuan Trung; Luca Tiberti
    Abstract: This paper examines the impact of the trade liberalization of chemical fertilisers on the allocation of labour between nonfarm and farm sectors in rural Vietnam during the period 1993-1998. To do that, we use a panel dataset controlling for fixed effects and instrumenting the volume of chemical fertilisers and the exogenous change in fertilisers’ prices is exploited. The study shows that a higher volume of chemical fertilisers reduces the employment of rural households in the nonfarm sector and increases labour participation in farm activities. A larger use of chemical fertilisers would also generate other complementary effects such as a higher demand for organic fertilisers, increased on-farm hired labour, a bigger cultivated area with chemical fertilisers and a larger number of crops grown with chemical fertilisers. Also, we find that a larger use of chemical fertilisers creates larger incentives for on-farm family labour for small landholders compared to those with larger agricultural land, and that the magnitude of the effects is relatively larger for new farmers.
    Keywords: instrumental variable, chemical fertiliser price, nonfarm activity, rural Vietnam.
    JEL: F16 H31 J01
    Date: 2016
  12. By: Czyżewski, Bazyli
    Abstract: This book has been prepared by a team of researchers from six renowned academic centres in the field of agricultural economics in Poland, under a National Science Centre research grant titled “Political rents in the European Union’s agriculture – comparative analysis basing on the UE27”. It aims not only to extend the paradigm of sustainable development and the concept of political rent, but also to present the results of empirical studies carried out using data from 27 EU member states for the years 1995-2014 (some of the analyses also go back to the 1950s) together with Polish case studies. Viewing the EU’s Common Agricultural Policy from the standpoint of the theory of rent seeking is a relatively uncommon approach, particularly as the authors draw attention to the need to predefine the concept of political rent received by farmers in a situation where they are supplying public goods. The book can thus be said to some extent to fill a gap in existing research at the boundary between agricultural and political economy. The approach proposed by the authors may be all the more interesting since it presents issues of agricultural policy and political rents in agriculture from the point of view of a new EU member country, while the existing literature on the topic is dominated by analyses carried out by researchers from the old EU-15 members.The book is divided into four parts, forming a logical sequence. The research goal is to develop the theory of rent seeking and adapt it to the paradigm of sustainable agriculture and, more broadly, to that of sustainable development in general. The deliberations of the authors of the individual chapters, taken as a whole, serve to verify several research hypotheses: 1) the conceptual approach to political rents in agriculture is incomplete, because it does not take account of the process of creation of public goods in agriculture and the need to apply correction to the market in that sector;2) political rents in sustainable agriculture fulfil a new role, which goes beyond the rent-seeking concept; 3) despite the existence of a Common Agricultural Policy, the political rents received by EU farmers are highly differentiated at national and regional level – there exist national models of rent seeking;4) the European Agricultural Model is not a universal development model for EU agriculture given the existing large disproportions in rent seeking between countries.
    Keywords: political rent, economy, agriculture, sustainable development, european farmers
    JEL: Q18
    Date: 2016
  13. By: Andrea Elteto (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Katalin Antaloczy (Faculty of International Management and Business, Budapest Business School)
    Abstract: The year of the great trade collapse in the world was 2009. The international crisis caused a shrinkage of domestic demand and general credit crunch. As a consequence, the growth-enhancing role of exports came into focus in most countries. Exports gained momentum from 2010 but with certain changes in structure and direction. Trade within global value chains has become more pronounced and non-EU markets were targeted by several firms. In certain countries it became a deliberate state policy to turn towards non-EU areas. On the one hand, our paper will describe government foreign trade strategies and institutional framework of the Iberian, Baltic and Central European countries, detecting possible similarities. On the other hand we will analyse the actual foreign trade data in the recent years; what are the main export products and services. Apart from desk research, our methodology consists of detailed trade data analysis from the Eurostat Comext database and service trade database. Based on these we can get a picture on the structure and direction of exports of the peripheric economies and this can be compared to the aims of the given states. Our preliminary hypothesis is that there is a gap between the reality and the intentions of the states. The size of this gap varies and is influenced by certain factors like the different involvement of multinational companies in the foreign trade or the different economic structure of these countries.
    Keywords: export, export promotion, Visegrád countries, Baltic countries, Iberian countries, global value chains
    JEL: F13 F14 P52
    Date: 2016–09

This nep-tra issue is ©2016 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.