Showing papers in "Post-communist Economies in 2008"
TL;DR: In this paper, the authors examined the relation between corporate governance practices measured by the Transparency Disclosure Index (TDI) and dividend payouts in Poland and found evidence that an increase in the TDI or its sub-indices leads to an increase of the dividend to cash flow ratio, which supports the hypothesis that companies with weak shareholder rights pay dividends less generously than do firms with high corporate governance standards.
Abstract: This study examines the relation between corporate governance practices measured by the Transparency Disclosure Index (TDI) and dividend payouts in Poland. Our empirical approach lies in constructing measures of the quality of the corporate governance in 110 non-financial companies listed on the Warsaw Stock Exchange between 1998 and 2004.We find evidence that an increase in the TDI or its sub-indices leads to an increase in the dividend to cash flow ratio. These results support the hypothesis that companies with weak shareholder rights pay dividends less generously than do firms with high corporate governance standards. We assume that well protected shareholders in Poland use their power to extract dividends, thus our results seem to support the outcome agency model of dividends.
48 citations
TL;DR: In this paper, the efficiency of the Central European countries' foreign direct investment policies by evaluating the spillover effects of foreign investment is examined by comparing two types of FDI policies: the Irish model and the TKC model.
Abstract: This article examines the efficiency of the Central European countries' foreign direct investment policies by evaluating the spillover effects of foreign investment. It is argued that the poor contribution of foreign direct investment to the emergence of competitive indigenous firms is partly due to the adoption by Hungary, the Czech Republic, Poland and Slovakia of a very friendly FDI policy. The argumentation is based on a stylised comparison of the ‘Irish Model’ and the ‘TKC model’ (Taiwan, Korea, China) representing two main categories of FDI policies of countries which have built their development on integration in international trade. The comparison of the two families of FDI policies tends to demonstrate that the ‘TKC model’, built on strong state intervention in the industrial structure and in industrial guidance of FDI, has been more efficient in terms of the creation of competitive indigenous firms than the ‘Irish model’ which totally bans policies constraining FDI.
47 citations
TL;DR: In this article, the determinants of innovative capability in a sample of MNC subsidiaries operating in the European transition economies were explored, and it was found that innovative capability and autonomy in product and process technology appear to be determined by a different set of variables than capability in marketing and management.
Abstract: This article explores the determinants of innovative capability in a sample of MNC subsidiaries operating in the European transition economies. It finds that innovative capability and autonomy in product and process technology appear to be determined by a different set of variables than capability and autonomy in marketing and management. The most independent affiliates have high innovative capability in product and process technology, but are less prominent in marketing and management technology. Affiliates that are closely integrated with their parent company exhibit the opposite pattern. These differences may have some impact on the kinds of spillovers generated by different kinds of foreign direct investment projects.
40 citations
TL;DR: In this paper, the authors describe the evolving pattern of Central European countries' agri-food trade using recently developed empirical procedures based around the classic Balassa index, showing that the trade pattern has converged in the Czech Republic, Hungary, Lithuania, Poland and Slovenia, while it polarised in Estonia, Latvia and Slovakia over the period.
Abstract: This article describes the evolving pattern of Central European countries' agri-food trade using recently developed empirical procedures based around the classic Balassa index. The extent of trade specialisation exhibits a mixed trend. The results suggest that the trade pattern has converged in the Czech Republic, Hungary, Lithuania, Poland and Slovenia, while it polarised in Estonia, Latvia and Slovakia over the period. For particular product groups, the indices display greater variation. They are stable for product groups with comparative disadvantage, but product groups with weak to strong comparative advantage show significant variation. In addition, in the Baltic countries many specialisation improvements occurred in those product groups for which world demand expanded at the fastest rates during the period analysed.
36 citations
TL;DR: In this paper, the authors illustrate the usefulness of applying bootstrap procedures to total factor productivity Malmquist indices, derived with data envelopment analysis (DEA), for a sample of 250 Polish farms during 1996-2000.
Abstract: This article illustrates the usefulness of applying bootstrap procedures to total factor productivity Malmquist indices, derived with data envelopment analysis (DEA), for a sample of 250 Polish farms during 1996–2000. The confidence intervals constructed as in Simar and Wilson suggest that the common portrayal of productivity decline in Polish agriculture may be misleading. However, a cluster analysis based on bootstrap confidence intervals reveals that important policy conclusions can be drawn regarding productivity enhancement.
35 citations
TL;DR: In this article, the authors examined income dispersion and convergence across 76 Russian regions using annual data for 1992-2005 to examine the distribution of income in each region. And they found evidence of both unconditional and conditional convergence, especially among the initially richer regions.
Abstract: This article uses annual data for 1992–2005 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998.
31 citations
TL;DR: In this paper, the authors analyzed the dynamics of concentration of the insurance industry in Central and Eastern Europe and determined the impact of the leading insurance company on the development of the market.
Abstract: Until the beginning of the 1990s the insurance markets of the transition countries of Central and Eastern Europe were highly concentrated, which means that one or only a few state-owned insurance companies operated on the market, with the market share of the leading company higher than 90%. At the beginning of the 1990s private investors entered the majority of economic sectors, including the insurance market. The entry of new companies has led to a decrease in concentration, i.e. to increased competition. This article analyses the dynamics of concentration of the insurance industry, and seeks to determine the impact of the leading insurance company on the development of the insurance market. Furthermore, the article examines the influence of the purchasing power of the population, measured by gross domestic product per capita, on the development of the insurance market and considers the potential scenario of development of the insurance market in the future.
31 citations
TL;DR: In this paper, the authors report the first cross-national evaluation of the prevalence of a little discussed wage arrangement where formal employers pay their formal employees two wages, one declared and the other an undeclared "envelope wage".
Abstract: This article reports the first cross-national evaluation of the prevalence of a little discussed wage arrangement where formal employers pay their formal employees two wages, one declared and the other an undeclared ‘envelope wage’. Analysing the results of a 2007 survey conducted in the 27 European Union member states, the finding is that some 5% of employees in formal employment receive an additional undeclared wage from their formal employer which amounts on average to some two-fifths of their wage packet. However, this employment practice is found to be markedly more prevalent in East-Central European countries, where some 11% of formal employees receive an undeclared wage and this is more often paid for their regular employment hours, which is in stark contrast to Continental Europe and Nordic countries, where such wages are less common and received mostly for overtime or extra work performed. The article concludes by discussing how this neglected but nevertheless significant practice might be tackled.
31 citations
TL;DR: In this article, the authors used a survey of urban Chinese workers in 2005 to estimate the private returns to education and the income elasticity of education expenditure and found that the return to education is relatively low and that expenditure on education is less sensitive to changes in income than expenditure on either food or clothing.
Abstract: This article draws on a survey of urban Chinese workers in 2005 to estimate the private returns to education and the income elasticity of education. Differences in the rates of return to schooling are examined between gender and between age groups. The estimated returns to schooling are found to be higher than those documented in existing studies for the mid-1980s to late 1990s. In particular, considerably higher returns to education are observed among people aged 35 or under, representing those who received standardised education and entered the labour market during the urban economic reform era. The study finds that the income elasticity of education expenditure is relatively low and that expenditure on education is less sensitive to changes in income than expenditure on either food or clothing.
28 citations
TL;DR: This paper found that Eastern Europe had about 70-80% of the USA's human capital in per capita terms in the 1990s, and that this difference is especially prevalent in Eastern Europe, which experienced a massive expansion of formal education in the twentieth century which was not always matched by demand from the market or the efficiency of institutions.
Abstract: There is a general consensus that human capital is a major determinant of economic development. However, the range of available human capital variables is very wide in both a technical and a theoretical sense, so that different human capital measures are sometimes only loosely correlated. This is partly because they capture different aspects of human capital ranging from the resources devoted to human capital creation (without taking account of market forces) to attaching a monetary value based on the market value of labour. Hence, different measures can lead to very different results and conclusions. This difference is especially prevalent in Eastern Europe, which experienced a massive expansion of formal education in the twentieth century which was not always matched by demand from the market or the efficiency of institutions. Consequently, if we look at the attainment figures only, we find that Eastern Europe had about 70–80% of the USA's human capital in per capita terms in the 1990s. Using methods th...
27 citations
TL;DR: In this paper, the authors investigated the relationship between various types of poverty in Poland and found that the share of persons living in subjective poverty was higher in 2003 than in 1997, while deprivation substantially decreased.
Abstract: This study investigates the relationships between various types of poverty in Poland. Monetary poverty is examined together with subjective poverty and with a concept of deprivation-based poverty conceived as lacking particular dwelling resources. The results reveal quite important discrepancies between these three types of poverty. Though income and expenditure poverty incidence generally decreased during the period investigated, the share of persons living in subjective poverty was higher in 2003 than in 1997, while deprivation substantially decreased. Moreover, quite large discrepancies at the individual level could be observed. Some conflicting results were also found between the correlates of poverty of the three types.
TL;DR: In this paper, the authors explored the changes in resource use, agricultural production and productivity during the transition of the former Soviet Union and found that countries that have achieved greater progress in the implementation of agricultural reform record better agricultural performance.
Abstract: Using long time series of basic agricultural statistics in 12 countries of the former Soviet Union, this article explores the changes in resource use, agricultural production and productivity during the transition. While the share of labour employed in agriculture has increased in all the countries analysed, the share of agriculture in GDP has declined, pointing to generally decreasing productivity of agriculture relative to manufacturing and other sectors of the economy. The precipitous transition decline that began in 1991 with the break-up of the Soviet system gave way to definite recovery starting around 1998. Agricultural growth and performance are shown to be positively linked with individualisation of farming in transition countries and with various measures of policy reform. Countries that have achieved greater progress in the implementation of agricultural reform record better agricultural performance.
TL;DR: This article explored the theoretical and empirical relationship between innovative inputs and innovative outputs in the EU-27 countries, focusing in particular on the Central and Eastern European countries (CEECs) and found evidence of strong East/West specificities, but also of marked heterogeneity within the CEECs.
Abstract: The recent literature dealing with the determinants of foreign direct investment (FDI) has increasingly emphasised the importance of technological aspects, as both attractive factors and FDI-related technological transfer effects. Focusing on the second perspective, this article explores the theoretical and empirical relationships between innovative inputs (particularly FDI) and innovative outputs in the EU-27 countries, focusing in particular on the Central and Eastern European countries (CEECs). Findings provide evidence of strong East/West specificities, but also of marked heterogeneity within the CEECs, thus supporting our approach, which emphasises complexity and the specificities of production and economic conditions.
TL;DR: In this paper, the authors deal with a specific legacy, concerning the labour force, with which transition countries have been burdened while instituting systemic change, and explain the sources of a bias in favour of low-skilled workers in the past.
Abstract: This article deals with a specific legacy, concerning the labour force, with which transition countries have been burdened while instituting systemic change. The majority of authors have concentrated on what this author calls transition cyclical unemployment, resulting from the permanent excess demand and the lack of penalty for financial failure under the communist economic system. However, another, more pernicious legacy has been the distorted skill structure in communist economies. This article explains the sources of a bias in favour of low-skilled workers in the past. In consequence, when transition began, these economies were faced with heavy excess supply of low-skilled and high demand for better skilled workers. The latter stemmed from normal requirements of economic development, that is, the need for continuous output quality improvement, technological upgrading and change in the portfolio of goods and services produced. Among the consequences of the sharp downward change in demand for low-skille...
TL;DR: In this paper, the authors analyzed the relationship between banking sector efficiency and economic growth using a panel data analysis of six South-eastern European countries during the period 1995-2005.
Abstract: This article analyses the relationship between banking sector efficiency and economic growth using a panel data analysis of six South-eastern European countries during the period 1995–2005. The analysis is concentrated on the banking sector because other segments of the financial market are underdeveloped in our sample of countries. We measure the qualitative development in the banking sectors by using the margin between lending and deposit interest rates as well as the share of non-performing loans. By applying the panel data method in a growth-type equation setting, we confirm that improvements in banking sector efficiency, measured through the decreasing interest rate spread, exerted a positive influence on the growth rate of the countries in the region.
TL;DR: In this paper, the authors analyzed the evolution of inter-regional output distribution during economic transition in two countries, namely, Russia and China, using two non-parametric methods, kernel density estimation and a Markov chain transition matrix.
Abstract: Several studies report increasing inter-regional inequality in transition countries over the course of economic reforms, but most of them fail to look at the underlying dynamics. Using the cases of Russia and China, this article analyses the evolution of inter-regional output distribution during economic transition. One non-parametric method, kernel density estimation, and one parametric method, a Markov chain transition matrix, are used to evaluate the shape of the inter-regional output distribution and to evaluate regions' mobility within this distribution. Estimated distributions for both countries are skewed with long right tails. Whereas the distribution for Russian regions shows multiple modes, the hypothesis of unimodality could not be rejected for Chinese regions over the last two decades. Stationary distributions of the Markov chain transition matrices support this finding. It turns out that increasing inequality and multimodality in both countries are driven by a few outliers with very distinct ...
TL;DR: In this paper, the authors present an integrated analysis of China's emerging urban institutions, and especially of how they respond to the fundamental change in property rights regime, and argue that the existing political structure also imposes a constraint on the development of urban communities.
Abstract: This article presents an integrated analysis of China's emerging urban institutions, and especially of how they respond to the fundamental change in property rights regime. In the last decade, homeowners' associations have been booming in Chinese cities, while the Ministry of Civil Affairs has been promoting ‘communities’. The traditional hierarchy of district, street office and residents' committee is also undergoing some transformation. The article argues that, in spite of bureaucratic turf battles, the evolution of China's urban institutions is a good example of how the establishment of private property rights causes corresponding changes in local governance forms. The existing political structure also imposes a constraint on the development of urban communities.
TL;DR: In this paper, the authors assess the sustainability of fiscal policies in a panel of eight EU New Member States, namely Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, the Slovak Republic and Slovenia.
Abstract: This article aims to assess the sustainability of fiscal policies in a panel of eight EU New Member States, namely Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, the Slovak Republic and Slovenia. First, using panel data unit-root tests, econometric findings show that the variables public expenditure and revenue are not stationary. However, employing panel cointegration tests, it is found that government spending and revenue are cointegrated. This implies that fiscal policies in these countries are sustainable in the long run, i.e. they are consistent with inter-temporal budget balance in accordance with the present-value approach. Finally, these results are confirmed if we exclude the countries with sound public finances, namely the three Baltic States and Slovenia: we obtain the same conclusion with a panel comprising Bulgaria, the Czech Republic, Poland and the Slovak Republic.
TL;DR: In this paper, the authors analyzed firm-level air pollutant emissions from a panel of Czech firms over the years 1993-98 and concluded that tighter environmental protection policies proved the most important re...
Abstract: During the 1990s air pollutant emissions declined dramatically in many of the transition economies in Central and Eastern Europe including the Czech Republic. Various reasons may explain these reductions, such as (1) a decline in production, (2) the exit of older, more polluting firms, along with the entry of new, less polluting firms, (3) more stringent environmental policies etc. To assess these reasons, this study analyses firm-level air pollutant emissions from a panel of Czech firms over the years 1993–98. By controlling for the level of production, this study eliminates the potentially confounding factor of reduced economic activity over this transition period. By tracking a fixed set of firms over time, one part of this study controls for the exit of older firms and the entry of new firms. Based on an assessment of the analytical results and an examination of reasons for the reduction in air pollutant emissions, we conclude that tighter environmental protection policies proved the most important re...
TL;DR: In this article, the authors analyzed the features defining the transition of China's energy system and highlighted continuities and ruptures with tradition, and relations between the transformation and three elements of China' current development phase: i) strong growth and changing industrial specialisation, ii) transport expansion and iii) urbanisation and new consumption habits.
Abstract: Since the 1990s China has been undergoing an energy transition. Increasing dependence on foreign hydrocarbons is the transformation's most striking feature, leading much analysis of China's energy system toward geo-strategic studies. This article analyses a) the features defining the transition – not exclusively dependence on foreign oil markets – highlighting continuities and ruptures with tradition; and b) relations between the transformation and three elements of China's current development phase: i) strong growth and changing industrial specialisation, ii) transport expansion and iii) urbanisation and new consumption habits. If these elements are indeed drivers, and if they persist, current features of the transition (including growing dependence on external markets) will continue.
TL;DR: In this paper, the authors examined the impact of household income on private transfers in Russia, based on the assumptions of altruism, exchange and risk sharing, and found that the fact of giving or receiving transfers does not relate to altruism but rather suggests reciprocity.
Abstract: This article examines the impact of household income on private transfers in Russia, based on the assumptions of altruism, exchange and risk sharing. Econometric investigations using data from the Russia Longitudinal Monitoring Survey 2002 show that the fact of giving or receiving transfers does not relate to altruism but rather suggests reciprocity. Notably, some informal assistance networks would develop among the poorest households on the basis of risk sharing, while the richest households' gifts would rather be guided by a search for compensation, thus showing the predominance of self-interest.
TL;DR: In this article, the relationship between market and client interest rates in the period of inflation stabilisation and banking system transformation in the Czech Republic in 1999-2006 was analyzed, and the character of short-run and long-run equilibrium of the transmission of market interest rates to lending and deposit interest rates was analyzed.
Abstract: This article deals with the relationship between market and client interest rates in the period of inflation stabilisation and banking system transformation in the Czech Republic in 1999–2006. It analyses the character of short-run and long-run equilibrium of the transmission of market interest rates to lending and deposit interest rates. In the theoretical part crucial characteristics of the banking system in transition countries and their effects on interest rate dynamics are discussed. These are the strong position of large state-owned banks, limited power of non-banks, low elasticity of demand for bank products, and high demand for investment and consumption. The empirical analysis shows different behaviour of client interest rates in the short and long run and a significant impact of changing characteristics of the bank sector (growth of competition, reduction in credit risk and an increase in operational efficiency) on the stability of the relationship between market and client interest rates.
TL;DR: In this paper, the authors examined the experience with decentralisation in Bulgaria at the end of its first decade and found that the characteristics of local governments varied greatly and evaluated the impact of varying local government characteristics on economic and social outcomes.
Abstract: Over the past two decades decentralisation of government has been widely promoted by international development organisations. In former socialist economies, where governance had been extremely centralised, decentralisation seemed a way to build economic efficiency and improve public sector governance from the bottom up. This article examines the experience with decentralisation in Bulgaria at the end of its first decade. It finds that the characteristics of local governments varied greatly and evaluates the impact of varying local government characteristics on economic and social outcomes. There is some evidence that local government characteristics do have a significant impact on performance, but this is impact is outweighed by inherited, historical differences in economic development.
TL;DR: In this paper, a step-by-step consideration of public opinion about business and the reasons for the formation of negative trends in this sphere is presented, based on public polls conducted in Russia in recent years and the analysis of relations among the state, business and society by Russian and foreign researchers.
Abstract: This article, based on public polls conducted in Russia in recent years and the analysis of relations among the state, business and society by Russian and foreign researchers, presents a step-by-step consideration of public opinion about business and the reasons for the formation of negative trends in this sphere; the influence of different aspects of economic policies (such as privatisation, tax policy, anti-monopoly policy and protection of consumers' rights, and combating corruption) on business activity and on the population's views on business; and the reaction of business to the negative attitude of society. The concluding part of the article identifies those social groups and economic and political players (federal and regional authorities, oligarchic and non-oligarchic big business, trade associations, NGOs and independent think tanks) who are capable of influencing opinion about business and also analyses their possible actions in the medium-term future.
TL;DR: The Czech Republic is too lax concerning modifications to the parameters of the PAYG system, consequently plunging the system into deep deficit as mentioned in this paper, which is the case in most of the countries in Central Europe.
Abstract: At present, the debate about pension reform in Central Europe is dominated by approaches which may be politically in conflict but have one thing in common: they address the pension system by means of indebtedness. The Czech Republic is too lax concerning modifications to the parameters of the PAYG system, consequently plunging the system into deep deficit. Poland, Hungary and Slovakia put forward a radical reform, which, however, would also be financed by increasing state debt. This article shows that both solutions hide serious pitfalls. Real reform should be budget-neutral, i.e. it should not generate any new budget deficits – whether explicit or implicit. Privatisation of the pension system is a reasonable aim but it should not take place at the cost of indebting future or current generations.
TL;DR: In this paper, the authors investigated the mechanisms by which a foreign owner influenced the transition of its subsidiary from central planning to market economy, and explored the role of local managers of the privatised company.
Abstract: This article investigates the mechanisms by which a foreign owner influenced the transition of its subsidiary from central planning to market economy, and explores the role of local managers of the privatised company. The subject is AGC Flat Glass Czech (renamed from Glaverbel Czech in September 2007 and formerly Glavunion), a glassmaker that was acquired early in the privatisation process by the Belgian Glaverbel Group (now AGC Group). The article documents the way in which the foreign owner transferred its tacit knowledge to local managers and workers immediately to restructure human capital, and illustrates the collaborative approach between foreign and local managers that was enabled by the favourable objective and psychological traits of the incumbent local managers.
TL;DR: The disintegration of the Soviet Union meant that an essential object of study for research analyzing centralised planning disappeared and the reference point for a lot of work dealing with the comparison of economic systems was lost.
Abstract: The disintegration of the Soviet Union meant that an essential object of study for research analysing centralised planning disappeared and the reference point for a lot of work dealing with the comparison of economic systems was lost. It could be assumed that such a structural alteration might lead to reduced interest in Russian studies and a crisis for the scientific community involved. The purpose of this study is to test this idea and to show how the scientific community interested in post-Soviet studies has changed during the transition period.
TL;DR: In this paper, the determinants of sectoral R&D and innovation expenditure as well as investment in Polish manufacturing industries in 1994-2004 were analyzed and the estimated coefficients for user cost of capital were generally in line with the neoclassical model of investment.
Abstract: This article analyses determinants of sectoral R&D and innovation expenditure as well as investment in Polish manufacturing industries in 1994–2004 The estimated coefficients for user cost of capital are generally in line with the neoclassical model of investment, except for R&D intensity The latter are primarily discouraged by systemic uncertainty The rate of growth of sales is not a prominent determinant of investment and innovation expenditure Market concentration coupled with uncertainty has a damaging effect on physical capital investment but it promotes R&D expenditure and leaves innovation intensity unaltered