nep-tra New Economics Papers
on Transition Economics
Issue of 2020‒05‒25
twelve papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Tournament incentives, age diversity and firm performance By Oleksandr Talavera; Shuxing Yin; Mao Zhang
  2. Azerbaijan’s Contribution to the Chinese Belt & Road Initiative By Babayev, Bahruz; Ismailzade, Fariz
  3. A Spatial Analysis of Inward FDI and Rural-Urban Wage Inequality: Evidence from China By Hao Wang; Jan Fidrmuc; Qi Luo
  4. Agrifood market participation, household economies of specialization and diversification: Evidence from Vietnam By Takeshima, Hiroyuki; Ajmani, Manmeet; Roy, Devesh; Fadhillah, Aniq; Liu, Yanyan
  5. Electoral systems and female representation in politics: Evidence from a regression discontinuity By Kantorowicz, Jarosław; Köppl-Turyna, Monika
  6. Patterns and drivers of household income dynamics in Russia : The role of access to credit By Perugini, Cristiano
  7. Developing the competence of organizing experiential activities for pre-service teachers – The case in Vietnam By Nguyen, V.C.
  8. The investment activity of cities in the context of their administrative status: A case study from Poland By Przybyla, Katarzyna; Kachniarz, Marian; Ramsey, David
  9. Chinese stock market performance in the time of novel coronavirus pandemic By Liew, Venus Khim-Sen; Puah, Chin-Hong
  10. Informal institutions, transaction risk, and firm productivity in Myanmar By Michael Danquah; Kunal Sen
  11. Trade Liberalization, Economic Reforms and Foreign Direct Investment – A Critical Analysis of the Political Transformation in Vietnam By Nguyen, V.C.
  12. Charitable giving by the poor: A field experiment in Kyrgyzstan By Adena, Maja; Hakimov, Rustamdjan; Huck, Steffen

  1. By: Oleksandr Talavera (University of Birmingham); Shuxing Yin (University of Sheffield); Mao Zhang (University of St Andrews)
    Abstract: This study introduces a new dimension, age diversity of non-CEO executives, which moderates the relationship between promotion-based tournament incentives, measured as the pay gap between the CEO and non-CEO executives, and firm performance. For a sample of Chinese listed firms from 2005 to 2015, we find that the tournament incentives for non-CEO executives relate positively to firm performance. This relationship is weaker when non-CEO executives are from different age cohorts, whereas the tournament effect is enhanced when non-CEO executives are from the same age cohort. The negative moderation effect of age diversity is more pronounced in state firms and in the Northern China Plain cultural region. The negative moderation effect disappears in firms with CEOs who have overseas experience. We reason that the peer pressure among the similar-aged non-CEO executives enhances the tournament competition and that age hierarchy reduces incentives for younger executives to compete. Our findings have important implications for firms not only in China, but also in countries and regions where seniority is highly valued when setting executive compensation and optimizing organizational structure.
    Keywords: Executive compensation; Tournament effect; Non-CEO executives; Age diversity; Seniority
    JEL: G30 J10 J33
    Date: 2020–05
  2. By: Babayev, Bahruz; Ismailzade, Fariz
    Abstract: The Belt and Road Initiative (BRI) was initiated by the Chinese government in 2013 to promote regional trade and increase Chinese political and economic presence in the region. The main instrument for realising the ambition of this initiative is the Chinese provision of financial support to the countries located on the Ancient Silk Road to implement infrastructure projects. It includes the construction of roads, railroads, seaports, logistic centres, and communication facilities. Azerbaijan is a BRI partner country in the South Caucasus strategically located between Asia and Europe. It can play the role of a strategic partner and hub connecting China with the Middle East and Europe. The paper finds out that China accepts Azerbaijan as a reliable partner. Azerbaijan perceives BRI as a promising initiative. The Azerbaijani government has a political will and the capacity to contribute to the BRI. By offering some key recommendations, the paper concludes that China and Azerbaijan should closely work to strengthen the BRI's influence in Central Asia and South Caucasus and priorities the Trans-Caspian International Transport Route (TITR) passing through Azerbaijan.
    Keywords: Belt & Road Initiative, China, Azerbaijan, integration, trade, and investment
    JEL: F15
    Date: 2020–05–13
  3. By: Hao Wang; Jan Fidrmuc; Qi Luo
    Abstract: When investigating the relationship between inward FDI and rural-urban inequality, previous studies overlook the inter-regional interactions. Building on the literature that highlights the significant role of rural-urban migration in inequality, this article investigates spatial spillover effect of inward FDI on the rural-urban wage inequality by utilizing the Spatial Durbin Model (SDM) both in the short run and long run. In particular, we carefully consider the heterogeneity of inward FDI and categorize it with respect to entry modes and sectoral distribution. On the basis of a panel dataset covering 30 provinces in China from 2000 to 2016, our results show that overall the inward FDI should not be blamed for the exacerbation of rural-urban wage inequality. We do not find significant relationship between inward FDI in secondary and tertiary sector while the FDI in primary sector has a slight negative effect. When we separate the FDI according to entry modes, we find that WFE is shown to have a negative effect on the rural-urban wage inequality and this effect is more pronounced in the long run when we conduct a period average estimation. This change also similarly applies to the equity joint ventures.
    Keywords: spatial spillovers, foreign direct investment, rural-urban wage inequality, SDM
    JEL: C21 F21 O19
    Date: 2020
  4. By: Takeshima, Hiroyuki; Ajmani, Manmeet; Roy, Devesh; Fadhillah, Aniq; Liu, Yanyan
    Abstract: Despite the growth of agrifood markets, and gradual structural transformation, smallholders persist in Asia. Such patterns are at odds with the views that market growth should encourage more specialization whereby smallholders’ transition to either larger farmers or specialized non-farm households. Using the panel household data in Vietnam, this study investigates how participation in agrifood markets affect smallholder households’ economies of scope (EOS) in diversifying into agriculture and non-agricultural income-earning activities. We find that, greater agrifood market participation proxied by the increased food purchase generally increases EOS between agriculture and non-agricultural activities at the household level. Moreover, it leads to greater labor productivity in agriculture, and also increases female household members’ diversifications into both agriculture and non-agricultural income-earning activities. These effects are relatively stronger and more consistent than conventional indicators of agrifood product sales or proximity to the market. The results shed more light on how exactly smallholders in Vietnam persist in the face of agrifood market growth, and what kind of their relations with such a growing market can be promoted in ways that enhance their livelihoods in the short- to medium- terms.
    Keywords: VIET NAM; VIETNAM; SOUTH EAST ASIA; ASIA; smallholders; agrifood sector; models; markets; gender; farm income; labour productivity; female labour; agrifood market participation; economies of scope; primal model; dual model
    Date: 2020
  5. By: Kantorowicz, Jarosław; Köppl-Turyna, Monika
    Abstract: This work looks at the policies aimed at promoting female participation in local legislative bodies using a series of changes to electoral law in Poland. Using an exogenous population threshold dividing municipalities into ones with proportional and ones with majoritarian elections, we estimate the effect of the electoral system on female representation. Moreover, we use difference-in-discontinuities to look at the effect of an introduction of a female quota on female participation in local councils. Contrary to the literature for the national elections, we find that more females are elected to local councils in the majoritarian system. We link this observation to countering party bias in list placements and lower costs of electoral participation in the majoritarian system. We find that the female quota has a strong positive effect on the percentage of females in the local council. It increases the pool of female candidates and has a positive effect on their list placements. It does not, however, create spillovers to neighboring regions.
    Keywords: electoral rules,forms of government,female representation,regression discontinuity,difference in discontinuities
    JEL: D72 B52
    Date: 2020
  6. By: Perugini, Cristiano
    Abstract: The microeconomic drivers of medium- and short-term income mobility in Russia over the period 1996–2016 are investigated using data from the Russian Longitudinal Monitoring Survey (RLMS). Focusing on the role of access to credit in triggering household income growth, the descriptive analysis suggests that high levels of mobility materialising in pro-poor patterns of growth may accompany Russia’s notoriously high levels of inequality. Controlling for other personal and household characteristics, the econometric model for drivers of income mobility indicates that access to credit boosts income mobility. Complementary empirical evidence suggests that this effect may unfold through channels related to the labour market and non-labour sources of income.
    JEL: D31 H81 J60 O15
    Date: 2020–05–07
  7. By: Nguyen, V.C.
    Abstract: Investing on human capital via enhancement of educational quality as one of the important factors to promote economic development all over the world. Basically, it is important to enhance pre-service teachers of primary education with necessary professional competences to implement teaching activities at primary schools. Based on relevant research on experiential activities, professional competence development for pre-service teachers of primary education and the general education curriculum in the case of Vietnam, the article develops a competency framework for organizing experiential learning activities for pre-service teachers of primary education in the context of education curriculum innovation; and simultaneously suggested fundamental solutions to improve pre-service teachers’ competence in organizing experiential activities. To achieve these above-mentioned goals, some research methods are used by the researchers including document analysis, pedagogical observation, and educational experience summarizing method.
    Date: 2020–04–25
  8. By: Przybyla, Katarzyna; Kachniarz, Marian; Ramsey, David
    Abstract: The article attempts to identify and assess the investment activity of major Polish cities, taking into account the division into voivodship cities, remaining the regional capitals, and also the ones which, as a result of public administration system reform, carried out in Poland in the 1990s, lost this function. Based on the group of diagnostic features (city investment expenditure per capita, capital expenditure of cities in relation to their total expenditure, capital expenditure of cities in relation to their own revenues), taxonomic synthetic measures for the studied cities were constructed. The research covered the years 2004 – 2015 – the period of particular investment intensity caused by the inflow of EU funds. It was concluded that even though the city status and revenue potential is, to some extent, determined by its investment activity, there are, however, clear examples showing that the appropriate local policy can modify these determinants.
    Keywords: voivodship cities, investment local government, administrative reform
    JEL: R11
    Date: 2020–02–01
  9. By: Liew, Venus Khim-Sen; Puah, Chin-Hong
    Abstract: This paper aims to quantify the effect of the deadly novel coronavirus (COVID-19) pandemic outbreak on Chinese stock market performance. Shanghai Stock Exchange Composite Index and its component sectorial indices are examined in this study. The pandemic is represented by a lockdown dummy, new COVID-19 cases and a dummy for 3 February 2020. First, descriptive analysis is performed on these indices to compare their performances before and during the lockdown period. Next, regression analysis with Exponential Generalized Autoregressive Conditional Heteroscedasticity specification is estimated to quantify the pandemic effect on the Chinese stock market. This paper finds that health care, information technology and telecommunication services sectors were relatively more pandemic-resistant, while other sectors were more severely hurt by the pandemic outbreak. The extent to which each sector was affected by pandemic and sentiments in other financial and commodity markets were reported in details in this paper. The findings of this paper are resourceful for investors to avoid huge loss amid pandemic outburst and the China Securities Regulatory Commission in handling future pandemic occurrence to cool down excessive market sentiments.
    Keywords: Novel coronavirus, COVID-19, SARS-CoV-2, pandemic, Chinese stock market, Exponential Generalized Autoregressive Conditional Heteroscedasticity
    JEL: G14 G15
    Date: 2020–04–01
  10. By: Michael Danquah; Kunal Sen
    Abstract: In many low-income transition countries, where formal institutions such as courts do not function effectively, informal institutions are often used by firms to minimize transaction risks. We examine the role of informal institutions, in the forms of relational contracting and social networks, in determining the risks that firms are willing to bear in their transactions with their suppliers and customers, and whether firms that bear such risks have higher firm productivity. Our country context is Myanmar, a country which is making a transition from a socialist to market-oriented economy.
    Keywords: Firm productivity, informal institutions, relational contracting, Social networks, Transitional economies, Myanmar
    Date: 2020
  11. By: Nguyen, V.C.
    Abstract: The purpose of this study is to discuss the trends of integration into the global economy since political and economic reforms (so-called Doimoi) and its influence on every presence of foreign investment in Vietnam. Lasting 20-year-war period and ended in 1975, by the mid-1980s per capita income was stuck between $200 and $300, Vietnam’s government introduced Doimoi through a series of reforms, and steered the country to be a socialist-oriented market economy. Based on the analysis of reform process and integration, the results are concerned. Our results demonstrate that foreign direct investment performance has significantly embraced trade liberalization with gusto. Further, the open trade policy in relation to FTAs could significantly promote foreign investment and maximize its benefits on the economy.
    Date: 2020–03–30
  12. By: Adena, Maja; Hakimov, Rustamdjan; Huck, Steffen
    Abstract: Previous studies of charitable giving have focused on middle- or high-income earners in Western countries, neglecting the poor, although the lowest income groups are often shown to contribute substantial shares of their income to charitable causes. In a large-scale natural field experiment with over 180,000 clients of a micro-lending company in Kyrgyzstan, we study charitable giving by a population that is much poorer than the typical donors studied so far. In a 2x2 design, we explore two main (pre-registered) hypotheses about giving by the poor: (i) that they are more price sensitive than the rich such that, in contrast to previous studies, matching incentives induce crowding in of out-of-pocket donations; (ii) that they care about their proximity to the charitable project. We find evidence in favor of the former but not the latter.
    Keywords: Charitable giving,field experiments,matching donations
    JEL: C93 D64 D12
    Date: 2020

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