ECONOMIC DEVELOPMENT OF SERBIA AFTER 200 0– RESULTS AND PERSPECTIVES FOR DEVELOPMENT

Aim. The work aimed to assess the impact of industrial production in the countries of Central and Eastern Europe (CEE) on the dynamics of trade in mechanical engineering products between these countries and the Russian Federation (RF) in the context of the latest geopolitical conditions.Objectives. The work seeks to analyze statistical data on the dynamics of trade relations between Russia and the countries of Central and Eastern Europe in the field of mechanical engineering at the current stage; to construct econometric models for regression analysis of the impact of industrial production on the dynamics of trade in mechanical engineering products; to determine the main trends in trade interaction between Russia and the countries of Central and Eastern Europe in the mechanical engineering sector in 2022–2024.Methods. The study employed research methods, namely statistical and econometric analysis, syntax, description, graphical modeling.Results. The econometric analysis provided reliable coefficients of regression models; however their values were small. This indicates that the impact of industrial production in the countries of Central and Eastern Europe on the key indicators of trade in engineering products between these countries and Russia was ambiguous and unclear.Conclusions. Current geopolitical realities have determined unfavorable medium-term trends in the trade interaction between Russia and the countries of Central and Eastern Europe in the engineering sector. The regression models coefficients obtained as a result of econometric analysis showed a small correlation between industrial production in the countries of Central and Eastern Europe and the export of engineering products to Russia. It implies that the decline in industrial production in the countries of Central and Eastern Europe had little effect on the volume of engineering products exported by them to Russia.

The presented study analyzes the specific features of economic cooperation of Russia and China with the countries of Central and Eastern Europe (CEE). In recent years, China has begun to actively cooperate with the former socialist republics of Central and Eastern Europe, offering them new institutional projects, such as the Belt and Road and 16+1 initiatives. At the same time, the CEE region has been distancing itself from Russia — it's once main economic partner — for a number of political reasons. Russia needs to maintain its standing in the region of its traditional external interests. This makes the analysis of the specific features of China and Russia's strategies for cooperation with the CEE countries relevant and practical. Aim . The study aims to analyze the specific features of economic cooperation of the People's Republic of China (PRC) and Russia with the countries of Central and Eastern Europe, assess the efficiency of their cooperation, and examine the existing problems. Tasks . The authors determine historical and strategic prerequisites for the development of Russia and China's cooperation with the countries of Central and Eastern Europe; examine the institutional framework of interaction between the countries under study; assess the dynamics of changes in the volume and structure of Russia and China's trade with the CEE countries; analyze the dynamics, priority sectors, and regional structure of direct Chinese investment in the countries of Central and Eastern Europe; assess the problems in Russia and China's cooperation with the CEE countries and prospects for further development of their interaction. Methods . This study uses such research methods as verbal and statistical analysis, observation, synthesis, generalization, description, graphical modeling, and data classification. Results . Central and Eastern Europe currently occupies one of the leading positions in China's foreign policy. After a long period of stagnating economic cooperation, relations between China and the CEE countries have entered a new stage within the framework of established institutional formats. The 16+1 strategy has been proposed, and the CEE countries have been included in China's Belt and Road Initiative. The pattern of economic interaction between Russia and the countries of Central and Eastern Europe in 2005-2018 is cyclical. Political factors have a significant impact on Russia's cooperation with the CEE. Conclusions . The lack of diverse tools for economic cooperation between Russia and Central and Eastern Europe, combined with Russia's low investment opportunities, prevents this cooperation from fulfilling its potential. Russia needs new institutional formats of interaction with the countries in this region, similar to those introduced by China.

Background Atopic dermatitis (AD) imposes a hidden burden through its negative effects on quality of life and productivity. We aim to estimate this hidden burden in adults and adolescents in Central and Eastern European (CEE) countries. Methods We created a burden of disease model to quantify AD’s hidden burden. Humanistic burden was calculated by estimating the monetary value of quality-adjusted life years (QALYs) lost, using prevalence data from the Global Burden of Disease study and gross domestic product (GDP) per capita for each country. Indirect economic burden was estimated based on productivity loss from absenteeism and presenteeism, adjusted for labor force participation and unemployment rates. Total hidden burden was determined by combining productivity losses and QALYs lost. Results QALY loss due to AD ranged from 1,832 to 58,596 annually in CEE countries, equating to 38 million to approximately 1 billion Euros per country. Productivity losses ranged from 3.6 to 148.9 million Euros annually. The total hidden burden of AD represents 0.11% to 0.43% of the GDP. Conclusions Our estimates reflect significant differences in population size, prevalence, and economic strength among CEE countries. Adjusting findings to country-specific GDP provided insights into AD’s true hidden burden, offering valuable information for decision-making.

PurposeThe purpose of this paper is to present an analysis of the size of the banking sectors in central and Eastern European (CEE) countries. The banking sectors' ability is focused to provide financial intermediation between savers and investors in the economy.Design/methodology/approachThe existing literature on banking in transition economies argues in unison that banking sectors in CEE countries are too small and do not provide sufficient levels of financial intermediation. In this paper, a common drawback of the existing measures used to indicate the size of CEE banking sectors is detected: they all relate the volume of bank intermediation to gross domestic product (GDP). It is argued that since transition economies have a low stock of financial wealth relative to economic activity, a more objective measure of the size of the banking sector is the ratio of bank assets to a proxy of the stock of financial wealth rather than to GDP.FindingsThere is evidence that the estimation of the size of the banking sectors relative to GDP produce downward biased measures for the ability of CEE banks to intermediate available financial resources. When the size of the banking sector is measured relative to financial wealth, the gap between the developed European Union banking systems and those of the CEE countries is not as severe as argued in studies based on the traditional approach of measuring the size of the banking system with respect to GDP.Practical implicationsUsing the downward biased measure of financial system development to stress the underdevelopment of the financial intermediation in CEE may produce misleading policy recommendations, e.g. recommendations in the direction of rapid financial system expansion by lowering barriers of entry for new banks. The authors' new measure presents an alternative that should be considered by policy makers in the design of measures promoting financial system development.Originality/valueThe paper challenges the existing consensus on severe underdevelopment of the CEE banking sectors. It presents a new approach of accessing financial system development in emerging economies.

This paper aims to assess the economic development and development policies in the Central and Eastern European (CEE) countries in 1990–2005, from the collapse of the USSR to the enlargement of the European Union. A great number of authors have generally seen the transition as a very positive process. They have concluded that the reform policies focusing on macroeconomic and price stability have been the key to success for CEE economies. A reliable economic environment is, of course, instrumental for longer-term economic success, as exemplified by the prolonged crisis in most of the former Soviet Union. Our analysis of the economic development and competitive advantages in the region, however, leads to the conclusion that the specific approach to transition that the Central and Eastern European countries followed came at a rather high cost. Comparative neglect and weakness of a set of policies crucial for longer-term development, such as science, technology and innovation policies, has led to deterioration in the last decade rather than the strengthening of the competitive advantages of Central and Eastern European economies. Furthermore, we argue that, in most cases, CEE countries have unfortunately overlooked or misjudged a number of development challenges, and have thus implemented policies that have generated growth at the cost of rapidly increasing risks. This is how the financial fragility of several Central and Eastern European countries has recently increased drastically, and the region seems to have virtually arrived at the brink of economic collapse. Since the CEE countries joined the European Union, the CEE governments have gradually moved towards acquiring a more active role in economic development. These policies need, however, to be strengthened considerably and reinforced by macroeconomic policies that curb current excessive dependence on foreign-financed growth.

Numerous studies have been conducted based on Okun’s Law (1962), researchers proposing various approaches, while the two most common are the difference approach, which reflects the link between the variation of unemployment rate and the output growth, and the gap approach, which shows the relationship between the deviation of the actual unemployment rate from the natural unemployment rate and the Gross Domestic Product (GDP) gap. In order to see how the relationship looks like over time and how the Okun’s coefficient varies from country to country, this study analyzes the sensitivity of unemployment at output changes while carries out a comparative analysis for Central and Eastern Europe (CEE) countries, regarding Okun's Law applicability in the post-financial crisis period, taking into consideration previous relevant researches. Therefore, the assessment is based on quarterly data, between 2010 and 2019, for unemployment and economic growth, recorded in five CEE countries, members of the Organization for Economic Co-operation and Development (OECD): Bulgaria, Czech Republic, Hungary, Poland and Romania. While the research is based both on the gap and difference method, it may lead to results sensitive to the method chosen in order to assess the unobservable variables, namely potential output and natural unemployment rate. In order to determine the structural components of the GDP and unemployment rate, it is used the Hodrick-Prescott univariate filter, applied on quarterly data. Before estimating the Okun's coefficient, the study also examines the causality relationship between unemployment and GDP using Granger causality test.

Objectives: This paper summarises the findings of a report by Acedański et al. (2023) that focuses on the relationship between science and economic growth. The report was commissioned by the Conference of Rectors of Economic Universities (KRUE) and prepared by researchers from five public economic universities in Poland. The authors of the report and the KRUE aim to share their message with a wide audience that includes policymakers, academic experts, and students. Additionally, the article analyses the impact of research and higher education spending on convergence processes in Central and Eastern European countries. Research Design & Methods: The study examined different indicators, including government expenditure on basic research, higher education, and research and development. We utilised SURE models and observed that there was notable diversity in the convergence processes among the analysed countries. Additionally, we found a correlation between research spending and the rate of catching up. However, it is important to note that this relationship is not universal and varies across countries, even those within the same region. Findings: Acedański et al. (2023) report quantifies the relationship between science, higher education, GDP, and economic development in Poland. The report states that science and higher education sectors positively impact local economies, and individuals with higher education contribute the most to human capital resources in the economy, leading to GDP growth. However, Poland has a funding gap in research and science compared to highly developed countries as well as many Central and Eastern European countries. The report suggests that investment in a country’s education and higher education system is essential for generating developmental impulses and supporting its economy. Implications / Recommendations: The impact of scientific activity depends heavily on funding, especially through higher education institutions. In Poland, the salaries of academic teachers have decreased compared to other professions, and their position in the wage distribution is the worst it has been in the past two decades. Investing in a country’s education and higher education system is essential to support the economy. Acedański et al. (2023) suggest that a 0.1 percentage point increase in research and development expenditure, as a percentage of GDP, can lead to a 0.8 to 1.3 percentage point increase in GDP growth. However, the conclusion was based on panel data from EU countries, and the impact of scientific research on GDP may differ when analysing Central and Eastern European (CEE) countries. In this paper, we also present an extended analysis of the impact of science and education on economic growth through the lens of convergence processes. We show that the relationship above is not straightforward and represents substantial variability across countries, even those of the same region. Contribution / Value Added: Firstly, the report by Acedański et al. (2023) emphasises the importance of the science and higher education sector for economic growth. Their empirical research helps quantify the relationship between science, higher education, GDP, and economic development, offering a deeper understanding of this connection. The report complements previously published analyses and research on the topic. Secondly, our regional research shows that the convergence processes vary greatly among the analysed countries. The inclusion of spending on science, research, or higher education in the convergence equations has a varied impact on the assessment of the pace of the catching-up processes in the CEE region.

Before the transition the principal development objective for the animal production sector in the Central and Eastern European (CEE) countries was the attainment of national self-sufficiency, and, is some countries, export orientation. Increasing production costs and the low productivity were compensated through subsides. During the first years of transition, the number of animals declined from 20 to 80 percent, due to the drastic reduction of demand (elimination of subsides and family revenue decrease), disruption of traditional markets, rise of the cost of production. The establishment of a large number of small private farms have led to the creation of specific production systems in a number of countries. Countries which have retained large production units are confronted with needs to update technology in accordance with new requirements (market, environment). Following the request of made by CEE countries, EAAP has established a Task Force on CEE countries. The Task Force has organised seven meetings (round tables, workshops and seminars) in the period 1991-96. Some experts from CEE and Western Europe participated at these events. Over 1400 pages of studies and proceedings have been published. The Task Force has completed its tasks in 1996, when a Contact Group on CEE countries has been established to identify the major policy issues influencing animal production in CEE, to prepare and organise meetings to address these policy questions, and to promote an increase in effectiveness of linkages between CEE and Western European countries.

Aim. The work aimed to identify the explanatory factors that determine the level of export diversification of countries of Central and Eastern Europe (CEE) in 2010–2021.Tasks. The work was performed to analyze theoretical aspects of export diversification of Eastern European countries; analyze the dynamics of changes in the volumes and structure of exports of the CEE states; assess the main factors influencing the process of export diversification in the countries of the region under consideration, and identify possible prospects for its further development.Methods. The author used such research methods as statistical analysis, observation, econometric analysis, generalization, description, graphical modeling and data classification.Results. The econometric analysis results suggest that there is a long-term relationship between export diversification and per capita gross domestic product, trade openness, human and physical capital accumulation, and foreign direct investment.Conclusion. The socio-economic indicators analyzed in this article are the main factors stimulating the process of export diversification in the CEE countries. During the study period of 2010–2021, the inflation rate showed a negative effect on the degree of export diversification in the CEE countries.

This paper intends to analyze the effects of openness to trade on economic growth and competitiveness of the Central and Eastern European (CEE) countries. Although these countries are at different stages of development and integration with the European Union, there are not highlighted differences on trade openness. Trade policies of them have been oriented towards regional trade cooperation and also integrating into the global economy. The empirical analysis of this study consists on 15- year panel data of 11 CEE countries over the period 2000 to 2014. The system GMM is used as the most appropriate estimation method that addresses various econometric challenges, including endogeneity problems. The growth rate of the sample countries is modelled as dependent on trade openness and a set of control variables such as initial level of income per capita, human capital, gross fix capital formation, FDI, labour force and some interaction variables with trade openness. The estimation results indicate that the positive effects of trade openness on economic growth are conditioned by the initial income per capita and other explanatory variables. Otherwise, there is not robust evidence between these two variables. Moreover, the trade openness is more beneficial to countries with higher level of initial income per capita, as well as trade openness favours countries with higher level of FDI and with a higher gross fixed capital formation. This paper intends to analyze the effects of openness to trade on economic growth and competitiviness of the Central and Eastern European (CEE) countries. Although these countries are at different stages of development and integration with European Union, there are not highlighted differences on trade openness. Trade policies of them have been oriented towards regional trade cooperation and also integrating into the global economy. The empirical analysis of this study consists on 15- year panel data of 11 CEE countries over the period 2000 to 2014. The system GMM is used as the most appropriate estimation method that addresses various econometric challenges, including endogeneity problems. The growth rate of the sample countries is modelled as dependent on trade openness and a set of control variables such as: initial level of income per capita, human capital, gross fix capital formation, FDI, labour force and a number of interaction variables with trade openness. The estimation results indicate that the positive effects of trade openness on economic growth are conditioned by the initial income per capita and other explanatory variables, otherwise there is not robust evidence between these two variables. Moreover, the trade openness is more beneficial to countries with higher level of initial income per capita, as well as trade openness favours countries with higher level of FDI and with higher gross fixed capital formation. DOI: http://dx.doi.org/10.5755/j01.ee.27.2.14013

The countries of Central and Eastern Europe (CEE) have much to gain from implementing policies that increase investment, support the development of human capital, and promote the legal, regulatory, and policy framework needed for market mechanisms to function. The faster they implement such changes, the faster they will bridge the income gap between them and the countries of the European Union - and the more likely their chances of successful integration. Joining the European Union (EU) is perhaps the key political and economic objective of Central and Eastern European (CEE) countries as they approach the 21st century. But how successful the CEE countries are in achieving this goal depends not only on how well and quickly they adapt their legal and regulatory systems to EU requirements but on how well and quickly they bridge the wide income gaps between CEE and EU countries. Using a model and cross-section data to develop estimates, Barbone and Zalduendo investigate how appropriate structural policies adopted before and after accession to the EU can help CEE countries bridge this income gap. They have much to gain from implementing policies that increase investment, support the development of human capital, and promote the legal, regulatory, and policy framework needed for market mechanisms to function. The faster they implement such changes, the faster they will bridge the income gap between them and the EU countries - and the more likely their accession to the EU will be successful. This paper - a product of Country Department II, Europe and Central Asia - is part of a larger effort in the department to examine issues related to accession to EU by Central and Eastern European countries. Luca Barbone may be contacted at lbarbone@worldbank.org.

IntroductionMeaningful patient involvement in health technology assessment (HTA) is essential in ensuring that the interests of the affected patient population, their families, and the general public are accurately reflected in coverage and reimbursement decisions. Central and Eastern European (CEE) countries are generally at less advanced stages of implementing HTA, which is particularly true for patient involvement activities. As part of the Horizon2020 HTx project, this research aimed to form recommendations for critical barriers to patient involvement in HTA in CEE countries.MethodsBuilt on previous research findings on potential barriers, a prioritisation survey was conducted online with CEE stakeholders. Recommendations for prioritised barriers were formed through a face-to-face workshop by CEE stakeholders and HTx experts.ResultsA total of 105 stakeholders from 13 CEE countries completed the prioritisation survey and identified 12 of the 22 potential barriers as highly important. The workshop had 36 participants representing 9 CEE countries, and 5 Western European countries coming together to discuss solutions in order to form recommendations based on best practices, real-life experience, and transferability aspects. Stakeholder groups involved in both phases included HTA organisation representatives, payers, patients, caregivers, patient organisation representatives, patient experts, health care providers, academic and non-academic researchers, health care consultants and health technology manufacturers/providers. As a result, 12 recommendations were formed specified to the CEE region’s context, but potentially useful for a broader geographic audience.ConclusionIn this paper, we present 12 recommendations for meaningful, systematic, and sustainable patient involvement in HTA in CEE countries. Our hope is that engaging more than a hundred CEE stakeholders in the study helped to spread awareness of the importance and potential of patient involvement and that the resulting recommendations provide tangible steps for the way forward. Future studies shall focus on country-specific case studies of the implemented recommendations.

Fiscal balance is perceived as a principal measure of fiscal sustainability in the local government. It also affects the budgetary response to a potential recession, determining a fiscal distress and a financial resilience. Thus, the economists conduct studies to identify factors influencing the fiscal balance at the local public level. Therefore, the aim of the paper is to examine fiscal, socio-economic, political, and institutional factors which affect the level of fiscal balance of the local government sector in Gross Domestic Product (GDP) on the basis of the OECD countries in the period 2007–2021. In the study both panel data models with fixed effects (FE) and random effects (RE), dynamic panel data models (GMM), as well as panel quantile regressions with fixed effects were estimated. As a result, the paper confirms that fiscal balance of the local government in GDP is affected by fiscal decentralisation on the expenditure side, an investment activity, a change in the debt ratio, an inflation, a change in the unemployment rate, the Human Development Index, the trade openness, the GDP growth, and local elections. What was also found was a statistically significant influence of the corruption in the case of the panel quantile regression with fixed effects. In addition, the Mann-Whitney U test, the Kruskal-Wallis test, and the Dunn test were applied to identify whether the level of fiscal balance of the local government sector in GDP had the same distribution in Central and Eastern European (CEE) countries and other OECD countries.

This chapter focuses on Central and Eastern European (CEE) countries and the relationship between their economic performance and air transport markets. In 2004, all seven investigated Central and Eastern European countries, together with Slovenia, Malta, and Cyprus, joined the European Union and entered the single aviation market. However, compared with the developed economies of Western European regions, Central and Eastern European countries still lag behind them in terms of the level of GDP per capita. The transformation of CEE economies from centrally managed to market-driven, initiated at the end of the 20th century, led to gradual changes in air transport markets at the beginning of this process. Air transport liberalisation accelerated the transformation and integration processes of CEE countries, not only in the field of air transport markets, but also through the development of whole economies. The relationships between economic development and the air transport market have been the subject of many studies.

The study assesses the development of the cooperative banking sector in selected Central and Eastern European (CEE) countries against the average statistics of the segment in those countries. It also compares it to the largest European cooperative banking group in Germany. The article presents the results of an analysis of the cooperative banking sectors between 2016 and 2021 in Poland, Bulgaria, Romania, Hungary and Germany, all of which are members of the European Association of Cooperative Banks (EACB). The selection criterion was based on the availability of detailed data on cooperative banks published by the EACB on a temporal and spatial basis. The empirical basis for the issues addressed in the article is a review of the reference literature and the comparative analysis of the development of the cooperative banking sector using a synthetic development indicator for the period 2016–2021. According to the theoretical and empirical analysis, Romania demonstrates the lowest level of development of the cooperative banking segment. In turn, the Polish and Bulgarian cooperative banking sectors represents a higher level of development than the Romanian one. Hungary has reached the highest level of development in the group of Central and Eastern European countries. While comparing the CEE countries to the German cooperative banking sector, their development was almost one and a half times lower and, in the case of Romania, three times lower.