European Transition Countries Research Articles

Does risk assessment and specific knowledge impact crop insurance underwriting? Evidence from Romanian farmers

Romania is one of the European countries in transition which has undertaken changes to align with the common agricultural policy after the EU adhesion. Our study examines the factors influencing the use of crop insurance as a strategy to mitigate risks by Romanian farmers. Using a sample of 721 farmers and a multinomial logit model we evaluate the impact of risk perception, risk taking, and specific knowledge, along with the farm’s characteristics and insurance perception variables, on the decision to buy crop insurance. We introduce among the classical influence factors, a novel determinant of crop insurance demand—the specific knowledge. Our empirical findings reveal that crop insurance knowledge and the assessment of risks are key factors for crop insurance buying, while the cultivated area, the trust in the insurer, and the type of culture are also significantly influencing this decision to buy crop insurance. Moreover, the chosen coverage is negatively influenced by the insurance premium adequacy and positively influenced by the farm’s revenue from crops. These findings are expected to help governments, policymakers, and insurers from transitional countries to better implement crop insurance as a risk management tool, by subsidizing the policies and raising the awareness of farmers regarding the risk exposure.

Analysis of the Relationship Between Energy Consumption and Economic Growth in Transition Countries

ABSTRACT This paper investigates the relationship between economic growth and energy consumption in European transition countries. Cross-sectionally augmented autoregressive distributed lag and cross-sectionally augmented distributed lag models were used in the paper to investigate the relationship, while robustness was checked using several different estimators. The results confirm a positive relationship between the variables. Growth of the gross domestic product will lead to an increase in energy consumption in the long run, so transition countries should work on creating new sources of energy and improving energy efficiency. Policies based on limiting energy consumption can have a negative impact on economic growth.

Can Credit Related Macroprudential Instruments Be Effective in Reducing the Correlation Between Economic and Credit Growth? Cross-Country Evidence

Abstract The study investigates effectiveness of selected credit related macro prudential instruments in reducing the correlation between economic and credit growth in European emerging countries between 2000 and 2017. Two GMM (Generalized Method of Moments) estimators are used to empirically investigate the validity of tightening policy actions. Although greater attention to MMPs is found in both European regions the study finds some differences as well. On the level of full sample, the findings confirm our expectation about effectiveness of the selected credit related macroprudential instruments in reducing credit growth. More specifically, the European transition countries proved to be more successful in using macroprudential tools in curbing credit growth than European post-transition countries. It is confirmed that all three employed credit related macroprudential instruments play a key role in curbing credit growth in the expansive stage of business cycle in the European transition countries. It means that a lower economic growth leads to lower effects of credit related macroprudential instruments on credit growth. However, empirical evidence from European post-transition countries shows mixed results followed by the lack of robustness of economic results, but with expected theoretical sign. In fact, introduction of CG limits and FC limits reduce the correlation between GDP growth and credit growth only in one step S-GMM estimator, while a variable of caps on debt-to-income ratio (DTI) not.

International labour migration and people’s views towards economic and political systems in transition countries

ABSTRACT During the 30 years of transition from communist regimes, the people’s views towards transition have varied from support to opposition. We empirically examine the influences of international labour migration on these views, using the survey data covering 28 transition countries in Europe and the former Soviet Union area and three points of time, 2006, 2010 and 2016, based on multivariate regression models. Our main findings are twofold. (I) Labour emigration to Western Europe increased people’s support for a market economy and democracy over a planned economy and authoritarian government, albeit a less robust result for democracy. This suggests the role of social remittances – migrants transmit their experiences and promote the support for transition among people remaining in the home countries. (II) However, immigrant inflows reduced these support, suggesting that the economic and cultural conflicts with immigrants made people sceptic towards liberal policies or nostalgic towards the communist era.

Međunarodna migracija i dohodovna konvergencija u evropskim tranzicionim zemljama

The subject matter of this paper is the analysis of the influence of international migrations on income convergence in European transition countries in the period 2000-2020. Convergence can be defined as the process of catching up richer countries by poorer ones, consequentially leading to the reduction of disparities in income per capita among countries. Theoretically, human migrations are a mechanism of the adjustment of the regional imbalance that contributes to the strengthening of convergence. The regression panel model was used in the research. The research results have shown that, if observed at the level of the entire sample of the countries of Central and Eastern Europe and the Western Balkan countries (CEE-11+WB), there is a positive and statistically significant influence of emigration on income convergence. Also, there is a positive influence of emigration on the income convergence per capita of the CEE-11 countries towards the average income of the developed countries of the EU-15. On the other hand, observed only at the level of the Western Balkan countries, there is no statistically significant influence of emigration on income convergence. The contribution of the research study reflects in filling the gap that exists in the literature on this field, since there is no large number of papers that have examined the influence of migrations on income convergence in the CEE-11 countries, as well as the Western Balkan countries.

Determinants of Syndicated Loan Spreads in Central, Eastern and South-Eastern European Countries

Despite the importance of the syndicated loan market as a source of international financing there is limited evidence on factors influencing syndicated loan pricing in European developing economies. Focusing in one particular region reduces the problem of cross-country heterogeneity and provides more specific policy recommendations for reducing the cost of funding for firms, in an environment where capital markets are less developed, and banks are seen as the main source of funding. This study investigates the determinants of syndicated loan spreads in a sample of 1004 syndicated loans from the Thomson One Banker database, granted to borrowers from 12 Central, Eastern and South-Eastern European countries. The results show that loan and country characteristics are the most significant determinants of syndicated loan spreads. Lenders seem to price loan characteristics in European transition economies in accordance with the existing academic literature – riskier loans are charged higher spreads. Augmenting the Thomson One Banker with the Worldscope database, we further find that borrower characteristics are generally significant determinants of syndicated loan spreads however their significance weakens once country characteristics are taken into account. Lender characteristics are found not to be significant determinants of syndicated loan spreads in European transition economies. The implication of these results is that governments of European transition countries have a major role to play in providing a macro-economic and legal infrastructure that will enable borrowing firms to get access to funding sources at lower spreads. Keywords: syndicated loans, spreads, emerging Europe, Thomson One Banker, Worldscope DOI: 10.7176/JESD/13-18-02 Publication date: September 30 th 2022

The Development of the Administrative Court Systems in Transition Countries and Their Role in Democratic, Economic and Societal Transition

The paper analyses the origins of judicial control of administration and the development of the administrative court system in European transition countries which have undergone three phases – the formation of democratic institutions and establishment of administrative courts, the reform phase under the influence of the Europeanisation process on administrative courts’development, and the evaluation phase. After the formation of the administrative court system, transition countries that formed specialised administrative courts in the second half of the 20th century were under the process of Europeanisation, while in countries which formed their specialised administrative courts later, this development is observed with some delay. The analysis aims to discover the connection between the development of administrative court systems and their role in democratic, economic and societal transition.

Does Institutional Quality Matter for the IDP Hypothesis? Evidence from Emerging Europe

The study empirically explores the relationship between OFDI and the home country’s institutional quality by employing a panel of 23 European emerging countries between 2000 and 2019. In doing so, the study employs the VECM estimation procedure. The key findings of this research indicate that the rate of adjustment to reach long-run equilibrium in European post-transition countries is lower than in European transition countries. In conclusion, there is evidence, for the period being investigated, of causality between the home country’s institutional quality and OFDI in both regions. Also, most of the transition countries are still in the process of building the institutional environment, with many institutional voids and different starting points of their internalization process. In fact, most of the countries, especially European transition countries, are in stage 2 or stage 3 of their investment development path (IDP) development, where IFDI stock still remains higher than OFDI stock.

Certification to compensate gender prejudice – Analysis on impact of management system certification on export

ABSTRACT Management system certification signals that the organization meets international standards, which provides a certain confidence in the company. This confidence is in particular needed for exporting companies in developing countries. Because the business world is dominated by men, female leadership might be another reason to have less confidence in a company. Women-led companies may therefore benefit more from certification. Therefore, this study empirically tests the impact of certification on export, and the moderating effect of female leadership. We use data from enterprise surveys conducted by the World Bank in 2013 that include 4111 firms from 25 Central and Eastern European countries in transition. We implement a recursive bivariate probit model and an extensive sensitivity analysis to account for endogeneity issues. Results confirm that certification and export are positively correlated. Firms managed by females benefit more from certification based on international standards than firms managed by men, especially in the service sector. This suggests that certification compensates for the possibly negative connotations of female leadership. Female managers may consider implementing a management system and get it certified, resulting in a competitive advantage in export markets. Our findings provide food for thought for purchase managers – are they free from prejudice?

An assessments on the impacts of educational functions decentralization to local council in the Tonkolili District-Yoni Chiefdom

In recent years the topic of decentralisation has received great attention. The increased interest is not only because of its theoretical appeal, but it is related to the rising number of countries adopting a more decentralised system. The widespread economic liberalization along with political change towards openness and democracy is one of the driving forces. In transition economies, including the transition countries in Europe and Central Asia (ECA)2 such trend was largely driven by the limited administrative and financial capacity of the center, while in some other regions the policy shift may be prompted by the collapse and erosion of central control. However, decentralization is not about weakening central authority. The important goal is to make the local government more responsive to the needs of local population. Most discussions about decentralisation accordingly center on attempts to improve the delivery of services. The countries in ECA region started the transition process with wholesale restructuring of their political systems. The discontent with welfare state institutions and the challenges that globalization processes triggered have modified the professional discourses on state, governance and democracy. The need for decentralization and devolution of power from central to local authorities has become one of the priorities in changing the state in these countries. The devolution of power necessarily intervenes with service delivery responsibilities, public finances arrangements, rebuilding central state capacities and institutions. While reasons for decentralization in the region vary, decentralization reform has been one of prevailing common prescriptions for addressing a wide range of other issues, including economic inefficiencies, macroeconomic instability, governance deficiencies, and poor delivery of public services. Interrogating some of the basic definitions on decentralization, decentralized governance and good governance and their significance for the ECA region, this paper focuses on the recent decentralization efforts made by the transition countries in ECA, concentrated around the implementation of the current decentralization agenda. It further explains why there are different approaches on the decentralization processes in these countries. At the same time, it recognizes that the decentralization everywhere is considered as a necessary mechanism to address a number of critical issues, including delivery of services. The section on legal, institutional capacities and financial resources at local level, attempts to underline the problem of limited capabilities that exists in local governments in these countries. The paper also addresses the importance of accountability and community empowerment in enhancing and improving service delivery. It suggests establishment of institutions and mechanisms to promote accountability in order to control government’s abuses and increase governments’ responsibility. Recognizing the predominant role of the public sector in delivery of services in ECA countries, the paper also explores the potential of different forms of public-private partnership, as well as the role of the civil sector in providing service delivery. Finally, while some of the challenges these countries are facing with in improving their governance systems are addressed in the concluding remarks (e.g. the fight against corruption), they are not further elaborated in this paper.

Does Trade Facilitation Promote Export Technological Sophistication? Evidence From the European Transition Countries

In this paper, we examine the impact of trade facilitation on the export technological sophistication from the European transition economies over 2004 to 2020. It is found that, in terms of trend, the export technological sophistication of labor-intensive and traditional resource-intensive industries is primarily concentrated in a lower range. In contrast, the export technological sophistication of capital and technology-intensive industries is generally low. Trade facilitation in each country shows a slow upward trend. The regression results show that trade facilitation significantly impacts the export technological sophistication of transition economies in general. In terms of heterogeneity, the impact is significant only in the Baltics economies, upper-middle-income and above countries, and to varying degrees in all types of light and heavy industries, differentiated industries, and technology-type industries. The mechanism analysis shows that the “reconfiguration” effect, “pushback” effect, and “spillover” effect are virtual channels through which trade facilitation affects the export technological sophistication.

Implikacije pandemije Covid-19 na strane direktne investicije u evropskim tranzicionim ekonomijama

In early 2020, the world faced a serious crisis caused by the Covid-19 pandemic, and the application of restrictive measures to prevent and slow down the spread of the virus had a negative impact on economic flows, including foreign direct investment (FDI). The effects of the Covid-19 pandemic on global FDI flows have been devastating, resulting in a large drop in FDI. Flows to European transition countries have also been affected, but less than the world average. It is expected that the recovery of FDI from the shock of 2020 would be long and that it would be impossible to return to structural and geographical patterns before the pandemic. Having in mind the above, the aim of this paper was to analyze the dynamics of FDI before and during the pandemic in European transition countries in order to examine the effect of Covid-19 pandemic on FDI. The results of the research confirm the negative impact of the pandemic on the flows of FDI in European transition economies, except for Montenegro, Bulgaria, Hungary and Estonia, where an increase in the inflow of FDI was determined.

Dohodovna konvergencija zemalja Zapadnog Balkana na putu pristupanja Evropskoj uniji

The common and main strategic goal of all Western Balkan States is integration into the European Union. Therefore, the transition of the Western Balkan region, as in the case with other Central European transition countries, must be seen as a part of the European integration process. The aim of this research is to tests whether income convergence exists between Western Balkan States and the developed European Union countries, with a comparison with New Member States. In order to test this assumption, regression analysis is used. The results did not confirm that income convergence existed from 1995 to 2019. However, the results indicate a strong impact of the Global Economic Crisis on income convergence, so it existed in the years before and after the Global Economic Crisis. Results also showed faster growth of the New Member States than the Western Balkan States.

Fertilitet i ekonomski rast selektovanih tranzicionih zemalja

The paper investigates the impact of total fertility rate as one of the basic demographic variables on economic growth per capita concerning six selected transition countries (including the five countries of the Western Balkans: Serbia, Bosnia & Herzegovina, North Macedonia, Albania, Montenegro, and Croatia as a member of the European Union), from 2000 to 2018. The fundamental idea of the research is the view discussed in the recent literature and it concerns the reduction of the total fertility rate as a burning problem of a large number of developed modern economies. Inspired by the question of whether such an attitude is relevant for a group of small European transition countries, an econometric model was constructed , as a framework for the application of statistical analysis of multiple regression. The results of empirical research showed that if the rate of total fertility increased by 0.1% in one of the analyzed countries, the GDP growth rate per capita for this country would fall by 0.53 percentage points in the same year of the period under review.

Impact of Public Investment Through Public Debt on Economic Growth: Empirical Analysis in European Countries in Transition

The main aim of this study is to investigate the link between public investment and public debt in transition countries. This analysis includes European countries in transition, and the source of data will be the World Bank, the International Monetary Fund, and Eurostat. This study has particular scientific importance; firstly, this study will reflect the relationship between public investment and public debt. Secondly, this study will give empirical data that shows the impact of public debt through public investment on economic growth in European countries in transition. To conduct this research, we have used various econometric models, such as OLS, Fixed and Random Effects, Hausman-Taylor, and GMM. The results obtained through this study are in full accordance with the theoretical hypotheses presented at the beginning of this research which emphasize that public debt is likely to affect economic growth through public investment positively. Empirical results show that public debt positively affects economic growth through public investment in transition countries in Europe, and it can be argued that these countries can increase the level of debt to finance public capital investment which then affects economic growth. The findings of this study are beneficial for the governments of European countries in transition, as it provides them with helpful information on the link between investment and public debt.

THE RELATIONSHIPS BETWEEN GDP GROWTH, ENERGY CONSUMPTION, RENEWABLE ENERGY PRODUCTION AND CO2 EMISSIONS IN EUROPEAN TRANSITION ECONOMIES

The objective of the analysis is to study the relationships between GDP, energy consumption, renewable energy production, and CO2 emissions in some European transition economies in the period 1990-2018. We use the growth rates of per capita values, in a panel VAR approach where all variables are typically treated as endogenous, allowing some inference on the causality of the relationships. The decision to focus on European transition countries is motivated by the fact that a significant part of the future of the green economy in Europe depends on the environmental and energy policies that will be implemented by these countries. In the transition economies (and years) included in the analysis, our findings suggest that investing in energy efficiency is good for the competitiveness of economies (in terms of effects on GDP growth) and is good for the environment (in terms of diminishing CO2 emissions). Finally, an increasing production of renewable energies reduces CO2 emissions.

Challenges of the Output-Employment Growth Imbalance in Transition Economies

Abstract The trade-off between output and unemployment has become an essential part of modern macroeconomics and is known as Okun’s law. However, in transition and emerging markets economies’ context, the output-employment nexus has a much more important role as these countries strive to significantly improve the growth dynamics of both variables. This paper aims to analyze the particularities of this relationship in selected Central- and South-Eastern European transition (and former transition) countries to find out a discrepancy between the output and employment growth. Therefore, the employment elasticity coefficients are calculated. The estimated results suggest that, in the observed period, economic growth has not contributed to satisfactory employment growth, which is commonly referred to as a “jobless growth” hypothesis. Accordingly, this paper attempts to single out the main challenges of the output-employment growth misbalance in these countries and propose adequate policy measures that could reduce it. The industrial policy that differentiates from the “one-size-fits-all” paradigm is emphasized as the most important part of macroeconomic policy in transition economies to make their development more balanced. Additionally, short-run stabilization policy, especially the one focused on the labour market, has a significant role in these economies.

Exploring the implications of the relationship between BMI and household consumptions for countries in transition

AbstractThis article explores the relationship between body mass index (BMI) and social status, namely household consumption and university education of the respondents, together with a set of demographics of 27 transitional countries in Eastern Europe using the data of the 2016 Life in Transition Survey. The two‐stage least squares (2SLS) estimations are conducted on the full sample of 27 countries, the sub‐datasets of former Soviet Union republics, as well as other Eastern European transitional countries, males and females, respectively, in an effort to compare the relationships between BMI and social status in different contexts. The results highlighted two important findings: First, household consumption has a strong and positive correlation with BMI across all the sub‐datasets. Second, the father's education of the respondent is a strong predictor in predicting low BMI. These findings indicate that these transitional countries still run the same model as that typical developing countries, 25 years after the beginning of the transition.

Labor Shortage in Seven Central and Eastern European Countries in Transition: Before and During COVID 19

Based on the responses of the surveyed companies and institutions, we analyzed what government measures help to solve the problems and tensions in the labor market. By our empirical research we aimed to look for the main triggers and the typical means of labor shortage and labor retention. We also examined what efficiency improvement plans and robotization programs are either planned or have already been implemented by the responding organizations. The study reflects the empirical results conducted in 2019 in seven countries in the region. One of the key issues in these countries during the period considered is the dramatic increase in labor shortages, which has been influenced by a variety of factors, namely outbound labor migration after the change of regime, unfavorable demographic factors, national and regional economic downturns as well as persistent wage differences within the EU. Wages and work-life balance are the two important factors that have a significant impact on labor mobility and fluctuation for both skilled and less skilled labor. Responses indicated a variety of reasons for labor shortages, different reasons in different countries. The research also provided an indication that robotization alone is not a solution to address labor shortages.

Trends and characteristics of patenting activity in Poland in 1990–2018

Patenting activity is broadly analysed in the literature at the micro, mezzo, and macroeconomic levels. Yet, not much attention regarding this issue is devoted to European countries in transition. The main aim of the study is a quantitative analysis of all patent applications filed with and grants issued by the Polish Patent Office throughout the period of 1990– 2018 at the aggregate and regional level. We investigate trends and factors determining the patenting activity in Poland – the country at an advanced level of the economic and social transition. The empirical analysis leads to several findings. First of all, we identify changes in the field of patenting related to Poland’s accession to the EU in 2004, which resulted in the increase of residents’ patenting activity and decrease of that of non-residents (in terms of the number of filed applications and granted patents at a national and regional level). This holds for absolute numbers as well as for a per capita perspective. Additionally, we demonstrate that the increase in R&D expenditure is not followed by a proportional increase in patenting, as the patent-to- R&D ratio is systematically shrinking. Finally, the study compares trends in patenting activity in Poland with those in different groups of countries, proving that the dynamic of change in Poland is much slower than could be expected.