nep-tra New Economics Papers
on Transition Economics
Issue of 2022‒05‒09
eleven papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. "Currency and commodity return relationship under extreme geopolitical risks: Evidence from the invasion of Ukraine". By Olga Dodd; Adrian Fernandez-Perez; Simon Sosvilla-Rivero
  2. How important are Russia's external economic links? By Korhonen, Iikka; Simola, Heli
  3. Middle Corridor—Policy Development and Trade Potential of the Trans-Caspian International Transport Route By Kenderdine, Tristan; Bucsky, Peter
  4. Do sanctions work in a crypto world? The impact of the removal of Russian Banks from SWIFT on Remittances By Farid Makhlouf; Refk Selmi
  5. Housing Conditions and Health in Urban China By Ding, Lanlin; Nie, Peng; Sousa-Poza, Alfonso
  6. Russia's government budget swings around elections and recessions By Korhonen, Vesa
  7. State capital involvement, managerial sentiment and firm innovation performance Evidence from China By Xiangtai Zuo
  8. Skill Formation, Employment Discrimination, and Wage Inequality: Evidence from the People’s Republic of China By Wang, Jun; Liao, Chengjuan; Wan, Xuan; Song, Hui
  9. Government Policy, Industrial Clusters, and the Blue Economy in the People’s Republic of China: A Case Study on the Shandong Peninsula Blue Economic Zone By Xie, Zhihai
  10. Small and medium enterprises in regions - empirical and quantitative approach By Ladislav Mura; Zuzana Hajduová
  11. FDI, technology & knowledge transfer from Nordic to Baltic countries By Arūnas Burinskas; Rasmus Holmen; Manuela Tvaronavičienė; Agnė Šimelytė; Kristina Razminienė

  1. By: Olga Dodd (Finance Department, Faculty of Business Economics and Law, Auckland University of Technology, New Zealand.); Adrian Fernandez-Perez (Finance Department, Faculty of Business Economics and Law, Auckland University of Technology, New Zealand.); Simon Sosvilla-Rivero (Complutense Institute for International Studies, Universidad Complutense de Madrid. 28223 Madrid, Spain.)
    Abstract: We examine the relationship between currency and commodity returns around the invasion of Ukraine in February 2022. We find that the expected positive contemporaneous relationship between currency and commodity returns reverses and becomes negative during this period of extreme geopolitical risks. In addition to commodity returns, currency returns around the invasion of Ukraine are significantly affected by geopolitical factors, particularly geographic distance to the war. Our results indicate that a war between two major commodity-exporting countries significantly affects global currency pricing.
    Keywords: Foreign exchange rates, Currency return, Commodity return, Russian invasion, Ukraine war, Geographic distance. JEL classification: F31, F51, G13, G14.
    Date: 2022–04
  2. By: Korhonen, Iikka; Simola, Heli
    Abstract: In this note, we review recent data concerning Russia's economic integration with other countries. We first analyze the general picture of Russia's economic integration with the rest of the world and the importance of foreign economic relations for the country. We then turn to China, an increasingly significant economic partner for Russia. The European Union remains Russia's most important trading partner and is by far the most important source of foreign direct investment to Russia as well as sources of other financing. China's importance to Russia has also increased, especially with respect to merchandise trade.
    Keywords: Russia,economic integration,trade,investment
    Date: 2022
  3. By: Kenderdine, Tristan (Asian Development Bank Institute); Bucsky, Peter (Asian Development Bank Institute)
    Abstract: The Trans-Caspian International Transport Route (TITR), known as the Middle Corridor, is a multilateral institutional development linking the containerized rail freight transport networks of the People’s Republic of China (PRC) and the European Union through the economies of Central Asia, the Caucasus, Turkey, and Eastern Europe. The multilateral, multimodal transport institution links Caspian and Black Sea ferry terminals with rail systems in the PRC, Kazakhstan, Azerbaijan, Georgia, Turkey, Ukraine, and Poland. Trans-Eurasian and intra-Eurasian rail freight development remains fundamentally policy- and subsidy-driven on the PRC side, yet dependent on European Union demand-side drivers to create traffic flow volumes. The development of the Middle Corridor, though, is institutionally independent and potentially transformative for the economies of Central Asia, the Caucasus, and Turkey. We explore the institutional development of transport infrastructure and economic potential from three macroregional angles: policy- and subsidy-driven development, the Central Asia–Caucasus–Turkey physical industrial geography and political institution limitations, and lack of demand-side fundamentals from European Union market agents. The PRC’s supply-side-policy evidence suggests that growth in transcontinental containerized rail transport is politically feasible. However, demand-side factors suggest that trade development potential is largely limited to greater extraregional connectivity from the Middle Corridor economies with little economic rationale for increased PRC–Europe transcontinental freight flows.
    Keywords: transport policy; economic geography; geoindustrial policy; industrial policy; Eurasian economic integration
    JEL: B15 B27 B52 E02 E61
    Date: 2021–05
  4. By: Farid Makhlouf (ESC Pau); Refk Selmi (ESC Pau)
    Abstract: Russia's invasion of Ukraine triggered a surge of calls for Western allies to completely sever Russia from the global financial system by disconnecting it from the SWIFT payment system. The sanctioning of large Russian banks, coupled with their severance from the SWIFT, will make it hard for banks to receive payments or act as intermediaries. The present note seeks to assess the impacts of the removal of Russian Banks from SWIFT on international remittances to and from Russia. Our results suggest that the economic sanctions imposed on Russia exert an immediate adverse impact on remittances. In the longer-term, there is definitely a high risk posed for global repercussions from this war and resulting sanctions; it seems unlikely their impact will be contained to one country's borders, especially if there is a risk of high inflation and tightening of global financial conditions. With Moscow becoming growingly closed off to the financial world, it appears that Russians are becoming increasingly active in the cryptocurrency market. But with the traceable nature of the blockchain and lack of liquidity, it may be difficult for Russians to use cryptocurrency to evade the bevy of sanctions placed on the country.
    Keywords: Remittances,War,SWIFT sanctions,Cryptocurrencies,Russia
    Date: 2022–03–06
  5. By: Ding, Lanlin (Xi’an Jiaotong University); Nie, Peng (Xi’an Jiaotong University); Sousa-Poza, Alfonso (University of Hohenheim)
    Abstract: Using longitudinal data from the China Health and Nutrition Survey, we investigate the causal relation between housing conditions (both internal and external) and health among urban adults aged 18+. We find that housing improvement reduces the probability of bad self-reported health by 3.7 percent, with more pronounced impacts among females, older adults, those with lower socioeconomic status (low education and income) and residents of the less developed central and western regions. This beneficial health effect is enhanced by longer treatment periods and consistent across several robustness checks. Housing conditions seemingly operate on health via poor macronutrient intake, physical inactivity, and sleep deprivation.
    Keywords: housing conditions, health, difference-in-differences, urban China
    JEL: D63 I10 I12 R21
    Date: 2022–03
  6. By: Korhonen, Vesa
    Abstract: This policy brief examines the shifts in Russia's government budget flows around election times and economic recessions. The issue is intriguing as Russia has basically pursued a policy of maintaining budget surpluses. Indeed, the government budget sector has shown a positive net financial stock for many years – a rare achievement for almost any country. Large downward and upward shifts in revenue and expenditure have induced sizeable changes in the balance, although in recent years swings in budget revenues have decreased as non-oil revenue streams gained importance.The real volume of government budget expenditure increased strongly around election time a decade ago. Such spending accelerations faded by the election cycle of autumn 2016 to early 2018 and remained subdued around the Duma elections in autumn 2021. Counter-cyclical budget spending policies were implemented around the 2009 and 2020 recessions to contain economic harms. The stimulus focus was on social benefits and corporate subsidies. Russia's spending increases in real terms around the 2009 recession reached the mid-range of increases when compared to twelve European economies and the US. During the 2020 recession, Russia's increases were short-lived and fell short of the hikes in almost all 13 comparison countries relative to size of GDP, but not drops in GDP.
    Keywords: Russia,government budget,recession,election
    Date: 2022
  7. By: Xiangtai Zuo (Shutter Zor)
    Abstract: In recent years, more and more state-owned enterprises (SOEs) have been embedded in the restructuring and governance of private enterprises through equity participation, providing a more advantageous environment for private enterprises in financing and innovation. However, there is a lack of knowledge about the underlying mechanisms of SOE intervention on corporate innovation performance. Hence, in this study, we investigated the association of state capital intervention with innovation performance, meanwhile further investigated the potential mediating and moderating role of managerial sentiment and financing constraints, respectively, using all listed non-ST firms from 2010 to 2020 as the sample. The results revealed two main findings: 1) state capital intervention would increase innovation performance through managerial sentiment; 2) financing constraints would moderate the effect of state capital intervention on firms' innovation performance.
    Date: 2022–04
  8. By: Wang, Jun (Asian Development Bank Institute); Liao, Chengjuan (Asian Development Bank Institute); Wan, Xuan (Asian Development Bank Institute); Song, Hui (Asian Development Bank Institute)
    Abstract: We study the impact of skill formation on employment opportunities and wages. Instead of international trade theory or technological progress theory, we focus on labor “skill formation” to investigate the employment discrimination and skill wage inequality in the PRC's labor market. Based on data from the 2014 China Family Panel Studies, we use cognitive ability and noncognitive ability to measure skill formation. The empirical results show that skill formation has a positive impact on employment opportunities and wages. This result exhibits robustness in tests on monopoly industries and non-monopoly industries, except that there is a certain tendency toward wage equalization in monopoly industries. We also find employment discrimination resulting from skill differences in state-owned and non-state-owned sectors. A similar trend of wage equalization exists in state-owned sectors, while a significant trend of wage differentiation exists between high and low skills in non-state-owned sectors.
    Keywords: skill formation; employment discrimination; skill wage inequality
    JEL: J21 J24 J71
    Date: 2021–08
  9. By: Xie, Zhihai (Asian Development Bank Institute)
    Abstract: The blue economy or marine economy has become increasingly important for countries not only to generate a new source of growth but also to construct the coexistence between humans and the environment. The People’s Republic of China (PRC) has attached great importance to the blue economy since the beginning of the 21st century. During the past 2 decades, the PRC’s blue economy has undergone considerable development. Its share in the GDP has increased substantially and remains large. The blue economy has become a national strategy, though traditionally the PRC has not relied heavily on marine resources. The PRC’s approach to the blue economy has also experienced transformative change during the last decade. In the policy directive and at the practice level, ecological sustainability and marine environmental protection have already become an important part of the blue economy in the PRC. We argue that government policy and industrial clusters are the two most important factors that contribute to the development of the PRC’s blue economy, as the case study of the Shandong Peninsula Blue Economic Zone (SP-BEZ) demonstrates. First, government policy is the basis for the establishment and development of the SP-BEZ. The PRC’s government has provided policy guidance and assistance for the development of the blue economy. Both central and municipal governments have sponsored the SP-BEZ project, providing considerable financial and technological support. With the government’s encouragement, blue finance has developed due to the public–private partnerships in the blue economy. Second, industrial clusters are both the means and the end for the SP-BEZ. To promote the development of the blue economy in the SP-BEZ, the government has made full use of Shandong Peninsula’s industrial advantages to redistribute and restructure the industries in the region. The SP-BEZ has formed industrial clusters with the support of its advantageous scientific and technological research and development in the blue economy. These industrial clusters have not only integrated a wide range of different industries but also helped to promote the domestic regional economic integration in the Shandong Peninsula.
    Keywords: blue economy; marine economy; blue economic zone; government policy; industrial cluster; People’s Republic of China
    JEL: G38 O11 O13 O47 Q28 Q57
    Date: 2021–12
  10. By: Ladislav Mura (Pan-European University); Zuzana Hajduová (University of Economics in Bratislava)
    Abstract: The problem of identifying and quantifying the efficiency of accommodation units is currently a discussed issue. Recognition and identification of the most important aspects that increase the financial efficiency of a rapidly changing business environment, especially in a difficult period of economic and tourism bounce back is a key issue. Only the companies that adequately address the issue of their measurement and evaluation and are able to choose the right approach in this regard will win the competition. Our work focuses on the identification of key factors influencing the management of business entities. We carried out a detailed analysis of accommodation units in selected accommodation facilities at the regional level. We wanted to point out the differences within the individual regions of Slovakia. By applying the DEA method, we used individual models focused on inputs and outputs in order to determine the inefficient units in our research, and revealed its shortcomings and pointed out the way to improve the economic results of these research subjects.
    Keywords: DEA,models,correlation,regions,small and medium enterprises
    Date: 2021–06–30
  11. By: Arūnas Burinskas (Vilnius Gediminas Technical University); Rasmus Holmen (Institute of Transport Economics - UiO - University of Oslo); Manuela Tvaronavičienė (Vilnius Gediminas Technical University); Agnė Šimelytė (Vilnius Gediminas Technical University); Kristina Razminienė (Vilnius Gediminas Technical University)
    Abstract: The purpose of this study is to examine the intensity of technology and knowledge transfer to the selected Baltic countries through foreign direct investment. The intensity of technology and knowledge transfer across the Baltic countries varies widely, with Estonia showing the leading position in the Baltic region. The amount of foreign direct investment in three countries is linked with the level of technology and knowledge transfer. It is indicated that during the Financial Crisis in 2008, the extent of foreign direct ownership changed in all three countries and later recovered. In the aftermath of this disruption, countries recovered their stock Foreign direct investment attraction rates and almost reached their 2004 level. Latvia has achieved a 50 per cent increase among Baltic countries, benefiting from it. Foreign direct investment and technology transfer increased through effective strategies and policies. In contrast, Estonia maintains a sustained stock foreign direct investment and has moderately lower margins than in other Baltic countries. Among countries, Estonia is the dominant stock FDI absorber in the Baltic region and have made significant contributions in the region.
    Keywords: FDI,Technology transfer,Knowledge transfer,Baltic countries,Nordic countries
    Date: 2021–09–30

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