nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒11‒25
nineteen papers chosen by
J. David Brown
United States Census Bureau

  1. Environmental Regulation and Export Product Quality: Evidence from Chinese Firms By Yuping Deng; Yanrui Wu; Helian Xu
  2. Heterogeneous Impacts of Finance on Firm Exports: Evidence from Export Deregulation in A Large Developing Country By Cheng, Dong; Hu, Zhongzhong; Tan, Yong
  3. Evolution of private returns to schooling over the business cycle in a transition economy By Leszek Wincenciak
  4. Local Capital Scarcity and Small Firm Growth: Evidence from Real Estate Booms in China By Harald Hau; Difei Ouyang
  5. Quid Pro Quo, Knowledge Spillover and Industrial Upgrading By Jie Bai; Panle Barwick; Shengmao Cao; Shanjun Li
  6. Poverty alleviation research in rural China: Three decades and counting By Luo, Jay
  7. Decomposition Analysis of Air Pollutants During the Transition and Post-Transition Periods in the Czech Republic By Milan Scasny; Beng Wah Ang; Lukas Recka
  8. The current account sustainability in Central and Eastern Europe: Has it changed? By Juan Carlos Cuestas
  9. Political Connections and Firm Pollution Behaviour: An Empirical Study By Yuping Deng; Yanrui Wu; Helian Xu
  10. Childcare availability and maternal labour supply in Russia By Kazakova, Yuliya
  11. Investments in Worker Health and Labor Productivity: Evidence from Vietnam By Massimo Filippini; Suchita Srinivasan
  12. Has fiscal expansion inflated house prices in China? Evidence from an estimated DSGE model By Liu, Chunping; Ou, Zhirong
  13. Herding behaviour in P2P lending markets By Caglayan, Mustafa; Talavera, Oleksandr; Zhang, Wei
  14. Regional Spillovers in the Hungarian Housing Market: Evidence from a Spatio-Temporal Model By Gábor Márk Pellényi
  15. Eurozone periphery post-crisis By Ana Podvršič; Joachim Becker
  16. The Drivers, Implications and Outlook for China’s Shrinking Current Account Surplus By Pragyan Deb; Albe Gjonbalaj; Swarnali A Hannan
  17. A Comprehensive Evaluation Framework on the Economic Performance of State-Owned Enterprises By Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Kim, Chul Ju; Mortha, Aline
  18. The relationship between financial development and growth: the case of emerging Europe By Alessio Ciarlone
  19. Explaining the past, predicting the future: the influence of regional trajectories on innovation networks of new industries in emerging economies By Plechero, Monica; Mandar, Kulkarni; Chaminade, Cristina; Balaji, Parthasarathy

  1. By: Yuping Deng (School of Economics and Trade, Hunan University, Changsha, P.R. China); Yanrui Wu (Business School, The University of Western Australia); Helian Xu (School of Economics and Trade, Hunan University, Changsha, P.R. China)
    Abstract: The Chinese government adopted a series of pollution reduction targets in its eleventh five-year (2006-2010) economic development program. Whether this program can achieve its goal of pollution reduction and quality improvement for exports is of vital importance for China’s sustainable development. This paper aims to investigate the effects of these environmental regulation policies on export product quality by using the quasi-difference-in-difference method. Empirical results show that the implementation of these pollution reduction targets significantly reduces export product quality. This negative impact is more profound in western regions, capital-intensive sectors and privately-owned firms. Moreover, the negative effect is only observed among firms exporting to non-OECD countries, whereas the export quality of firms exporting to OECD countries is positively affected by the new policy. Lastly, our extended analysis shows that the negative effects can be mitigated through product switching within the firms.
    Keywords: Environmental regulation; Export product quality; Product switching; China
    JEL: F10 F18 Q56
    Date: 2019
  2. By: Cheng, Dong; Hu, Zhongzhong; Tan, Yong
    Abstract: This paper investigates the heterogeneous effects of finance on firm exports through the lens of differential exporting modes. China's WTO accession leads to an export deregulation, which empowers private domestic firms with low registered capital to export directly. This quasi-natural experiment encourages firms switching from indirect to direct exporting, and thus providing an ideal setting to explore the heterogeneous effects of finance on exports for switchers and non-switchers. Applying the difference-in-differences(DID) approach to a comprehensive survey data on Chinese manufacturing firms, we find that finace improves exports more for firms switching from indirect to direct exporting, relative to continuous indirect exporters. Moreover, we show that the heterogeneous effects of finance on exports of switchers and non-switchers are more pronounced in the post-WTO accession period. The time-varying heterogeneous impacts suggest an economic loss causes by the export distortion before China's WTO accession because it prevents productive but financially constrained private domestic firms from direct exporting.
    Keywords: Financial Credits, WTO Accession, Indirect export, Direct Export, Difference-in-Differences
    JEL: F13 F14 F61 G28
    Date: 2019–08–07
  3. By: Leszek Wincenciak (Faculty of Economic Sciences, University of Warsaw)
    Abstract: The purpose of this study is twofold. First, it aims to provide the estimates of returns to schooling using consistent methodology and comparable set of data for a relatively long time horizon for a country undergoing economic transition and accession process into European Union, 1995-2017. Secondly, using the Mincer (1974) methodology of wage regressions it aims to verify if returns to schooling are pro-cyclical or counter-cyclical. Returns to schooling are linked to the evolution of unemployment rate on a regional level. Estimated earnings functions suggest that returns to schooling were increasing in Poland until 2006 and declining afterwards unveiling the supply side effects domination. The estimates show that an increase in unemployment rate by 1 percent leads to an increase of return to additional year of schooling roughly by 0.008 percentage points.
    Keywords: returns to schooling, education, earnings equation, wage curve, business cycle, transition
    JEL: I26 J24 J31
    Date: 2019
  4. By: Harald Hau; Difei Ouyang
    Abstract: In geographically segmented credit markets, local real estate booms can deteriorate the funding conditions for small manufacturing firms and undermine their competitiveness. Using exogenous variation in the administrative land supply across 172 Chinese cities, we show that higher predicted real estate prices cause higher borrowing costs for small manufacturing firms, reduce their bank lending, lower their investment rate and labor productivity, and reduce their output and TFP growth by economically significant magnitudes. These effects are absent in large and listed companies with access to the national capital market. The evidence highlights the benefits of financial market integration.
    Keywords: factor price externalities, real estate booms, firm growth, financial constraints
    JEL: D22 D24 R31
    Date: 2019
  5. By: Jie Bai (Center for International Development at Harvard University); Panle Barwick; Shengmao Cao; Shanjun Li
    Abstract: Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
    Keywords: Knowledge spillover
    Date: 2019–11
  6. By: Luo, Jay
    Abstract: Poverty alleviation is a hallmark of post-revolution Chinese policymaking. Since 1978, the Communist Party of China (CPC) has implemented successive waves of poverty alleviation policies whose effects have become the focus of an ever-increasing body of academic literature. This paper reviews this diverse but limited literature that evaluates the impact of the CPC’s poverty reduction programs through four major channels, namely fiscal investment programs, social safety nets, rural governance on the village-, county- and provincial level, and the relocation of rural populations from destitute regions. This paper aims to synthesize results and evaluate whether and how the abovementioned poverty alleviation programs have had distinct positive or negative impacts on regional development outcomes. Furthermore, I highlight contradictions in empirical findings to motivate the discussion about contextual importance when designing and implementing future poverty alleviation programs. Finally, I suggest that an exhaustive and critical appraisal of the empirical strategies used in this literature would further the development and application of more accurate and informative methodologies.
    Date: 2019–09–08
  7. By: Milan Scasny (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; Charles University Environment Centre, Jose Martiho 407/2, 162 00, Prague, Czech Republic); Beng Wah Ang (Department of Industrial and Systems Engineering, National University of Singapore, 10 Kent Ridge Crescent, 119260, Singapore); Lukas Recka (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic)
    Abstract: It is common in index decomposition studies to decompose an aggregate into five or more factors. This applies to energy-related carbon emissions since carbon emission coefficient by fuel type is relatively easy to derive. However, it is extremely demanding to derive the air pollutant emission coefficient by fuel type and by sector. As a result, air pollutant emissions have typically been decomposed into three factors — the scale, the structure and the intensity factor. Using a unique facility-level dataset, this is the first study that decomposes air pollutant emissions into five factors, i.e. by decomposing the emission intensity effect further into the fuel-intensity, the fuel-mix, and the emission-fuel intensity factors. Specifically, we use a 5-factor Logarithmic Mean Divisia Index (LMDI) method to decompose annual changes in the emissions of four types of air quality pollutants (SO2, NOx, CO and particulate matters) stemming from large stationary emission sources in the Czech Republic. Our analysis covers the period 1990 to 2016, during which the Czech economy transited towards a market economy. It also implemented strict environmental regulation to become a full member of the European Union in 2004. The emissions decreased cumulatively by 74% or more in the 1990s, remained at stable levels during the 2000s and declined again thereafter. We examine how the results differ if one relies on the ‘standard’ 3-factor and the 4-factor decompositions.
    Keywords: LMDI, 5-factors IDA, air quality pollutants, emission per fuel type, economic transition
    JEL: P28 Q43 Q53 Q56
    Date: 2019–11
  8. By: Juan Carlos Cuestas (Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: In this paper we aim to analyse the evolution of the current account as percentage of the GDP for a group of Central and Eastern European Countries. Instead of only analysing the variable for unit roots, we go a step further and test for different speeds of mean reversion dependent on break dates endogenously determined. We apply the Bai and Perron method to find that although most countries have managed to balance their current account but some of them should keep an eye on a low speed of mean reversion and deviating time trend from balance.
    Keywords: debt, Central and Eastern Europe, structural breaks, European integration
    JEL: C22 F15 F32
    Date: 2019
  9. By: Yuping Deng (School of Economics and Trade, Hunan University, Changsha, P.R. China); Yanrui Wu (Business School, The University of Western Australia); Helian Xu (School of Economics and Trade, Hunan University, Changsha, P.R. China)
    Abstract: A firm’s top manager and a government official may be connected due to special circumstances. This social relationship or political connection may provide industrial polluters with protection or a “pollution shelter” which could lead to severe environmental deterioration. This paper aims to examine the link between political connections and firms’ pollution discharges by using Chinese data. Empirical results show that political connections are the institutional origin for firms to adopt strategic pollution discharges. Government officials who are young, of low education, promoted locally and in office for a relatively long time are more likely to build political connections with polluters. This phenomenon may lead to inadequate enforcement of regulation and emission control. The pollution discharge of politically connected firms also varies considerably due to firm heterogeneity. This study also shows that pollution shelter effects caused by political connections are more obvious in the central and western regions, prefecture cities and capital-intensive industries.
    Keywords: Political connections; pollution discharges; political promotion; China
    JEL: Q51 L20 O12
    Date: 2019
  10. By: Kazakova, Yuliya
    Abstract: Over the past 15 years, Russia experienced an increase in childcare enrolment from 55% to 66.2%, reflecting an increase in childcare availability that was rolled out unequally across the Russian regions - the enrolment rate has increased from less than 1% in some regions to almost 35% in other regions. Exploiting a substantial variation in childcare availability across regions over time, this paper uses the Russian Longitudinal Monitoring Survey to evaluate the impact of extending childcare availability on mothers' labour outcomes. I find that an increase in childcare availability has a positive and significant effect on maternal employment both at the intensive and the extensive margins and the effects are higher for partnered mothers. A set of robustness checks confirm the validity of the identification strategy and the results.
    Date: 2019–11–18
  11. By: Massimo Filippini (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland and Universita della Svizzera Italiana (USI), Switzerland); Suchita Srinivasan (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland)
    Abstract: The health and safety of workers are important determinants of their productivity. In manufacturing industries, occupational health and safety (OHS) measures are critical workplace practices for employers to ensure better working conditions for employees, particularly in industries with rampant indoor pollution. This paper studies the impact of investments undertaken by small and medium enterprises in Vietnam in worker health and safety (including in air quality improvements, heat and noise protection as well as in lighting measures) on labor productivity using a production function approach and panel data from 2011-2015. We find that the amount invested by the firm per worker has a significant positive effect on labor productivity. Moreover, our results hold true for both small and large firms, and for firms belonging to different subgroups of industries. Given historically poor working conditions in Vietnam, policy implications relate to the importance of OHS measures and pollution abatement in influencing economic outcomes such as productivity.
    Keywords: Investments in health, Indoor pollution, Labor productivity, Small and medium enterprises, Vietnam
    JEL: D83 Q18 Q54 C23 C26
    Date: 2019–11
  12. By: Liu, Chunping (Nottingham Trent University); Ou, Zhirong (Cardiff Business School)
    Abstract: A canonical DSGE model for housing, extended to embrace government spending and government investment, is estimated on Chinese data to evaluate the impact of fiscal policy on house prices. Government spending substitutes for housing; a rise in government spending lowers house prices, but its impact is weak. Government investment generates a wealth effect, causing housing demand, and therefore prices, to rise; its variation had a substantial impact on the boom-bust cycles of house prices in the past decade. Both government spending and government investment are effective instruments for manipulating output. However, their different impacts on house prices would recommend policies to count more on spending if fiscal expansion is not to sacrifice the stability of house prices.
    Keywords: fiscal policy; housing price; China; DSGE model
    JEL: E62 R31
    Date: 2019–11
  13. By: Caglayan, Mustafa; Talavera, Oleksandr; Zhang, Wei
    Abstract: We explore individual lender behaviour on, a leading Chinese peer-to-peer (P2P) crowdlending platform. Using a sample of roughly 5 million investor-loan-hour observations and applying a high-dimension fixed effect estimator, we establish evidence of herding behaviour: the investors in our sample tend to prefer assets that had attracted strong interest in previous periods. The herding behaviour relates to both the experience of the investor and the length of time of each investment session. The results show that herding happens mostly in the first or final hour of long sessions. Herding behaviour is further confirmed by estimates at the listing-hour data.
    JEL: G21
    Date: 2019–11–14
  14. By: Gábor Márk Pellényi
    Abstract: This paper analyses housing market spillovers between Hungarian regions in a small, spatio-temporal model, which features both the house price and housing supply as endogenous variables. The paper estimates both the long-run relationship between housing variables and economic fundamentals, and the short-run adjustment path of the housing market towards the long-run equilibrium. Long-run elasticities are in line with previous studies. The size of spillovers between Hungarian regions is economically meaningful; therefore, region-specific developments such as the recent run-up of Budapest house prices can have significant aggregate effects.
    JEL: E32 R12 R21 R31
    Date: 2019–04
  15. By: Ana Podvršič (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, CSEES - Centre for Southeast European Studies, Karl Franzens University Graz); Joachim Becker (Vienna University of Economics and Business - WU - Wirtschaftsuniversität Wien [Austria])
    Abstract: The article provides a comparative study of Slovenia and Slovakia to analyse the transformation of dependent accumulation regimes in the Eurozone periphery after 2010. The study of these two economies from CEE is particularly insightful to understand how the Eurozone countries from the industrial periphery coped with the challenges of restructuring after the outbreak of the crisis. The article combines dependency and régulationist approaches to study European asymmetrical accumulation regimes. We argue that the post-crisis economic trajectories in CEE continue to reflect main traits of the pre-crisis asymmetrical relationship with the core. The key vulnerabilities are linked to the ongoing reliance on FDI for export industrialisation, the narrow export specialisation, and, particularly in Slovakia, a rapid expansion of household debt. In Slovenia, under the EU supervision, the pre-crisis private debts were shifted to the public sector and henceforth burden public investment. Our findings suggest that financialisation as well the Eurozone monetary constraints should be systemically included in the analysis of post-crisis CEE growth trajectories. In addition, despite economic recovery, the accumulation regimes at Eurozone industrialised periphery continue to exhibit strong anti-labour bias.
    Keywords: financialisation,Slovakia,Eurozone crisis,uneven development,Slovenia
    Date: 2019–11
  16. By: Pragyan Deb; Albe Gjonbalaj; Swarnali A Hannan
    Abstract: China’s current account surplus has declined significantly from its peak in 2008 and the external position in 2018 was in line with medium-term fundamentals and desirable policies. While cyclical factors and expansionary credit and fiscal policies contributed, the trend decline has been largely structural, driven by economic rebalancing from investment to consumption, appreciation of the real effective exchange rate (REER) towards equilibrium, increase in outbound tourism, and moderation in goods surplus reflecting market saturation and China’s faster growth compared with trading partners. Policies should focus on continued rebalancing and opening up to ensure excessive surpluses do not return, and to prepare the economy and the financial system to handle more volatile capital flows. From a global perspective, the decline in China’s surplus has lowered global imbalances, but with different impact across countries. The analysis is based on data as of July 2019.
    Date: 2019–11–08
  17. By: Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute); Kim, Chul Ju (Asian Development Bank Institute); Mortha, Aline (Asian Development Bank Institute)
    Abstract: State-owned enterprises (SOEs) play a key role in the economy of many countries. They are usually thought to be in charge of increasing social welfare. At the same time, their relatively low performance poses several problems, including slowing down economic growth, which is especially pronounced in countries where these firms represent a large share of the economy. Therefore, it is crucial for central governments to implement a comprehensive evaluation method to assess the performance of SOEs. By employing the principal component analysis technique and using data of 1,148 SOEs, mostly from European countries, we provide a more comprehensive framework for assessing SOE performance, which includes various factors: profitability, per capita productivity, per capita costs, debt due days, and solvency. The results of our empirical study show that solvency, per capita costs, and per employee productivity have more deterministic power over the success or failure of SOEs than profitability. Focusing on profitability as the sole assessment criterion will mislead policy makers, keeping in mind also that the nature of many SOEs is to generate social welfare and not profit.
    Keywords: state-owned enterprises; SOEs; performance assessment; public economics
    JEL: H11 L32 P11
    Date: 2019–05–10
  18. By: Alessio Ciarlone (Banca d'Italia)
    Abstract: In this paper, I provide evidence about the impact that changes in certain indicators of financial development have on economic growth in a sample of 19 countries of Emerging Europe. Real per capita GDP growth, bank credit to the private sector, stock market capitalization and the outstanding stock of international debt securities – along with a series of other traditional determinants of economic development – are found to be co-integrated. By means of recent econometric techniques for heterogeneous panels, inference is drawn about the long- and short-run relationship between the variables of interest. The main result of the analysis points to the existence of non-linearities. There appears to be an inverted U-shaped relationship between bank credit to the private sector and economic growth. By contrast, both domestic stock market capitalization and the stock of international debt securities display a more traditional positive and monotone relationship with economic development.
    Keywords: finance, economic growth, pooled mean group estimator, threshold effect, dynamic panel threshold, non-monotonicity, emerging Europe
    JEL: C23 F43 G21 G23 O11 O16 O41 O47 P34
    Date: 2019–11
  19. By: Plechero, Monica (University of Florence); Mandar, Kulkarni (International Institute of Information Technology); Chaminade, Cristina (Lund University); Balaji, Parthasarathy (International Institute of Information Technology)
    Abstract: Economic geographers have recently made important contributions to the relationship between regional transformation, industrial specialisation and innovation networks in the emergence of new industries. However, most contemporary research has focused on the influence of networks on regional trajectories, paying lip service to how regional trajectories also influence network configurations. Furthermore, international comparative research on how specific regional innovation system (RIS) trajectories may shape innovation networks in new industrial sectors is underdeveloped. The paper investigates how the trajectories of Bangalore and Beijing RISs influence the objectives and geographical configuration of innovation networks in the new media industry. The coevolution of the different elements of the RIS trajectory points to the unfolding of politically and institutionally driven trajectory in Beijing and cognitively driven trajectory in Bangalore. These trajectories lead to specific barriers and opportunities for the development of innovation networks in new industries.
    Keywords: RIS trajectories; Innovation networks; New media industry; Beijing; Bangalore
    JEL: O19 O30 R50
    Date: 2019–11–13

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