nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒05‒13
34 papers chosen by
J. David Brown
United States Census Bureau

  1. What Causes Chinese Listed Firms To Switch Bank Loan Provider? Evidence From A Survival Analysis By Huang, Jiayi; Matthews, Kent; Zhou, Peng
  2. Land Market Development and Small Farms’ Access to Land in the Western Balkans By Bedrač, Matej; Bele, Sara; Cunder, Tomaž; Kožar, Maja
  3. Economic and non-economic returns to Communist Party membership in Viet Nam By Markussen Thomas; Ngo Quang-Thanh
  4. Evaluation of the sophistication of Chinese industries using the information-geometric decomposition approach By Takanori Minamikawa
  5. Social capital and household vulnerability: New evidence from rural Viet Nam By Vo Thang
  6. Rise of Bank Competition: Evidence from Banking Deregulation in China By Haoyu Gao; Hong Ru; Robert Townsend; Xiaoguang Yang
  7. Individual-level employment transitions in rural Viet Nam By Ngo Quang-Thanh
  8. Income under-reporting and tax evasion: How they impact inequality in Viet Nam By Dang Duc; La Hai
  9. Trade policy repercussions: the role of local product space -Evidence from China By Julien Gourdon; Laura Hering; Stéphanie Monjon; Sandra Poncet
  10. Ethnicity and risk sharing network formation: Evidence from rural Viet Nam By Hoang Quynh; Pasquier-Doumer Laure; Saint-Macary Camille
  11. Multidimensional poverty in Viet Nam: Evidence from a rural household survey By Diem Hoang; Van Hoang Tran
  12. Are exporters more environmentally friendly? A re-appraisal that uses China's micro-data By Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
  13. The effect of the single currency on exports: comparative firm-level evidence By Tibor Lalinsky; Marian Jaanika Meriküll
  14. Global Commodity Markets and Rebalancing in China: The Case of Copper By Jeannine Bailliu; Doga Bilgin; Kun Mo; Kurt Niquidet; Benjamin Sawatzky
  15. Russian Business under Economic Sanctions: Is There Regional Heterogeneity? By Yoshisada Shida
  16. Georgia’s Economic Performance: Bright Spots and Remaining Challenges By Tinatin Akhvlediani; Peter Havlik
  17. Pecuniary returns to working conditions in Viet Nam By Sharma Smriti; Nordman Christophe
  18. Why do household businesses in Viet Nam stay informal? By Tran Thi; La Hai
  19. The interaction of institutional quality and human capital in shaping the dynamics of capital structure in Viet Nam By Santarelli Enrico; Tran Hien
  20. Multi-scale assessment of the economic impacts of flooding:: evidence from firm to macro-level analysis in the Chinese manufacturing sector By Hu, Xi; Pant, Raghav; Hall, Jim W.; Surminski, Swenja; Huang, Jiashun
  21. Measuring China's patent quality: Development and validation of ISR indices By Böing, Philipp; Müller, Elisabeth
  22. The welfare impact of Viet Nam’s national target programme ‘building a new countryside’: A quasi-experimental evaluation By Verwimp Philip; Zhang Sisi
  23. The Transmission of Business Cycles: Lessons From the 2004 Enlargement and the Euro Adoption By Hoang Sang Nguyen; Fabien Rondeau
  24. China’s grains policy: Impacts of alternative reform options By Shingo Kimura; Stephan Hubertus Gay; Wusheng Yu
  25. Capital allocation, credit access, and firm growth in Viet Nam By Newman Carol; O’Toole Conor; Kinghan Christina
  26. How important are management practices for the productivity of small and medium enterprises? By Demenet Axel; Hoang Quynh
  27. Understanding farmers’ valuation of agricultural insurance: Evidence from Viet Nam By Singh Anuj; King Michael
  28. Institutional change and the development of lagging regions in Europe By Andrés Rodríguez-Pose; Tobias Ketterer
  29. The Effect of Higher Capital Requirements on Bank Lending: The Capital Surplus Matters By Dominika Kolcunova; Simona Malovana
  30. Land Market Institutions and Agricultural Productivity in Ukraine By Koshovnyk, Roman; Nivievskyi, Oleg
  31. Impacts of extreme events on technical efficiency in Vietnamese agriculture By Yoro Diallo; Sébastien Marchand; Etienne Espagne
  32. Innovation efforts in developing countries: The case of Vietnamese small and medium-sized enterprises By Le Son
  33. Tenurial security and agricultural investment : Evidence from Viet Nam By Bellemare Marc; Chua Kenn; Santamaria Julieth; Vu Khoa
  34. Can Health Savings Account Reduce Health Spending?: Evidence from China By Tianxu Chen

  1. By: Huang, Jiayi (Cardiff Business School); Matthews, Kent (Cardiff Business School); Zhou, Peng (Cardiff Business School)
    Abstract: This paper analyses the duration of firm-bank relationships and examines what drives firms in China to change from one bank loan provider to another. Matched data of firm-loan-duration to bank provides a unique panel data set of relationship between China's listed firms and their lending banks consisting of 2,102 firms listed on both the Shanghai Stock Exchange and Shenzhen Stock Exchange in the period of 1996-2016. The Cox proportional hazard model is used to allow for a semiparametric hazard function after parametrically controlling for firm specific financial factors, industry factors, ownership characteristics, internal management changes, and external macroeconomic changes. In addition, we explore the impact of the 2008 financial crisis, bank-financial and ownership characteristics. The main finding of this study is that in an environment of growing ommercialisation of relationships the firm-bank relationship between state-owned enterprises (SOEs) and state-owned banks (SOBs) in China remains super-stable. However, a change in the CEO of a firm even of a SOE increases the probability of the loan-provider being changed.
    Keywords: Firm-Bank Switch, China, Survival analysis, Hazard Function
    JEL: G21 D22
    Date: 2019–05
  2. By: Bedrač, Matej; Bele, Sara; Cunder, Tomaž; Kožar, Maja
    Abstract: The agricultural sector of Western Balkan (WB) countries/territories faces major structural and competitiveness issues; in order for the sector to modernize and to approximate to the European Union (EU) standards, they will need to overcome the obstacles in land market. This paper presents the findings of a cross-country analysis of the land market functioning in selected WB countries/territories (Albania, Federation of Bosnia and Herzegovina, Republic of Srpska, Kosovo*1, Republic of North Macedonia, Montenegro and Serbia) with a focus on small farms’ access to land. Analysis is based on data and information collected with the means of survey questionnaire and focus groups with the relevant stakeholders in the countries/territories under review. Results show that the analysed agricultural land markets in WB are generally underdeveloped and that the small farmers have poor access to land and agricultural credits. Among the analysed countries/territories, Serbia has the most developed agricultural land market.
    Keywords: Land Economics/Use
    Date: 2019–02–27
  3. By: Markussen Thomas; Ngo Quang-Thanh
    Abstract: Single-party political systems exist in a number of countries, such as China and Viet Nam. In these countries, party membership is potentially an important source of economic and social status.This paper investigates these effects and the mechanisms behind them. In particular, we use household- and individual-level panel data to analyse the causes and consequences of Communist Party membership in rural areas of Viet Nam. Fixed effects models are employed to control for unobserved differences between party members and others.Results suggest that party membership has a moderate positive effect on income, on the order of seven per cent, and a large positive effect on subjective well-being, even after controlling for income. Party membership is closely associated with working for the government but also appears to increase the propensity to use credit and to boost income from farm and non-farm enterprises. There are strong gender effects: men are several times more likely to be party members than women, and the effects of membership on income and subjective well-being are only present among men. Overall, results confirm that in spite of pro-market economic reforms, Communist Party membership continues to be of high value in rural Viet Nam.
    Keywords: subject well-being,Viet Nam,Communist Party membership,Income,Credit
    Date: 2018
  4. By: Takanori Minamikawa (Economic Research Institute for Northeast Asia (ERINA))
    Abstract: Since the Open Door Policy was implemented in 1978, China economy has maintained a high economic growth. During this period, although the reform of state-owned enterprises and the introduction of foreign direct investments might cause the change of the industrial structure, the common recognition, about how those factor has changed Chinese industrial structure, has not been obtained. This paper applied information geometric decomposition to Input-Output tables of China in the period 1981 to 2010, and extracted the factors of the technological changes in the whole industry in China. This paper examines the different of evaluation of industrial structure between input coefficient index and information geometry approach. Furthermore based on the factors, two industrial sophistication indicators, which are about degree of Mechanization and degree of ICT introducing, respectively are constructed. The empirical results suggests that the degree of mechanization and included ICT has different characteristics for each other. Regarding mechanization, the mechanized manufacturing sectors showed increases in sophistication in the 1980s and 2000s; however, mechanized tertiary sectors showed increases in sophistication in the 1990s. Regarding ICT input, while manufacturing sectors showed a high level of sophistication in ICT input in the 2000s, tertiary sectors showed a high level of sophistication in ICT input in the 1990s.
    Keywords: Input-Output tables, Industrial structure, RAS method, Foreign Direct Investment, Innovation
    Date: 2018–03
  5. By: Vo Thang
    Abstract: Using the Viet Nam Access to Resources Household Survey (VARHS) with a panel of households present from 2008 to 2016, the study investigates the impact of social capital on household vulnerability.The empirical results indicate that both commune shocks and household shocks are associated with the higher likelihood of having state-run group memberships, except for the case of the political party. Group membership is also strongly influenced by a number of household characteristics. Most importantly, participation in local organizations could reduce both households’ probability of being poor and the utility loss caused by covariate risks.In addition, social capital shows its influence on some intermediate factors, which in turn contribute to the lower vulnerability at the household level. While participation in the Women Union or the Farmer Union reinforces the households’ ability to overcome negative shocks, the memberships of the Communist Party and the Farmer Union are associated with a higher level of saving. Members of the Communist Party are more likely to possess insurance, and members of the Women Union and the Farmer Union have better access to general information.The findings imply that poverty reduction policies in rural Viet Nam should consider the role of social capital, especially in the forms of group participation, as an effective informal coping strategy.
    Keywords: Fixed effects,Vulnerability,Social capital (Sociology)
    Date: 2018
  6. By: Haoyu Gao; Hong Ru; Robert Townsend; Xiaoguang Yang
    Abstract: Using proprietary individual level loan data, this paper explores the economic consequences of the 2009 bank entry deregulation in China. Such deregulation leads to higher screening standards, lower interest rates, and lower delinquency rates for corporate loans from entrant banks. Consequently, in deregulated cities, private firms with bank credit access increase asset investments, employment, net income, and ROA. In contrast, the performance of state-owned enterprises (SOEs) does not improve following deregulation. Deregulation also amplifies bank credit from productive private firms to inefficient SOEs due mainly to SOEs’ soft budget constraints. This adverse effect accounts for 0.31% annual GDP losses.
    JEL: G21 G28 L50 O40
    Date: 2019–05
  7. By: Ngo Quang-Thanh
    Abstract: Structural transformation in rural areas is a key issue in economic development. While much of the literature on structural transformation has so far focussed on household- or commune levels or even higher aggregate levels, little is known about the individual member level.The paper aims at examining factors that affect the individual-level employment rural transitions in Viet Nam, namely: (1) non-transient farm; (2) positive transient farm; (3) out-of-wage transition; (4) transitory farm-household work; and (5) transitory wage-household work.By taking advantage of the Viet Nam Access to Resources Household Survey (VARHS) with data on 2,699 individuals for two years, 2008 and 2016, we find that individual-level human capital and social capital are important factors affecting employment transition status in the rural area. In addition, changes in individual and household characteristics and socio-economic conditions at commune level are important to influence various types of employment transitions.These results have implications for the development policy on rural transition in developing countries, highlighting the importance of recognizing the positive aspects of changes in individual-, household-, and commune-levels for rural transformation. Promotion of education attainment is necessary at both individual- and household-level to spur the transition out of farming.Broadened policy mechanisms which support and encourage non-farm employment at the household level are also needed. Likewise, development initiatives that focus on increasing the human and social assets of the individual farmers and farming households are more likely to be successful in supporting livelihood diversification and reducing vulnerability.
    Keywords: Employment,Rural areas,Structural transformation
    Date: 2018
  8. By: Dang Duc; La Hai
    Abstract: Personal income tax is attracting more attention from the Vietnamese government, which has been looking for a way to reinforce its budget revenue.Although this tax plays an increasing role, representing 7.3 per cent of the revenue expected in 2018, this figure is still small, suggesting an issue of tax evasion and ineffective tax policy.Using the Viet Nam Household Living Standard Surveys 2010, 2012, 2014, and 2016 and the expenditure-based approach pioneered by Pissarides and Weber, this paper first applies the non-linear least squares method to distinguish under-declaration rates for various income sources, and then uses a static microsimulation SOUTHMOD model to estimate the impact of income under-reporting on the scale of tax evasion and income inequality of Viet Nam.The paper finds that the officially reported income only accounts for 80 per cent of the true income, leaving 20 per cent unreported. Consequently, without income under-reporting, tax revenue in Viet Nam would increase by about VND23,000 billion (equivalent to US$1.0 3 billion) and the Gini coefficient for disposable income would increase from 0.379 to 0.409.
    Keywords: Tax evasion,Income inequality,Income under-reporting,permanent income,SOUTHMOD
    Date: 2018
  9. By: Julien Gourdon (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Laura Hering (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Stéphanie Monjon (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Sandra Poncet (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    Abstract: Our study shows that the relatively under-studied VAT export rebate system is a major industrial policy of the Chinese authorities to support exports. We use city-specific export-quantity data at the HS6-product level over the 2003-12 period to assess how changes in the VAT export tax have affected China's export performance. We are particularly interested in how the impact of this policy varies within products across cities depending on how well connected the targeted product is to the local productive structure. Our difference-indifference estimates exploit an eligibility rule disqualifying some export flows from the rebates. Our results suggest that a one percent rise in the VAT export tax leads to a 6.6% relative decrease in eligible export quantities. We then show that the effectiveness of this export tax policy is magnified when it applies to products with denser links with the local productive structure. Hence export benefits from VAT export rebates are greater for cities that have the necessary capabilities and resources to carry out the activities supported by this rebate policy.
    Keywords: VAT system,policy evaluation,export tax,export performance,trade elasticity,product relatedness,China
    Date: 2019–03–13
  10. By: Hoang Quynh; Pasquier-Doumer Laure; Saint-Macary Camille
    Abstract: Ethnic inequality remains a persistent challenge for Viet Nam. This paper aims at better understanding this ethnic gap through exploring the formation of risk sharing networks in rural areas. It first investigates the differences in risk sharing networks between the ethnic minorities and the Kinh majority, in terms of size and similarity attributes of the networks. Second, it relies on the concept of ethnic homophily in link formation to explain the mechanisms leading to those differences.In particular, it disentangles the effect of demographic and local distribution of ethnic groups on risk-sharing network formation from cultural and social distance between ethnic groups, while controlling for the disparities in the geographical environment. Results show that ethnic minorities have smaller and less diversified networks than the majority.This is partly explained by differences in wealth and in the geographical environment. But ethnicity also plays a direct role in risk-sharing network formation through the combination of preferences to form a link with people from the same ethnic group (inbreeding homophily) and the relative size of ethnic groups conditioning the opportunities to form a link (baseline homophily). Inbreeding homophily is found to be stronger among the Kinh majority, leading to the exclusion of ethnic minorities from Kinh networks, which are supposed to be more efficient to cope with covariant risk because they are more diversified in the occupation and location of their members.This evidence suggests that inequalities among ethnic groups in Viet Nam are partly rooted in the cultural and social distances between them.
    Keywords: Risk-sharing network,Ethnic group,Ethnic inequality,Homophily
    Date: 2018
  11. By: Diem Hoang; Van Hoang Tran
    Abstract: For years, the international development community has been considering poverty as a multidimensional phenomenon, which takes into account not only income or consumption of the poor, but also their access to basic needs (education, health, etc.) and resources (credit, social network, etc.).In Viet Nam, since 2016, the Government has adopted the multidimensional approach to thoroughly measure poverty. This paper is an attempt to assess the state and evolution of multidimensional poverty in the rural areas of Viet Nam, using data from the Viet Nam Access to Resources Household Survey 2008–16.Results show remarkable improvement of the living conditions in the rural areas, with a greater pace shown among the ethnic minority groups. However, there need to be more efforts to reduce the gap in poverty headcount ratios among Kinh and non-Kinh groups, households with male and female heads, and among households in different provinces.Some of the main suggestions to reduce multidimensional poverty in Viet Nam is to increase households’ access to health care services, education, clean water and hygienic latrines, and to improve the presence of such service providers near the households’ locations.
    Keywords: Household survey,Multidimensional poverty,Poverty analysis,Rural households
    Date: 2018
  12. By: Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
    Abstract: Is a firm's ability to export an important determinant of environmental performance? To answer this question, we construct a unique micro dataset that merged two rich firm-level datasets for China for 2007. When combining this new dataset with well-received empirical specifications, we found that both export status and export intensity are associated with lower sulfur dioxide (SO2) emissions intensity. In addition to the traditional OLS estimation, we verified this association by using the propensity score matching method. Our findings show that the baseline result still holds. In short, exporters are more environmentally friendly than non-exporters,which is in line with previous evidence reported for developed economies. We further discuss mechanisms that explain the observed pattern and show that exporters realize higher abatement efforts compared to non-exporters. This study complements the literature in terms of providing China's micro evidence on SO2 abatement efforts. It also serves as a first step toward a better understanding of the impact of trade on the environment, especially in developing countries.
    Keywords: Exporters and the environment,firm heterogeneity,SO2 emissions,abatement
    JEL: F18 Q53 Q56
    Date: 2019
  13. By: Tibor Lalinsky (National Bank of Slovakia); Marian Jaanika Meriküll (Eesti Pank)
    Abstract: We investigate how adopting the euro affects exports using firmlevel data from Slovakia and Estonia. In contrast to previous studies, we focus on countries that adopted the euro individually and had different exchange rate regimes prior to doing so. Following the New Trade Theory we consider three types of adjustment: firm selection, changes in product varieties and changes in the average value of the exports that compose the exports of individual firms. The euro effect is identified by a difference in differences analysis comparing exports to the euro area countries with exports to the non-euro area EU countries. The results highlight the importance of the transaction costs channel related to exchange rate volatility. We find the euro has a strong pro-trade effect in Slovakia, which switched to the euro from a floating exchange rate, while it has almost no effect in Estonia, which had a fixed exchange rate to the euro prior to the euro changeover. Our findings indicate that the euro effect manifested itself mainly through the intensive margin and that the gains from trade were heterogeneous across firm characteristics.
    Keywords: international trade, common currency areas, euro adoption, transaction costs, Slovakia, Estonia, firm-level data
    JEL: F14 F15
    Date: 2019–03
  14. By: Jeannine Bailliu; Doga Bilgin; Kun Mo; Kurt Niquidet; Benjamin Sawatzky
    Abstract: Given that China accounts for about half of global copper consumption, it is reasonable to expect that any significant change in Chinese copper consumption will have an impact on the global market. This paper examines the likely impact of the rebalancing of the Chinese economy on its copper consumption over the next decade, focusing on the relationship between the copper intensity of GDP and the share of investment in GDP. We use a panel smooth transition regression model to account for potential non-linearities in this relationship at different levels of urbanization and income. Our findings suggest that there is indeed a significant relationship between a country’s copper intensity of GDP and its investment share. Our baseline rebalancing scenario for China implies that copper intensity in China has already peaked and is expected to decline steadily through the next decade. This anticipated reduction in Chinese copper intensity is the result of the dampening impact of rebalancing and higher per capita income on copper intensity, which more than offsets the upward pressure stemming from the ongoing process of urbanization. An exploration of alternative rebalancing scenarios suggests that China’s rebalancing path could have a significant impact on global copper consumption.
    Keywords: Econometric and statistical methods; International topics
    JEL: O13 O14 Q02
    Date: 2019–04
  15. By: Yoshisada Shida (Economic Research Institute for Northeast Asia (ERINA))
    Abstract: The sanctions against Russia, beginning in early 2014, provide us with a unique opportunity to study whether, and how sanctions affect a vast territorial global superpower. This study attempts to empirically examine the economic impact of this event, paying particular attention to the existence or inexistence of its regional heterogeneity. For these purposes, this study used a dataset from a survey that asked the executive managers of Russian regional companies to assess the impact on their management activities in late 2015. The key findings are as follows. First, approximately half of those interviewed perceived the economic sanctions as having a negative impact. Second, no regional variations in the impact of the sanctions could be found. It follows that financial, institutional-framework sanctions, aimed at an entire nation, exert a significant and geographically uniform impact. Moreover, even regional businesses near the Asia-Pacific region, holding strong connections with Asian countries, cannot avoid its impact.
    Keywords: economic sanctions, enterprise survey, Far East, Russian economy
    JEL: M2 F51 P20 R11
    Date: 2019–04
  16. By: Tinatin Akhvlediani; Peter Havlik (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Georgia has long been one of the most trade-open economies in the world. It joined WTO in 2000 and currently has a free trade agreement with the EU and EFTA, as well as with Turkey, the CIS and China. Georgia has been also one of the most business-friendly countries. The basic objectives of Georgia’s trade policy are integration, liberalisation, diversification and transparency. The Association Agreement (AA) with the EU signed in June 2014 and in force since July 2016 lays the foundations for far-reaching political and economic cooperation with the EU and serves as a backbone for reforms. The Deep and Comprehensive Free Trade Area (DCFTA) agreement that represents a part of AA envisages a gradual implementation of reforms in areas such as trade, environment, agriculture, tourism, energy, transport and education with the aim to bring Georgia in line with EU standards. The DCFTA sets a path for further reforms in trade-related policies, such as hygiene standards for agriculture products, the approximation of regulations for industrial products, enforcement of intellectual property rights at the border, rules on public procurement and approximation to EU rules in the services area. However, there is no prospect for EU membership in the Agreement. Georgia has been suffering from chronic goods trade and current account deficits; the export base has been very narrow. Foreign trade has been regionally focused on its neighbouring partners. Russia is the largest export market, ahead of Azerbaijan, Armenia, Turkey and China. Among the EU countries, the biggest markets for Georgian exports are Bulgaria and Romania. Exports are highly concentrated and there has not been much export diversification yet. The key exports to the EU include copper ores (39% of the total), nuts, nitrogen fertilisers and mineral oils. The DCFTA apparently has not had much positive effect on Georgian exports to the EU so far, despite some spectacular increases by individual products. Rather than in goods exports, Georgia has a competitive advantage in services, especially in tourism and transit transport. Georgia has been also relatively successful in attracting foreign direct investment (FDI) cumulated inward FDI stocks amounted to about EUR 4,000 per capita as of mid-2018. A development strategy combining existing competitive advantages of tourism with domestic agriculture (using the excellent domestic wine and delicious local food), supported by structural reforms in the agricultural sector and targeted FDI policies, could be a viable option to foster inclusive economic growth and mitigate external vulnerabilities.
    Keywords: Georgia, foreign trade, foreign direct investment, economic integration
    JEL: E6 F13 P33 O24 O52
    Date: 2019–04
  17. By: Sharma Smriti; Nordman Christophe
    Abstract: Using matched worker-firm data from three waves of the Viet Nam Small and Medium Enterprises data, we examine whether workers are compensated with higher wages for working in vulnerable jobs and unfavourable working conditions. Wage equations indicate that there are no clear compensating mechanisms for working in poor conditions, for having an informal contract, and for having few financial benefits.Quantile regressions show that workers in the upper tail of the wage distribution are more likely to be penalized for working in adverse conditions. Employees recruited through official hiring channels with an informal contract earn less than employees hired through social networks.Upon estimating mean decompositions of wage gaps based on working conditions, we find that the gap is almost entirely explained by the conjunction of worker, job and firm characteristics in 2015, in contrast to the previous survey year of 2013.
    Keywords: Wage differentials,Employment and Industry,Small and medium enterprises,SMEs,Working conditions
    Date: 2018
  18. By: Tran Thi; La Hai
    Abstract: Using unbalanced panel data from the small and medium enterprise surveys in Viet Nam in 2005, 2007, 2009, 2011, 2013, and 2015, this paper investigates factors associated with informality in Viet Nam. We assume that household businesses, especially the top tier firms, become formal either because they perceive benefits of formalization such as an increase in the household performance, or because they want to escape bribes and harassment.Using the random effects model with controlling for the pre-formalization trends, our results show that productive household businesses stay informal because net costs from tax payment may surpass net benefits from formalization. Moreover, government controls do not promote formalization, especially among the ‘upper’ tiers of informal households.Our findings raise a suspicion of collusion corruption between informal households in the top tiers and government tax officials. This opens room for future qualitative and quantitative studies to investigate collusion corruption as a determinant of informality in developing countries.
    Keywords: Formal and informal,Household business,Informal sector
    Date: 2018
  19. By: Santarelli Enrico; Tran Hien
    Abstract: The aim of this paper is to find which of two theories of capital structure—trade-off theory or pecking order theory—best explains the capital structure decision of non-state firms during the post-transition process in Viet Nam. We also investigate the effect of human capital, institutional quality, and their interaction on the capital structure decision. For empirical evidence, we use a unique database provided by the CIEM-DANIDA project covering around 2,000 micro, small, and medium-sized enterprises in Viet Nam for each year from 2003 to 2014. We estimate our empirical models by employing the System Generalized Method of Moments estimator.Our findings suggest that the capital structure of Vietnamese firms is a balance between the trade-off theory and the pecking order theory. On one hand, accessing formal debts is extremely tough for young and non-state firms; they bootstrap themselves out of financial constraints by stretching and making the most of their internal resources and assets. On the other hand, those with access to formal sources take advantage of leverage tools from using formal loans to exploit the tax benefits against the costs of financial distress.Other noteworthy findings include: (i) profitability and debt tax shields are no longer significantly important when entrepreneurs adopt informal debt financing; (ii) high-quality institutions with transparent and fair credit rationing rules will enable firms to reduce their reliance on debt financing; and (iii) while human capital encourages entrepreneurs to obtain more loans, its interaction with institutional quality deters debt financing and favours other financial sources.
    Keywords: Pecking order theory,Trade-off theory,Capital Structure,Debts,Institutional quality,Human capital
    Date: 2018
  20. By: Hu, Xi; Pant, Raghav; Hall, Jim W.; Surminski, Swenja; Huang, Jiashun
    Abstract: We present an empirical study to systemically estimate flooding impacts, linking across scales from individual firms through to the macro levels in China. To this end, we combine a detailed firm-level econometric analysis of 399,356 firms with a macroeconomic input-output model to estimate flood impacts on China's manufacturing sector over the period 2003-2010. We find that large flooding events on average reduce firm outputs (measured by labor productivity) by about 28.3% per year. Using an input-output analysis, we estimate the potential macroeconomic impact to be a 12.3% annual loss in total output, which amounts to 15,416 RMB billion. Impacts can propagate from manufacturing firms, which are the focus of our empirical analysis, through to other economic sectors that may not actually be located in floodplains but can still be affected by economic disruptions. Lagged flood effects over the following two years are estimated to be a further 5.4% at the firm level and their associated potential effects are at a 2.3% loss in total output or 2,486 RMB billion at the macro-level. These results indicate that the scale of economic impacts from flooding is much larger than microanalyses of direct damage indicate, thus justifying greater action, at a policy level and by individual firms, to manage flood risk.
    Keywords: China; flooding; indirect economic impact; manufacturing firms; natural disasters; ES/K006576/1
    JEL: N0
    Date: 2019–04–01
  21. By: Böing, Philipp; Müller, Elisabeth
    Abstract: Because China has become one of the largest applicants of PCT patents, it is of interest to compare the quality of Chinese and non-Chinese applications. We extend a quality index based on internationally comparable citation data from international search reports (ISR) to consider foreign, domestic, and self citations. Whereas foreign citations show that Chinese PCT patent applications reach only a third of the non-Chinese quality benchmark, the extension towards domestic and self citations suggests a higher quality level that converges to or even surpasses the benchmark. We investigate these differences based on firm-level regressions and find that in China, only foreign citations, but not domestic and self citations, have a significant and positive relation to R&D stocks. Using Germany as a representative country without policy support for patenting, we show that all three citations types may be used as economic indicators if policy distortion is not a concern. Our results show that domestic and self citations suffer from an upward bias in China and should be employed with caution if they are to be interpreted as a measure of patent quality.
    Keywords: patent quality,cross-country comparison,China
    JEL: O34 O3
    Date: 2019
  22. By: Verwimp Philip; Zhang Sisi
    Abstract: We evaluate the impact on household income of Viet Nam’s national target programme to build a new countryside for the period from 2010 to 2015.The purpose of the programme is to modernize rural Viet Nam. Given the universal implementation of the programme, we use a quasi-experimental approach whereby we employ three evaluation techniques which each have their own strengths and weaknesses: an income growth model (ordinary least squares), differences-in-differences, and propensity score matching.We exploit the fact that not all rural communes graduated by the end of the period as ‘new rural communes’ and consider the unsuccessful communes as our comparison group. We find that the programme was responsible for an increase in household income of between 16 and 28 per cent, depending on the evaluation method used. As the comparison communes have also benefited to some extent from the programme, these percentages are an underestimate of the true effect.We also find that the programme was pro-poor and that it raised non-farm income in particular.
    Keywords: Poverty reduction,Household income,Impact evaluation
    Date: 2018
  23. By: Hoang Sang Nguyen (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Fabien Rondeau (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper evaluates macroeconomic interdependencies of seven Central and Eastern European Countries (CEECs) with the Euro Area (EA) through trade relationship. We estimate a near-VAR model and we simulate responses of activity in those CEECs to output shocks for twelve former members of the EA before and after the 2004 enlargement of the European Union (EU). During both periods, empirical results show that spillover effects come through the main economies of the EA: Germany, France and Italy. Furthermore, CEECs are more responsive to output shocks in the EA after 2004 than before (3.3 times larger on average). Increases in spillover effects are larger for the three CEECs that adopted the Euro early (Slovenia, Slovakia, and Estonia) than the other CEECs (4.9 versus 2.1) but without higher trade intensity with the EA (1.07 versus 1.12). Our results show that trade effects are positive inside the same currency area but negative for the CEECs without the euro. JEL Classifications: F13, F15, F45
    Keywords: Enlargement,European Union,Trade Spillovers,Euro,Near-VAR,OCA
    Date: 2019–03–27
  24. By: Shingo Kimura (OECD); Stephan Hubertus Gay (OECD); Wusheng Yu (University of Copenhagen)
    Abstract: Reforming China’s grain policy could have significant implications for both domestic and international markets. China has begun to reform its price support policies for several commodities, replacing them with commodity specific area payments. The assessment of policy reform scenarios for grains, using two partial equilibrium models, show that China would maintain more than 80% of self-sufficiency in wheat and maize, and more than 95% in rice. The increase in its grain imports could increase international prices, in particular for wheat and rice. A gradual approach to reforming market price support with compensatory payments would smooth the potential impacts on domestic and world commodity markets, as well as on domestic farm income. While the reform of price support policies benefit consumers the most, more decoupled area payments could also have a greater impact on farm income without increasing the overall cost to society as well as environmental performance of agriculture. Lower costs of managing public grain stocks would equally reduce the budgetary cost of reforms.
    JEL: Q11 Q17 Q18 F14
    Date: 2019–05–13
  25. By: Newman Carol; O’Toole Conor; Kinghan Christina
    Abstract: In this paper, we explore the relationship between firm growth, access to finance, and the efficiency of capital allocation in Viet Nam over the period 2005–2015. Using data from the UNU-WIDER Viet Nam SME survey, we test whether firms with higher marginal returns to capital are more or less likely to get access to financing. This is a key test of how efficiently the financial system is functioning.We also test whether credit supply constraints are hindering capital allocation by limiting the investment and employment activities of firms with the highest marginal return on capital. A number of findings emerge. We find that high return investors, with the greatest marginal return on capital, have a lower likelihood of having formal finance (loans outstanding with formal credit institutions).We find evidence that rejected credit applications are limiting investment activity but not employment, particularly for firms with higher investment efficiency. This suggests a link between firm growth and a suboptimal allocation of credit.
    Keywords: Access to credit,Investment and access to finance,SME
    Date: 2018
  26. By: Demenet Axel; Hoang Quynh
    Abstract: Is the lack of ‘managerial capital’, alongside human and financial capital, a constraint on the growth of firms in developing countries? The evidence on this is still mixed, especially among small and medium enterprises.This paper uses a panel of Vietnamese small and medium enterprises to investigate this question. We build a multidimensional measure of managerial capital, combining both practices and attitudes, and link it with consistent estimates of firm-level productivity and mark-up. Even though bias may still affect the estimation of the overall influence of managerial capital on productivity, we show that there is a positive and significant association.Changes in management practices allow firms to be more efficient. Furthermore, we compare this association by firm size, and show that managerial capital is arguably as important for micro and small firms as it is for medium firms. Finally, it appears that the indicators related to ‘entrepreneurial attitudes’ play a more important role than elementary business skills.
    Keywords: Small and medium enterprises,Informal sector (Economics),Entrepreneurship
    Date: 2018
  27. By: Singh Anuj; King Michael
    Abstract: We employ a novel approach to investigate the reasons for a low demand for agricultural insurance. We confirm that farmers systematically undervalue agricultural insurance.First, we find that private transfers, mainly from family members, explain under-valuation of agricultural insurance. Second, membership of a farmer’s union, interpreted as a form of social capital or pro-active behaviour, explains the differential between willingness to pay (WTP) and the predicted economic value of insurance. Third, we help answer the puzzle why the most risk averse are least likely to take up agricultural insurance.We find that over-confidence holds a positive and significant relationship with WTP for agricultural insurance and interpret this as evidence that, within the context of implementation challenges and likely concerns about insurer viability, only the most confident are likely to purchase insurance. These results hold across a range of robustness checks.
    Keywords: Agriculture,Insurance,Risk
    Date: 2018
  28. By: Andrés Rodríguez-Pose; Tobias Ketterer
    Abstract: In this paper we assess whether both the levels and the degree of change in government quality influence regional economic performance in the European Union (EU) and, in particular, in its lagging regions. The results of the econometric analysis, covering 249 NUTS2 regions for the period between 1999 and 2013, suggest that: a) government quality matters for regional growth; b) relative improvements in quality of government are a powerful driver of development; c) one-size-fits-all policies for lagging regions are not the solution; d) government quality improvements are essential for low growth regions; and e) in low income regions basic endowment shortages are still the main barrier to development. In particular, low growth regions in Southern Europe stand to benefit the most from improvements in government quality, while in low income regions of Central and Eastern Europe, investments in the traditional drivers of growth remain the main factors behind successful economic trajectories.
    Keywords: Economic growth, government quality, institutional change, regions, EU
    JEL: R11 R50
    Date: 2019–05
  29. By: Dominika Kolcunova; Simona Malovana
    Abstract: This paper studies the impact of higher additional capital requirements on growth in loans to the private sector for banks in the Czech Republic. The empirical results indicate that higher additional capital requirements have a negative effect on loan growth for banks with relatively low capital surpluses. In addition, the results confirm that the relationship between the capital surplus and loan growth is also important at times of stable capital requirements, i.e. it does not serve only as an intermediate channel of higher additional capital requirements.
    Keywords: Bank lending, banks' capital surplus, regulatory capital requirements
    JEL: C22 E32 G21 G28
    Date: 2019–04
  30. By: Koshovnyk, Roman; Nivievskyi, Oleg
    Abstract: Ukraine’s agriculture increasingly contributes to global food security. However, there is a significant untapped agricultural production and export potential with the country. Weak land governance and institutions, including the moratorium on farmland sales, are generally recognized as the major source of a significant agricultural productivity gap in Ukraine. In this paper we match a rich farm-level accounting data with a unique set of land governance indicators to measure the role of land institutions in enhancing agriculture productivity. Controlling for farm specific characteristics, land institutions turned out to have quite sizable impact on productivity.
    Keywords: Land Economics/Use
    Date: 2019–03–07
  31. By: Yoro Diallo (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Sébastien Marchand (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Etienne Espagne (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech, AFD - Agence française de développement, CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The aim of this study is to examine farm household-level impacts of weather extreme events on Vietnamese rice technical efficiency. Vietnam is considered among the most vulnerable countries to climate change, and the Vietnamese economy is highly dependent on rice production that is strongly affected by climate change. A stochastic frontier analysis is applied with census panel data and weather data from 2010 to 2014 to estimate these impacts while controlling for both adaptation strategy and household characteristics. Also, this study combines these estimated marginal effects with future climate scenarios (Representative Concentration Pathways 4.5 and 8.5) to project the potential impact of hot temperatures in 2050 on rice technical efficiency. We find that weather shocks measured by the occurrence of floods, typhoons and droughts negatively affect technical efficiency. Also, additional days with a temperature above 31°C dampen technical efficiency and the negative effect is increasing with temperature. For instance, a one day increase in the bin [33°C-34°C] ([35°C and more]) lessen technical efficiency between 6.84 (2.82) and 8.05 (3.42) percentage points during the dry (wet) season.
    Keywords: Weather shocks,Technical efficiency,Rice farming,Vietnam
    Date: 2019–03–22
  32. By: Le Son
    Abstract: The identification of potential innovation efforts plays an important role in evaluating the innovation process. The innovation efforts of firms in developing countries might be different to those of Western enterprises.This paper evaluates innovation processes in developing countries, especially the relationship between innovation efforts and outcomes. Instead of capturing only investment in research and development as in Western firms, the innovation efforts of firms in developing countries include investments in in-house research and development, technology acquisition, and other informal innovation activities.This research develops a mechanism to capture all innovation efforts based on firms’ characteristics, market features, and business environment. A predicted value of innovation investment is created which is intended to capture observed and latent innovation efforts.The results show that predicted innovation investment triggers innovation outcomes (jointly, product and process innovation outcomes) in the context of Vietnamese small- and medium-sized enterprises.
    Keywords: Small and medium enterprises,Developing countries,Innovation
    Date: 2019
  33. By: Bellemare Marc; Chua Kenn; Santamaria Julieth; Vu Khoa
    Abstract: In Viet Nam, all lands belong to the state, who assigns usufruct rights to those lands to individuals and households. In 1993, the state gave 20-year usufruct rights to growers of annual crops, and 50-year usufruct rights to growers of perennial crops.In 2013, as the usufruct rights of growers of annual crops were set to expire, the Vietnamese government passed a law—the Land Law of 2013—that extended the usufruct rights of all landowners by 50 years. We exploit this largely unanticipated shock to study the effect of the Land Law of 2013 on the investment behaviour of growers of annual crops.Using a difference-in-differences design, we find that the Land Law of 2013 is associated with a higher likelihood of investment in irrigation technology or soil and water conservation, but not other types of investment.Our results are robust to controlling for endogenous switching from annual to perennial crops, and our data support the parallel trends assumption. Our results also suggest that the long-term effects of the Land Law of 2013 are larger than its short-term effects.
    Date: 2018
  34. By: Tianxu Chen (University of Connecticut)
    Abstract: Health care costs are high and rising in most major economies, and health savings account (HSA) is often viewed as an appealing way to contain health care costs because it can potentially solve the moral hazard spending caused by traditional health insurance. In this paper, I use the China Household Finance Survey to empirically examine the effectiveness of HSAs in containing medical expenses and reducing moral hazard. I find that HSAs that restrict the use of funds may lead enrollees to discount the value and thus spend more on health care. In addition, I find that the positive effect of HSAs on medical expenses is larger for the relatively healthier group, which may suggest that moral hazard behavior exists with regard to the use of HSA funds. The empirical estimates of the effect of HSAs on medical expenses are robust when a set of covariates are controlled, and HSA balances are instrumented using housing savings account balances.
    Keywords: Health savings account; medical expense; risk behavior; China
    JEL: I13 I12 I18 I14 J1
    Date: 2019–05

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