|
on Transition Economics |
| By: | Bomprezzi, Pietro; Cherepinskiy, Daniel; Irto, Giuseppe; Kharitonov, Ivan; Nishikawa, Taro; Trebesch, Christoph |
| Abstract: | This report takes stock of international support for Ukraine. It is based on almost 3 years of data collection from the Ukraine Support Tracker, stretching from January 22nd, 2022 to December 31st, 2024. Over the past 3 years, Ukraine has received a low but steady inflow of foreign aid, with Europe taking the lead. On military aid, Europe's support of EUR 62 billion is on a similar level to that of the United States, which has allocated EUR 64 billion in total. However, Europe has long surpassed the US when it comes to financial and humanitarian aid allocations (EUR 70 billion vs. 50 billion). Total aid allocations by all donor governments to Ukraine amount to EUR 267 billion as of Dec 2024, or about EUR 80 billion per year. In percent of GDP, only Scandinavian and Eastern European countries, plus the Netherlands, have made a significant effort to support Ukraine. Major donors such as Germany, the US or the UK have allocated less than 0.2% of their GDP on aid to Ukraine per year. This is comparable to minor and questionable domestic subsidy programs such as for diesel fuel or company cars. Southern European countries like France, Spain or Italy have done even less, with just around 0.1% of GDP mobilized for Ukraine per year. Through the lens of Western governments' fiscal budgets, aid to Ukraine thus looks more like a minor political "pet project" rather than a major fiscal effort. The Russia-Ukraine war has become a battle of procurement and military production. In 2022, more than 70% of foreign military aid came from national stockpiles, with little industry procurement. By 2024, that ratio had reversed, as two-thirds of all arms and equipment allocated to Ukraine now come directly from defense industries. This trend underscores the growing relevance for ramping up defense production in Europe. European donors are increasingly collaborating through multilateral procurement initiatives to jointly produce and deliver weapons to Ukraine. Our dataset records a total of EUR 5 billion in military procurement initiatives, including ad-hoc coordinated projects or more institutionalized multilateral funding mechanisms, such as the International Fund for Ukraine, the Czech Ammunition Initiative, and the NATO Comprehensive Assistance Package. While these initiatives remain relatively small, they could become a blueprint for the future of aid for Ukraine. Donors such as Denmark have started to purchase weapons directly from Ukrainian producers, in particular drones. Looking ahead, this "Danish model" could help to deliver weapons that are cheaper and delivered more quickly. |
| Keywords: | International aid, military aid, war, geoeconomics, Ukraine |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:320382 |
| By: | Smolnik, Franziska; Tadumadze, Giorgi |
| Abstract: | Georgia is at a turning point due to democratic backsliding in domestic policy and a reconfiguration of external relations influenced by regional and global geopolitical turbulence. In addressing this challenge, the EU should: consider carefully whether using communication channels will promote Georgia's democracy and future in Europe; assess the implications of cooperation for the broader population; and strengthen the resilience of Georgian civil society. Progress in the accession processes of other EU candidate countries could weaken EU-skeptical voices in Georgia and help solidify public support for the country's European aspirations. |
| Keywords: | Georgia, EU, Georgian Dream (GD), Mikheil Kavelashvili, democratic backsliding, global geopolitical turbulence, accession processes, Foreign Agents Registration Act (FARA), Parliamentary Assembly of the Council of Europe (PACE), Institute of Social Studies and Analysis (ISSA) |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:320460 |
| By: | Hinnerk Gnutzmann (Leibniz Universität Hannover); Arevik Gnutzmann-Mkrtchyan (Leibniz Universität Hannover & CESifo); Tobias Korn (Leibniz Universität Hannover & Heidelberg University) |
| Abstract: | Abstract Empirical models of trade agreements implicitly assume that withdrawal from a trade agreement has an equal and opposite trade effect as accession, i.e., symmetry. With increasing opposition to international economic cooperation, it becomes urgent to test this assumption. We analyze a quasi- natural experiment to explicitly test the symmetry assumption in the context of FTA termination using the gravity model. In 2004, Estonia joined the European Union, which mandated that it withdraws from its FTA with Ukraine. Carefully controlling for possible confounding effects of EU enlargement using a variety of methods, we isolate the FTA withdrawal effect and find strong support in favour of symmetry. Moreover, while import tariffs are part of the impact, the bulk of the effect comes from non-tariff effects of an FTA. General equilibrium estimates suggest that the FTA withdrawal led to a noticeable loss in members’ welfare. |
| Keywords: | Free trade agreement, withdrawal, gravity, welfare analysis, European Union, Estonia, Ukraine |
| JEL: | F13 F14 J13 F15 F17 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ost:wpaper:407 |
| By: | Maycas-Sardi, Jose (Carlos III University of Madrid (UC3M)); Serrano-Serrat, Josep |
| Abstract: | In the aftermath of globalization, Western democracies have witnessed a surge in political disaffection and radical-right support. While economic and migration shocks have been widely studied, the political effects of border liberalization remain underexplored. This paper theorizes and tests how increased border permeability can generate political discontent, even without necessarily affecting immigration or direct economic competition. We argue that open borders enable brief, routine interactions between groups across historically closed frontiers. When this occurs between regions of unequal perceived status, it can erode symbolic boundaries and foster resentment. We examine this in the context of the German--Czech border, which transformed from a militarized Cold War frontier to an internal EU border. Leveraging two moments of liberalization---the fall of the Iron Curtain (1989) and Czech EU accession (2004)---we apply difference-in-differences and event study designs using municipality-level data from Bavaria. Border liberalization led to a drop in turnout (around 2 pp) and a rise in radical-right support (around 1 pp). This findings have implications on the determinants of backlash against globalization. |
| Date: | 2025–07–04 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:t6fhm_v1 |
| By: | Mikula, Stepan (Masaryk University); Reggiani, Tommaso G. (Cardiff University); Sabatini, Fabio (Sapienza University of Rome) |
| Abstract: | We exploit a historical experiment that occurred in Czechoslovakia after World War Two to study the drivers of social capital accumulation in an extremely unfavorable environment. Between 1945 and 1948, the Sudetenland became the scene of ethnic cleansing, with the expulsion of nearly three million German speakers and the simultaneous influx of nearly two million resettlers. Focusing on the areas where at least 90% of the population was forced to leave, we show that the municipalities hosting a church built before 1945 developed significantly higher social capital under the communist rule, which persisted after the dissolution of Czechoslovakia. The heterogeneity of effects reveals that the longer a resident pastor served in a parish, the more civic capital emerged in the municipality after the Velvet Revolution, suggesting that the social interactions facilitated by pastors were crucial in establishing the foundational layer for social capital in church-hosting communities. |
| Keywords: | social capital, forced migration, conflict, institutions, religion, transition countries |
| JEL: | D74 L31 N24 N44 N94 O15 Z12 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17981 |
| By: | Magdalena Gadek; Joanna Kott; Marek Kott; Jagoda Mrzygłocka-Chojnacka; Katarzyna Walecka-Jankowska; Anna Kowalska-Pyzalska |
| Abstract: | The aim of the article was to deepen the understanding of the implementation of ESG (Environmental, Social, Governance) principles within the small and medium-sized enterprises (SMEs) sector in Poland, taking into account the impact of company size on the level of knowledge about ESG issues, the motives for undertaking related actions, as well as the state of ESG implementation and reporting. The study was conducted using a quantitative method (CAWI) on a sample of 533 enterprises. The results indicate that both the level of ESG knowledge and the scope of implemented actions increase with the size of the company. The main motivators for enterprises are regulatory requirements and market and client pressure, which are particularly evident among medium-sized enterprises. The analysis also identified significant implementation barriers, such as limited resources and the lack of coherent reporting standards. The article highlights the necessity of enhancing educational and financial support for micro and small enterprises, as well as the need for appropriate regulatory adjustments to encourage SMEs to actively participate in the transition towards sustainable development. |
| Keywords: | ESG; CAWI; SME; Sustainable Development; Poland |
| JEL: | Q01 Q58 M14 M21 O35 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ahh:wpaper:worms2504 |
| By: | Yerimpasheva, Aida; Brauweiler, Hans-Christian |
| Abstract: | Kazakhstan views the implementation of the European Union's Global Gateway strategy as a key element of its foreign economic policy. For Kazakhstan, this strategy is important not only from an economic point of view, since it is aimed at stimulating the country's sustainable growth, but also from the point of view of geopolitical risks, allowing it to move away from excessive dependence on one direction (be it Russia or China) and, ultimately, strengthen multi-vectors. The presence of a strong European track makes Kazakhstan's foreign economic strategy more sustainable. A comprehensive analysis conducted as part of desk research allowed us to make several key conclusions regarding the new European strategy. Thus, the Global Gateway offers Kazakhstan and other Central Asian countries a new model of cooperation focused on long-term economic and social progress without sacrificing sovereignty. On the other hand, challenges remain significant, and the success of the Global Gateway depends on how they are overcome. The implementation of Global Gateway projects largely depends on the creation of effective coordination mechanisms between EU institutions and the authorities of Kazakhstan. |
| Keywords: | Global Gateway, sustainable development, cooperation, BRI, geoeconomic strategy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:opodis:320422 |
| By: | Magnus Neubert (Leibniz Institute of Agricultural Development in Transition Economies and Martin-Luther-Universität Halle-Wittenberg); Stefan Nikolić (Loughborough University) |
| Abstract: | Are railways always a harbinger of prosperity? We examine the economic effects of railways in Bosnia-Herzegovina under Habsburg colonial rule. Our novel dataset consistently tracks the non-agrarian population share of over 4, 500 settlements in Habsburg Bosnia in 1885, 1895, and 1910, based on census records. Applying the inconsequential units approach, with least cost paths as our instrumental variable, we estimate the effect of railway access on structural transformation. Normal-gauge railways deindustrialized Bosnian settlements by exposing local crafts to imperial competition. Narrow-gauge railways accelerated structural transformation temporarily, primarily by attracting foreigners. Narrow-gauge railways had a more sustained impact on structural transformation in settlements endowed with human capital and secured by law enforcement. Our findings suggest colonial railways are no silver bullet for economic development; transport infrastructure requires development prerequisites to have a lasting positive effect. |
| Keywords: | railways, occupational structure, Bosnia-Herzegovina, Habsburg Empire |
| JEL: | I25 J21 N94 O18 R11 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:hes:wpaper:0280 |
| By: | Tatjana Schulze; Weining Xin |
| Abstract: | So-called “connector” countries have been argued to benefit from the US-China trade tensions, given their rising share in US imports. This paper draws an important distinction between trade reallocation—countries increase domestic production to substitute for declining Chinese exports to the US—and trade rerouting—countries serve as one-stop place for transshipment of Chinese exports to the US. Leveraging granular data on trade and FDI flows and global input-output linkages, focusing on six Asian countries, we first document that the connector role of these countries may reflect their growing domestic markets and Chinese supply chain reconfiguration, beyond trade rerouting from China to the US. We then zoom in on value-added components and deploy a synthetic control approach to disentangle trade reallocation from trade rerouting. While the evidence remains elusive for five of the six countries, Vietnam appears to have benefited from trade reallocation, with increased domestic content in its exports to the US in strategic sectors, instead of facilitating significant transshipment of Chinese exports to the US. Such domestic production expansion also helped increase domestic content in Vietnam’s exports to the rest of the world, and may be partly due to Chinese firms relocating to Vietnam through greenfield FDI. Despite potential short-term gains, trade reallocation increases connector countries’ vulnerability to geoeconomic fragmentation with losses to all countries in the long run. |
| Keywords: | Geoeconomic Fragmentation; Trade Reallocation; Trade Rerouting; US-China Trade Tensions; Connector Countries |
| Date: | 2025–06–27 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/129 |
| By: | Adrian Pop (Faculté de Droit, Economie et Gestion de l’université d’Angers., GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Diana Pop (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement) |
| Abstract: | This article documents the existence of an anchoring bias in the pricing and acceptance of takeover bids in a blockholder regime where the mandatory bid rule applies. Our analysis, performed on the Romanian market for corporate control, shows that the 52‐week high price of the target and the pricing of direct privatisations conducted by the government are strong predictors of both bid premium and outcome. The tender decision depends also on the scope of expropriation perceived by minority shareholders. Our results suggest that stronger capital market discipline is also important for insuring an effective protection of minority shareholders. |
| Keywords: | 52‐week high, acquisition premium, mandatory bid rule, minority shareholder rights, privatisation premium, reference point, tender outcome |
| Date: | 2025–03–28 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05067197 |
| By: | Yen Thi Hai Nguyen; Truc Ngoc Hoang Dang; Brian Buh; Isabella Buber-Ennser |
| Abstract: | Due to strong filial piety, parents(-in-law) play an important role in their adult daughtersâ fertility decisions in Vietnam; women feel pressured to fulfil their duties to produce a male descendant for the family. However, rapid urbanisation and industrialisation mean that multigenerational households are becoming less common, despite having been the standard household structure for centuries. Based on the 2020â21 Vietnam Multiple Indicator Cluster Survey, we investigate if women who coreside with the parental generation are more likely to desire additional children. In an industrialised economy, grandparents may be an important source of childcare while simultaneously exerting pressure on their adult children to have additional children. Further, we explore the association of the sex of previous child(ren) to capture the pressure associated with son preference. Multivariate regressions reveal an association between coresiding with parents and the desire for a second child, regardless of the sex of the first child. Among women with two children, third-child desires do not appear to be associated with coresiding with parents but are substantially related to having two daughters. Given the strong two-child norm in Vietnam and previous policies implying negative consequences for parents with three or more children, few women show a desire for a third child. Those women who report a desire for a third child mostly have two daughters, reflecting societal norms about the need for a male heir. |
| Keywords: | Coresiding with parents, Desire for additional children, Son preference, Vietnam Multiple Indicator Cluster Survey |
| Date: | 2023–08 |
| URL: | https://d.repec.org/n?u=RePEc:vid:wpaper:2303 |
| By: | Backes, Annika; Kovač, Dejan |
| Abstract: | Using the universe of high school and college admissions data in Croatia, we geocoded nearly half a million students' residential addresses to investigate how their college and major choices are influenced by older neighbors and peers. Using an RDD to exploit time and program variation in admission cutoffs, we find that having an older neighbor who was admitted to and enrolled in a program increases a student's probability of applying to the program by about 20%. We find that this effect consistently holds only for the closest neighbors, both in terms of distance and age difference. Female students are more likely to be influenced by older neighbors' choices, and male older neighbors' admission has a larger impact on both male and female students compared to female older neighbors. The effect is stronger if the student-neighbor pair lives in a region that does not have its own university, implying that the value of information in rural areas is higher. We find evidence that students don't follow their older neighbors to less competitive programs; instead, they are more likely to apply for the same programs their older neighbors were admitted to when the program is more prestigious. Next, we utilize the variation in weight scheme of Croatia's college study programs to show evidence, beyond college choices, of how older neighbors affect the human capital formation of their younger peers. The main channel through which we observe this effect is during high school, through specialization in the subjects needed to gain admittance to older neighbors' college programs. These findings shed light on the intricate dynamics shaping educational decisions and underscores the significant role older neighbors play in guiding younger peers toward specific academic pathways. |
| Keywords: | college-major choice, human capital accumulation, neighbors, peer effects |
| JEL: | D83 I23 I24 O15 R23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:319913 |
| By: | Kovač, Dejan; Neilson, Christopher A.; Raith, Johanna |
| Abstract: | How do beliefs on admission probability influence application choices? In this study, we empirically investigate whether and how admission probability is reflected in application choices in a centralized admission system. We exploit a novel setting of a dynamic deferred acceptance mechanism as employed in Croatia with hourly information updates and simultaneous application choices. This setting allows us to explore within-applicant strategic adjustments as a reaction to changing signals on admission probability. We show in an RDD analysis that applicants react to negative signals on admission probability with an increased propensity to adjust their application choices by 11-23%. Additionally, we show how application strategies evolve over time, while applicants learn about their admission probability. The group most-at-risk to remain unmatched improves their application choices by applying to programs with a higher admission probability towards the application deadline. Yet, we also identify a popular and potentially harmful strategy of applying to safer programs before applying to more risky "reach" programs. About a quarter of applicants have the potential to improve their application choices by resorting their application choices. |
| Keywords: | belief updating, college admission, deferred acceptance, higher education, preference misrepresentation |
| JEL: | D82 I21 I23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:319912 |
| By: | Tomáš Boukal (Charles University); Petr JanskyÌ (Charles University); Miroslav PalanskyÌ (Charles University and Tax Justice Network) |
| Abstract: | We develop a methodology to decompose the tax revenue impact of the global minimum tax introduced in 2024 into several components and quantify its potential impact on profit shifting. We apply it to 34 thousand multinational-country observations from tax returns, financial statements and country-by-country reports of all multinationals active in Slovakia. We find that the global minimum tax has the potential to decrease profit shifting by most multinationals, which are on average likely to pay higher effective tax rates in most countries worldwide post-reform. We find that Slovak corporate tax revenues will increase by 4%, with half of the increase due to its minimum top-up taxes. The other half of the increase is corporate income tax on profits that will no longer be shifted out of the country. We expect the global minimum tax to target 49% of previously shifted profits. |
| Keywords: | Global minimum tax, profit shifting, multinationals, tax avoidance |
| JEL: | H25 H26 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:025 |
| By: | von Ondarza, Nicolai |
| Abstract: | Europe must take more responsibility for its defence, if necessary without the United States, given Washington's volatility. In March 2025, the European Union (EU) launched a series of initiatives to strengthen defence industry and defence policy cooperation. With these new instruments also come the outlines of a new partnership strategy. Previous Brussels formats for defence industrial cooperation were only open to members of the EU and the European Economic Area (EEA). The Security Action For Europe (SAFE) Regulation - adopted by the EU in May 2025 - on the other hand, provides for a level of integration of Ukraine in this sector that comes close to that of an EU member. With the United Kingdom, the EU has created new opportunities for participation for the first time since Brexit via a security partnership agreement. The EU also wants to offer countries such as Canada, Turkey, Japan, South Korea, Australia and even India points of contact via partnership agreements. In order for this strategy to be successful, the EU needs to make itself a more attractive partner. |
| Keywords: | European Union, defence industry, security and defence policy, security partnerships, security partnership agreements, alliance strategy, partnership and alliance strategy, armaments policy, White Paper "Readiness 2030", Security Action For Europe, SAFE |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:320462 |