nep-tra New Economics Papers
on Transition Economics
Issue of 2021‒08‒23
five papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. Regional income inequalities and labour mobility in Hungary By Svraka, András
  2. Muting the Dragon's Ringtone: A case for the transition of the Indian Electronics Industry from China to Vietnam By Gupta, Kanika; Gupta, Kashish
  3. Economics of co-firing rice straw in coal power plants in Vietnam By an Ha Truong; Minh Ha-Duong
  4. The Impact of Delay: Evidence from Formal Out-of-Court Restructuring By Srhoj, Stjepan; Kovač, Dejan; Shapiro, Jacob N.; Filer, Randall K.
  5. Mutations of the emerging new globalization in the post-COVID-19 era: Beyond Rodrik’s trilemma By Vlados, Charis; Chatzinikolaou, Dimos

  1. By: Svraka, András (Tax Policy and Research Unit, Ministry of Finance)
    Abstract: We analyse regional wage inequalities in the 2010s using administrative data sources at highly disaggregated regional levels, including commuting zones. The decline in national wage inequalities during this period is reflected at regional levels and we find convergence between regions in income levels and in the decreasing weight of between region inequalities as well. There are still large differences, and high income employees are concentrated in prosperous regions. Interregional mobility was also a driving force behind changes in income inequalities even in a country with low overall mobility rates. High income employees are much more likely to move, typically from less central, less developed regions to more central, larger labour markets. We find some evidence for a transitory mobility premium, although we cannot establish the causality of this relationship.
    JEL: D31 J61 R12
    Date: 2021–08
  2. By: Gupta, Kanika; Gupta, Kashish
    Abstract: The policy of Atma-nirbhar Bharat is aimed at making India a self-sufficient and self-generating economy. This self-reliance sentiment was bolstered by anti-China protests due to the Galwan valley standoff. In this context, many Indian nationalists have vouched for the boycott of “Made in China” products especially electronics since they form 50% of Chinese imports and so moving to Vietnam is appreciated as a viable option. In this context, this paper uses the tools of comparative data analytics and constitute a Vector Error Correction Model (VECM) to analyze the efficacy of substituting Chinese imports with those from Vietnam and make a case for making this substitution possible.
    Date: 2021–05–30
  3. By: an Ha Truong (VIET - Vietnam Initiative for Energy Transition); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Purpose: As governments force electricity producers to use more renewable energy sources, over a hundred thermal power plants in high-income countries turned to biomass as a partial or complete replacement for coal. Is the co-firing technology appropriate for Vietnam? Method: The technology assessment study is conducted by building an integrated lifecycle model of the sector, tracking material and financial flows from fuel sourcing to airborne emissions, simulating the economics, environmental and social implications of blending 5% of rice straw in two different existing coal power plants in Vietnam. Findings: The business value of co-firing is positive –straw is cheaper than coal–. It is likely not large enough to motivate the stakeholders. Co-firing creates an external social benefit by reducing air-borne pollution and creating jobs. It reduces the pollution caused by open field straw burning. We found the external social benefit to be several times larger than the private business value. Within that external benefit, the social value of avoided SO2, PM2.5 and NOx emissions dominates the social value of avoided CO2 emissions. The net job creation effect is positive: collecting straw creates more employment than using less coal destroys. Originality and limitations: This is the first technology assessment of co-firing biomass in coal power plants in Vietnam and one of the first for a subtropical middle-income country. The study only considers rice straw, and it does not address the role of government nor the biomass market functioning. Conclusion: The price of coal is the primary determinant of co-firing business value. There is an empirical economic justification for a public intervention to promote co-firing biomass in Vietnam. Local air quality goals, rather than greenhouse gas reduction policy, can justify such regulations.
    Keywords: Biomass cofiring,Emission control,Coal power,Lifecycle Assessment LCA,Technology assessment
    Date: 2021–07–02
  4. By: Srhoj, Stjepan; Kovač, Dejan; Shapiro, Jacob N.; Filer, Randall K.
    Abstract: Bankruptcy restructuring procedures are used in most legal systems to decide the fate of businesses facing financial hardship. We study how bargaining failures in such procedures impact the economic performance of participating firms in the context of Croatia, which introduced a "pre-bankruptcy settlement" (PBS) process in the wake of the Great Recession of 2007 - 2009. Local institutions left over from the communist era provide annual financial statements for both sides of more than 180,000 debtor- creditor pairs, enabling us to address selection into failed negotiations by matching a rich set of creditor and debtor characteristics. Failures to settle at the PBS stage due to idiosyncratic bargaining problems, which effectively delays entry into the standard bankruptcy procedure, leads to a lower rate of survival among debtors as well as re- duced employment, revenue, and profits. We also track how bargaining failures diffuse through the network of creditors, finding a significant negative effect on small credi- tors, but not others. Our results highlight the impact of delay and the importance of structuring bankruptcy procedures to rapidly resolve uncertainty about firms' future prospects.
    Keywords: bankruptcy,insolvency,liquidation,restructuring
    JEL: G33 G34 D02 L38 P37
    Date: 2021
  5. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: Today’s tensions and challenges at the global governance level seem to constitute structural expressions of the global system’s mutations towards the post-COVID-19 era. This study examines whether the structural changes observed in various socio-economic dimensions and interdependent spatial levels due to the pandemic crisis are accelerating the emergence of a new phase of global governance. It investigates whether Rodrik’s trilemma (the incompatibility of synchronously achieving national sovereignty, democracy and globalization) seems to be relatively inadequate to approach today’s emerging global reality and challenges comprehensively. After an elliptic overview of world governance’s evolutionary shaping and reaching the present-day necessarily repositioned role of Brazil, Russia, India, China and South Africa (BRICS), we argue that these countries must no longer be perceived as emerging exceptional cases but as central participants, equally responsible for promoting a more balanced and sustainable development perspective for the less developed socio-economic formations and the entire global socio-economic system’s stability. We conclude that in the progressively shaped ‘new globalization’, which is a distinct evolutionary phase of the international economy and international relations, Rodrik’s trilemma seems to some extent analytically insufficient since there is no more a sustainable optimum in any of its coupled dimensions, which could allow a viable exit from the current crisis.
    Keywords: global governance; BRICS; post-COVID-19 era; new globalization; global socio-economic development; Rodrik’s trilemma
    JEL: F63 F69
    Date: 2021–07–27

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