nep-tra New Economics Papers
on Transition Economics
Issue of 2019‒12‒02
seventeen papers chosen by
J. David Brown
United States Census Bureau

  1. Former Communist Party Membership and Present-Day Entrepreneurship in Central and Eastern Europe By Ivlevs, Artjoms; Nikolova, Milena; Popova, Olga
  2. Drivers of bank loan growth in China: government or market? By Xiaohong Chen; Paul Wohlfarth
  3. Liberalizarea economiei României (1990-2000) By Iancu, Aurel
  4. Energy Governance in China: The Structures and Processes of Government Decision-Making By Dongmei Chen; Paul Mollet; Brian Efird
  5. What are the determinants of international trade in services? Evidence from firm-level data for Poland By Krzysztof Matuszczak
  6. Beyond "dependent development" in a high-tech industry? The interplay between domestic institutions and transnational sectoral governance in the trajectories of emerging Polish IT firms By Lechowski, Grzegorz
  7. Challenges in Implementing the Credit Guarantee Scheme for Small and Medium-Sized Enterprises: The Case of Viet Nam By Dang, Le Ngoc; Chuc, Anh Tu
  8. The Puzzle of Industrial Enterprises in Romania over a Century: 1918-2017 By Chivu, Luminita
  9. The effect of public funding on scientific performance: A comparison between China and the EU By Wang, Lili; Wang, Xianwen; Piro, Fredrik Niclas; Philipsen, Niels
  10. Non-Financial Reporting In The Extractive Industry - Regulations And Application By Atanasov, Atanas; Marinova, Rumyana
  11. Financial development and FDI inflows in China By Khan, Hameed; Khan, Umair
  12. The impact of international financial institutions on small and medium enterprises: The case of EIB lending in Central and Eastern Europe By Gereben, Áron; Rop, Anton; Petriček, Matic; Winkler, Adalbert
  13. An Economic Analysis of China’s Domestic Crude Oil Supply Policies By Bertrand Rioux; Philipp Galkin; Kang Wu
  14. Административноправни аспекти на трудовата миграция и трудовата мобилност в националното ни законодателство By Andreeva, Andriyana; Dimitrova, Darina
  15. The Effects of the Vietnam Hunger Eradication and Poverty Reduction Program on Schooling By Bertoni, Marco; Huynh, Quynh; Rocco, Lorenzo
  16. China’s international projection in the Xi Jinping’s era By Lorenzo Bencivelli; Flavia Tonelli; Daniela Marconi; Stefano Iezzi; Andrea Zanotti; Raffaele Tartaglia Polcini; Alberto Coco; Maurizio Ghirga; Andrea Zucchini; Alessandro Giraudo; Raffaele De Marchi; Andrea Furgeri; Pietro Ginefra; Sergio Longoni; Giovanni Majnoni d'Intignano; Anna Marra; Elisa Sales; Giorgio Trebeschi; Ignazio Musu
  17. Application of Principal Component Analysis in Chinese Sovereign Bond Market and Principal Component-Based Fixed Income Immunization By Lim Tze Yee; Tony She; Kezia Irene

  1. By: Ivlevs, Artjoms (University of the West of England, Bristol); Nikolova, Milena (University of Groningen); Popova, Olga (Leibniz Institute for East and Southeast European Studies (IOS))
    Abstract: After the collapse of Communism in Central and Eastern Europe, former party members were particularly likely to start businesses and become entrepreneurs. However, it remains unclear whether this entrepreneurial activity was driven by the resources, information and opportunities provided by former party membership or because people with specific individual attributes were more likely to become party members (self-selection). This study is the first to separate the causal effect of former Communist party membership from self-selection. Using individual-level Life in Transition–III survey and instrumental variables analysis, we find that, in Central and Eastern European countries, membership of former Communist party has facilitated business set-up but not business longevity. Our results also suggest evidence of negative self-selection, meaning that people who joined the former ruling party tended have fewer of the traits associated with entrepreneurship such as motivation, risk tolerance, and entrepreneurial spirit. We show that former Communist party membership still matters for business practices, business ethics, and the nature of doing business in transition economies.
    Keywords: communism, communist party, elite networks, entrepreneurship, post-socialist countries
    JEL: L26 P20 P31
    Date: 2019–11
  2. By: Xiaohong Chen (Birkbeck, University of London); Paul Wohlfarth (Birkbeck, University of London)
    Abstract: This paper investigates China’s banking system in a post-crisis environment, 2008- 2018, focusing on determinants of bank lending. We use a panel of 14 Chinese listed banks, for which there is data over this period. We group these 14 banks into various bank-clusters, classified by ownership and systemic importance. Possible determinants of loan growth are divided into two sets of variables: bureaucratic variables and economic variables. We find that for individual banks and bank groups bureaucratic variables are very significant and the economic variables have comparatively little influence, which is consistent with the state retraining quite a lot of control. However, pooling of the data gives evidence for the influence of economic variables. The size of the coefficients is similar to the average of the individual banks but they are now significant, reflecting the larger sample size. Thus the pooled estimates are more supportive of the role of bankspecific market forces in determining loan growth.
    Keywords: Loan growth, Listed banks, Bureaucratic effects, Market effects, China
    JEL: E51 P34 C32
    Date: 2019–11
  3. By: Iancu, Aurel (Institutul National de Cercetari Economice al Academiei Române)
    Abstract: After the fall of communism, in December 1989, the transition period from the planned centralized state economy to the free market economy followed. The article presents the main actions regarding the internal and external economic liberalization of Romania, the opposing – disruptive factors of the liberalization and the main measures of economic recovery. It is mentioned the abolition of centralized planning, privatization, liberalization of prices, etc. The stage of liberalization of the Romanian economy was strongly marked by the application of the Association Agreement of Romania with the European Union (European Association Agreement) of 1993. Among its specific actions foreseen and applied in Romania are the following: liberalization of trade in goods and services through the abolition of tariff and non-tariff customs barriers, Romania taking over the common commercial policies of the EU vis-àvis third parties, taking over and applying the Community acquis of the single market. Finally, the article mentions the main positive and negative effects of liberalization.
    Keywords: free market economy, liberalization, European Association Agreement, abolishing tariff and non-tariff customs barriers, common commercial policy
    JEL: P10 P20 N10 F13
    Date: 2019–11
  4. By: Dongmei Chen; Paul Mollet; Brian Efird (King Abdullah Petroleum Studies and Research Center)
    Abstract: This paper describes the current governance structure of China’s energy sector. The interplay between central government, the Communist Party, regional governments and key economic actors within the framework of China’s five-year planning processes are complex and constantly evolving. As such, the structure and processes for energy governance are similarly complex. The oversight and process for governing China’s energy sector will continue to change as the country transitions from an emerging to a mature economy. This paper provides an overview of how key decisions in the energy sector are currently made, implemented and monitored in China as the country is consolidating its policy and decision making processes. The paper’s aim is to provide insights for those outside China who wish to better understand Chinese energy governance, from policymakers, researchers and academics, to diplomats, or corporations wishing to invest in the country.
    Keywords: China Belt and Road Inititative (BRI), Energy Policy, Energy Policy Analysis, Foreign Direct Investment
    Date: 2019–03–14
  5. By: Krzysztof Matuszczak (Faculty of Economic Sciences, University of Warsaw)
    Abstract: In this paper, we investigate the determinants of firm-level services export performance. Our focus is on three main aspects affecting services export: international capital linkages (FDI relationships), the existence of trade barriers, the demand and supply factors. The estimated models of the export performance include product and firm-level controls, such as foreign demand, firm-level imports, merchandise exporter status and foreign ownership, as well as destination fixed effects, product fixed effects, firm-level fixed effects. We used the Services Trade Restrictiveness Index (STRI) as a proxy to control for institutional trading barriers. The results suggest export-augmenting effects in services caused by both foreign ownership and involvement in activity in merchandise trade. Restrictions on international services market turned out to be significant as well. As far as the heterogeneity of firms is concerned, size of firms, industry and gravity variables such as GDP of trade-partner, distance and the common border have a significant impact on export. The study uses a unique firm-level dataset providing detailed information on services exports for the period of 2010-2015. In contrast to modern studies based on a random sample of firms, we used the entire population of services exporters in Poland.
    Keywords: firm heterogeneity, services trade, FDI in services, trade barriers, determinants of export
    JEL: F10 F14 F23
    Date: 2019
  6. By: Lechowski, Grzegorz
    Abstract: The present study adds to the ongoing discussions on the economic and industrial change in postcommunist Central Europe by investigating in-depth the case of a relatively successful development of two large domestic IT firms from Poland. The case is theoretically interesting because it calls into question the dominant perspective on industrial transformation in the region which focuses on the role of foreign direct investment (FDI). The presented empirical analysis uses rich historical data to reconstruct the strategies of the two Polish firms regarding: sales market operations, corporate finance, and productive organization. The study's general assumption is that the relatively successful development of the two analyzed companies has been shaped by the interplay between home-country conditions and the governance structure of the transnational enterprise IT (EIT) industry. The conducted analysis indicates, first, that the firms have benefited from a well-functioning local capital market, the domestic supply of high-skilled labor, and some characteristics of the home country sales market. Second, the study reveals that the firms' development has been conditioned by the ongoing "modularization" processes in the EIT sector. In their initially home market oriented operations, the analyzed firms focused on the downstream segments of the EIT value chain while sourcing the more high-tech components (e.g. databases) from collaborations with foreign suppliers. In general, the results of the study suggest that a more nuanced perspective on the ongoing processes of industrial change in Central Europe than the one proposed in the existing literature is needed.
    Keywords: IT industry,emerging-country firms,Poland,postcommunist Europe,IT-Industrie,Schwellenländerunternehmen,Polen,postkommunistisches Europa
    JEL: P12 P16 L86
    Date: 2019
  7. By: Dang, Le Ngoc (Asian Development Bank Institute); Chuc, Anh Tu (Asian Development Bank Institute)
    Abstract: Access to credit is still one of the greatest obstacles to the growth of small and medium-sized enterprises (SMEs) in Viet Nam. To date, only 39% of SMEs have bank loans. To cater to SMEs’ need for financial sources, especially formal sources such as the banking system, the Vietnamese government has implemented a large number of supporting programs, including the credit guarantee scheme (CGS) for SMEs, which it established in 2001. Through collecting, synthesizing, and analyzing data, we aim to study the challenges involved in implementing CGSs for SMEs as well as the causes of their poor performance. The fundamental reasons we find include the strict and impractical conditions for issuing credit guaranteed loans; the lack of adequate professional competence of staff involved in the credit guaranteeing task; the fragmented relationship between the credit institution and the CGS; and the lack of a credit database platform that facilitates access to finance for SMEs by providing comprehensive and reliable creditworthiness.
    Keywords: credit for SMEs; Vietnamese business environment; SMEs in Viet Nam
    JEL: E51 G23 G28 H81
    Date: 2019–04–08
  8. By: Chivu, Luminita ("Costin C. Kirițescu" National Institute for Economic Research, Romanian Academy)
    Abstract: The configuration of industrial enterprises in Romania, in terms of numbers and structure, in relation to their characteristics, mirrors the Romanian economy and society at large, in their chronological development. Marked by the changes in the technological and economic paradigm, by the legal-institutional framework and changes in the ownership regime, by the commercial policy guidelines on the background of the dominant economic doctrine, but also by the characteristics of the communities in which they were operating, in turn the †architecture†of the industrial enterprises put a special footprint on the economic and social development. Our analyses are focusing on three major historical periods: a) the inter-war period, the arms industry, and the post-war reconstruction period of 1918-1947; b) the period of centralised economy (with nationalisation, collective farming, and planned economy as its corollary), 1948-1989; c) the period of transition to a market economy and the European Union integration, 1990-2017.
    Keywords: industrialization; industrial restructuring; privatization; deindustrialization
    JEL: D23 L11 L16 L22 L25 L52 N14
    Date: 2019–10
  9. By: Wang, Lili (UNU-MERIT); Wang, Xianwen (Dalian University of Technology); Piro, Fredrik Niclas (Nordic Institute for Studies in Innovation, Research and Education); Philipsen, Niels (RILE, Erasmus University Rotterdam, and METRO, Maastricht University)
    Abstract: Public funding is believed to play an important role in the development of science and technology. However, whether public funding actually helps to increase scientific output (i.e. publications) remains a matter of debate. By analysing a dataset of co-publications between China and the EU and a dataset of joint project collaborations in European Framework Programmes for Research and Innovation (FP7 & H2020), we investigate whether different public funding agencies have different goals in their research policy. Our results support the hypotheses that funded research output represents the intentions of funding sponsors and a high level of public funding does not necessarily lead to high scientific output. Our results show that FP7/H2020 funded projects do not have a positive contribution to the output of joint publications between China and the EU. Interestingly, cooperation in the form of jointly writing proposals to these EU programmes, especially when they are not granted by the European Commission, can contribute significantly to joint scientific publications at a later stage. This applies in particular to cases where funding from China is involved. Our findings highlight the key role that funding agencies play in influencing research performance. While the Chinese government is interested in pursuing a high number of publications, the EU cares more about the social impact and indirect effect, which is hard to measure in the short term.
    Keywords: Public funding, research evaluation, scientific output, international collaboration, China, EU member states
    JEL: F02 H52 O20 O38 O52 O53
    Date: 2019–11–08
  10. By: Atanasov, Atanas; Marinova, Rumyana
    Abstract: The extractive industry constitutes about 5% of Bulgaria's GDP, and the gross value added per person employed for 2016 is 47.19 thousand BGN, which assigns it a significant position in the business statistics of this country. At the same time the environmental and social matters occupy a central place in assessing the activities of enterprises in this industry. The aim of this publication is to substantiate the need to introduce uniform practices in disclosing non-financial information on the part of enterprises in the extractive industry and the ways in which the management of these enterprises communicates that information to stakeholders. The article reviews the financial statements of the ten largest companies in the industry according to the amount of realised revenue for 2017. It was found that despite the importance of the issues of environmental and social nature, the enterprises in this industry are not obliged to prepare a non-financial declaration (statement) within the meaning of the Accountancy Act, and the information disclosed by them in management reports is primarily descriptive in nature. As a result of this a proposition is put forward that, with regard to the enterprises in this industry, a requirement for the preparation of a non-financial declaration should be introduced, whereby the main part of the disclosed non-financial information is to be "structured" and appropriately linked to the financial indicators of the enterprise as part of a single integrated management report.
    Keywords: non-financial reporting, extractive industry, non-financial declaration (statement), regulation
    JEL: M4 M41
    Date: 2019
  11. By: Khan, Hameed; Khan, Umair
    Abstract: In this paper, the authors revisit the nexus of financial development and FDI inflows in Chinese perspective, incorporating the vital role of institutional quality and other important variables in this paradigm. Using ARDL bound testing and VECM procedures, they establish causality by exploiting variations in financial development and FDI. To unmask the shortcomings in the previous literature, the authors use a composite index of financial development, recently developed by the IMF, since it provides a more fine-grained analysis. The results show that there is a long-run relationship between FDI and financial development. Bidirectional causality is confirmed by using VECM. The inclusion of control variables, e.g., institutional quality, transport infrastructure, per capita GDP, trade openness, domestic investment, natural resources rent, is robust in the analysis. The positive role of financial development in FDI inflows is of utmost importance for policymakers and the Chinese government. Several policy implications are given in this study.
    Keywords: financial development,FDI,ARDL,liberalization,capital market,money market
    JEL: C22 F23 F38 G21 G32 O17
    Date: 2019
  12. By: Gereben, Áron; Rop, Anton; Petriček, Matic; Winkler, Adalbert
    Abstract: Does IFI funding provide support to SMEs receiving such funding? We assess the impact of funding by the European Investment Bank (EIB) on the performance of 5,223 SMEs in eight countries of Central and Eastern Europe (CEE) during 2008-2014. Our results, derived from propensity score matching and difference-in-difference estimation exercises, indicate that EIB lending has a positive effect on employment, revenues and profitability. This positive effect holds irrespective of the economy entering a prolonged crisis or a seeing a recovery in the years following EIB funding. Overall, our results provide support to the view that IFI funding makes a difference in a period characterized by financial and economic turmoil.
    Keywords: International financial institutions,SMEs,impact,financial crisis
    JEL: G01 H81 L25
    Date: 2019
  13. By: Bertrand Rioux; Philipp Galkin; Kang Wu (King Abdullah Petroleum Studies and Research Center)
    Abstract: China’s domestic oil production has lagged the rapid growth in the country’s oil consumption since 2000, leading to a large, and growing, reliance on crude imports to meet demand. Factors including China’s current market structure and regulatory environment impede further development of the country’s oil industry, despite a number of policies aimed at protecting domestic producers. Using a short-run equilibrium model of China’s oil and gas supply industry, calibrated to 2016 data, the authors assessed the impact of market access barriers on China’s domestic production.
    Keywords: Crude Oil Trade, Fossil Fuel Policy, Market Deregulation, Oil Production
    Date: 2019–05–28
  14. By: Andreeva, Andriyana; Dimitrova, Darina
    Abstract: В доклада се изследват някои от основните административноправни аспекти на трудовата миграция и трудовата мобилност в националното ни законодателство. Акцент в изложението е поставен на анализа на административния контрол осъществяван от административните органи с оглед обезпечаване на трудовата дейност на чужденци. На база на извършеният анализ се правят изводи с практическа насоченост и се набелязват проблеми и тенденции на трудовата миграция и трудовата мобилност. The report examines some of the main administrative-legal aspects of the labour migration and labour mobility in the Bulgarian national legislation. The accent is on the analysis of the administrative control performed by the administrative bodies with view of securing the labour activity of foreigners. Based on the analysis are made conclusions with practical direction and are marked out problems and tendencies of the labour migration and labour mobility.
    Keywords: labour migration, labour mobility, administrative control over the labour mobility, administrative bodies
    JEL: K21 K31
    Date: 2019
  15. By: Bertoni, Marco (University of Padova); Huynh, Quynh (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: This paper studies the effects of the Vietnam Hunger Eradication and Poverty Reduction (HEPR) program on school enrolment, using longitudinal data that span over 15 years and a difference-in-differences research design. We find that early treatment (at age 8) increases children enrolment by about 9 percent. This positive effect disappears by age 15, and is more pronounced in urban areas. In sharp contrast, children receiving treatment later (age 12–15) are more likely to drop out by age 15, especially in rural areas. The decline in enrolment is paralleled by an increase in labor market participation. We interpret these divergent results by age as an unintended effect of another program aimed at fostering vocational training among the 15+ in rural areas. Our findings highlight the importance of integrating different anti-poverty measures to reduce inefficiency and achieve social goals.
    Keywords: child poverty, child education, enrolment, Vietnam, poverty reduction
    JEL: H52 H53 I24 I32
    Date: 2019–11
  16. By: Lorenzo Bencivelli (Bank of Italy); Flavia Tonelli (Bank of Italy); Daniela Marconi (Bank of Italy); Stefano Iezzi (Bank of Italy); Andrea Zanotti (Bank of Italy); Raffaele Tartaglia Polcini (Bank of Italy); Alberto Coco (Bank of Italy); Maurizio Ghirga (Bank of Italy); Andrea Zucchini (Bank of Italy); Alessandro Giraudo (Institut Supérieur de Gestion - Paris); Raffaele De Marchi (Bank of Italy); Andrea Furgeri (Bank of Italy); Pietro Ginefra (Bank of Italy); Sergio Longoni (Bank of Italy); Giovanni Majnoni d'Intignano (Bank of Italy); Anna Marra (Bank of Italy); Elisa Sales (Bank of Italy); Giorgio Trebeschi (Bank of Italy); Ignazio Musu (University of Venice Ca' Foscari)
    Abstract: Since the beginning of his presidency, Xi Jinping has progressively redirected foreign policy in order to better protect Chinese interests around the world. To this end, Beijing has significantly increased its international exposure on various fronts, often combining assertive approaches with more cooperative ones, among them the proposal of an "alternative model" of world economic cooperation. The external projection of the Chinese economy has continued to grow and diversify, as can be seen from the trend in exports, their composition (today characterized by greater added value than in the past), the amount of foreign investments and the credit granted by Chinese financial institutions to foreign borrowers. This evolution faces up to the incompleteness of China’s transformation into a market economy, evident in the ongoing role of the State in directing economic decisions (also through the lever of companies and public-owned banks), a source of growing tensions with its major trading partners.
    Keywords: China, BRI, MIC2025, FDI, trade disputes
    JEL: F02 F40 F53 P33
    Date: 2019–07
  17. By: Lim Tze Yee; Tony She; Kezia Irene
    Abstract: This paper analyses the Chinese Sovereign bond yield to find out the principal factors affecting the term structure of interest rate changes. We apply Principal Component Analysis (PCA) on our data consisting of the Chinese Sovereign bond from January 2002 till May 2018 with the different yield to maturity. Then we will discuss the multi-factor immunization model (method on hedging market risk) on a bond portfolio.
    Date: 2019–11

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