nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒02‒11
nineteen papers chosen by
J. David Brown
United States Census Bureau

  1. China’s Digital Economy: Opportunities and Risks By Longmei Zhang; Sally Chen
  2. Competition, Markups, and Gains from Trade: A Quantitative Analysis of China Between 1995 and 2004 By Hsu, Wen-Tai; Lu, Yi; Wu, Guiying Laura
  3. Устойчивост на селското стопанство в България By Bachev, Hrabrin; Koteva, Nina; Mitova, Dilyana; Ivanov, Bojidar; Chopeva, Minka; Sarov, Angel; Toteva, Dessislava; Todorova, Kristina; Yovchevska, Plamena; Kaneva, Krasimira; Aleksandrova, Svetlana; Mitov, Anton
  4. "Public Debt in Southeast Europe” – Why to enable public participation? By Trenovski, Borce; Mijovic-Spasova, Tamara
  5. Albania; 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Albania By International Monetary Fund
  6. Vietnam; Technical Assistance Report-Report on Residential Property Price Statistics Capacity Development Mission By International Monetary Fund
  7. Republic of Belarus; 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Republic of Belarus By International Monetary Fund
  8. The only child, birth order and educational outcomes By Lao, Yehui; Dong, Zhiqiang
  9. Unequal Migration and Urbanisation Gains in China By Pierre-Philippe Combes; Sylvie Démurger; Shi Li; Jianguo Wang
  10. Market And Network Corruption By Maria Kravtsova; Aleksey Oshchepkov
  11. Ukraine; Technical Assistance Report-Report on Residential Property Price Index Capacity Development Mission By International Monetary Fund
  12. Facilităţile fiscale ca instrument de stumulare a investiţiilor By Balan, Aliona
  13. Ukraine; Request for Stand-By Arrangement and Cancellation of Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for Ukraine By International Monetary Fund
  14. Financial Inclusion of Small and Medium-Sized Enterprises in the Middle East and Central Asia By Nicolas R Blancher; Maximiliano Appendino; Aidyn Bibolov; Armand Fouejieu; Jiawei Li; Anta Ndoye; Alexandra Panagiotakopoulou; Wei Shi; Tetyana Sydorenko
  15. Non-linear Incentives and Worker Productivity and Earnings: Evidence from a Quasi-experiment By Richard B. Freeman; Wei Huang; Teng Li
  16. Столица Казахстана: институциональная среда агропродовольственного рынка, инфраструктура продовольственного снабжения мегаполиса By Zadvorneva>, Evgeniya; Stukach, Victor
  17. Republic of Armenia; Technical Assistance Report-Public Investment Management Assessment By International Monetary Fund
  18. Chinese competition and network effects on the extensive margin By Daniel Goya
  19. Former Yugoslav Republic of Macedonia; 2018 Article IV Consultation; Press Release; Staff Report; and Statement by the Executive Director for Former Yugoslav Republic of Macedonia By International Monetary Fund

  1. By: Longmei Zhang; Sally Chen
    Abstract: China’s digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.
    Date: 2019–01–17
  2. By: Hsu, Wen-Tai (School of Economics, Singapore Management University); Lu, Yi (School of Economics and Management, Tsinghua University); Wu, Guiying Laura (Division of Economics, Nanyang Technological Univeristy)
    Abstract: This paper provides a quantitative analysis of gains from trade in a model with head-to-head competition using Chinese firm-level data from Economic Censuses in 1995 and 2004. We find a significant reduction in trade cost during this period, and total gains from such improved openness during this period is 7.1%. The gains are decomposed into a Ricardian component and two pro-competitive ones. The procompetitive effects account for 20% of the total gains. Moreover, the total gains from trade are 13 - 31% larger than what would result from the formula provided by ACR (Arkolakis, Costinot, and Rodríguez-Clare 2012), which nests a class of important trade models, but without pro-competitive effects. We find that head-to-head competition is the key reason behind the larger gains, as trade flows do not reflect all of the effects via markups in an event of trade liberalization. One methodological advantage of this paper’s quantitative framework is that its application is not constrained by industrial or product classifications; thus it can be applied to countries of any size.
    Keywords: Gains from trade; Markups; Pro-competitive effects; ACR formula; Head-to-head competition; Chinese economy
    Date: 2019–01–11
  3. By: Bachev, Hrabrin; Koteva, Nina; Mitova, Dilyana; Ivanov, Bojidar; Chopeva, Minka; Sarov, Angel; Toteva, Dessislava; Todorova, Kristina; Yovchevska, Plamena; Kaneva, Krasimira; Aleksandrova, Svetlana; Mitov, Anton
    Abstract: This paper gives answer to topical and debated research and practical questions at the current stage of development of Bulgarian agriculture - „what is sustainability of agriculture", „how to assess sustainability of agricultural in the conditions of EU CAP implementation in the country“, and „which are critical factors for improvement of socio-economic and environmental sustainability in the sector“. Evolution of the „concept“ of agrarian sustainability and the major approached for its assessment are discussed More precise definition of sustainability of Bulgarian agriculture is suggested and the requirements for the system of its assessment are characterised. For the first time a new „governance“ pillar of agrarian sustainability is included along with the universally accepted economic, social and environmental pillars (aspects). Practically applicable for the specific conditions of Bulgarian agriculture holistic framework for assessing sustainability level of agrarian systems of different types (sector, sub-sector, region, ecosystem, agricultural farm) is suggested. The later included 25 principles, 66 criteria, and 163 indicators and reference values for assessing integral, governance, economic, social and environmental sustainability as well as approach for their calculation, integration and interpretation. Approbation of the elaborated framework in assessment of agrarian sustainability at various levels (national, sub-sector, region, (agro)ecosystem, and farm) is made on the base of official statistical, etc, information and original farm surveys. Critical factors for improving sustainability of Bulgarian agriculture are identified, and recommendation made for amelioration of research and assessment practices, public policies and farming strategies for sustainable development. Website of the project:
    Keywords: agrarian sustainability, assessment framework, governance, economic, social, environmental, integral, Bulgaria
    JEL: Q10 Q12 Q13 Q15 Q18 Q5
    Date: 2019–02–07
  4. By: Trenovski, Borce; Mijovic-Spasova, Tamara
    Abstract: The objective of the study is to analyze various policies, regulation and legislation regarding public debt and processes of the situation in the public finance field, to recognize key problems, propose solutions and advocate for change, with a special focus on monitoring of public finance. Often debt does not serve the needs of the citizens and puts limitations on democracy in a sense that does not imply involvement of citizens and NGOs in the process of decision making in the area of public finances and at the same time is characterized by a low level of transparency. Hence, the study will identify problems in implementation of the existing legislation or identify lack of necessary legislation. This will be the basis for proposing policy recommendations regarding monitoring of public finance for the covered countries and advocating for them. The study analyzes the recent debt trends in Bosnia and Herzegovina, Bulgaria, Kosovo, Macedonia, Montenegro, Serbia, and Slovenia with the aim of warning about possible problems with long-term debt sustainability. It is very important to detect debt vulnerabilities and to react in a timely manner.
    Keywords: public finances, Balkan countries, public finance management
    JEL: H3 H5 H6
    Date: 2018–06–01
  5. By: International Monetary Fund
    Abstract: Despite robust GDP growth, projected at 4 percent in 2018, inflation remains below its 3 percent target. The fiscal deficit has stabilized around 2 percent of GDP, implying a modest gradual reduction in public debt, which remains high at close to 70 percent of GDP. Monetary policy was relaxed further in June 2018 following a rapid appreciation of the exchange rate. The current account deficit has moderated over recent years, to about 6.5 percent of GDP. The outlook is mostly positive, with GDP growth projected to converge to 4 percent over the medium term, with inflation stabilizing around its target by 2021. Further fiscal consolidation and an accommodative monetary policy, combined with growth-promoting structural reforms represent the right policy mix.
    Date: 2019–01–28
  6. By: International Monetary Fund
    Abstract: A technical assistance (TA) mission was conducted during July 9–13, 2018 to assist the General Statistics Office of Vietnam (GSO) with the development of a residential property price index (RPPI). This was the first mission conducted to Vietnam under the auspices of the multi-annual STA Data for Decisions (D4D) trust fund. The main objective of TA provided to Vietnam under the D4D will be to assist the GSO to develop an RPPI. The GSO recently launched two initiatives to collect potential source data for the RPPI since taxation data are unreliable in respect of reported transaction prices, and the State Bank of Vietnam (SBV) does not collect loan level mortgage data.
    Keywords: Asia and Pacific;Vietnam;
    Date: 2019–01–10
  7. By: International Monetary Fund
    Abstract: The Belarusian economy is in a cyclical recovery, inflation is at historically low levels and the exchange rate has been broadly stable. Although macroeconomic policy frameworks have improved, there is a need to reduce deep seated vulnerabilities such as rapidly rising public debt, high dollarization, and limited trade and financing diversification. In addition, reforms of the large state-owned enterprise sector are critical to tackle inefficiencies and increase potential growth. Risks ahead are elevated; notably, Belarus could lose significant oil-related discounts and transfers due to internal tax changes in Russia, but the authorities are confident of a successful outcome to the ongoing negotiations.
    Date: 2019–01–17
  8. By: Lao, Yehui; Dong, Zhiqiang
    Abstract: The one-child policy was implemented in September 1980 and abolished in late 2015. With this change in the demographic policy, the fertility decision of families also changed. Such decisions can result in an increase in the number of siblings in a family. Individuals' educational outcomes may be affected by a change in their parents' fertility decision. The objective of this paper is to provide evidence of the difference of educational outcomes between the only child and the first born. The authors try to estimate the change of educational outcomes when the only child of a family turns to the first born of a family. Moreover, they estimate different channels to interpret these effects. They employ the dataset of China Education Panel data in this paper. In the part of mechanism check, the Sobel-Good test is used for checking the mediation effects of different channels. They found the only child has significant higher educational outcomes comparing to a child who has siblings. Furthermore, the middle child has the lowest educational outcomes of a family. The last born has higher educational outcomes than his or her siblings. To explain these effects, the authors use three channels to interpret: (1) money resource, (2) parenting time, and (3) closeness of parent-child relationships. The policy implication is to help the policymaker estimate and predict the impact of the new demographic policy.
    Keywords: only child,birth orders,educational outcomes
    JEL: I20 J13
    Date: 2019
  9. By: Pierre-Philippe Combes (Institut d'Études Politiques [IEP] - Paris); Sylvie Démurger (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Shi Li (Beijing Normal University); Jianguo Wang (Beijing Information Science and Technology University)
    Abstract: We assess the role of internal migration and urbanisation in China on the nominal earnings of three groups of workers (rural migrants, low-skilled natives, and high-skilled natives). We estimate the impact of many city and city-industry characteristics that shape agglomeration economies, as well as migrant and human capital externalities and substitution effects. We also account for spatial sorting and reverse causality. Location matters for individual earnings, but urban gains are unequally distributed. High-skilled natives enjoy large gains from agglomeration and migrants at the city level. Both conclusions also hold, to a lesser extent, for low-skilled natives, who are only marginally negatively affected by migrants within their industry. By contrast, rural migrants slightly lose from migrants within their industry while otherwise gaining from migration and agglomeration, although less than natives. The different returns from migration and urbanisation are responsible for a large share of wage disparities in China.
    Keywords: urban development,agglomeration economies,wage disparities,migrants,human capital externalities,China
    Date: 2019
  10. By: Maria Kravtsova (National Research University Higher School of Economics); Aleksey Oshchepkov (National Research University Higher School of Economics)
    Abstract: Economists tend to reduce all corruption to impersonal market-like transactions, ignoring the role of social ties in shaping corruption. In this paper, we show that this simplification substantially limits the understanding of corruption. We distinguish between market corruption (impersonal bribery), and network (or parochial) corruption which is conditional on the social connections between bureaucrats and private agents. We argue, both theoretically and empirically, that these types of corruption have different qualities. Using data from the Life in Transition Survey (LiTS) which covers all post-socialist countries we show, first, that the correlation between market and network corruption is weak, which implies that ignoring network corruption leads not only to an underestimation of the overall scale of corruption but also biases national corruption rankings. Secondly, in line with theoretical expectations, we find that network corruption is more persistent over time, less related to contemporary national socio-economic and institutional characteristics and has stronger historical roots than market corruption. Yet, network corruption, unlike bribery, is not able to ‘grease the wheels’ and is not associated with political instability. Lastly, we show that the decline in bribery which was observed in almost all post-socialist countries in the period from 2010 to 2016 was accompanied by rising network corruption in many of them, which has important policy implications
    Keywords: market corruption, parochial corruption, network corruption, blat, bribery, post-socialist countries
    JEL: D73 Z13 L26
    Date: 2019
  11. By: International Monetary Fund
    Abstract: A technical assistance (TA) mission was conducted during June 18–22, 2018 to support the State Statistics Service of Ukraine (SSSU) in improving the residential property price indexes (RPPI) for Ukraine. This was the second of a series of SECO2 RPPI-funded TA missions to take place until mid-2019 that will assist in building staff capacity for further development of the RPPI. RPPIs have been identified as critical ingredients for financial stability policy analysis. The indexes are used by policy makers as an input into design of macroprudential policies, that is, those policies aim to reduce systemic risks arising from “excessive” financial procyclicality (such as asset bubbles). RPPIs are also used by policy makers to inform monetary policy and inflation targeting.
  12. By: Balan, Aliona
    Abstract: In the present article we make reference to the role of tax incentives in stimulating investment. There are a number of factors that influence the investment process, including tax concessions, as one of the most common measures of support by the state of investment activity. In this paper it is presented an analysis of the existing tax incentives in the Republic of Moldova aimed at stimulating investment activity, have been identified the types of tax breaks that have the greatest impact on investment incentives, as well as proposed some recommendations on the granting of tax incentives and customs in order to stimulate investment activity in the Republic of Moldova.
    Keywords: investment, taxes, tax incentives, methods of regulation, fiscal policy
    JEL: M2
    Date: 2018
  13. By: International Monetary Fund
    Abstract: The Ukrainian authorities have been able to restore macro-economic stability and growth following the severe economic crisis of 2014–15. However, efforts to create a more dynamic, open, and competitive economy have fallen short of expectations, and the economy still faces important challenges. Investment, particularly foreign direct investment, is held back by a difficult business environment, while large numbers of worker seek job opportunities abroad as economic growth is too low for incomes to noticeably close the gap with regional peers. Reserves have recovered, but remain relatively low, while the economy is still vulnerable to shocks.
    Keywords: Ukraine;Europe;
    Date: 2019–01–08
  14. By: Nicolas R Blancher; Maximiliano Appendino; Aidyn Bibolov; Armand Fouejieu; Jiawei Li; Anta Ndoye; Alexandra Panagiotakopoulou; Wei Shi; Tetyana Sydorenko
    Abstract: The importance of financial inclusion is increasingly recognized by policymakers around the world. Small and medium-sized enterprise (SME) financial inclusion, in particular, is at the core of the economic diversification and growth challenges many countries are facing. In the Middle East and Central Asia (MENAP and CCA) regions, SMEs represent an important share of firms, but the regions lag most others in terms of SME access to financing.
    Keywords: Financial inclusion;Middle East and Central Asia;Business enterprises;Small and Medium Enterprises; Financial Inclusion; Middle East and Central Asia
  15. By: Richard B. Freeman; Wei Huang; Teng Li
    Abstract: Firms often use non-linear incentive systems to motivate workers to achieve specified goals, such as paying bonuses to reach targets in sales, production, or cost reduction. Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents greatly in 2015, we find that increased incentives induced agents to increase sales of the increasingly incentivized life insurance products, bunched around the new targets, albeit in part with some low quality sales that led to canceled contracts, while reducing sales of products out-side the new incentive system. The greater non-linear incentives raised agent incomes and low-ered turnover and substantially increased firm revenues net of the increase in payments to agents. The stock market reacted to the new system with a jump in the firms’ share price relative to its main competitor by 15-20% in the days surrounding introduction of the new system.
    JEL: J00 J22 J3 M5 M52
    Date: 2019–01
  16. By: Zadvorneva>, Evgeniya; Stukach, Victor
    Abstract: The resource base and market institutions of food supply of the suburban area of the capital of Kazakhstan are investigated. The economic essence, principles of formation and development of the institutional environment of the infrastructure of the agricultural market of the metropolis, methods of analysis of the state and efficiency of the strategic directions of development, factors of infrastructure development, the formation of modern institutions of food supply of the population. The parameters of the scenario of socio-economic dynamics up to 2030, based on the foresight methodology, are proposed. The potential and capabilities of the functional links of the infrastructure that require their development are analyzed: logistics, marketing, information, trade, service, innovation, etc. The book is addressed to employees of regional governments and local self-government, market research specialists, researchers, teachers, students of the system of training, managers and specialists of infrastructure organizations, agricultural enterprises
    Keywords: The suburban economy of the metropolis, the resource base of food supply, the infrastructure of the agro-food complex, the institutional structure of food supply to vulnerable segments of the population.
    JEL: Q1 Q18 R1 R12 R5
    Date: 2018–05
  17. By: International Monetary Fund
    Abstract: Public capital stock declined from 160 percent of GDP in 2000 to 62 percent of GDP in 2017. Public investment has remained low at approximately half of that invested by regional peers since 2012.1 This can be explained—to some extent—by a faster growth of recurrent spending at the expense of capital expenditure. As a result, Armenia ranks the mid-range of comparator countries in terms of the public capital stock. For the last three years, public investments have started to pick up through large energy and road projects, but this has been unable to reverse the declining trend of public capital stock
    Date: 2019–01–29
  18. By: Daniel Goya
    Abstract: I construct a network of input-output linkages in Chilean manufacturing and show that a negative demand shock has an impact on the number of firms producing in sectors that supply the sectors affected by the shock. Approximately one-third of the effect of increased Chinese competition on the extensive margin can be attributed to these network effects. The observed effect is a combination of multiproduct firms dropping varieties and firms leaving the market. I also study whether there is evidence of 'cascading failures' that could amplify the impact of idiosyncratic shocks. I find no evidence of these 'cascading effects'.
    Keywords: production networks, extensive margin, propagation of shocks, input-output, Chinese competition.
    JEL: D57 L25
    Date: 2019–02
  19. By: International Monetary Fund
    Abstract: More than twelve years after achieving candidate status, FYR Macedonia’s prospects for opening accession negotiations with the European Union are looking hopeful for the first time. The end of the political crisis has revived structural reforms, but investment is yet to gain a strong footing amid lingering uncertainties. Structural policies should focus on addressing longstanding weaknesses in the labor market, judiciary, and public administration to boost productivity and achieve faster income convergence. Macroeconomic policies should support this goal by rebuilding buffers and maintaining financial stability.
    Date: 2019–01–29

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