nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒03‒15
ten papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Net Migration and its Skill Composition in the Western Balkan Countries between 2010 and 2019: Results from a Cohort Approach By Sandra M. Leitner
  2. Separating the Political from the Economic: The Russia-Traffic in Transit Panel Report By Pramila Crivelli; Mona Pinchis-Paulsen
  3. Import Competition from China in Manufacturing after the Financial Crisis: Evidence for European Regions By Werner Hölzl
  4. Towards a new growth model in CESEE: Convergence and competitiveness through smart, green and inclusive investment By Gereben, Áron; Wruuck, Patricia
  5. Labour Market Effects of Trade in a Small Open Economy By Agnes Kügler; Klaus S. Friesenbichler; Cornelius Hirsch
  6. Territorial dimension of wheat production in Romania By Zaharia, Marian; Gogonea, Rodica- Manuela; Balacescu, Aniela
  7. Taxes and business philanthropy in Armenia By Asatryan, Zareh; Joulfaian, David
  8. A BVAR Model for Forecasting Ukrainian Inflation By Nadiia Shapovalenko; ;
  9. Cross-national comparison of job types: analysis using the EU LFS and Albanian LFS By Drishti, Elvisa
  10. Currency Depreciations in Emerging Economies: A Blessing or a Curse for External Debt Management? By Boris Fisera; Menbere Workie Tiruneh; David Hojdan

  1. By: Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: In our analysis we applied the newly developed ‘cohort approach’ to the six Western Balkan countries (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia) for the period 2010-2019 to shed light on the total extent and skill composition of net migration, differentiating between four educational levels Low (primary or lower secondary education), Medium-general (upper secondary general education), Medium-VET (upper secondary vocational education and training), and High (tertiary education). Our results show that during the period analysed all six countries experience net emigration. However, in terms of magnitude and particular age pattern these movements differ across countries. Net migration is particularly prevalent among the young. A high youth unemployment rate, family reunification and education abroad are key drivers behind this pattern. A further breakdown of net migration by highest level of education shows that net emigration in the region occurs mainly among the medium- and low-educated, particularly among those in their early to mid-20s and early 30s. There is evidence of brain drain in Albania, Bosnia and Herzegovina and Kosovo. In Albania, net emigration of the highly educated is substantial and accounts for almost 40% of the total estimated cumulative outflow. Brain drain in Albania and Kosovo is highest among recent university graduates. Importantly, and contrary to widespread perception, there is evidence of brain gain in some Western Balkan countries, namely in Montenegro, North Macedonia and Serbia. The key drivers of this are students, who return in large numbers to their home countries after graduating from tertiary education abroad. In Serbia and Montenegro immigration of highly skilled workers is also important in this context.
    Keywords: Net-migration, skill composition, Western Balkans, cohort approach
    JEL: J61 J24
    Date: 2021–03
  2. By: Pramila Crivelli; Mona Pinchis-Paulsen
    Abstract: This paper reviews the World Trade Organization (WTO) Panel Report “Russia-Measures Concerning Traffic in Transit” of April 2019. It constitutes the first attempt to disentangle the legal and political aspects related to the invoked essential security interests from the economic considerations underlying the measures imposed on the transit through Russia of goods exported from Ukraine to the Republic of Kazakhstan and Kyrgyzstan. One the one hand, the Panel’s analytical framework for the interpretation of Article XXI of the GATT denied Members unilateral determination over the security exceptions. It further enables future WTO panels a pathway for reviewing possible abuses of the security exceptions, a growing concern with the rising complexity of transnational economic relations. On the other hand, our economic analysis suggests a stricter assessment of Russia’s transit restrictions was necessary to satisfy this framework. In particular, the economic analysis argues the Panel adopted a circular assessment when considering the plausibility of whether Russia implemented its measures for the protection of its essential security interests in time of emergency in international relations. Ultimately, the Panel's attention to finding a diplomatic and legal path forward failed economic scrutiny; still, a legal assessment argues that the Panel's findings fit the legal design of Article XXI:b of the GATT.
    Keywords: WTO, dispute settlement, national security, transit, trade barriers, Russia
    Date: 2021–02
  3. By: Werner Hölzl
    Abstract: This research studies the effect of import competition from China for the period after the financial crisis 2008-09 until 2014. It draws on a unique dataset containing employment information for 248 regions in the EU. The uncovered coefficients are statistically not significant, indicating that Chinese imports were not an important driver of deindustrialisation in Europe in the period analysed. The estimates are imprecise, however. An analysis of the economic importance of the results leads to the conclusion that Chinese import competition was not a primary driving force of European manufacturing employment. Possible explanations for the lack of significant results are discussed.
    Keywords: Trade, Employment, China, EU, Regions
    Date: 2021–02–12
  4. By: Gereben, Áron; Wruuck, Patricia
    Abstract: This paper focuses on the growth and convergence of Central, Eastern and South-Eastern European EU countries (CESEE). We argue that the factors behind the pre-crisis growth model of the region - skilled yet affordable labour force, foreign direct investment, imports of productivity-enhancing technology - are petering out, and are yet to be substituted. We propose a new growth model centred around a shift towards more home-grown innovation, digitalisation, climate change mitigation and a strong focus on skills, labour and social inclusion to leave the middle income trap behind for good and to boost economies' growth prospects in a post-COVID world. Based on analysis of firm-level data, we highlight the prerequisites of making this transition happen.
    Keywords: climate change,convergence,economic policy,digitalisation,innovation,labourmarket,long-term growth,productivity,skills
    JEL: J24 O14 O33 O40 P27 P28
    Date: 2021
  5. By: Agnes Kügler; Klaus S. Friesenbichler; Cornelius Hirsch
    Abstract: Austria is a small open economy that in the last decades underwent two different waves of increasing trade integration: one with Eastern Europe and one with China. This paper studies the effects of increases in trade with China and Eastern Europe on labour market dynamics in Austrian NUTS-4 regions for two ten-year periods between 1995 and 2015. Given the limited data available, the current analysis could not identify significant effects on aggregate labour dynamics neither for rising imports from Eastern Europe or China, nor for rising exports to Eastern Europe. However, there is weak evidence that exports to China have facilitated employment growth, especially in high quality segments. Overall, these results add a cautious perspective to the discussion of import competition.
    Keywords: Trade, Employment, China, Eastern Europe, Austria
    Date: 2021–02–12
  6. By: Zaharia, Marian; Gogonea, Rodica- Manuela; Balacescu, Aniela
    Abstract: Romania's significant agricultural productive potential can fully cover domestic demand and can ensure important export deliveries. However, the yield of cereal production is below the European Union average. Of these, an important place is occupied by wheat production. Taking into account these aspects, the paper investigates the potential of wheat production in Romanian counties starting from a set of indicators and using cluster analysis to identify similarities and disparities between counties from this point of view. Through this study we tried to provide answers to the questions: What is the configuration of wheat production yield at the regional level in Romania? What is its evolution over time? The results obtained during the research show that there are disparities in the counties of Romania in terms of the efficiency of wheat production in correlation with the resources used for its production.
    Keywords: agricultural sector, wheat production, production yield, regional development, Romania.
    JEL: C10 C38 O13
    Date: 2020–11–19
  7. By: Asatryan, Zareh; Joulfaian, David
    Abstract: The majority of countries around the world provide tax incentives for business philanthropy. However, little is known about the responsiveness of businesses to this tax treatment. This paper expands on this scant literature by focusing on the Armenian tax system which provides incentives for business philanthropy. The support takes the form of a deduction capped at a fraction of business receipts. This generates a kink beyond which the marginal tax subsidy drops to zero. Using administrative panel data for the years 2007 through 2017, we find strong evidence of bunching by Armenian firms at the kink, with a sizeable tax elasticity of giving at the intensive margin. The evidence on bunching is robust to whether firms have been audited, and to whether any tax deficiencies are observed. This suggests that the observed response is likely to be real rather than being driven by reporting responses.
    Keywords: Business philanthropy,charitable giving,corporate income taxes,firm behavior,bunching,tax-price elasticity
    JEL: H25 H32 M14
    Date: 2021
  8. By: Nadiia Shapovalenko (National Bank of Ukraine); ;
    Abstract: In this paper, I examine the forecasting performance of a Bayesian Vector Autoregression (BVAR) model with steady-state prior and compare the accuracy of the forecasts against the forecasts of QPM model and official NBU forecasts over the period 2016q1–2020q1. My findings suggest that inflation forecasts produced by the BVAR model are more accurate than those of the QPM model two quarters ahead and are competitive for the longer horizon. For GDP growth, the forecasts of the BVAR outperform those of the QPM for the whole forecast horizon. For inflation they also outperform the official NBU forecasts over the monetary policy horizon, whereas the opposite is true for the forecasts of the GDP growth.
    Keywords: BVAR, forecast evaluation, inflation forecasting
    JEL: C30 C53 E37
    Date: 2021–03–05
  9. By: Drishti, Elvisa
    Abstract: This paper is dedicated to the cross-national comparison of the labour markets of the EU member countries and Albania. The aim is to establish whether or not cross-national variations in propensities of being hired in a non-standard job are the result of differences in national institutional regimes and labour market regulations. An adapted version of the Fraser Index is used to explain cross-country differences in relation to the application of rigid labour market regulation. The econometric analyses indicate that the net effect of more stringent labour market regulation, increase job quality in different senses: in less affluent transition economies, more workers use involuntary non-standard jobs as a means to escape unemployment. On the other hand, in affluent economies, interventionist policies are associated with high levels of voluntary non-standard work and low unemployment.
    Keywords: involuntary non-standard employment,Albania,European Union,labour market regulation,post-communist
    Date: 2021
  10. By: Boris Fisera (Slovak Academy of Sciences; Charles University, Prague); Menbere Workie Tiruneh (Slovak Academy of Sciences; Webster Vienna Private University); David Hojdan (Webster Vienna Private University)
    Abstract: We investigate the long-term effect of domestic currency depreciation on the external debt for a panel of 41 emerging economies over the years 1999-2019. Using heterogenous panel cointegration methods, we find that domestic currency depreciation leads to an increase in external debt to GDP ratio over the long-term and it reduces the sustainability of external debt. This is particularly the case for larger depreciations, while smaller depreciations might reduce the external debt burden over the long-term for more developed emerging economies. Poorer emerging economies face a greater increase in external debt burden following domestic currency depreciation. We also find that higher exchange rate volatility and the use of floating exchange rates contributes to an increase in external debt burden over the long-term. Consequently, our results suggest that for emerging economies, having more volatile and floating exchange rates reduces the sustainability of external debt. We find asymmetrical effects of exchange rate depreciation on external debt: higher central bank independence limits the effect of currency depreciation on external debt, while higher financial development and illicit financial flows augment the effect of depreciation on external debt.
    Keywords: external debt, exchange rate, currency depreciation, exchange rate volatility, exchange rate regime, DFE estimator, PMG estimator
    JEL: E50 F31 F34
    Date: 2021–03

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