nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒07‒29
fourteen papers chosen by
J. David Brown
United States Census Bureau

  1. The waves of enterprises bankruptcy and the factors that determine them: the case of Latvia and Lithuania By Jonas Mackevičius; Ruta Šneidere; Daiva Tamulevičienė
  2. The level of labour profitability and development opportunities of farms in Poland By Józwiak, Wojciech; Sobierajewska, Jolanta; Zieliński, Marek; Ziętara, Wojciech
  3. Methodical and practical aspects of the parity income in the Polish agriculture By Wąs, Adam; Sulewski Piotr; Majewski, Edward
  4. Integral assessment of developmental stability: cases of Lithuania and Ukraine By Liliya Filipishyna; Svetlana Bessonova; Gerda Venckeviciute
  5. A Panel Analysis of Polish Regional Cities Residential Price Convergence in the Primary Market By Matysiak, George; Olszewski, Krzysztof
  7. ‘More Children, More Happiness?’: New Evidence from Elderly Parents in China By Gao, Yanyan; Qu, Zhaopeng
  8. Lifting Growth in the Western Balkans; The Role of Global Value Chains and Services Exports By Nadeem Ilahi; Armine Khachatryan; William Lindquist; Nhu Nguyen; Faezeh Raei; Jesmin Rahman
  9. Revisiting the management of stationary fuel supply security and gas diversification in Hungary By Csaba Weiner
  10. Innovations and diversifications toward sustainable Bulgarian agriculture By Harizanova-Bartos, Hristina Stefanova; Terziyska, Ralitsa; Dimitrova, Annie
  11. An empirical study on the influencing factors for the over-investment of Chinese SOEs By Hou, Yang; Wu, Manling
  12. Bank Survival in Central and Eastern Europe By Evžen Kočenda; Ichiro Iwasaki
  13. Do political connections matter for firm innovation? Evidence from emerging markets in Central Asia and Eastern Europe By Krammer, Sorin; Jimenez, Alfredo
  14. Local entrepreneurship ecosystems and emerging industries: Case study of Pomorskie, Poland By OECD

  1. By: Jonas Mackevičius (Vilnius University [Vilnius]); Ruta Šneidere (LU - University of Latvia); Daiva Tamulevičienė (Vilnius University [Vilnius])
    Abstract: Bankruptcy of enterprises is macroeconomic issue and a phenomenon of a dynamic and competitive market economy. It results in a lot of negative effects not only for the enterprise and its employees but also for other enterprises and institutions, as well as the state and society. The aim of the article is to carry out the analysis of bankruptcy of Latvian and Lithuanian enterprises. No such study has been carried out so far. Article analyses the dynamics of Latvian and Lithuanian enterprise bankruptcy, which manifest themselves in larger waves in certain periods and the factors that influence them. From 1993-when the bankruptcy of enterprises was started to be officially registered-to 1 January 2017, 21,503 Latvian enterprises and 20,933 Lithuanian enterprises went bankrupt. The largest wave of bankruptcy took place in the period of 2008-2010, when the financial crisis started in both countries. The comparative analysis of Latvian and Lithuanian enterprise bankruptcies was carried out according to the economic activity types and enterprises legal forms. In both countries mostly wholesale and retail trade, repair of motor vehicles and motorcycles enterprises (30% on average) go bankrupt, while construction enterprises (13% on average) are the runners-up. Initiators of enterprise bankruptcy are studied, numbers of Latvian and Lithuanian enterprises that went bankrupt are compared to the overall number of companies in the country. The data of this analysis are valuable when forecasting enterprise bankruptcy and preparing the measures to avoid it. The main research methods: analysis of scientific literature and statistical data, case analysis, methods of collection, grouping, comparison and generalization of information.
    Date: 2018–09–30
  2. By: Józwiak, Wojciech; Sobierajewska, Jolanta; Zieliński, Marek; Ziętara, Wojciech
    Abstract: This article proposes the classification of farms of natural persons according to the level of farm income per unit of work of a farmer and farmer’s family members. One hour of family labour was adopted as such unit. According to this criterion, farms were divided into three classes. In the first one, the unit income is lower than the average payment for employed labour in agriculture. In the second one, this income is higher than the average payment for employed labour in agriculture but lower than the average payment for labour in the national economy. Farms of the third class allow earning income higher than the average payment for labour in the national economy. Those from the first class are called auxiliary farms, from the second – transitional, and from the third – developmental. The research included a panel of 5471 farms with economic size above EUR 4 thousand SO and covered by the monitoring of the Polish FADN in 2009-2017. The average share of auxiliary, transitional and developmental farms in the analysed period amounted to 31.2%, 12.1% and 56.5%, respectively. Auxiliary and transitional farms did not show the ability to develop. Developmental farms showed this ability. It was estimated on this basis that in 2016 there were 147.2 thousand of them in Poland, which means that the share of this group in the national population of farms owned by natural persons was 10.6%. Keywords: .
    Keywords: Farm Management, International Development, Labor and Human Capital
    Date: 2019
  3. By: Wąs, Adam; Sulewski Piotr; Majewski, Edward
    Abstract: The topic of farmers’ income is one of the most frequently discussed issues in agricultural economics literature. Particular interest is focused on the problem of the so-called parity income. The study attempts to assess the amount of farmers’ income from own labour in the context of average wages in the national economy. The analysis covered individual farms within the field of the Polish FADN observation. The study used farm net income (SE420) and the income from farmers’ own labour. The results of the study based on the FADN sample were compared with the average net wages according to the Statistics Poland. The analysis covered the period between 2006 and 2017. The analyses showed the existence of a clear difference between the average income from work on the farm (calculated after taking into account the alternative costs of land and capital) and the average net wage in the national economy. At the same time, significant differences were observed between agricultural income per unit of own labour depending on the economic size of the farm. Only medium-large, large and very large farms provided wages higher than average in the economy. The existing differences in the level of income correspond to the level of labour productivity, which suggests that one of the ways to limit the income problem in the Polish agriculture are structural changes leading to an increase in the average economic size of farms.
    Keywords: Farm Management, Labor and Human Capital
    Date: 2019
  4. By: Liliya Filipishyna (Admiral Makarov National University of Shipbuilding); Svetlana Bessonova (Pryazovskyi State Technical University); Gerda Venckeviciute (Vilnius University [Vilnius])
    Abstract: The article highlights three directions of stable development: economic growth, ecological management, social integration which cover all the sectors of development. Main tasks and functions are presented in the context of stable enterprise and society development. They can be carried out with the help of certain indicators and applied in different countries, regions, or industries. Approbation of the proposed mechanism was carried out at Lithuanian waste management sector and Ukrainian metallurgical enterprises. The system of stable development indicators proposed by the authors includes three groups for Lithuanian waste management industry case and five groups of them for Ukraine metallurgical enterprises. The ISI-a stability index which is used for integral assessment of industrial enterprises' developmental stability, and is based on calculating complex indicators of economic, ecological, social, risk and market stability. The mechanism of integrated assessment of enterprise stability has been improved and now allows choosing the optimal continuous monitoring method, giving enterprises an opportunity to work effectively and develop steadily for a long period of time. Developmental stability corresponds to the average level and characterizes the need to develop the dimensions for increasing the level of developmental stability of such enterprises.
    Date: 2018–09–30
  5. By: Matysiak, George; Olszewski, Krzysztof
    Abstract: We employ two methodologies in order to identify groupings of cities and to analyse the factors which drive convergence in residential prices across Polish prime markets over the period 2007-2018. The Phillips and Sul (2007) methodology is used to identify convergence in primary residential prices in the major Polish cities. The results indicate that residential prices do not converge to a single common trend. However, we find the existence of three distinct sub-groups of cities (‘clubs’) where residential prices converge to their own steady-state paths. Using an ordered logit model, we investigate supply and demand factors determining club membership, which subsequently allocates 13 out of the 15 cities as belonging to the clubs identified by the Phillips and Sul procedure.
    Keywords: Polish residential prices, Phillips and Sul, panel convergence, relative transition, ordered logit model.
    JEL: R1 R15 R3 R31 R32
    Date: 2019–06–23
  6. By: Nikolai Bazenkov (Institute of Control Sciences RAS, Moscow, Russia); Elena Glamozdina (National Research University Higher School of Economics); Maria Kuznetsova (National Research University Higher School of Economics); Marina Sandomirskaia (National Research University Higher School of Economics)
    Abstract: This paper considers three hypotheses about the strategic origin of price dispersion in homogeneous product online sales. The rst two are the E-equilibrium and the quantal-response equilibrium (QRE) in a pure Bertrand setting involving the boundedly rational behavior of sellers. The third introduces the share of loyal consumers into the model of competition. These hypotheses were supported by estimations on experimental lab data. We test the hypotheses on a set of real prices for 30 models of household appliances collected from the largest Russian online marketplace In contrast to the previously reported experimental data, we found very limited support for any of these explanations. QRE showed the best performance on the data. For most of the products it accurately predicts central tendency, i.e. the mean and the median. However, the shape of the observed price distributions is not explained well by any of the models. These results pose new challenges for theoretical explanations of observed Internet prices.
    Keywords: price dispersion, Internet markets, household appliances, E-equilibrium, quantal-response equilibrium, loyal consumers, e-commerce
    JEL: C52 C72 D22 D43 L81
    Date: 2019
  7. By: Gao, Yanyan; Qu, Zhaopeng
    Abstract: In this paper, we test the conventional wisdom in developing countries of ‘more children, more happiness’ by exploiting the cohort and provincial variations of elderly parents exposed to the one-child policy in China. Using nationally representative survey data from the 2015 China Health and Retirement Longitude Survey, the results from both the ordinary least square and two-stage least square methods find that more children can enhance elderly parents’ subjective well-being (SWB) measured with either life satisfaction or depression mood. The effect is channelled by raising their satisfaction with children and receiving in-kind transfers from children. The heterogeneity analysis also shows that the effect of children on parents’ life satisfaction is heterogenous to sex composition, first-birth gender, and parents' age. Our study provides new causal evidence of the impact of fertility on elderly parents’ SWB from a developing economy.
    Keywords: children,happiness,life satisfaction,elderly parents,depression,China
    JEL: J13 J14 I18 I31
    Date: 2019
  8. By: Nadeem Ilahi; Armine Khachatryan; William Lindquist; Nhu Nguyen; Faezeh Raei; Jesmin Rahman
    Abstract: In the past 25 years, exports have contributed strongly to growth and economic convergence in many small open economies. However, the Western Balkan region, consisting of small emerging market economies, has not fully availed itself of this driver of growth and convergence. A lack of openness, reliance on low value products, and weak competitiveness largely explain the insignificant role of trade and exports in the region’s economic performance. This paper focuses on how the countries in the Western Balkan could lift exports through stronger integration with global value chains and broadening of services exports.
    Keywords: Economic growth;Foreign trade;Supply;Services industry;Regional integration;Trade; Global Value Chains; Supply Chains; Growth; Services Trade; EU accession; Regional Integration
  9. By: Csaba Weiner (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: This paper aims to assess the security of stationary fuel supply in Hungary by applying the three-dimensional approach, encompassing availability, affordability and sustainability. The main focus is on primary energy fuels in relation to electricity, but the approach is also applied, in part, to electricity itself. It is shown how select influencing factors affect the choices made from among security of supply dimensions. Although providing a source-by-source review, special attention is paid to nuclear energy and natural gas. For a long time, natural gas has been the fuel that Hungary is particularly sensitive to in terms of security of energy supply. Thus, gas diversification has become a key issue, analysed here also by using my own gas diversification scheme. I find that considerable progress has been made in this area. However, along with the 2014 decision on the construction of new units at the Paks Nuclear Power Plant (Paks II), aimed at achieving self-sufficiency in Hungarian electricity supplies, the energy agenda has changed considerably. With Paks II, Hungary’s dependence will both decrease and increase – as new types of risks emerge. In such circumstances, a Nuclear–Solar/Biomass–Natural Gas concept of the electricity mix seems to be emerging in Hungary.
    Keywords: Hungary, Russia, energy security, security of supply, gas diversification, stationary fuels
    JEL: L71 L95 O13 P28 Q4
    Date: 2019–06
  10. By: Harizanova-Bartos, Hristina Stefanova; Terziyska, Ralitsa; Dimitrova, Annie
    Abstract: This article proposes an interpretation of the process of adopting innovations and farm manager perceptions of innovations and diversification in Bulgarian agriculture. Bulgarian agriculture is operating in new macro-conditions since Bulgaria joined the EU. This paper shows the main trends of agricultural sector and the level of diversification of the activities, which also is the aim of the study. It represents the adoption of innovation as a possibility for farm development using the collected data. The well-known models of farm management are not bringing the required profit of agricultural activities every time. Furthermore, the scarcity of resources and the increasing need for environmental protection lead to a search for innovative processes and techniques for reaching decent development in the sector. There is a link between the farmer’s age and the willingness to innovate the activities. The main findings show that farmers under 50 are more likely to adopt innovations. Around 37% of the farmers are planning to adopt innovations. The paper outlines some factors that are constraining the processes. Other evidences show that some diverse activities in Bulgaria are an innovation for the area. The innovative activities are: provision of health, social or educational services, snow cleaning, craftsmanship and restaurant services, rural tourism, etc. The methodological framework is based on the following logic: theoretical review of innovation and item discussing the diversification as an innovative concept in agriculture; the state and condition of the Bulgarian agriculture; evaluation of some factors influencing innovative processes in the agriculture based on own survey; evidence of diversification activities based on statistics and own research. According to the analysed information some general conclusions are made.
    Keywords: Agricultural and Food Policy, Agricultural Finance, Research Methods/ Statistical Methods
    Date: 2019
  11. By: Hou, Yang; Wu, Manling
    Abstract: The efficiency of investment affects the future development of the enterprises. The relevant literature on the corporate investment shows that the information asymmetry and the conflict of agency between the executives and the shareholders of the enterprises have a significant influence on the investment decision-makings. This study uses data of Chinese SOEs to analyze the factors affecting the efficiency of capital allocation of these Chinese SOEs from the perspective of free cash flow, ownership structure, agency costs, financing constraints and government intervention. The results of this study show that the phenomenon of over-investment is relatively obvious among the Chinese state-controlled listed enterprises. The results also show that substantial free cash flow, relatively high ownership concentration and government intervention are the major factors that lead to the over-investment in these Chinese state-owned listed companies. At the meantime, the financing constraints play a positive role in restraining the over-investment of Chinese SOEs, but their effect is quite weak. Moreover, the distortions of the senior executives’ value goals lead to the failure of executive compensation mechanism and the construction of a proper governance system needs to begin with the property rights relations.
    Keywords: Over-investments Chinese SOEs Capital Allocation Free Cash Flow
    JEL: G31 G32
    Date: 2019–06–27
  12. By: Evžen Kočenda (Institute of Economic Studies, Charles University, Prague); Ichiro Iwasaki
    Abstract: We analyze bank survival on large dataset covering 17 CEE markets during the period of 2007–2015 by estimating the Cox proportional hazards model. We group banks across countries and according to their financial soundness. Our results show that progress in banking reforms positively affects bank survival. During global financial crisis, banking reform progress is not linked with improved survival probability, though. On the other hand, during the European sovereign debt crisis and afterwards, banking reform progress contributes to improve survival probability substantially. The economic impact of various determinants is largest for average banks measured by their soundness. Financial indicators predict bank survival rate with intuitively expected impact that is economically less significant in comparison to other factors. Specifically, ownership structure and legal form are the key economically significant factors that exhibit strongest economic effect on bank survival. We further document importance of banks being listed with respect to their survival. We also show that probability of exit increases after number of directors increases beyond a threshold. The results are robust with respect to bank grouping, alternative model specifications, and alternative assumptions on survival distribution.
    Keywords: bank survival; banking reform; European emerging markets; survival and exit determinants; hazards model
    JEL: C14 D02 D22 G33
    Date: 2019–07
  13. By: Krammer, Sorin; Jimenez, Alfredo
    Abstract: We posit that the investments in political connections made by a firm in an emerging market will impact differently its propensity to introduce radical and incremental innovations. In addition, we argue that this effect will be moderated by alternate non-market firm strategies, such as bribery. Using a dataset of more than 9,000 firms in 30 emerging economies from Eastern Europe and Central Asia we find that political connections increase the probability of radical innovation but have no significant impact on incremental innovation. Moreover, larger bribing reduces the positive impact of political connections on radical innovation. Our results confirm the importance of political connections for firm activities, but also caution firms on their heterogeneous impact on various types of innovations, and their detrimental interplay with other non-market strategies.
    Keywords: Radical innovation; Incremental innovation; Political connections; Bribery; Non-market strategy.
    JEL: D72 L2 O31
    Date: 2019–06–27
  14. By: OECD
    Abstract: This case study examines the Pomorskie local entrepreneurship ecosystem and regional smart specialisation approach. It identifies bottlenecks and enablers in the local entrepreneurship ecosystem and makes policy recommendations on how to further strengthen local entrepreneurship and industrial renewal. The case study offers a number of policy suggestions and models for Pomorskie and for other regions interested in promoting entrepreneurship and emerging industries.
    Date: 2019–07–24

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