nep-tra New Economics Papers
on Transition Economics
Issue of 2017‒01‒08
twenty-six papers chosen by
J. David Brown
United States Census Bureau

  1. Glass Ceiling Effect in Urban China: Wage Inequality of Rural-Urban Migrants during 2002-2007 By Qu, Zhaopeng (Frank); Zhao, Zhong
  2. Trends toward the concentration of economic activity and uneven spatial development of Russia By Anna Bufetova
  3. Anti-Corruption Compliance of Development Assistance Donor Organisations: The Case of Russia By Alina A. Shenfeldt
  4. Modification of the GE-IO model of the Russian economy with dynamic optimization of macroeconomic policy By Gilmundinov, Vadim; Bozo, Natalia; Melnikov, Vladimir; Petrov, Sergei
  5. Energy consumption and CO2 emissions in the northern cities (case of Yakutia) By Tuyara Gavrilyeva
  6. Resilience capacity and vulnerability: The case of Slovakia By Aura Reggiani; Oto Hudec; Monika Siserova
  7. Provincial valuations of human capital in urban China, inter-regional inequality and the implicit value of a Guangdong hukou By Jeffrey Zax
  8. Boards of Directors in Russian Publicly Traded Companies in 1998-2014: Structure, Dynamics and Performance Effects By Muravyev, Alexander
  9. The impact of economic crisis on R&D convergence in Romania By Zizi Goschin; Steliana Sandu; Georgiana Gloria Goschin
  10. Comparison of smart specialization in coastal regions in Poland By Jacek Soltys; Dorota Kamrowska-Za?uska
  11. Partial decentralization and its influence on local governments’ spending policy. An analysis of spending for teachers and other resources needed for schools. By Agnieszka Kopańska
  12. Growth Policy, Agglomeration, and (the Lack of) Competition By Wyatt J. Brooks; Joseph P. Kaboski; Yao Amber Li
  13. Quasi-Experimental Evidence on the Political Impacts of Education in Vietnam By Dang, Thang
  14. Multilateral mechanism analysis of interprovincial migration flows in China By Yingxia Pu; Ying Ge
  15. Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China By Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
  16. Real and structural convergence in the Romanian counties in the pre-accession and post-accession periods By Mihaela-Nona Chilian; Marioara Iordan; Carmen Beatrice Pauna
  17. Simulation modelling of public-private partnership in the Arctic regions By Olga Tarasova
  18. The Mechanism of Giffen Behaviour By Zhu, Drew
  19. Entrepreneurial Intentions in Selected Southeast European Countries By Edo Rajh; Jelena Budak; Jovo Ateljevic; Ljupco Davcev; Tamara Jovanov; Kosovka Ognjenovic
  20. Externalities of urban agglomerations: An empirical study on Chinese case By Jin Guo; Yingzhi Xu
  21. Inbound tourism as a driving force of the regional innovation system: An impact study on China By Jingjing Liu; Peter Nijkamp
  22. Structural transformation and allocation efficiency in China and India By Enrica Di Stefano; Daniela Marconi
  23. Interfirm Relationships and Business Performance By Jing Cai; Adam Szeidl
  24. Economic Development as a Factor of Democratisation: Evidence from Post-Socialist Economies By Michal Madr
  25. Intergenerational Transmission of Values in Urban and Rural Area (the Case of Russia) By Dmitrii Dubrov; Alexander Tatarko
  26. Does administrative status matter for urban growth? Evidence from present and former county capitals in East Germany By Bastian Heider; Martin T.W. Rosenfeld; Albrecht Kauffmann

  1. By: Qu, Zhaopeng (Frank) (Nanjing University); Zhao, Zhong (Renmin University of China)
    Abstract: The paper studies the levels and changes in wage inequality among Chinese rural-urban migrants during 2002-2007. Using data from two waves of national household surveys, we find that wage inequality among migrants decreased significantly between 2002 and 2007. Our analysis on the wage distribution further shows that the high-wage migrants experienced slower wage growth than middle-and low-wage migrants – a primary cause of declining inequality of migrants. By using distributional decomposition methods based on quantile regression, we find that overall between-group effect dominates in the whole wage distribution, which means that the change in returns to the characteristics (education, experience and other employment characteristics) plays a key role, but on the upper tails of the wage distribution, the within group effect (residual effect) dominates, implying that the unobservable factors or institutional barriers do not favor the migrants at the top tail of the wage distribution. We also study wage differential between migrants and urban natives, and find that though the wage gap is narrowed, gap at upper wage distribution is becoming bigger. Overall, the results suggest that there exists strong "glass ceiling" for migrants in urban labor market.
    Keywords: rural to urban migrants, wage inequality, quantile decomposition, China
    JEL: J30 J45 J61
    Date: 2016–12
  2. By: Anna Bufetova
    Abstract: The introduction of market mechanisms regulating the economy in the Russian Federation has led to change of spatial distribution of economic activity and further increase of regional economic development disparities. All the approaches to the regional policy declared by the Government in the last decades didn't succeed. So the question of evolution of spatial distribution of economic activity and regional disparities remains very actual. The aim of this work was to analyze the evolution of spatial distribution of economic activity in the Russian Federation and the role of space in the inequality of regional development. We study the evolution of spatial distribution of economic activity and convergence process among regions from the change of the region relative position inside the cross-sectional distribution of regions in terms of gross regional product (GRP). The growth process is modeled as a first-order Markov chain. Spatial effects in our study are introduced within the Markov chain framework using regional conditioning and spatial Markov chain. By applying this technique we achieve a more detailed picture of the evolution of distribution of economic activity and spatial disparities than in other studies on the topic. These tools also allow studying how the economic performance of a region and its position inside the GRP distribution can be explained by its geographical environment. The results of the analysis, based on a data set for 79 Russian regions over 2001-2013 period suggest that the process of economic growth has been characterized by the continuing concentration of economic activity. Along with the preservation and strengthening of positions of the former centers, a number of new ones emerged, and at the same time some centers with resource specialization to some extent weakened their positions. The study showed a progressive bias toward a poverty trap. The ergodic distribution of the regions in terms of economic activity, achievable while maintaining trends of study period, shows the formation of a sufficiently large pole of relative poverty and pole of wealth that concentrates a significant proportion of manufacturing value added. Emerging group of regions with an average level of development is relatively small. Regional conditioning and spatial Markov chain clearly indicate that location and physical geography matter to explain growth and convergence process. The changes of the relative position of a region in the cross-sectional distribution are highly constrained by its geographical environment. Regions of almost all level of development have better evolutionary perspectives when surrounded by rich neighbors (but not less developed regions) and worse perspectives when surrounded by poor neighbors so that progressive bias towards poverty trap has a strong spatial explanation. In such circumstances, regional policy aimed at stimulating the developed regions, can reinforce the ongoing process of polarization. And policy aimed at smoothing the uneven territorial development in order to avoid excessive deepening of regional disparities and inequalities seems to be more adequate.
    Keywords: spatial distribution of regional economic activity; regional disparities; Markov chains
    JEL: R11 R12
    Date: 2016–12
  3. By: Alina A. Shenfeldt (National Research University Higher School of Economics)
    Abstract: The article sheds light on the scope of transparency in the Russian Official Development Assistance (ODA) and anti-corruption compliance that has been forged by Russian authorities in the field of international development aid. Analysis of official documents, reports and available statistical sources shows quite poor performance of the Russian Federation, especially with regard to the international standards on open aid data and OECD members’ experience. First, the article lays out the evolution of transparency and accountability standards in international development assistance and highlights the best practices in forging anti-corruption compliance of leading donor organizations and countries. Though it cannot be said with certainty that the level of corruption globally in development aid has diminished, it is obvious that major OECD donor organizations have improved their integrity and managed to render their aid transparent. This research has been focused on Russian development assistance. Analysis of published information on Russian ODA such as reports by the Ministry of Finance, web-sites of the Ministry of Finance, Ministry of Foreign Affairs and the Rossotrudnichestvo, Concepts on ODA and other published documents showed that apart from procurement mechanisms, Russian authorities have not still forged anti-corruption compliance of its agencies in the filed of international development assistance. Moreover, Russia does not account for its ODA in a sufficient manner. First, the reports of the entitled authorities published on the official websites do not present precise information on Russian projects in development assistance. Though some information is publicly available, it is rather difficult to access to it as it is dispersed across various sources. Second, the functions on ODA are divided among agencies which makes the accountability process more complex. Third, Russia does not meet international standards outlined by the Busan Partnership on enhancing transparency in development aid: Russia does not report neither to the DAC Creditor Reporting System, nor to Forward Spending Survey, nor to the International Aid Transparency Initiative. Though the failure to publish detailed data stem from the lack of institutional capacity of the system of Russian development aid, still more transparency and accountability should be enhanced to enable civil society and scholars to contribute to the development of Russian aid. The paper concludes with recommendations to Russian responsible authorities on how to make Russian development assistance transparent
    Keywords: official development assistance (ODA), transparency, accountability, anti-corruption standards, OECD donor countries, Russia
    JEL: F35
    Date: 2016
  4. By: Gilmundinov, Vadim; Bozo, Natalia; Melnikov, Vladimir; Petrov, Sergei
    Abstract: The paper describes recent results connected with extension of the general equilibrium input-output model of Russia with aggregated markets (Gilmundinov et al, 2015). Consideration of economic policy’s influence on a variety of macroeconomic and structural policy goals is an aim of this extension. For this purpose we add into GE-IO model sectoral fixed capital investment’s sub-models and sub-model of dynamic optimization of economic policy. Sectoral sub-models of fixed capital investments are based on the assessments of sectoral production functions with variable degree of capacity use. Sub-model of dynamic optimization of economic policy is based on extension of basic approaches suggested by H. Theil (1954, 1964), J. Tinbergen (1952) and R. Mundell (1962) with dynamic social losses function and accounting of influence of economic policy on sectoral structure of national economy. The suggested modification allows to simulate impact of different variants of economic policy on national economy, aggregated markets and main sectors. That is very helpful for estimation of consequences of various internal and external shocks and development of optimal economic policy and gives more advantages in comparison with standard DSGE or CGE models. The preliminary results of simulations based on suggested model for the Russian economy show considerable dependence of the Russian economy dynamic and structure on economic policy. Optimal economic policy should be hybrid with combining structural policy with sectoral credit policy of Central Bank. According to the basic scenario of simulation with neutral economic policy the Russian GDP in constant prices will decline at 1.8% in 2016 in comparison to 2015 and almost have no changes in 2017 in comparison to 2016. Stimulating economic policy allows to raise growth rates of the Russian economy at 2-3%.
    Keywords: Economic Policy, Optimization, Input-Output, Economy of Russia, Forecasting, General Equilibrium
    JEL: C61 C63 C67 E52
    Date: 2016–05–15
  5. By: Tuyara Gavrilyeva
    Abstract: The huge territory and long distances between settlements (up to 700 km) determine the complex structure of the energy system of Yakutia. The average duration of the heating season in the region is 8-9 months, and 12 months in the Arctic. Electricity generation is carried out mostly by low-capacity boilers using coal and diesel fuel. About 85% of fuel is imported from outside of Yakutia. The northern provision is seasonal, due to a complicated transport scheme. The time of fuel delivery reaches 18 - 30 months. As a result, the net cost of electricity generation in the Arctic is higher than in Central Yakutia in 7-40 times. There are considerable territorial disparities of net costs of heating generation too. The settlements of Yakutia are not compact, have a large area because of the specific agricultural specialization. Construction of new buildings of public services increases the number of low-capacity boilers. There are 1355 heating units operating in villages and cities of Yakutia. The share of houses with central heating varies greatly. In settlements with significant proportion of houses with stove heating there is a reduction in forest area within a radius of 20-40 km, which leads to an increase in environmental problems. Yakutia obtains a certain effect from programs of local energy optimization systems and implementation of energy saving measures, including gasification of settlements, but budget costs are still very significant. This is a common problem for all northern countries. At present the system of cross-subsidization of energy consumption changes. It meant that a part of the energy consumption costs of economic agents have been paid by other economic agents, including the state. Its main reason is population poverty. Actually Inhabitants compensate by own funds only 25.5% of the real cost of central heating, 78.2% - of electricity. It is considerably lower than in Russia in general. The transition to rates, based on real costs, will lead to a rapid loss of population in the Arctic and other remote areas. At the same time the crisis in Russia dictates the necessity of reform of the energy sector, in particular by reducing energy consumption. Some programs envisage the improvement of urban planning, concentration and increase in the density of population in large settlements and towns of Yakutia. Concentration allows to get a significant saving in energy costs, however it leads to an increase in the anthropogenic impact on the environment. Areas, where the largest power plants are located, provide the highest CO2 emission. These are Serebryany Bor (Neryungri district), Yakutsk and Svetly (Mirninsky district). These settlements are the centers of intensive anthropogenic impact on the environment by energy generation activity. The reform of energy system in Yakutia is complicated. It is closely related to the transformation of the spatial structure. Liquidation of the Arctic settlements is objectively impossible due to national security interests, historical and cultural traditions of indigenous peoples that we have to protect. The searching for new technological, spatial, financial and social mechanisms for wellbeing of northern communities is needed. Republic of Sakha (Yakutia) needs a new spatial structure. Moreover, it can be fundamentally new. For example, decentralized, allowing disperse anthropogenic load on the environment, if in the near future, new technologies will provide individual livelihoods and access to basic social services to households in rural areas. Alternatively, it could be more concentrated, not linear-focal and linear as now. When large urban settlements will be located on the main highways or rivers. This problem can be solved in the framework of strategic planning in the region. Continuing of studies of transport isolation, market and economic potential of northern communities are needed.
    Keywords: North; energy system; net cost; energy consumption; heat energy; cross-subsidization; Arctic settlements; population; territorial disparities
    JEL: Q28 Q41 Q56 R32
    Date: 2016–12
  6. By: Aura Reggiani; Oto Hudec; Monika Siserova
    Abstract: The concept of resilience has been recently investigated from the perspective of several disciplines. This extensive research has brought many approaches anchoring the key definitions, linked to both the notion of stability in dynamics (return to the previous equilibrium after a shock) and to the idea of adaptivity (absorption of the shock leading to new equilibria). Among the various definitions and measurements which can be found in the literature, the Resilience Capacity Index (RCI) classifies the most resilient regions and municipalities, in the case of external shocks, according to three different dimensions: a) economic; b) socio-demographic; and c) community-connectivity. However, the RCI should also be tested empirically versus other resilience/vulnerability indicators. This is the approach which will be used in the present paper. Vulnerability refers to the degree to which a system is susceptible to harm. In general, the concept of vulnerability has had limited attention in spatial economics. In the present paper, this concept will be adopted by analysing the dynamics of the unemployment growth rate, and comparing it to the RCI. In this context, the role of economic space is relevant, since the spatial units can provide good insights into resilience and vulnerability measures. The country of interest in this paper is Slovakia. Slovakia is a country in central eastern Europe which is bordered by the Czech Republic, Austria, Poland, Ukraine, and Hungary and presents interesting socio-economic-policy characteristics. The chosen spatial unit is at the district level. In the context of the 2007-2008 economic crisis, the RCI in the 79 Slovak districts is examined vs. vulnerability (based on the unemployment rate) in the first period of rising unemployment (2007-2011), as well as in the second period of following vulnerability/absorption to the economic shock (2011-2014). Similarly to previous research, the result show higher RCI in the major economic centres of Slovakia. In addition, a form of the west-east divide in RCI can also be seen. However, the reaction of the districts is ambiguous in terms of their vulnerability to the economic crisis. The more urban, export-oriented districts seem to be exposed to higher vulnerability and to a rapid increase in unemployment in comparison to the rural districts. On the contrary, smaller, peripheral districts respond to a lesser extent or with a delay to the shock. The approach of combining RCI with vulnerability indices provides a new understanding of the resilience-vulnerability relationship. Moreover, a deeper analysis of the Bratislava metropolitan region explains the connection between resilience capacity, economic resilience and vulnerability, as well as between employment and unemployment measures, justifying the need for an integrated approach considering all these concepts together.
    Keywords: resilience capacity; vulnerability; Slovak districts (LAU 1)
    JEL: R11
    Date: 2016–12
  7. By: Jeffrey Zax
    Abstract: This paper assesses regional inequality in contemporary urban China by predicting earningss for individual workers in multiple provinces, comparing the province of maximum predicted earnings to the province of residence and assessing the predicted gains from relocation. The paper performs the same comparison for the U.S. in 1940 to provide an informal baseline comparison. Workers predicted relatively similar earningss in each of the nine U.S. Census divisions. Fewer than 10% of them predicted maximum earnings in divisions other than their home division that exceeded their predicted home division earnings by more than 20%. In contrast, 45% of Chinese urban workers in 1988 predicted maximum earnings in provinces outside their home province that exceeded their predicted home province earningss by more than 50%. The same was true of 54% of Chinese urban workers in 1995, 74% in 2002 and 57% in 2008. If all Chinese urban workers received the maximum of their predicted earningss across all provinces, rather than their predicted earnings in their home province, average earningss would approximately double, interpersonal inequality would decline by 40-50% and inter-provincial inequality would vanish. In all years, predicted earnings in Guangdong province have generally been greater than in any other province. The implicit value of the right to live in Guangdong was at least 26% of earnings in 1988 and 41% in 1995. It declined to about 7% of earnings in 2002 and 2008, but only because predicted earnings in Beijing and Shanghai had risen. The gaps between predicted earnings in Guangdong and other provinces in those years was similar to those in earlier years.
    Keywords: Inequality; Returns to human capital; Migration; Law of one price
    JEL: J24 J31 J61 R12 R23
    Date: 2016–12
  8. By: Muravyev, Alexander (Higher School of Economics, St. Petersburg branch)
    Abstract: This paper provides new evidence on the structure, dynamics and performance effects of corporate boards in publicly traded companies in Russia. It takes advantage of a new and unique longitudinal dataset of virtually all Russian companies whose shares were traded in the RTS/MICEX/MOEX over 1998-2014. The analysis highlights a number of strong trends in the evolution of boards of directors, such as the declining participation of insider directors and the increasing participation of foreign and female directors. It also shows that board characteristics are linked to company performance (the market-to-book ratio, Tobin's Q, ROE and ROA), suggesting that boards of directors play a non-trivial role in corporate governance in Russia. Testing for structural breaks in the relationship between board composition and firm performance provides some evidence of the changing role of corporate boards over time.
    Keywords: board of directors, publicly traded companies, corporate performance, Russia
    JEL: G34 L22
    Date: 2016–12
  9. By: Zizi Goschin; Steliana Sandu; Georgiana Gloria Goschin
    Abstract: Research and development (R&D) is an important driver of productivity, competitiveness and economic growth, both nationally and regionally. In Romania all national development strategies acknowledged R&D as a priority sector, but the territorial component of the national innovation system is still underdeveloped. Moreover, research and development activity might be among the factors accountable for the increasing regional economic disparities, as the territorial distribution of its potential and performance is extremely unbalanced, the capital region (Bucharest-Ilfov) concentrating over half of R&D endowment. Romania is still lacking a strong regional R&D policy to address such disparities and the recent economic crisis brought about new hardships on the Romanian innovation system. Following a significant rise in research and development funding prior to the crisis, R&D intensity declined from 0.58 % in 2008 la 0.38 % in 2014, placing Romania at the bottom of European Union hierarchy. The convergence of the regional R&D and innovation system is as an essential component of successful regional development because, on the one hand, it provides a key asset to improve local economic competitiveness and, on the other hand, facilitates cohesion in the social sector. In this context our paper explored the convergence patterns of R&D in Romania over 1995-2014 and several subperiods, with a focus on the recent economic crisis, applying the ?sigma? and "beta? convergence methods, as introduced by Barro and Sala-i-Martin (1995). We used county level (NUTS3) data provided by the National Institute of Statistics. The diagnostics for spatial dependence have been performed, but Moran?s I test for errors couldn?t reject spatial randomness (on all time spans considered), therefore classic OLS model has been applied as the best fit for our data. We found a discontinuous sigma convergence trend, with some temporary periods of divergence that disrupted the convergence process, and conditional beta convergence over 1995-2014. When exploring the relevant subperiods of this time span, the results indicated absolute (unconditional) beta convergence until 2008, but no evidence of either convergence or divergence afterwards. The annual average speed of convergence declined from 6.97% over 1995-2000 to 2.65% over 2000-2008. Sigma convergence has been also reversed during the crisis, but seems to have resumed in the last couple of years. Our findings clearly show the disruptive impact of the economic crisis on the convergence path, from the perspective of both sigma and beta technique. The persistence of high R&D regional inequalities and low convergence calls for adequate policies, able to stimulate the regional innovation potential and underpin faster development of the Romanian regional research and innovation system.
    Keywords: research and development; sigma and beta convergence; Romania
    JEL: R11 C51
    Date: 2016–12
  10. By: Jacek Soltys; Dorota Kamrowska-Za?uska
    Abstract: The priorities set by the European Commission for Programming Period 2014-2020 introduced new instruments supporting regional development but also posed new requirements that must be met by European regions. One of them is smart specialization. To implement Strategy for Europe 2020, published by the European Commission in 2010, EU Member States and their regions develop strategies for smart specialization that will show directions for providing support to the strengthening of research, development and innovation. Smart specialization is an important instrument for creating a strategy for the development of innovation at the state and regional level as well as for defining and building the knowledge-based economy. This paper presents analyzes of processes responsible for identifying smart specialization in West Pomeranian and Pomeranian Regions. This article is a continuation and extension of the research on the process of emergence of smart specialization in Pomeranian Region by the inclusion of the West Pomeranian Region into this study. Both Regions are situated on the southern coast of the Baltic Sea and are seats of main Polish harbours and shipyards. Their regional capitals Gdansk and Szczecin are emerging metropolitan areas as well as economic engines of polish economy. It is our goal to analyze to what extent emergence of smart specialization is helping to focus development of innovation in areas consistent with their endogenous potentials. The aims of the paper are: comparison of the areas of smart specialization with particular emphasis on the specifics of the seaside location and endogenous potential of both regions, comparison of emergence and the process of selection of smart specialization, including its evaluation. In Pomeranian region the process of emergence of smart specialization was a bottom-up one where Regional Government invited all actors to build a partnership. The result is participation of all stakeholders to identify opportunities and specify areas of development of smart specializations for the Voivodship. In other regions of Poland it was more of a top-down process, conducted by experts and the West Pomeranian Region is an example of this approach. Methodology of the research applied for this study is desk research (analysis of literature, documents and strategies from Voivodeship Marshal Offices from both West Pomeranian and Pomeranian Regions), individual in-depth interviews, participation in the process of emerging of smart specialization in Pomorskie Voivodeship (focus group interviews, workshops, SWOT analysis and Delphi study) and comparative analysis of the process of emergence and selection of the smart specialization in both regions.
    Keywords: smart specialization; coastal regions; maritime economy; regional knowledge-based development; innovation strategy
    JEL: O2 O3 O38
    Date: 2016–12
  11. By: Agnieszka Kopańska (Faculty of Economic Sciences, University of Warsaw)
    Abstract: The aim of the paper is to analyze how limits in revenue and spending autonomy of sub-sovereign governments influence these governments’ decisions. The analysis is focused on Polish towns current spending for schools in years 2002-2013. It presents that revenue autonomy increases towns spending, however the results are different for various categories of expenditure. The expenses were disaggregated for spending for teachers and other schools’ recourses. The first category is the most important in schools’ budget and in Poland is strongly (but not completely) determined by central regulations. The second category is more decentralized. It is presented that less decentralized spendings are unified among towns and are higher in more revenue’ autonomous towns, the spending autonomy doesn’t influence them. In case of more decentralized tasks, differences among municipalities are important, expenditure is influenced by spending autonomy, not by revenue autonomy. These results show that less autonomous tasks crowd out others.
    Keywords: partial decentralization, spending and revenue autonomy, local government spending policy
    JEL: H72 H75 H77
    Date: 2016
  12. By: Wyatt J. Brooks; Joseph P. Kaboski; Yao Amber Li
    Abstract: Industrial clusters are promoted by policy and generally viewed as good for growth and development, but both clusters and policies may also enable non-competitive behavior. This paper studies the presence of non-competitive pricing in geographic industrial clusters. We develop, validate, and apply a novel test for collusive behavior. We derive the test from the solution to a partial cartel of perfectly colluding firms in an industry. Outside of a cartel, a firm's markup depends on its market share, but in the cartel, markups across firms converge and depend instead on the total market share of the cartel. Empirically, we validate the test using plants with common owners, and then test for collusion using data from Chinese manufacturing firms (1999-2009). We find strong evidence for non-competitive pricing within a subset of industrial clusters, and we find the level of non-competitive pricing is about four times higher in Chinese special economic zones than outside those zones.
    JEL: L11 O1 O25 R11
    Date: 2016–12
  13. By: Dang, Thang
    Abstract: In this study, I estimate the causal effects of education on political outcomes in Vietnam using data from Vietnam’s World Values Survey. To address the potential endogeneity problem of education, I employs the 1991 compulsory schooling reform in Vietnam to instrument for exogenous changes in schooling years with a regression discontinuity design. I find that in general education does cause favorable impacts on political outcomes in Vietnam using the whole sample. In particular, one more year of schooling results in increases in the probabilities of political concern and political participation by about 6–12% points and 6–8% points, respectively. However, I strikingly find that for those whose at least lower secondary degree, more schooling years they achieve less political concern they have.
    Keywords: education, political outcomes, regression discontinuity, Vietnam
    JEL: D72 I25
    Date: 2017–01–01
  14. By: Yingxia Pu; Ying Ge
    Abstract: With the development of global economy and rapid process of urbanization, migration has become one of the key forces in population redistribution and has important implications for socio-economic development in a region. As we all know, population migration flows between different regions are related to not only the origin- and destination-specific characteristics, but also to the migration flows to and from neighborhoods. Intuitively, changes in the characteristics of a single region will impact both inflows and outflows to and from other regions. In order to explore the spatial interaction mechanism driving the increasing population migration in China since the open door policy, this paper builds the spatial OD model of interprovincial migration flows based on the sixth national population census data and related social-economic data. The findings are as follows: (1) Migration flows show significant autocorrelation effects among origin and destination regions, which means that the migration behavior of migrants in some region is influenced by that of migrants in other places. The positive effects indicate the outflows from an origin or the inflows to a destination tend to cluster in a similar way. Simultaneously, the negative effects suggest the flows from the neighborhood of an origin to the neighborhood of a destination tend to disperse in a dissimilar way. (2) Multilateral effects of the regional economic and social factors through the spatial network system lead to the clustering migration flows across interrelated regions. Distance decay effect plays the most influential force in shaping the patterns of migration flows among all the factors and the negative spillover effect further aggravates the friction of distance. As for destinations, the influence of wage level and migration stocks is beyond the GDP and the positive spillover effects of these factors enhance the attraction of neighborhood regions. The spillover effects of unemployment rate and college enrollment of higher education are significantly negative while destination population is not significant. As for origins, population and migration stocks lead to positive spillover effects on the neighborhoods while the effects of other factors are negative. (3) Changes in the regional characteristics will potentially lead to a series of events to the whole migration system, and the flows to and from the center of oscillation and its neighborhoods vibrate greatly compared with other regions. The simulation results of 5% GDP increase in Jiangsu province indicate that the outflows to other regions decrease while the inflows from all others increase to some different extent. Comparatively, the influence on the flows to and from the regions neighboring Jiangsu is significant while that of remote regions is much less, which cannot be explained by the traditional gravity model.
    Keywords: population migration flows; network autocorrelation; multilateral effects; spatial OD model; spatial mechanism analysis; China
    JEL: C13 C15 C31
    Date: 2016–12
  15. By: Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
    Abstract: We use household-level panel data from China and a quantitative framework to document the extent and consequences of factor misallocation in agriculture. We find that there are substantial frictions in both the land and capital markets linked to land institutions in rural China that disproportionately constrain the more productive farmers. These frictions reduce aggregate agricultural productivity in China by affecting two key margins: (1) the allocation of resources across farmers (misallocation) and (2) the allocation of workers across sectors, in particular the type of farmers who operate in agriculture (selection). We show that selection can substantially amplify the static misallocation effect of distortionary policies by affecting occupational choices that worsen the distribution of productive units in agriculture.
    Keywords: agriculture, misallocation, selection, productivity, China.
    JEL: O11 O14 O4
    Date: 2017–01–03
  16. By: Mihaela-Nona Chilian; Marioara Iordan; Carmen Beatrice Pauna
    Abstract: In the European Union, one of the primary goals of integration is the convergence of the regional income per capita (and of other significant socio-economic indicators), and hence, how to generate a process of convergence. In the economic literature, theories of convergence and divergence examine the reasons for diminishing or increasing the disparities between the rich and the poor re¬gions, and in the case of divergence, explain the persistence of such disparities. In particular, the real convergence approaches are connected to the study of long-term economic growth, economic development and the dynamics of complex economic sectors with high economic and social impacts, and also to the supporting/unsporting institutions and economic mechanisms (market structure, distribution of economic results). Concomitantly, the structural convergence has deserved less attention; although it is an important process for both building and functioning of the single economic and monetary area and for the development of the Member States and their regions. Studies have found that there is a correlation between structural convergence and income (real) convergence, though the findings differ in what regards the strength and direction of such a connection. Starting from the concepts of real and structural convergence, the paper presents an analysis of the real and structural convergence processes in the Romanian counties during the pre-accession and post-accession periods, based on specific indicators (GDP per capita, gross speed of convergence, variation coefficient, gross labor productivity, gross productivity growth rate). Also, with the help of real convergence indices and structural coefficients, the presence and evolution of the relationship between real and structural convergence at sub-regional level is revealed. The results show that the analyzed convergence processes had different speeds in Romania, and that counties have adapted differently to the new economic environment of the EU single market, conditional on their pre-accession development level. The counties which during the pre-accession period recorded good performances have usually strengthened their positions after the EU accession, while the counties with lower performances generally revealed slower growth and convergence, despite recording faster growth rates over certain short periods. Especially regarding productivity convergence, the situation is worrisome for the poorest counties of Romania, but also for some of the counties with higher development level. The real convergence was generally aligned with the structural convergence in the Romanian counties, but again only the most developed counties recorded post-accession progresses in both the convergence processes. Such results are in line with the findings of other studies on the economic and structural convergence of the Member States and/or their regions, but also reveal the sub-regional peculiarities of the catching up and development processes going on in the Romanian economy, and call for more effective implementation of the national and EU development policies at all levels.
    Keywords: real convergence; convergence indicators; structural convergence; structural coefficients; Romanian regions and counties
    JEL: O47 R11 R12
    Date: 2016–12
  17. By: Olga Tarasova
    Abstract: Arctic vector of economic development is now a strategic imperative for the Russian Federation. Apparently, severe climatic conditions, low population density, lack of infrastructure leave all Arctic projects outside the market and allow only nodular economic development of the Russian Arctic territories. The internal structure of these patches of economic activity should be justified with the help of economic-mathematical modeling. This becomes of particular importance given that all Arctic investment projects will for sure employ administrative and financial resources of the state along with private initiative. Views on state participation in the economy are different: from the invisible hand of Adam Smith's market to a tight state policy of Soviet administrative economy. On the other hand, it is impossible to use templates in the Russian Arctic: PPP best practices might not give results in risky northern conditions. Each group of projects should be simulated and all effects forecasted on the series of evaluative scenario calculations. Certain results in this direction have been obtained and described by the authors in previous works. The aim of the present work was to search for opportunities as well as to implement modifications of economic-mathematical models used for the assessment in order to improve the convenience of predictive scenario calculations and expand the analytical capabilities of instruments. The simulation model was modified in the following areas: 1. introduced an opportunity to observe the project?s effects in dynamics. It is important when choosing a combination of measures of state support when taking into account the correlation of their effectiveness in various stages of implementation; 2. added a variability of projects? productivity; 3. added an option to specify the result year (up to which a forecast of the development ought to be done, and accordingly, all effects to be shown). The idea was that for different actors of the project different length of the forecast period could be important. Furthermore, long-term, medium-term and short-term period calculations may be required at once, and late on their correction would need on a regular basis; 4. added a possibility of variation of the construction period (two discrete provisions "handing on time" and "delay"). This is done for the convenience of reference in time of the projects in the case of a delay occurred on one of them and searching a mechanism to respond to such delays. With the help of the modified simulation model the authors generated a pack of scenarios, obtained their quantitative assessment and attempted to determine the optimal trajectory of Taimyr-Yakut ATPC?s development. Key projects here are Tomtor and Popigai fields and the ports included in the logistic maintenance scheme - Tiksi, Khatanga, Yuryung-Khaya (provided transportation for export and Zheleznogorsk for processing). These projects are strategically important for Russia: having a wide range of applications in high-tech industries, those minerals could give rise to the Russia? innovative development.
    Keywords: Arctic investment projects; simulation modeling; scenario modeling
    JEL: C63 O18 R58
    Date: 2016–12
  18. By: Zhu, Drew
    Abstract: The law of demand might have no exception and the Giffen behavior should be one of the standard forms of the law. According to the new attribute theory and semi-empirical simulation method, Giffen behavior is verified in a general equilibrium framework using the data of food consumption in rural China. The superior food and the wealthy households with high preference for taste have higher possibility than the inferior food and low income households in exhibiting Giffen property. Therefore, to find empirical Giffen behavior, we should focus on the superior food and wealthy households with high preference for taste.
    Keywords: Law of demand, New attribute theory, Giffen behavior
    JEL: C61 D01 D11 D12
    Date: 2016–12–20
  19. By: Edo Rajh (The Institute of Economics, Zagreb, Croatia); Jelena Budak (The Institute of Economics, Zagreb, Croatia); Jovo Ateljevic (Faculty of Economics, University of Banja Luka); Ljupco Davcev (Faculty of Economics, Goce Delcev University in Shtip); Tamara Jovanov (Faculty of Economics, Goce Delcev University in Shtip); Kosovka Ognjenovic (Institute of Economic Sciences, Belgrade)
    Abstract: Entrepreneurship has an increasingly important role in economic growth and development in both developed and underdeveloped countries. In order to explore entrepreneurial intentions and their antecedents in the post-transition context, we have conducted a survey among 1,200 students of economics and business in four Southeast European countries: Bosnia and Herzegovina, Croatia, Macedonia and Serbia. The following scales were included in the highly structured questionnaire: locus of control, risk taking propensity, perceived barriers, perceived support factors, personal attitude towards entrepreneurship, perceived behavioral control, subjective norm and entrepreneurial intention. Collected data were analyzed with multiple regression technique in order to explore the effects of various antecedents on entrepreneurial intention in the context of Southeast European countries. The results indicate that personal attitude towards entrepreneurship, perceived behavioral control and subjective norm positively and significantly affect entrepreneurial intent. Respondents from Bosnia and Herzegovina exhibit higher levels of entrepreneurial intent compared to other observed countries. The findings of our research provide better understanding of entrepreneurial intentions and their antecedents in the specific post-transition context of Southeast European countries. Theoretical and policy implications of the research findings are discussed in the paper.
    Keywords: entrepreneurship, entrepreneurial intentions, survey, post-transition, Southeast Europe
    JEL: L26
    Date: 2016–11
  20. By: Jin Guo; Yingzhi Xu
    Abstract: Benefit from the advantage of externalities, urban agglomerations are playing more and more important roles in regional economic development. However, present literature failed to distinguish the differences between urban agglomerations? pecuniary externality and technology externality. In this paper, we took Chinese five national key construction urban agglomerations as cases to make more comprehensive empirical studies of these two types externalities? manifestations, mechanisms and key factors. The results indicated that (a) urban agglomerations? pecuniary externality manifested as inter-urban capital allocation while its technology externality manifested as inter-urban technology spillover. Currently, (b) the key factor for Chinese five national key construction urban agglomerations? pecuniary externality was market size, that meant to pursue larger market size was one main motivation in forming Chinese urban agglomerations, but the inter-urban capital allocation did not show a trend of shifting to cities with higher labor productivity. (c) The key factor for Chinese five national key construction urban agglomerations? technical externality was economical density, that meant to pursue higher economical density was another main motivation in forming Chinese urban agglomerations, but both cities? own research and development activities and the spread from other cities? failed to improve urban agglomerations? technological levels. Besides, (d) there was no evidences suggested diversification or specialization of industrial structure had relations with urban agglomerations? pecuniary externality or technology externality. The regressions of dummy variables indicated that (e) there were no significant differences in pecuniary externality between Chinese five national key construction urban agglomerations? core cities and surrounding cities, but their technology externality presented complex differences.
    Keywords: urban agglomeration; pecuniary externality; technology externality; agglomerate motivation
    JEL: O47 R1 R3
    Date: 2016–12
  21. By: Jingjing Liu; Peter Nijkamp
    Abstract: Along with the globalization and information-economic epoch, international knowledge spillover plays an important role in regional development, and the regional innovation system becomes more and more open-ended. As a nexus of the destination and the outside world, inbound tourism brings various economic and social resources for the development of the host region, which may also contribute to a higher level of cognitive proximity and absorptive capability as well as to greater product variety and manifold consumption externalities. Much research has addressed the influence of innovation on the tourism industry development, but only a few studies have focused on the impact of tourism on innovation. This study focusses on the influence of inbound tourism on a regional innovation system. The aims of this research are to: (1) interpret the mechanism of how inbound tourism impacts regional innovation; (2) inquire the external influence factors of the performance of inbound tourism; (3) explore the different characteristics of these effects when considering different types of innovation; (4) revisit the Tourism-Led Growth (TLG) hypothesis, and consider whether innovation can be a new vehicle to explain the influence of inbound tourism on spatial economic development. The influence of inbound tourism on innovation will provide a new perspective for analyzing the long term impact of tourism development. Furthermore, it may also be a meaningful complement to studies on the relationship between immigration, culture diversity and innovation, especially in the context of developing regions. Our study is organized as follows. First, the theoretical framework and the related hypotheses on the interaction between inbound tourism and regional innovation are presented. The network structure and diverse demands approaches as well as the effect of the regional absorptive capacity are considered and highlighted. Next, data from 30 Chinese Mainland provinces (Tibet being excluded, because part of the important indicators are unavailable) for the years 2003-2012 are used for the empirical analysis. The data come from the Chinese Patent Statistical Yearbook, the Chinese Statistical Yearbook, and the China Economic & Industry Data Database. From a methodical perspective, an entropy method and a perpetual inventory method were undertaken to measure the key variables. Next, a descriptive analysis was used to reach a preliminary idea on the above relationship. As to the existence of spatial autocorrelation, spatial panel data analysis was conducted to test these hypotheses. The study finds that inbound tourism is a driving force for a regional innovation system in China and can bring a new life to regional economic development. Firstly, inbound tourism appears to have a direct and indirect impact on regional innovation, while absorptive capacity has a significant mediating effect in this relationship. Secondly, the impact of inbound tourism on regional innovation capacity tends to be stronger in the wealthier and more international-oriented provinces. Thirdly, the effect of inbound tourism on technological innovation is mostly weaker than that of social innovation. Fourthly, this study supports the TLG hypothesis with regional innovation as the mediating variable.
    Keywords: Inbound tourism; regional innovation; absorptive capability; spatial panel data analysis; China.
    Date: 2016–12
  22. By: Enrica Di Stefano (Bank of Italy); Daniela Marconi (Bank of Italy)
    Abstract: Market frictions prevent the efficient allocation of factors of production, slow down structural transformation and lead to costs in terms of lower output and aggregate total factor productivity (TFP). We use a theoretical framework developed by Aoki (2012) featuring sector-specific frictions on capital and labor à la Chari, Kehoe and McGrattan (2007), and compute capital and labor misallocations in China and India using data for 26 sectors over the period 1980-2010. Our findings show that large factor misallocations exist in the two countries. We estimate the potential gains in terms of aggregate TFP stemming from an efficient allocation of factors to range from 25% to 35% in China and from 35% to 40% in India. Finally, we discuss the implications for structural transformation and the relationship between the observed allocation inefficiencies and the evolution of the business environment in the two countries.
    Keywords: structural transformation, frictions, resource allocation, productivity, China, India
    JEL: E23 O11 O41 O47 O53 O57
    Date: 2016–12
  23. By: Jing Cai; Adam Szeidl
    Abstract: We organized business associations for the owner-managers of randomly selected young Chinese firms to study the effect of business networks on firm performance. We randomized 2,800 firms into small groups whose managers held monthly meetings for one year, and into a “no- meetings” control group. We find that: (1) The meetings increased firm revenue by 8.1 percent, and also significantly increased profit, factors, inputs, the number of partners, borrowing, and a management score; (2) These effects persisted one year after the conclusion of the meetings; and (3) Firms randomized to have better peers exhibited higher growth. We exploit additional interventions to document concrete channels. (4) Managers shared exogenous business-relevant information, particularly when they were not competitors, showing that the meetings facilitated learning from peers. (5) Managers created more business partnerships in the regular than in other one-time meetings, showing that the meetings improved supplier-client matching. (6) Firms whose managers discussed management, partners, or finance improved more in the associated domain, suggesting that the content of conversations shaped the nature of gains.
    JEL: D22 L14 O12 O14
    Date: 2016–12
  24. By: Michal Madr (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)
    Abstract: The main aim of the paper is to verify whether economic development, as the main component of Modernization theory, has affected the development of political regimes/democracy in post-socialist countries. Within Modernization theory, the contribution distinguishes between endogenous and exogenous Modernization theory. As indicators of the political regime, a composite index combining three concepts of democracy (Freedom in the World, Polity2 of the Polity IV Project and Freedom of Press) is used. On the basis of the index, several political systems (liberal democracies, hybrid and authoritarian regimes, non-liberal states, electoral democracies and non-democratic countries) are compared. For attainment of the aim, the paper uses three methods, a test of the equivalence of means, and logistic and linear regression analyses (OLS, OLS fixed effects, the Difference GMM and the System GMM). The reference period is focused on the years 1990-2015. According to the results, the paper rejects the endogenous Modernisation hypothesis as an explanation of the establishment of political regimes (formal institutions) in post-socialist countries, but alongside, one can state that the theory could be used as an elucidation of the formation of liberal democratic and authoritarian political systems in the post-socialist area. Simultaneously, the exogenous Modernization theory is confirmed, which means that higher economic development promotes the consolidation of democratic systems, particularly in the case of liberal democracies.
    Keywords: Modernization theory, income, democratisation, post-socialist economies
    JEL: D72 O17 P26
    Date: 2016–12
  25. By: Dmitrii Dubrov (National Research University Higher School of Economics); Alexander Tatarko (National Research University Higher School of Economics)
    Abstract: This paper examines the role of the place of living (rural or urban) and its socio-cultural context in determining the parent-adolescent child value similarity. We interviewed representatives of two generations: parents and adolescent children from 90 families in Moscow and 62 families in villages (n=304 people). Our findings indicate the influence of the socio-cultural context on the transmission of values. Conservation values are primarily transmitted from parents to children in more traditional, rural contexts. Openness to change, Self-Enhancement and Self-Transcendence values are transmitted from parents to children mainly in urban contexts. The perceived psychological closeness between parents and adolescents (adolescent perception) predicts value transmission in urban and rural contexts. All values of adolescents are more similar to the values of peers than parents, in both urban and rural contexts.
    Keywords: individual values, intergenerational transmission of values, value similarity, socialization, parents, adolescents
    JEL: Z
    Date: 2016
  26. By: Bastian Heider; Martin T.W. Rosenfeld; Albrecht Kauffmann
    Abstract: Public sector activities are often neglected in economic approaches to analyze the driving forces of urban growth and changes in urban hierarchies. One crucial aspect of public sector activities is the institutional status of cities as regional capital. The paper is reporting on a quasi natural experiment on East German county towns. Since 1990, cities in East Germany have shown remarkable differences in their population development. During the same period many towns have lost their former status as county seat due to several administrative reforms. Using a Difference-In-Difference approach we compare the population development of former county capitals to cities successfully holding a capital status over the observed period. The estimation results show a statistically significant and economically relevant positive effect of holding a county capital status on annual population change. We further observe that the difference in population developments is increasing over time. Our results are not only of empirical interest but contribute to the general literature, explaining urban hierarchies and should be considered by policymakers for future policy measures stimulating urban economic growth.
    Keywords: Urban Economic Growth; Centrality; Institutions; Public Sector; East Germany; Post-socialist Cities; Capital Cities; County Towns; County Government Reform
    JEL: R1 R5 P2 H1 H7
    Date: 2016–12

This nep-tra issue is ©2017 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.