Eastern European Transition Economies Research Articles

Competition and Contestability in Central and Eastern European Banking Markets

This study analyzes the evolution of competitive conditions in the Banking industries of fourteen Central and Eastern European (CEE) transition economies using firm-level data for the period 1993-2000. The results of the competition analysis suggest that the banking markets of CEE countries cannot be characterized by the bipolar cases of either perfect competition or monopoly over 1993-2000 except for FYR of Macedonia and Slovakia. That is, banks earned their revenues as if operating under conditions of monopolistic competition in that period. Furthermore, the cross-sectional analysis of competitive structure reveals initially a decreasing trend between 1993 and 1996 and a subsequent increasing trend in competitive conditions after 1996. Large banks in transition countries operate in a relatively more competitive environment compared to small banks, or in other words, competition is lower in local markets compared to national and international markets.

FDI as a multiplier of modern technology in Hungarian industry

Foreign direct investment is generally expected to play a significant role as a multiplier of modern production and management know-how in Central Eastern European transition economies. The following paper examines the various mechanisms by which such technological spillover effects could in theory take place and compares them with the results of an empirical study of their practical significance for Hungarian industry.

Macroeconomic Convergence in Transition Countries

This paper analyzes the performance of the Central and Eastern European (CEE) transition economies in terms of their convergence in selected macroeconomic fundamentals. The analysis is carried out within distinctive groups of countries to reflect different institutional and geographical aspects of transition. We have found evidence of convergence in macroeconomic fundamentals among the CEE countries in general and have shown that common institutional attributes and economic policies tend to correlate with a higher degree of convergence. This finding is in line with neoclassical growth theory that supports the occurrence of convergence among similar countries. J. Comp. Econ., March 2001 29(1), pp. 1–23. Center for Graduate Education and Economic Research-Economics Institute (CERGE-EI); Prague 111 21, Czech Republic; The William Davidson Institute of the University of Michigan Business School, Ann Arbor, Michigan 48109; and Centre for Economic Policy Research (CEPR), London EC1V 7RR, United Kingdom. Copyright 2001 Academic Press.Journal of Economic Literature Classification Numbers: C23, E65, F15, O11, P52.

Welfare Changes in Eastern European and Central Asian Transition Economies

This paper investigates the regularities of the transition processes in countries at different levels of transformation from 1994-1998. Twenty-four countries are involved into the analysis and the indicator of welfare is used for analysis. Welfare is measured by the production of gross product per capita, which is adjusted with purchasing power parity (GDP-PPP). The 24 countries will be divided into three groups according to the level of transformation, using the canonical discriminant analysis. The basis of the analysis will be the transition index computed by EBRD. For each group, a component analysis related to various economic indicators will be used. From the results, four transition components will be formed. The effect of the obtained transition components on welfare will be examined with the help of regression analysis, the results of which are the basis for interpreting the causes of welfare changes. The paper concludes that the main factor determining welfare is the development level of a country. Other factors have less influence.

Infrastructure Requirements in the Area of Bankruptcy Law

Infrastructure Requirements in the Area of Bankruptcy Law

Baltic accession to the European Union

The in reforming Baltic states their have economies. made extraordinary A decade ago, progress few during dreamed the that 1990s the in reforming t eir economies. A decad ago, few d eame tha the Baltic states would be negotiating membership in the European Union in the year 2000. Yet, here we are. The success of the Baltics testifies to their commitment to reforming economic structures and pursuing consistent economic policies. This tough policy line has largely compensated for their disadvantageous starting conditions. Even so, significant differences among the Baltics persist. These differences illustrate the importance of holding to coherent economic policies in building a market economy. Estonia followed radical but consistent reform policies, while Lithuania's commitment to reforms has lapsed at times and been indecisive. Latvia, which once fell squarely between the two Baltic extremes, rapidly closed the gap with Estonia over the past two years. Estonia's efforts were rewarded in 1997 with an invitation from the European Union to start membership negotiations. Latvia and Lithuania were invited to negotiations in 1999. If compared with Central and Eastern European transition economies generally, Estonia and Latvia have fared well with their reforms.

Investment Incentives in the Central and Eastern European Transition Economies

Investment Incentives in the Central and Eastern European Transition Economies

Measuring Central Bank Independence in Selected Transition Countries and the Disinflation Process

The paper measures the degree of legal and actual central bank independence (CBI) in five Central and Eastern European transition economies striving for EU accession, namely the Czech Republic, Hungary, Poland, Slovakia and Slovenia (CEEC-5). The degree of legal CBI is measured by applying the two most widely used indices, the Cukierman and the Grilli-Masciandaro-Tabellini (GMT) indices. Moreover, the turnover rate of central bank governors is used as a proxy to measure actual CBI. The paper gives an interpretation of computed results, comparing the findings with those of other authors and earlier calculations. Furthermore, the indices on legal and actual CBI themselves are critically reviewed, in particular against the background of the Maastricht Treaty requirements, which in practice constitute the driving force for any amendment of central bank laws in the CEEC-5. Moreover, the role of CBI in bringing down inflation in the CEEC-5 at different stages of transition is briefly discussed. The paper concludes that the overall degree of legal CBI is comparatively high in all countries examined, while the measured turnover rates of governors do not seem to fully reflect the degree of actual CBI in the CEEC-5. Looking at the role of CBI in the disinflation process at different stages of transition, the main causes for inflation seem to have been beyond the direct control of the central bank. A high degree of CBI, together with a reasonable mix of fiscal and monetary policies as well as structural reforms, will be necessary for the CEEC-5 to meet all requirements for joining the EU and, in a more distant future, for adopting the euro.

Capital mobility and EU enlargement

Capital Mobility and EU Enlargement. — The membership of the Eastern European transition economies in the EU would require inter alia the full liberalization of their capital flows. Using the correlation between domestic saving and investment, this paper provides empirical evidence of the openness with respect to foreign capital that the accession states have attained so far. A comparison with the southern members of the EU shows that the countries under review have reached a similar degree of integration in quantitative terms. Yet, further adjustment in qualitative terms, i.e., in the structure of capital flows, can be expected as the process of accession proceeds.

Competitiveness in Transition Economies: What Scope for Real Appreciation?

This paper estimates equilibrium dollar wages for 15 transition economies. Equilibrium dollar wages are interpreted as full employment wages consistent with a country’s physical and human capital endowment, and estimated by regressing actual dollar wages on productivity and human capital proxies in a short (1990-95) panel of 85 countries. The main results are: (i) equilibrium dollar wages have appreciated steadily in the Baltic countries and fast-reforming Central and Eastern European (CEE) transition economies, but have been flat in most CIS countries; and (ii) 1996 actual dollar wages remain below estimated equilibrium dollar wages for most but not all transition countries covered.

Competitiveness in Transition Economies: What Scope for Real Appreciation?

This paper estimates equilibrium dollar wages for 15 transition economies. Equilibrium dollar wages are interpreted as full employment wages consistent with a country’s physical and human capital endowment, and estimated by regressing actual dollar wages on productivity and human capital proxies in a short (1990-95) panel of 85 countries. The main results are: (i) equilibrium dollar wages have appreciated steadily in the Baltic countries and fast-reforming Central and Eastern European (CEE) transition economies, but have been flat in most CIS countries; and (ii) 1996 actual dollar wages remain below estimated equilibrium dollar wages for most but not all transition countries covered.