nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒01‒21
twenty-one papers chosen by
J. David Brown
United States Census Bureau

  1. Pull factors driving Russian multinationals into five CEE countries, a sectoral overview By Csaba Weiner
  2. China’s High Savings: Drivers, Prospects, and Policies By Longmei Zhang; Ray Brooks; Ding Ding; Haiyan Ding; Jing Lu; Rui Mano
  3. Republic of Poland; Technical Assistance Report-Revenue Administration Gap Analysis Program—The Value-Added Tax Gap By International Monetary Fund
  4. Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam By Le, Kien
  5. Globalization and State Capitalism: Assessing Vietnam's Accession to the WTO By Leonardo Baccini; Giammario Impullitti; Edmund J. Malesky
  6. The Chinese model of universal service policy: A two-decade retrospect based on an integrated framework By Xia, Jun
  7. Problems and solutions of accounting and evaluation of biological assets in Latvia By Iluta Arbidane; Iveta Mietule
  8. Different Versions of the Easterlin Paradox: New Evidence for European Countries By Kaiser, Caspar F.; Vendrik, Maarten C.M.
  9. Does environmental heterogeneity affect the productive efficiency of grid utilities in China? By Liu, X-Y.; Liu, L-Q.; Xie, B-C.; Pollitt, M.
  10. Does the adoption of Information and Communication Technologies improve the subjective well-being of citizens? A micro-level and city-level empirical investigation By Feng, Xiaodong; Jayakar, Krishna; Zhang, Huiping; Tang, Zhiwei
  11. When does privatization spur entrepreneurial performance? The moderating effect of institutional quality in an emerging market By Christopher Boudreaux
  12. The Potential of ICT in Serbia: An Emerging Industry in the European Context By Alexander Kleibrink; Nikola Radovanovic; Henning Kroll; Djerdj Horvat; Djuro Kutlaca; Lazar Zivkovic
  13. What drives old age work in China? By Henry, Carla.; Fraga, Federico.; Yu, Tang.
  14. Stock market and macroeconomic policies: The case of Mongolia By Taguchi, Hiroyuki
  15. Republic of Armenia; Financial Sector Assessment Program-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Armenia By International Monetary Fund
  16. Republic of Serbia; First Review under the Policy Coordination Instrument-Press Release; and Staff Report By International Monetary Fund
  17. Migrants and Firms : Evidence from China By Imbert, Clement; Seror, Marlon; Zhang, Yifan; Zylberberg, Yanos
  18. Improvement of Regional Innovation Policy in Ukraine in the Sustainable Development Context By Inna I. Koblianska; Larysa I. Kalachevska
  19. The logical evolution of internet governance policy in China from 1994-2017: A computational textual analysis approach By Wu, Jun
  20. Public Policy of Gender Equality in Albania in the Contexts of New Institutionalism By Eglantina Gjermeni; Alkida Lushaj
  21. Georgia; Third Review Under the Extended Fund Facility Arrangement-Press Release; Staff Report; Staff Supplement By International Monetary Fund

  1. By: Csaba Weiner (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: Investigating the Russian economic footprint through outward foreign direct investment (OFDI) and the activities of Russian multinationals has not become either outdated or less interesting, even though, understandably, most of the current attention on Russian influence in Europe has been focused on direct interference in political affairs. This paper is the second of a four-part series that outlines the international expansion of Russian multinationals in five EU-member Central and East European (CEE) states, i.e., the Czech Republic, Hungary, Poland, Slovakia and Slovenia. Here, the focus is on the pull factors responsible for Russian FDI inflows into these countries, as well as on the sectors in which investments are made. In doing so, the research relies on company data analysed using Dunning’s eclectic paradigm of international production and his typology of four motives behind FDI. We find that most Russian FDI has been done in hydrocarbons, iron, steel and machinery, but banking, software solutions, electronic production, real estate and even the light industry have also been targeted. Investment is dominated by market-seeking and, to a lesser extent, efficiency-seeking projects carried out by state-owned or state-related private firms. There are a limited number of innovative private Russian companies on the market that show features similar to those of multinationals from developed countries.
    Keywords: outward foreign direct investment, multinational enterprises, pull factors, Russia, Europe, Czech Republic, Hungary, Poland, Slovakia, Slovenia
    JEL: D22 F23 M16
    Date: 2018–11
  2. By: Longmei Zhang; Ray Brooks; Ding Ding; Haiyan Ding; Jing Lu; Rui Mano
    Abstract: China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, or lead to large external imbalances when they flow abroad. Today, high savings mostly emanate from the household sector, resulting from demographic changes induced by the one-child policy and the transformation of the social safety net and job security that occured during the transition from planned to market economy. Housing reform and rising income inequality also contribute to higher savings. Moving forward, demographic changes will put downward pressure on savings. Policy efforts in strengthening the social safety net and reducing income inequality are also needed to reduce savings further and boost consumption.
    Keywords: Asia and Pacific;China, People's Republic of;China; Savings; Demographic Changes; Social Safety Net; Inequality; Housing; Projections, China, Savings, Demographic Changes, Social Safety Net, Inequality; Housing, Projections, , General, Demographic Trends and Forecasts, Social Security and Public Pensions
    Date: 2018–12–11
  3. By: International Monetary Fund
    Abstract: This report presents the results of applying the Revenue Administration Gap Analysis Program (RA-GAP) value-added tax (VAT) gap estimation methodology1 to Poland for the period 2010–16. The RA-GAP methodology employs a top-down approach for estimating the potential VAT base, using statistical data from national accounts on value-added generated in each sector. There are two main components to this methodology for estimating the VAT gap: 1) estimate the potential VAT collections for a given period; and 2) determine the accrued VAT collections for that period. The difference between the two values is the VAT gap. RA-GAP provides estimates of the two components of the tax gap: the compliance gap and the policy gap. The compliance gap is the difference between the potential VAT that could have been collected given the current policy framework and actual accrued VAT collections. The policy gap is the difference between the overall tax gap and the compliance gap. To put the level and trends of the compliance gap into context it is also necessary to analyze the level and trends of the overall tax gap and the policy gap.
    Date: 2018–12–07
  4. By: Le, Kien
    Abstract: We evaluate the effects of restricted land use rights on aggregate productivity using micro-level data within a quantitative model. In particular, we exploit the Rice Land Designation Policy in Vietnam, which forces farmers to produce rice on almost 45% of plots of land. The policy provides a natural setting for investigating the aggregate effects of land use misallocation. We quantify the impacts of this system by formulating a two-sector model featuring production and occupation choices. We also use digitized versions of Vietnam’s Local Land Use Atlas and Global Agro-Ecological Zones database to construct a micro-spatial dataset that shapes important features of the model and allows us to compare the restricted against a counterfactual efficient allocation. The main findings suggest that eliminating all land use restrictions leads to 10.6% gain in agricultural total factor productivity and 4.36% increase in real GDP per capita. While misallocation in agriculture has been studied extensively, our research highlights a novel source of misallocation that is prevalent in other countries such as China, Myanmar, Uzbekistan, among others.
    Keywords: Agriculture, misallocation, land use restrictions, aggregate productivity, Vietnam
    JEL: O11 O13 O4
    Date: 2018–12–20
  5. By: Leonardo Baccini; Giammario Impullitti; Edmund J. Malesky
    Abstract: What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset of Vietnamese firms we document a set of empirical regularities distinguishing SOEs from private _rms. Then we empirically study the effect of the 2007 WTO accession on selection, competition, and productivity. Our results show that WTO entry is associated with higher probability of exit, lower firm profitability, and substantial increases in productivity for private firms but not for SOEs. Our estimates suggest that the overall productivity gains would have been about 40% larger in a counterfactual Vietnamese economy without SOEs. We highlight some economic mechanisms possibly driving these findings through the lenses of a model of trade with heterogeneous private and state-owned firms. The model suggests that political/regulatory barriers to entry and access to credit are key drivers of the different response of SOEs to trade liberalization. Further empirical tests broadly validate these insights.
    Keywords: state-owned enterprises, state capitalism, heterogeneous firms, gains from trade, WTO, Vietnam
    JEL: F12 F13 F14 P31 P33
    Date: 2019–01
  6. By: Xia, Jun
    Abstract: Over the past two decades China has achieved eye-catching development in the provision of telephone and Internet services in its vast rural areas. With the literature's lopsided focus on Western nations, a cohesive paradigm in mapping the Chinese style of universal service policy remains elusive, a situation that has often obfuscated deeper understanding of the Chinese case. This present paper proposes and applies an integrated offer–agent–target (OAT) framework in a retrospective and empirical examination of China's universal service practices and characterization of what has appeared to be the Chinese model. In so doing, China's universal service development is demarcated into discernible stages which are then matched with corresponding institutional landscapes. Three stages are identified and corresponding institutional landscapes explicated. Finally, implications are discussed and policy suggestions are made for the Chinese policy-maker.
    Keywords: Telecommunications universal service,Broadband Internet,Universal access,Policy analysis,Chinese model
    Date: 2018
  7. By: Iluta Arbidane (Rezekne Academy of Technologies); Iveta Mietule (Rezekne Academy of Technologies)
    Abstract: Activities in the field of agriculture deal with plants and animals constituting biological assets of the sector. From the point of view of accounting and valuation, biological assets is a scarcely investigated topic in Latvia, as well the object of the research only in general terms is reflected in Latvian legislation. That leads to confusion and uncertainty in evaluation and accounting of biological assets in the practical accounting. The subject of the study: evaluation and accounting of biological assets. The aim of the study is to explore and analyse problems of accounting and evaluation of biological assets in Latvia and to propose solutions. One of the research tasks is to explore the current legal base for evaluation and accounting of biological assets provided in the national legislation, to evaluate how it complies with the international accounting standards and to analyse the experience of other countries. The challenging issues of evaluation and accounting of biological assets in Latvia are defined in the research, possible solutions for improving the quality of accounting of biological assets are developed proposing the necessary amendments to the legislation and revisions to the methodological documents. Methods of the research: monographic/descriptive method, document analysis, and graphical analysis.
    Keywords: biological assets,evaluation,accounting,agricultural
    Date: 2018–09–30
  8. By: Kaiser, Caspar F. (Nuffield College, Oxford); Vendrik, Maarten C.M. (Maastricht University)
    Abstract: Richer people are happier than poorer people, but when a country becomes richer over time, its people do not become happier. This seemingly contradictory pair of findings of Richard Easterlin has be-come famous as the Easterlin Paradox. However, it was met with counterevidence. To shed more light on this controversy, we distinguish between five different versions of the paradox. These versions apply to either groups of countries or individual countries, and to either the long or the medium term. We argue that the long term is most appropriate for testing the paradox, and that tests of the paradox should always control for an autonomous time trend. Unfortunately, this requirement renders the long-term version of the paradox for individual countries untestable. We test all other versions of the paradox with Eurobarometer data from 27 European countries. We do so by estimating country-panel equations for mean life satisfaction that include trend and cyclical components of per capita GDP as regressors. When testing variants of the paradox that apply to groups of countries, we find a clear and robust confirmation of the long- and medium-term versions of the paradox for a group of nine Western and Northern European countries. Moreover, we obtain a non-robust rejection of the medium-term variant of the paradox for a set of eleven Eastern European countries. On the level of individual countries, the medium-term variant of the paradox clearly holds for the nine Western and Northern European countries, but is consistently rejected for Greece, Ireland, Italy, and Spain. In the case of the Eastern European countries, the medium-term version of the paradox is rejected for Bulgaria, Lithuania, and Poland. As the Western and Northern European countries have a high per capita GDP as compared to that of Southern and Eastern European countries, our results are in line with the finding of Proto and Rustichini (2013), who find a non-monotonic relation between per capita GDP and life satisfaction over time which is positive for poorer countries, but flat (or negative) for richer countries.
    Keywords: Hodrick-Prescott filter, economic growth, life satisfaction, happiness, Easterlin Paradox, European country panel
    JEL: I31 I32 O11
    Date: 2018–11
  9. By: Liu, X-Y.; Liu, L-Q.; Xie, B-C.; Pollitt, M.
    Abstract: China’s electricity industry has experienced a reform whereby the generation sector is being opened up to competition but the transmission and distribution sectors are still regulated. Efficiency and benchmarking analyses are widely used for improving the performance of regulated segments, and the impact on efficiency of observable environmental factors, together with unobservable characteristics, has gained increasing attention in recent years. This study uses alternative stochastic frontier models combined with input distance functions to study the productive efficiency of 29 grid firms of China over the period 1993–2014 and investigates the effect of observed environmental factors and unobserved heterogeneity. The results indicate that efficiency is sensitive to model specification and illustrates the presence of observed and unobserved heterogeneity. The number of customers, power delivered and network length are demonstrated to have positive impacts on the utilities’ efficiency while adverse environmental conditions harm the operation of grid utilities, but policy regulations may offset the negative impact. Finally, we suggest that there is room for efficiency improvement in the distribution grid, which could be encouraged by incentive regulation, even taking due account of environmental heterogeneity.
    Keywords: Grid industry; Efficiency estimation; Stochastic frontier analysis; Environmental heterogeneity; China
    JEL: L94
    Date: 2018–06–25
  10. By: Feng, Xiaodong; Jayakar, Krishna; Zhang, Huiping; Tang, Zhiwei
    Abstract: This paper investigates the role of information and communication technologies (ICT) adoption and usage in enhancing the subjective well-being (SWB) of citizens, using the latest available China General Social Survey (CGSS) database. The impact is assessed using a two-level hierarchical linear model (HLM) accounting for both individual- and city-level characteristics. The findings suggest that government policies to increase the adoption of broadband and ICTs have implications beyond economic growth and opportunity, extending to the "happiness" of citizens.
    Date: 2018
  11. By: Christopher Boudreaux
    Abstract: We explore how institutional quality moderates the effectiveness of privatization on entrepreneurs sales performance. To do this, we blend agency theory and entrepreneurial cognition theory with insights from institutional economics to develop a model of emerging market venture performance. Using data from the World Banks Enterprise Survey of entrepreneurs in China, our results suggest that private-owned enterprises (POEs) outperform state-owned enterprises (SOEs) but only in environments with high-quality market institutions. In environments with low-quality market institutions, SOEs outperform POEs. These findings suggest that the effectiveness of privatization on entrepreneurial performance is context-specific, which reveals more nuance than previously has been attributed.
    Date: 2019–01
  12. By: Alexander Kleibrink (European Commission - JRC); Nikola Radovanovic (European Commission - JRC); Henning Kroll (Fraunhofer Institute for Systems and Innovation Research ISI); Djerdj Horvat (Fraunhofer Institute for Systems and Innovation Research ISI); Djuro Kutlaca (Institute Mihajlo Pupin); Lazar Zivkovic (Institute Mihajlo Pupin)
    Abstract: The Information and Communication Technologies (ICT) industry is widely recognised as one of key driving forces of contemporary competitiveness. Inside the European Union, ICT are not only seen as a strategic sector, but also as a means to create positive spillovers to other economic sectors and achieve cross-innovation. Under this objective, the European Union supports the enhancement of the ICT industry potential in the Western Balkans, which was recently underlined with the adoption of the Digital Agenda for the Western Balkans. Within this region, Serbia has recorded the strongest growth. The Serbian government recognised digitalisation as priority. However, the environment of the ICT industry in Serbia, mostly referring to regulatory, political and educational frameworks, still needs to be improved. This paper analyses the status quo of the ICT industry in the Western Balkans with a focus on Serbia. It discusses the main challenges and proposes development paths with specific measures to be taken.
    Keywords: EU, Western Balkans, Serbia, ICT, software
    Date: 2018–12
  13. By: Henry, Carla.; Fraga, Federico.; Yu, Tang.
    Abstract: The aim of this paper is to contribute to an understanding of the decisions of the near old and older Chinese to work, and how work characteristics vary across genders, localities, and within overall income and security situations as ageing advances.
    Keywords: 1, 2, 3
    Date: 2018
  14. By: Taguchi, Hiroyuki
    Abstract: Mongolian stock market is underdeveloped compared with its banking credit market, due to a lot of impediment factors to prevent its development. This means Mongolian economy still has much room where its stock market development promotes the long-term financing and investment into non-mining sectors for sustainable economic growth. This paper aims to provide the evidence on the relationship between stock market and macroeconomic policies in Mongolia under the hypothesis that the recent biases of fiscal and monetary policies would distort her stock-price formation. The empirical analysis in this study found that the cumulative public debt and too high policy rate have stagnated the stock prices, through identifying the negative impulse responses of stock prices to the shocks of policy rate and government securities under a vector-autoregressive model estimation. The strategic policy implication for normalizing the stock prices could be the significance in ensuring budget consolidation and in addressing a fear of floating in monetary policy management in Mongolia.
    Keywords: Stock Market; Fiscal policy; Government Securities; Monetary Policy; Policy Rate; Vector auto-regression
    JEL: E44 G32 O53
    Date: 2018–12
  15. By: International Monetary Fund
    Abstract: The Armenian banking sector is recovering from the 2014 economic slowdown, aided by additional capital injected by shareholders, several mergers, and improved regulation and supervision. However, banks, including the largest ones, are vulnerable to external shocks because high levels of dollarization expose them to FX-related credit and liquidity risks. These risks can be mitigated with the adoption of a stressed debt service to income ratio limit, the gradual introduction of reserve requirements in foreign currency for liabilities denominated in foreign currency, and the adoption of the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) in domestic currency and in United States dollars (USD). The introduction of the capital surcharge for domestic systemically important banks is also needed.
    Keywords: Middle East;Armenia;
    Date: 2018–12–12
  16. By: International Monetary Fund
    Abstract: Recent economic developments. The program is broadly on track and the economy is growing strongly, supported by private consumption, investment, and exports. Fiscal performance remains sound, modernization of the tax administration has accelerated, and public debt has fallen sharply. Inflation remains below the mid-point of the NBS inflation band, while the NBS has kept rates on hold since April. Both credit and private sector wage growth are strengthening. Program performance. Quantitative targets (QTs) for end-September 2018 were met, apart from a minor deviation on the QT for domestic arrears. Most reform targets (RTs) have been implemented, albeit some with delays. Staff recommends completion of the first review under the Policy Coordination Instrument and modification of QTs for end-March and an establishment of end-September 2019 QTs.
    Date: 2018–12–19
  17. By: Imbert, Clement (University of Warwick and JPAL); Seror, Marlon (University of Bristol); Zhang, Yifan (Chinese University of Hong Kong); Zylberberg, Yanos (University of Bristol and CESifo)
    Abstract: This paper estimates the causal effect of rural-urban migration on urban production in China. We use longitudinal data on manufacturing firms between 2001 and 2006 and exploit exogenous variation in rural-urban migration due to agricultural price shocks. Following a migrant inflow, labor costs decline and employment expands. Labor productivity decreases sharply and remains low in the medium run. A quantitative framework suggests that destinations become too labor-abundant and migration mostly benefits lowproductivity firms within locations. As migrants select into high-productivity destinations, migration however strongly contributes to the equalization of factor productivity across locations
    JEL: D24 J23 J61 O15
    Date: 2018
  18. By: Inna I. Koblianska (Sumy National Agrarian University, Sumy, Ukraine); Larysa I. Kalachevska (Sumy National Agrarian University, Sumy, Ukraine)
    Abstract: In the light of the Sustainable Development (SD) concept, the eco-innovation promotion becomes the central issue of innovation regulation. Given the strategic significance of SD goals for Ukraine and ongoing powers decentralization reform, it is desirable to study the capacity of regional and local authorities to form a proper incentive environment for the sustainable community’s development on innovation (eco-innovation) basis. The conducted analysis shows a limited capacity of regional and local bodies to set drivers of the eco-innovation development in motion. The need to extend the authorities’ powers in the field of resource prices and local tax rates setting and to strengthen the environmental orientation of existing innovation regulation tools is emphasized, in order to improve the regional innovation policy in Ukraine.
    Keywords: innovation policy, sustainable development, regional policy, eco-innovation, eco-innovation drivers
    JEL: O38 O31 Q01 Q58 R5
    Date: 2019–01
  19. By: Wu, Jun
    Abstract: As China government gives full play to the role of digital technology in driving and leading the development of economy and society, policy issues on China internet governance have gained wide attractions from academics and practitioners. Grounded on a unique textual dataset collected from China official law and regulation database with over 300 central and local government laws and regulations on internet governance released during the period of 1994 and 2017,this study investigates the evolutional characteristics of the policy central topics, policy subjective and policy orientation in the timeframe of 1994 to 2017.This paper contributes to the existing knowledge accumulation not only in its uncovering of the evolutional logic hidden in the large swaths of policy text but also by introducing a computational text analysis approach to facilitate the text oriented policy evaluation.
    Keywords: Internet governance;regulation policy;China,Topic modeling
    Date: 2018
  20. By: Eglantina Gjermeni (Parliament of Albania, Tirana, Albania); Alkida Lushaj (OSCE Presence in Albania, Parliament of Albania, Tirana, Albania)
    Abstract: The core of this paper is to analyze the public policy of gender equality in Albania, particularly on policy areas of political participation, in the context of new institutional approaches. Having done a research, this article attempts to explain the effects of mechanism as gender quota to the level of women's participation in politics and decision-making in Albania. At the same time, examines the challenges of gender quota implementation in Albania. In this paper, it is understood that the interpretation of “the gender inequality problem†determines the equality policies applied on this issue and the structure of formal institutions in that policy. That is, how the gender equality policy has been formed and applied as a public policy in Albania. Besides, equality policies and formal institutional structure on that issue is being formed depending on how “the problem of gender inequality†is perceived by policy-maker actors. In this paper, using the concept of gender as a process analysis, we find evidence that the implementation of gender quotas increased the number of women's participation in politics and decision-making and brought in a more diverse group of women. We also find that women in Albania still continue to face inequality and discrimination, and there is still a lot to be done, to enjoy their rights de facto and to have effective protection against gender discrimination.
    Keywords: Gender Equality, Gender Quota, Public Policy, New Institutionalism
    Date: 2018–11
  21. By: International Monetary Fund
    Abstract: Recent economic developments. Economic activity remained strong in 2018H1 but decelerated since due to subdued private construction activity and delays in public infrastructure. Inflation has remained below the 3-percent inflation target in 2018. Higher revenues and lower investment resulted in a fiscal surplus through September 2018. Against the background of high credit growth, the authorities introduced regulations to limit household over-indebtedness. The banking sector remains well capitalized, liquid, and profitable, but dollarization remains high.
    Date: 2018–12–19

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