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on Transition Economics |
| By: | Irakli Barbakadze; Jan Fidrmuc; Martin Hulényi; Ketevani Kapanadze |
| Abstract: | We study Russia's February 2022 full-scale invasion of Ukraine as a natural experiment to determine how sudden disruptions to international market access reshape sub-national economic inequalities. Using remotely-sensed nighttime lights as a proxy for economic activity, we estimate the economic effects of the war at the national and regional levels. We find that Russia experienced an overall economic slowdown after the start of the full-scale invasion. Regions in Western and North-Western Russia experienced significantly larger economic contractions, while Southern and Southeastern regions exhibit relative improvements in performance. These findings suggest that sanctions, a shift toward non-Western markets, and increased military production, have driven significant regional changes in Russia’s economy and urban structure. |
| Keywords: | Russia, regional and local inequalities, resilience, nighttime lights |
| JEL: | F15 P25 R11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12869 |
| By: | Ibadoghlu, Gubad |
| Abstract: | This article examines Azerbaijan’s transformation from a hydrocarbon exporter into an increasingly important Eurasian transport and logistics hub, situating this shift within the political economy of connectivity rather than treating it as a purely infrastructural achievement. It traces the origins of this strategy to the 1998 TRACECA agreement, well before the post-2022 surge of international interest in the Middle Corridor, and argues that recent geopolitical shocks — the COVID-19 pandemic, Russia’s invasion of Ukraine, and instability in the Middle East — have accelerated rather than created Azerbaijan’s transit role. Drawing on recent freight and transit data, the article shows that Azerbaijan has successfully embedded itself within Eurasian trade networks, but that freight growth since 2022 has been driven substantially by external diversion from competing routes rather than by domestic structural transformation. It further examines the European Union’s Global Gateway investments, Azerbaijan’s own infrastructure programme at the Port of Alat and along the Baku–Tbilisi–Kars railway, and the emergence of the Trump Route for International Peace and Prosperity (TRIPP) as an instrument linking connectivity to regional peacebuilding. The article concludes that Azerbaijan’s long-term competitiveness as a transit hub will depend less on geography or infrastructure than on institutional modernization — customs reform, digitalization, regulatory harmonization, and economic diversification — without which the country risks capturing only a limited share of the value generated by the trade it facilitates. |
| Keywords: | Azerbaijan, Middle Corridor, Trans-Caspian International Transport Route (TITR), TRACECA, Global Gateway, Baku International Sea Trade Port, Baku–Tbilisi–Kars railway, Zangezur Corridor, TRIPP, International North–South Transport Corridor (INSTC), political economy of transit, institutional reform, regional connectivity |
| JEL: | R41 R42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342605 |
| By: | Jashari, Skender |
| Abstract: | The article examines Russia’s long‑standing pattern of expansionist warfare and argues that these historical dynamics, combined with modern geopolitical pressures, are pushing the Russian Federation toward an imminent breakup. Drawing on centuries of conflicts—from the Russo‑Turkish wars to Soviet‑era occupations—the author highlights how Russia has repeatedly used military force, ideological manipulation, and proxy groups to dominate neighboring regions. Following the collapse of the Soviet Union, the study argues that Vladimir Putin’s restoration strategy relies on tools such as Islamist networks, corruption, organized crime, energy coercion, propaganda, and nuclear intimidation. Russia’s wars in Georgia and Ukraine are presented as extensions of this strategy, with the 2022 invasion marking a turning point that exposes deep structural weaknesses inside the Russian state. The article emphasizes Russia’s extreme ethnic and linguistic fragmentation, noting over 150 languages, 193 ethnic groups, and numerous republics where ethnic Russians are not the majority. Based on these internal divisions, the author predicts that the Russian Federation could fragment into dozens of new states, similar to the dissolution of the Soviet Union. The study concludes that a united Europe and Ukraine’s military resilience are accelerating Russia’s decline, framing the Russian Federation as the modern “Sick Man of Siberia.” The author argues that the collapse of Russia would also significantly weaken international terrorism, particularly Islamist networks historically supported by Soviet and Russian structures. |
| Keywords: | Russian expansionism Hybrid warfare Dissolution of the Russian Federation Ethnic fragmentation Soviet legacy Geopolitical instability Russian–Ukrainian war Balkan security International terrorism Putin’s restoration strategy Proxy warfare Post‑Soviet states Ethnolinguistic diversity Russian imperialism |
| JEL: | F5 N4 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130026 |
| By: | Quang-Thanh Tran (Research Center for Policy Design, Graduate School of Economics and Management, Tohoku University; Development and Policies Research Center); Duc-Thinh Bui (Development and Policies Research Center); Minh-Chau Pham (Development and Policies Research Center); Anh Ngoc Nguyen (Development and Policies Research Center) |
| Abstract: | Viet Nam has reached upper-middle-income status in 2025 and has set its sights on high-income status by 2045. To achieve this goal, it must sustain, on average, a per-capita growth rate of at least 7 percent a year for two decades, something most middle-income economies have never succeeded in doing. In this paper, we analyze what may stand in Viet Nam's way, via five channels: demography and labor, industrialization, infrastructure, institutions, and technology. Benchmarking Viet Nam against the East Asian economies that graduated to high income, and against Southeast Asian peers of comparable size, we find that each constraint binds earlier in Viet Nam's income trajectory than it did for any successful graduate. The demographic window is closing at a lower income level; manufacturing has plateaued, with low domestic value added in exports remaining a chronic problem; infrastructure quality and institutional capacity remain short of what higher-value production requires; and the country is currently underutilizing the human capital it builds. Against this diagnostic, we assess the government's 2024--2026 reform program and recommend where it needs to go further: industrial and infrastructure deepening, labor formalization, technology absorption and institutional and competition reform. |
| Keywords: | middle-income trap, Viet Nam, industrialization, global value chains, productivity, demographic transition, human capital, institutions |
| JEL: | O11 O14 O25 O40 O53 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0202 |
| By: | Alisherov, Foziljon; Djuraeva, Mukhayyo |
| Abstract: | This paper asks whether the positive association between household shocks and food insecurity is weaker among remittance-receiving households in Kyrgyzstan and Uzbekistan. The analysis uses the 2019 wave of the Life in Kyrgyzstan Study and Listening to the Citizens of Uzbekistan rounds 49-82. Because the surveys differ in design, unit of observation, reference period and shock measurement, all models are country-specific and observational rather than pooled. Kazakhstan is included only as a regional benchmark context. The preferred Kyrgyzstan model estimates a negative remittance-shock interaction of -0.2140 (95% CI -0.6549 to 0.2269; p=0.3415), which is directionally consistent with a weaker shock-food-insecurity association but imprecise. The preferred Uzbekistan broad-shock model estimates a negative interaction of -0.5406 (95% CI -1.0415 to -0.0398; p=0.03437). Four-group predictions are used to interpret the interaction on the food-insecurity raw-score scale and to separate baseline remittance differences from shock-period differences. The Uzbekistan household fixed-effects estimate remains negative but is smaller and imprecise (-0.1771; 95% CI -0.5515 to 0.1973; p=0.3539). L2CU estimates are unweighted because the available popw documentation was not approved for this analysis. The findings are compatible with remittance-related moderation of household shock vulnerability, especially in Uzbekistan, but the evidence remains associational and subject to selection, timing and measurement limitations. |
| Keywords: | remittances, household shocks, food insecurity, resilience, migration, Kyrgyzstan, Uzbekistan, Central Asia |
| JEL: | F24 I32 O15 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342683 |
| By: | NGUYEN, THI NGOC ANH |
| Abstract: | In debates on digital sovereignty, states seek to build the technological and regulatory capacity to govern dependence on foreign digital infrastructures. AI complicates this ambition because its development relies on globally concentrated chips, cloud services, foundation models, capital and technical expertise. This article examines how Viet Nam seeks to build domestic AI capability while remaining integrated into global technology markets. Drawing on qualitative document analysis of Viet Nam’s legal and policy instruments, together with records of foreign AI and infrastructure partnerships, the article conceptualises Viet Nam’s approach as developmental digital sovereignty through controlled interdependence. Viet Nam combines risk-based AI regulation, national AI and data infrastructure, public support for domestic innovation and strategic coordination of technology development with continued foreign investment, research partnerships and technology cooperation. The analysis identifies a non-exclusionary variant of centralised digital sovereignty in which state coordination over infrastructure, data and regulation coexists with continuing foreign participation. It finds stronger evidence of policy aspiration and regulatory access than of material leverage over critical chips, cloud infrastructure or models. However, this strategy remains politically ambiguous. The institutions intended to strengthen domestic compute, data and research capacity also centralise regulatory authority, expand executive discretion and provide limited publicly visible mechanisms for independent oversight. The article argues that developmental digital sovereignty should be assessed through both its capacity to reshape external technological dependence and the accountability conditions governing the domestic exercise of technological power. |
| Date: | 2026–07–27 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:snwfx_v1 |
| By: | Dmitrii Shchetinin (Erasmus University Rotterdam); Stanislav Avdeev (University of Amsterdam) |
| Abstract: | International trade depends on the expectation that courts will protect commercial interests when disputes arise. With the growing number of international conflicts, it is crucial to know whether this expectation is met in practice. We examine the effect of the 2014 annexation of Crimea on the enforcement rate of foreign decisions by Russian and Ukrainian judges. We assemble novel data on the entire universe of Russian and Ukrainian court decisions concerning the enforcement of foreign decisions resolving cross-border commercial disputes. Using a difference-in-differences design, we find that the enforcement rate of Ukrainian (Russian) decisions in Russia (Ukraine) fell by 26% (33%) after the annexation. We show that courts increasingly justified refusals through discretionary legal grounds and undue-notification claims. Our findings provide the first causal evidence that international conflict affects both judicial decision-making and compliance with commercial treaties. |
| Keywords: | Arbitration, Armed conflict, Cross-border commerce, Extrajudicial factors, International commercial disputes, Transnational litigation |
| JEL: | D74 F14 F51 F53 K33 |
| Date: | 2026–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260042 |
| By: | Hoang Ha Nguyen; Van Lam Do; Van Thang Ta |
| Abstract: | The article uses data on Vietnamese enterprises from 2010 to 2023 to assess theimpact of the Global Minimum Tax (GMT) on the FDI sector and domestic enterprises. The resultsshow that GMT has a negative and statistically significant e!ect on fixed asset investment, profits, and revenues of FDI firms, while domestic enterprises respond positively in the short term. Thesefindings imply that Vietnam needs to quickly adjust its FDI attraction strategy, shifting from taxincentives to improving institutional quality, infrastructure, and domestic capacity, while alsorefining tax policy to both secure budget revenues and maintain investor appeal in the newcontext. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:dpc:wpaper:0201 |
| By: | Dang, Hai-Anh (World Bank) |
| Abstract: | Vietnam’s goal for high-income status by 2045 requires roughly 5.5% annual growth in income per capita, versus 5% historically. We offer thoughts on whether artificial intelligence (AI) can supply the missing margin. Reviewing the growing AI literature, we find that appropriate policies are instrumental. Vietnam has several advantages, including scoring a high score above what its income predicts on government AI readiness and its AI diffusion rate is rising faster than in any other low-income or middle-income economy. Borrowing results from existing cross-country evidence on digital adoption, we construct three tentative growth scenarios on AI adoption. Broad and deep adoption could help the country reach its goal earlier than the baseline without any adoption. Realizing that dividend depends on four priorities: teachers first, electricity and Vietnamese-language data, an open-source latecomer strategy reaching millions of small firms, and institutions that pay for talent. These findings can be relevant to other developing countries. |
| Keywords: | AI, middle-income, growth, poverty, inequality, Vietnam |
| JEL: | H00 I3 O1 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18867 |
| By: | Marcel Schlepper; Timo Wochner |
| Abstract: | This paper provides causal evidence that the mere risk of war — absent actual conflict — imposes substantial economic costs. Our setting exploits NATO's Cold War defense line against a potential Soviet invasion, which created a geographic discontinuity in war risk within West Germany. A leak of classified defense plans in 1977 made this discontinuity salient to the public. We show that war risk distorted firm behavior on the exposed side of the defense line: firm entry declined, and incumbent firms reduced investment. These responses caused persistent regional divergence. Decades after the Cold War ended, incomes remain significantly lower in areas once exposed to higher war risk. |
| Keywords: | war risk, conflict, economic growth, firm decisions |
| JEL: | D74 R11 O12 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12915 |
| By: | Attila Lindner (University College London; ELTE Centre for Economic and Regional Studies; IFS; IZA); Balázs Reizer (ELTE Centre for Economic and Regional Studies; Corvinus University of Budapest); Andrea Weber (CEU; CEPR; RFBerlin) |
| Abstract: | We investigate how a large-scale outflow of workers affect the reaming workforce. We use Hungarian administrative social security data on the opening of the Austrian labor market to Hungarian workers as a natural experiment. We find that the opening of the Austrian border increased wages by 1 percent and decreased employment by 5 percent in the close neighborhood of the Hungarian side of the border. We also show that the outflow of workers slightly decreased the quality of the remaining workforce in Hungary. Furthermore, we show that Austrian labor demand shocks have a positive impact on Hungarian wages as the increase of vacancies in Austria increases the wages on the Hungarian side of the border. |
| Keywords: | Labor demand, migration |
| JEL: | J23 F22 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:has:discpr:2514 |
| By: | Alisherov, Foziljon; Djuraeva, Mukhayyo |
| Abstract: | This study tests several implications of weak-form market efficiency for the Uzbekistan Composite Index (UCI) and the official USD/UZS exchange rate. Corrected daily samples contain 2, 389 UCI returns from 30 August 2016 to 4 May 2026 and 4, 865 FX returns from 2 January 2013 to 5 May 2026. Weekly levels use the last available observation in Friday-ending weeks. The analysis combines descriptive and microstructure indicators, selected autocorrelations, Ljung-Box tests, sign runs tests, robust Lo-MacKinlay variance-ratio tests, unit-root checks, a 5 September 2017 reform split, a precisely defined no-jump robustness sample, and rolling windows. UCI evidence is mixed: robust variance-ratio tests fail to reject a random-walk null at all reported daily and weekly horizons, while the daily runs test and longer-lag Ljung-Box tests reject their distinct randomness nulls; weekly aggregation removes the runs-test rejection but not all serial dependence. Full-sample FX autocorrelations are small, yet runs and selected variance-ratio tests reject non-random adjustment. Pre-reform official-rate changes show pronounced dependence. Post-reform linear autocorrelation is weak when the liberalisation jump is included, but short-horizon dependence remains after that single return is excluded. The results support a partial, test-dependent, frequency-dependent, reform-dependent, and time-varying interpretation. They do not establish profitable trading strategies, and the FX findings describe official exchange-rate adjustment rather than a continuously traded, freely clearing FX market. |
| Keywords: | efficient market hypothesis, random walk, variance ratio test, runs test, thin trading, frontier markets, Uzbekistan, exchange rate liberalization |
| JEL: | C22 G14 G15 F31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342597 |
| By: | Márta Bisztray (HUN-REN Centre for Economic and Regional Studies); Beata Javorcik (University of Oxford; European Bank for Reconstruction and Development (EBRD)); Helena Schweiger (European Bank for Reconstruction and Development (EBRD)) |
| Abstract: | This paper uses rich firm-level data from Hungary to present some stylized facts on services trade. We show that (i) services exporters are even more rare than goods exporters; (ii) services exports are highly concentrated; (iii) services exporters are more likely than goods exporters to be located in cities; (iv) services exports tend to be preceded by services imports; (v) manufacturing firms also export services with services exports following goods exports in terms of timing and destinations; and (vi) services exporters have comparable premia to goods exporters. |
| Keywords: | trade in services, services exporters, servicification, Hungary |
| JEL: | F14 L80 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:has:discpr:2421 |
| By: | Adamecz, Anna (University College London and KRTK KTI); Jerrim, John (University College London); Szabó-Morvai, Ã gnes (KRTK KTI and University of Debrecen) |
| Abstract: | This paper examines the role of dropping out of school in the association between adolescent mental health disorders (MHDs) and subsequent early-life outcomes. Utilising an administrative panel dataset that links education, health, and employment records for half of the Hungarian school population, we track the life outcomes of a school cohort until age 22. Our findings indicate that adolescents diagnosed with an MHD between the ages of 14 and 16 are 5.8 percentage points (or 34%) more likely to drop out of secondary school compared to their peers, even after controlling for social background factors and educational performance. Furthermore, MHDs are associated with poorer early-life outcomes by age 22, including reduced employment rates, an increased likelihood of being neither in education nor employment, lower wages, and higher probabilities of motherhood, abortions, sexually transmitted diseases, and substance abuse. On average, approximately a third of these negative associations are mediated through school dropout but there are substantial differences across these outcomes. |
| Keywords: | adolescent mental health, school dropout, school-to-work transition, NEET, abortion, substance abuse, sexually transmitted diseases, causal mediation analysis |
| JEL: | I12 I29 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18763 |