nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒05‒17
seven papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Road and Belt, Iron Silk Road and Russian-Chinese geopolitical cooperation and competition By Lukin, Artyom
  2. Cooperation between global and local firms in emerging markets: a coopetition approach The case in Vietnam By Thuy Do; Frédéric Le Roy; Thuy Seran
  3. Understanding the Croatian Export Boom By Kristian Orsini; Arian Perić
  4. Trade-Off Theory and Pecking Order Theory: Evidence from Real Estate Companies in Vietnam By Le, Hoang Duc; Viet, Nguyen Quang; Anh, Nguyen Huaong
  5. The Dynamics of Property Rights in Modern Autocracies By Dan Cao; Roger Lagunoff
  6. Macroeconomic Forecasting in Poland: Lessons From the COVID-19 Outbreak. By Rybacki, Jakub; Gniazdowski, Michał
  7. Robust Inference on Income Inequality: \textit{t-}Statistic Based Approaches By Rustam Ibragimov; Paul Kattuman; Anton Skrobotov

  1. By: Lukin, Artyom
    Abstract: This paper examines political and economic dimensions of the Russia-China relationship, with an emphasis on Russia's involvement in Beijing's Belt and Road Initiative (BRI). Being the largest, and trans-continental, Eurasian country, Russia occupies an important place in China's BRI. The current relationship between the two great Eurasian powers can be characterized as an entente, or quasi-alliance. Moscow welcomes the BRI, but, unlike many other governments across the world, it has never signed an agreement to formally join the initiative. This signals Russia's stance that Eurasian integration should not be dominated by China, as well as the Kremlin's insistence on status equality with China. In recent years there has been a noticeable rise in shipments from China to Europe, and in the reverse direction, using the rail routes via Russia. However, despite the increase in its trans-continental freight traffic going via Russia, China still refrains from investing in the upgrade of Russia's transport networks, such as railroads, ports and highways, and is overall reluctant to invest in the Russian economy. The reasons are both economic, such as the relatively high risks and low profit margins in the Russian market, and political ones, related to Russia's insistence on parity and equality with China.
    Keywords: Russia-China relations,the Belt and Road Initiative,Eurasia
    Date: 2021
  2. By: Thuy Do (UM - Université de Montpellier, Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School); Frédéric Le Roy (UM - Université de Montpellier, Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School); Thuy Seran (UM - Université de Montpellier, Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School)
    Abstract: This empirical research investigates the sharing and protecting knowledge mechanism used by global companies while collaborating with a local partner in IT Services sector in an emerging economy. The results reveal the combination and effectiveness of knowledge protection mechanisms used by the global firms when they cooperate with the local firm in the emerging economy. This research contributes, first, to literature on collaboration between global and local firms on emerging economy markets by showing 1) that global companies are able to share and protect their knowledge when they collaborate with local firms, and 2) that global companies and local firms are able to learn from the cooperative project to increase their innovation capabilities. The research contributes, second, to coopetition literature by showing that managing the coopetitive dilemma between sharing and protecting knowledge is also a concern for companies cooperating with potential competitors.
    Keywords: knowledge sharing,knowledge protection,emerging markets,global firms,local firms
    Date: 2021–06–01
  3. By: Kristian Orsini; Arian Perić
    Abstract: Notwithstanding a quite diversified export base, a fair degree of sophistication of its products and a well-established presence in a large number of markets, Croatia’s export performance has trailed that of other Central and Eastern European countries – most of which joined the EU already in 2004. Following its EU accession in 2013, however, Croatia’s export performance has improved markedly. The aim of this paper is to review the performance of Croatia’s exports of goods over the past two decades and assess to what extent EU accession facilitated the surge in exports. The strong export growth is partly explained by the recovery in global demand, as well as policies geared to restore external competitiveness and wage restraint. More importantly, our analysis provides evidence that EU accession opened new opportunities for Croatian firms, which are making inroads into EU value chains and gaining market shares. Interestingly, deeper trade links with the EU do not seem to have come at the cost of Croatia's historical trade ties with CEFTA countries – and particularly the ex-Yugoslav economies. Sluggish demand growth, nevertheless, implies that these markets now absorb a much lower share of Croatia’s total exports. Policy action should aim to ensure that real wage improvements go hand in hand with productivity gains, while incentivise investing in product upgrades, particularly in sectors where Croatia already enjoys a strategic advantage. At EU level, relaunching accession talks with candidate members participating in CEFTA would boost Croatia's strategic role in the regional trade flows.
    Keywords: Croatia, EU accession, Trade developments, value chains, export elasticities, CEE, CEFTA, Understanding the Croatian export boom, Kristian Orsini, Arian Perić.
    JEL: F14 F15 F43
    Date: 2021–03
  4. By: Le, Hoang Duc; Viet, Nguyen Quang; Anh, Nguyen Huaong
    Abstract: This study was implemented with the goal of testing the validity of trade-off theory and pecking order theory in determining the capital structure in 50 listed real estate companies in Vietnam. The result of this study shows that the pecking order theory is the more approriate and should be applied for the listed real estate companies in Vietnam, and be the informative document for those firms to take into account the relevant theory to adjust their own capital structure, so that they can raise their own competitiveness and continue the development of the business
    Date: 2021–05–08
  5. By: Dan Cao (Department of Economics, Georgetown University); Roger Lagunoff (Department of Economics, Georgetown University)
    Abstract: This paper studies a dynamic model of property ownership and appropriation in modern autocracies. An autocrat represents the interests of an elite ``in-group." It chooses whether and how much to appropriate from public assets and from private assets of an ``out-group" at each date. To maintain the appearance of the rule of law, the autocrat implements an ownership assignment only if it is accepted by the affected citizens. However, because its enforcement of property rights is tied to the duration of its commitment, the autocrat's enforcement is conditional and temporary. Consequently, the autocrat systematically appropriates property from the out-group and from public assets. Under some initial conditions, the autocrat initially implements popular land reform only reverse course later on. More generally, wealth shares of both public property and private property of the out-group decline monotonically after an initial adjustment period. The model rationalizes the connection between increasing wealth inequality and privatization in autocracies such as Russia and China. Simulations of these countries' wealth distributions to mid 21st century display widening gaps in wealth between elites and the rest of the populace. Finally, we show that the ruling group under anocracy, an autocratic system that admits civil society groups, will generally be better off than under a traditional autocracy. The dilemma is that the anocratic system might enable the growth of an opposition party that eventually displaces the ruling group. Classification-C73, D72, H13, H41, P5
    Keywords: Authoritarian legalism, autocracy, anocracy, property rights, appropriation constraint, takings, civil society groups, Samuelson condition
    Date: 2021–05–11
  6. By: Rybacki, Jakub; Gniazdowski, Michał
    Abstract: The aim of this paper is to analyze the forecast errors of Polish professional forecasters under the COVID-19 crisis in 2020—based on the Parkiet competition. This analysis shows that after the initial disruption related to imposed lockdown in March and April, commercial economists were capable of lowering their forecasts errors of the industrial production and retail sales. On the other hand, the far worse performance has been seen in the case of the market variable; either the size of errors or the disagreement were elevated throughout the entirety of 2020. Furthermore, long-term forecasts that were produced during the first year of the pandemic have been characterized with visible inconsistencies (i.e., projections of economic growth were similar when forecasters either assumed a strong increase in unemployment or when they did not).
    Keywords: GDP forecasting, Labor Market forecasts, COVID-19
    JEL: E27 E32 E37
    Date: 2021–05–11
  7. By: Rustam Ibragimov; Paul Kattuman; Anton Skrobotov
    Abstract: Empirical analyses on income and wealth inequality and those in other fields in economics and finance often face the difficulty that the data is heterogeneous, heavy-tailed or correlated in some unknown fashion. The paper focuses on applications of the recently developed \textit{t}-statistic based robust inference approaches in the analysis of inequality measures and their comparisons under the above problems. Following the approaches, in particular, a robust large sample test on equality of two parameters of interest (e.g., a test of equality of inequality measures in two regions or countries considered) is conducted as follows: The data in the two samples dealt with is partitioned into fixed numbers $q_1, q_2\ge 2$ (e.g., $q_1=q_2=2, 4, 8$) of groups, the parameters (inequality measures dealt with) are estimated for each group, and inference is based on a standard two-sample $t-$test with the resulting $q_1, q_2$ group estimators. Robust $t-$statistic approaches result in valid inference under general conditions that group estimators of parameters (e.g., inequality measures) considered are asymptotically independent, unbiased and Gaussian of possibly different variances, or weakly converge, at an arbitrary rate, to independent scale mixtures of normal random variables. These conditions are typically satisfied in empirical applications even under pronounced heavy-tailedness and heterogeneity and possible dependence in observations. The methods dealt with in the paper complement and compare favorably with other inference approaches available in the literature. The use of robust inference approaches is illustrated by an empirical analysis of income inequality measures and their comparisons across different regions in Russia.
    Date: 2021–05

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