nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒04‒24
eight papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. A new era for the defense industry? Security policy and defense capability after the Russian invasion of Ukraine By Röhl, Klaus-Heiner; Bardt, Hubertus; Engels, Barbara
  2. China’s monopolization of newspaper ownership in the context of changing policies By Aya KUDO
  3. Labour quality growth in Poland By Jan Baran
  4. Inequality of opportunities and beliefs about economic outcomes in the Western Balkans By Drishti, Elvisa; Mehmetaj, Nevila; Imami, Drini; Zhllima, Edvin
  5. The housing market in a DSGE model for Kazakhstan By Akbobek Akhmedyarova
  6. Household-level welfare effects of land expropriation: Evidence from China By Randolph, Hannah
  7. Scientific collaboration amid geopolitical tensions: a comparison of Sweden and Australia By Shih, Tommy; Chubb, Andrew; Cooney-O'Donoghue, Diarmuid
  8. Adaptation measurement: Assessing municipal climate risks to inform adaptation policy in the Slovak Republic By OECD

  1. By: Röhl, Klaus-Heiner; Bardt, Hubertus; Engels, Barbara
    Abstract: The Russian attack on Ukraine has brought the question of the German Armed Forces' operational capability back into focus. National defense, which seemed to play only a minor role with the end of the Cold War and the dissolution of the Warsaw Pact and the Soviet Union in 1991, now has gained a higher political priority again. In his government declaration of 27 February 2022, German Chancellor Olaf Scholz spoke of a turning point in time due to this war and announced a special fund of 100 billion euros to strengthen the country's defense capabilities. However, these extensive funds can only have a sustainable effect on security policy if the possibilities of the defense industry to supply new weapons systems and the possibilities of the Bundeswehr to use and maintain these weapons are brought into line. In 2020, the approximately 55, 500 employees in the defense industrial sector in Germany produced weapons, combat aircraft, warships and military vehicles for approximately 11.3 billion euros; both figures were lower than in 2015 despite Russia's occupation of Crimea in 2014. This policy paper therefore presents the status of plans to strengthen the Bundeswehr and classifies them in terms of security policy. In addition, the German defense industry with its sectors of aircraft and spacecraft, naval shipbuilding, combat vehicles as well as weapons and ammunition is portrayed and the increasingly important area of cyber defense is discussed. The policy paper concludes with defense policy and defense industry recommendations derived from the previous chapters. Recommendations include a long-term plan for strengthening the Bundeswehr and the German defense industry, stronger cooperation with European partner countries on defense projects to reduce dependency on the U.S. and including the defense industry in the European taxonomy for the financial sector, as its current status of non-sustainability threatens especially smaller and medium defense companies that are important for European security.
    JEL: H12 L64 L88 Z0
    Date: 2023
  2. By: Aya KUDO (Research Fellow of the Japan Society for the Promotion of Science)
    Abstract: This paper examines the mechanism of the Chinese Communist Party’s (CCP) monopolization of media outlets, especially newspaper ownership, from the 1950s by analyzing the process of the institutional development of newspaper ownership. The CCP’s substantial monopolization of newspaper ownership and the exclusion of private and foreign capital influence on media outlets leaves the CCP in the position of the owner of all newspapers. This study reveals institutional changes by examining the institutional development and path dependency of “newspaper owner-sponsor institutions” (主管主办单位制度) from the perspective of Historical Institutionalism. The Newspaper OwnerSponsor Institution evolved as an institution to ensure that the party owns newspapers while avoiding controversies over the property rights of newspapers. The development of the Newspaper Owner-Sponsor Institution was fostered by the threat of private and foreign capital inflows. The Newspaper Owner-Sponsor Institution has led to the stability of the control over newspapers, but the institution might generate instability because the CCP is stuck in a path dependency and cannot change the institution.
    Keywords: China, Chinese Communist Party, Newspaper, Ownership, Institution, Non-public capital
    Date: 2023–03
  3. By: Jan Baran (Narodowy Bank Polski & University of Warsaw, Faculty of Economic Sciences)
    Abstract: The paper investigates changes in the quality of the labour input in Poland in 2006-2020. Labour quality – which captures compositional changes of the workforce, referring to education, experience, gender and occupation – substantially improved, growing on average by 0.55% a year, compared to much slower growth of unadjusted labour input (hours worked) of 0.11% a year. Growth in the labour quality, which means improvement in workers’ characteristics, was mainly driven by positive changes in the educational composition of workers. Labour quality growth showed less volatility compared to growth of hours worked in the economy and it was negatively correlated to both growth of hours worked and GDP growth, mitigating procyclicality of the labour input. Additionally, falling tertiary education wage premia are documented.
    Keywords: human capital, labour quality, labour input.
    JEL: E24 J21 J24
    Date: 2023
  4. By: Drishti, Elvisa; Mehmetaj, Nevila; Imami, Drini; Zhllima, Edvin
    Abstract: An egalitarian society is one that incentivises individuals to use their resources in order to be improve their economic outcomes and achieve social integration. The objective of this paper is to analyse Inequality of Opportunity (IOp), a measure of deprivation which counts for differences in economic outcomes, as well as estimate its effects. The research findings show that IOp is positively associated with statements on beliefs about the unfair distribution of outcomes in the sense of a successful life and towards the most important factors of finding a job at present. On the other hand, higher levels institutional trust reverse the effect of IOp. There are additional positive impacts in terms of such beliefs for those whose access to primary goods is limited due to disfavourable initial conditions at birth (being born in a rural area and being a female), who perceive themselves as belonging to a lower social class and those who have had positive experiences from their interaction with institutions. Findings are especially important in the context of countries with weak institutions and democracy, such as the case of Western Balkans (focus of this paper) and urge for a strengthening of institutions which regulate and support the citizens' integration into society.
    Keywords: social exclusion, Western Balkans, Post-Communist, inequality of opportunities
    Date: 2023
  5. By: Akbobek Akhmedyarova (NAC Analytica, Nazarbayev University)
    Abstract: In this paper, we build a DSGE model with the housing market, the non-resource sector and the endogenous oil production sector for an oil-exporting economy. We assess the role of housing market shocks in business cycle fluctuations for Kazakhstan. The model incorporates four key sectors and is estimated using Bayesian methods over the period from 2007Q2 to 2022Q1. We find that inflationary processes in Kazakhstan are mainly driven by shocks arising from housing and import markups. We also find that productivity and housing investment shocks are pivotal in explaining the disturbances in GDP growth. Impulse responses of the model show that a housing productivity shock exerts a stronger impact on output than a housing investment shock. We observe that a positive shock to an oil price leads to a negligible increase in output for all sectors except the non-resource sector, while its impact on inflation is limited.
    Keywords: DSGE; Housing market; Bayesian estimation; multi-sector; Kazakhstan
    JEL: C11 E30 E32 R21
    Date: 2022–09
  6. By: Randolph, Hannah
    Abstract: A number of developing countries use land expropriation policies to expand cities and develop peri-urban areas. In China alone, an average of 1, 600 square kilometers were expropriated annually between 2004 and 2018. The impact of this urban development strategy on expropriated households is not well-understood. I estimate the causal effect of expropriation on Chinese households' livelihood choice and earned income, relying on panel data and comparison to non-expropriated households to observe how household-level outcomes change in response to expropriation. Controlling for baseline outcomes, I find that for at least the first two years, expropriation reduces household agricultural participation and production but does not increase other types of income-generating activities. The result is reduced food security and ability to earn income. Compensation paid to households does not fully offset these effects in cases where households lose all their land or are uncompensated. These findings suggest concrete policies governments can implement to lessen the negative welfare impacts of urban development on expropriated households: higher compensation rates, development of rural non-agricultural labor markets, and direct food assistance to expropriated households.
    Keywords: Land rights, Land expropriation, Household welfare, China
    JEL: H13 O15 Q15
    Date: 2023–03–03
  7. By: Shih, Tommy; Chubb, Andrew; Cooney-O'Donoghue, Diarmuid
    Abstract: Significant collaborations with research partners in China are seen in many Western countries. With increasing geopolitical tensions governments, research institutions and individuals are increasingly called upon to address a proliferating array of risks and challenges associated with scientific collaboration with China. The situation is characterised by two parallel, intertwined processes. On the one hand, scientific research is characterised by openness and the ambition to do good for humanity. On the other hand an increased focus on knowledge securitization. How responses in different countries develop to this conflict are starting to be apparent, and academic studies are only beginning to describe how these responses look like. To date, the majority of studies focusing on how concerns over collaboration with China shape internationalisation look at the US. A few studies focus on other advanced science nations, for example Australia, UK, or Sweden. But there is limited comparative research on approaches to internationalisation in the context of these geopolitical tensions. This paper bridges the gap by illuminating the dimensions of variation in country-level responses to this situation. Comparing the cases of Sweden and Australia illustrates the wide variation that exists in the agents, methods and goals of responses. The comparison illuminates differences in responses by countries across these three dimensions.
    Date: 2023–03–06
  8. By: OECD
    Abstract: Climate change presents a major social, economic and political challenge for the Slovak Republic. The majority of municipal administrations are unaware of the potential climate risks they face today and in the coming years. Identifying risks posed by climate change and its inevitable impacts is an essential part of developing adaptation policies. While national adaptation policies have historically been formulated in an ad hoc manner, an evidence-based approach that relies on data is increasingly informing policy decisions. This paper provides an overview of the country’s adaptation policy context and presents a methodology – and the results of its application – for measuring climate change risks with respect to heat, drought and extreme precipitation. The results aim to inform future budget allocation decisions for climate change adaptation.
    Keywords: climate change adaptation, climate hazards, data envelopment analysis
    JEL: C60 Q54 Q58
    Date: 2023–04–13

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