Group Of Transition Countries Research Articles

Transition welfare gaps: One closed, another to follow?

AbstractRespondents from post‐communist countries have been found to systematically report lower levels of happiness and self‐rated health. While the first welfare gap in happiness has closed recently, the second transition gap in self‐perceived health only started to close. Specifically, this paper shows that treating all transition countries as a homogeneous group may be misleading and therefore divides 28 transition countries into three groups. As a result, in the most recent 2016 round of the ‘Life in Transition’ survey, transition countries in Southern Europe are no longer found to be different from non‐transition nations in terms of their self‐rated health. Although the gap in self‐perceived health for transition nations in Eastern Europe is present in a basic model, it becomes less statistically and economically significant when subjective beliefs and macro‐level variables are added. Countries from the former Soviet Union and Mongolia remain the only group in which respondents report 16.5%–29.1% lower probability of ‘Good’ or ‘Very Good’ health compared to other transition and non‐transition countries. Controlling for communist party membership, ideological beliefs and macro‐level variables somewhat reduces the gap for the former Soviet Union and Mongolia but it remains significant in multiple robustness checks. Although the gap in self‐rated health now applies to only one group of transition countries, it remains an important empirical puzzle with far‐reaching implications for health policy, demand for healthcare and the process of transition.

Transition Welfare Gaps: One Closed, Another to Follow?

Respondents from post‐communist countries have been found to systematically report lower levels of happiness and self‐rated health. While the first welfare gap in happiness has closed recently, the second transition gap in self‐perceived health only started to close. Specifically, this paper shows that treating all transition countries as a homogeneous group may be misleading and therefore divides 28 transition countries into three groups. As a result, in the most recent 2016 round of the ‘Life in Transition’ survey, transition countries in Southern Europe are no longer found to be different from non‐transition nations in terms of their self‐rated health. Although the gap in self‐perceived health for transition nations in Eastern Europe is present in a basic model, it becomes less statistically and economically significant when subjective beliefs and macro‐level variables are added. Countries from the former Soviet Union and Mongolia remain the only group in which respondents report 16.5%–29.1% lower probability of ‘Good’ or ‘Very Good’ health compared to other transition and non‐transition countries. Controlling for communist party membership, ideological beliefs and macro‐level variables somewhat reduces the gap for the former Soviet Union and Mongolia but it remains significant in multiple robustness checks. Although the gap in self‐rated health now applies to only one group of transition countries, it remains an important empirical puzzle with far‐reaching implications for health policy, demand for healthcare and the process of transition.

Entrepreneurial Innovations in Countries at Different Stages of Development

The aim of our paper is to provide a comprehensive picture of the role of innovation within the entrepreneurial ecosystem in certain countries. In this way, we propose the following research question as to what kind of interrelatedness can be observed between the innovation capability of a country and other elements of its entrepreneurial ecosystem. Ninety-five countries have been involved in our analysis, which initially have been grouped by their level of economic development and a group of transition countries has been created as well. In order to measure these relations, the Global Entrepreneurship Index (GEI) was applied. This index measures the qualitative aspects of the entrepreneurial ecosystem in a national context. The index consists of fourteen pillars covering the relevant aspects of the entrepreneurial ecosystem. Out of the pillars, there are three pillars associated with three different aspects of innovation: Technology Absorption, Product Innovation, and Process Innovation. After analyzing the pillars, we conducted a k-means cluster analysis in order to demonstrate whether countries with the same level of development are ranked in a common group if they are clustered by the values of the three innovation pillars. Our results suggest that the quality of the entrepreneurial ecosystem reflects the level of economic development. Regarding the role of innovation, it seems that the innovation-related pillars have an important role within the entrepreneurial ecosystem. Technology Absorption is highly related to the GEI score and the level of economic development since the most developed countries have the highest values for this pillar. While the Product and Process Innovation pillars have a relatively strong relationship with GEI score as well, it seems that a couple of countries have higher pillar values in these innovation-related pillars than the position of their GEI scores would lead one to expect. This may indicate that these countries have relatively good performance in research and development, but other components of their entrepreneurial ecosystem may hamper the exploitation of the results achieved by new firms.

Diverging trends in health care use between 2010 and 2016: Evidence from three groups of transition countries

This paper investigates changes in health care use in 28 transition countries using data on more than 60,000 households from the “Life in Transition” surveys II and III conducted in 2010 and 2016. Following the literature, the transition countries are divided into three groups – Eastern Europe, Southern Europe and the non-Baltic states of the former Soviet Union with Mongolia – based on the speed of their transformation. Regressions based on Andersen’s conceptual framework show no difference in public health care use between the three groups in 2010. By 2016, however, the share of households using the public health care system dropped by remarkable 17.1–22.2% points in Southern Europe and 13.5–27.1% points in the former Soviet Union with Mongolia compared to Eastern Europe. Moreover, by 2016, the probability of a household using the private health care system (with no use of public health care) in Southern Europe and the former Soviet Union was 7.5–18.7% points higher than in Eastern Europe, whereas it was 2.9–6.8% points lower than in Eastern Europe back in 2010. The analyses indicate that differences in household characteristics, as well as perceived corruption and quality of public health care, help to understand these diverging trends in health care use in the three groups of transition countries between 2010 and 2016.

Convergence or Divergence? Life Expectancy Patterns in Post-communist Countries, 1959\u20132010

In the 1960s and 1970s, the countries of Central and Eastern Europe and the Soviet Union experienced an unanticipated stagnation in the process of mortality reduction that was accelerating in the west. This was followed by even starker fluctuations and overall declines in life expectancy during the 1980s and 1990s. We identify statistically the extent to which, since the 1990s, the countries of the post-communist region have converged as a group towards other regional or cross-regional geopolitical blocks, or whether there are now multiple steady-states (‘convergence clubs’) emerging among these countries. We apply a complex convergence club methodology, including a recursive analysis, to data on 30 OECD countries (including 11 post-communist countries) drawn from the Human Mortality Database and spanning the period 1959–2010. We find that, rather than converging uniformly on western life expectancy levels, the post-communist countries have diverged into multiple clubs, with the lowest seemingly stuck in low-level equilibria, while the best performers (e.g. Czech Republic) show signs of catching-up with the leading OECD countries. As the post-communist period has progressed, the group of transition countries themselves has become more heterogeneous and it is noticeable that distinctive gender and age patterns have emerged. We are the first to employ an empirical convergence club methodology to help understand the complex long-run patterns of life expectancy within the post-communist region, one of very few papers to situate such an analysis in the context of the OECD countries, and one of relatively few to interpret the dynamics over the long-term.

Non-life insurance markets in CEE countries– part I: Products’ structure

IntroductionInsurance remains a relevant contributor to the economic growth. It offers a reduction of anxiety and more effective management of risk as well as promotes financial stability by mobilisation of savings and more efficient capital allocation [Outreville 1990; Skipper 1997; Liedtke 2007; Han et al. 2010, p.184-185; Albouy & Blagoutine 2011, p.467-469; Haiss & Sumegi 2008; Curak, Loncar & Poposki 2009]. However, the contribution of the insurance sector to the economy depends on the development of the insurance system, which is sensitive to many factors. In particular, from a macro perspective, the development of a giv- en national non-life insurance market is influenced by favorable or unfavorable economic conditions and globalization processes that release the flow of capital and spread of knowledge. Another area of influence is represented by riskspecific conditions. For example, natural catastrophes have a power to enhance the cyclicality of an insurance market, followed by changes of insurance premiums and availability of coverage. The behavior of insurance consumers is also a relevant factor, with changing attitudes to the need of insurance protection in the first place. It is worth to note that the development of the non-life insurance sector is also related to the situation of real estate, motor and bank loan markets.If considering the European Union countries, the current state of the development of the national non-life insurance markets differs significantly. In particular, there is a group of transition countries which are specific due to some aspects of the non-life market development. The purpose of this study is to evaluate these changes in a group of the eight transition countries from the region of Central and Eastern Europe (CEE). This study contributes to the existing academic debate as there is a clearly identifiable research gap within crossnational studies on the performance of non-life insurance markets. The available cross-country comparative studies usually address the whole insurance sector (aggregated data), which is discussed further in the first section of this paper. By addressing exclusively the situation of the non-life markets, the evaluation provided in this study offers an insight into a segment of insurance market which is of particular importance for companies and households.Additionally, it should be noted that the studies on the development and contribution of the insurance sector in transition countries, also remain rare in academic literature. Such studies gain considerably lower attention, when compared to other aspects of financial system performance (banking sector or capital markets). This cognitive gap may be at least partially fulfilled by this study, as it deepens some relevant aspects related to the performance of non-life markets in selected CEEs as transition economies. Non-life insurance markets in CEE countries remain specific in some aspects, although they overcame considerable changes, stimulated by the process of harmonization with the European Union. In this context, the problems subject to closer evaluation in this study correspond with three broad areas of concern. The first is presented in this paper (as the first part of the study) and addresses the market structure from a product-oriented point of view. The second area of concern refers to the polarization of insurance markets from a cross-country comparative perspective, whereas the third focuses on market concentration. The latter two aspects will be discussed in a separate paper (as the second part of this study).The paper is organized as follows. The first section provides an overview of the accessible previous research related to the development of insurance markets in the transition countries. The second section of the paper presents the design of research and its methodology. In particular, it explains the adopted approach to the study structure, selection of sample, sources of data, as well as the timeframe of analysis. …

Comparative analyses of the banking environment in transition countries

This paper investigates the dynamics of the banking environment in early and late transition countries for the period 2000-2012. We consider macroeconomic, governance, economic freedom, financial depth, industrial, bankspecific, and CSR variables to compare the banking environment in transition countries. Our analyses show the presence of differences in the banking environment of two groups of transition countries: however, this gap shrunk over the period 2000-2012. The late transition countries have lower scores in the variables ?Investment? and ?Financial freedom?, implying that in the future the governments of these countries may focus on improving the investment and financial climate.

Reforming the power sector in transition: Do institutions matter?

This paper aims to investigate the often poorly explored link between power sector reforms and wider institutional reforms in the economy across different groups of transition countries. We use panel-data econometrics based on bias corrected dynamic fixed effect analysis (LSDVC) to assess the impact of reforms on macroeconomic and power sector outcomes. The results indicate that power sector reform is highly inter-dependent with wider reforms in other sectors of the economy. The findings indicate that failure to harmonize inter-sector reforms leads to power sector reform measures being ineffective. We conclude that the success of power sector reforms in developing countries largely depend on the extent to which they synchronize inter-sector reforms in the economy.

Are Central European countries' financial institutions embedded?

The fall of the Iron Curtain in 1989 was one of the causes of an increased interest in the relation between economics and culture. An important idea of this literature is that social and economic systems will function properly if they are embedded in a corresponding value system. Although some studies have discussed the relevance of culture for the transition process, no one has performed a systematic analysis. This paper investigates whether the financial systems in a group of Central European transition countries correspond with the underlying values. These countries' high scores on Uncertainty Avoidance and low scores on Individualism correspond with the poor protection of shareholders' rights and the low level of stock market capitalisation relative to industrialised countries. Differences within the group of transition countries are related to differences in Power Distance and Individualism.

Testing Purchasing Power Parity for the New EU Members and Turkey: A Panel Cointegration Analysis with Disaggregated CPI

This study applies multivariate panel cointegration technique to evaluate purchasing power parity (PPP) hypothesis by using consumer price sub-indices of new EU member transition economies and Turkey. We aim not only to compare the parameter estimates across the sectors of an economy but also across the economies at different EU transition stages. We find that failure to get evidence for cointegration to support PPP can be attributed to the inclusion of non-tradable goods in the aggregated data. Inclusion of Turkey into the group of transition countries strengthens the test results in favor of weak form PPP. That verifies the significance of the extent of trade relationship as one of the requisite for the PPP hypothesis to hold.

Post-Adaptation Growth Recovery in Poland and Russia - Similarities and Differences

The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries - Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc. The period of 'adaptation' output decline was much more severe and longer in Russia than in Poland, and recovery came later. Unlike in the leading transition countries, the role of new private firms and FDI in Russia has been very limited what can be explained by administrative barriers, widespread corruption, lack of transparency, instability and contradictions in economic legislation, reflecting poor business climate. In the absence of FDI and with limited role of SME Russian economy is dominated by large domestic corporations, many of them having an 'oligarchic' characteristic. This additionally complicates the political economy of market reforms and weakens constituency of favor of open democratic society and liberal economic policies. The high oil prices helped in economic recovery and fiscal adjustment in Russia in early 2000s. However, Russian economy has become increasingly oil-dependent. While major obstacles to future Russia's growth can origin from its structural monoculture dominated by the oil and energy sector, and poor business climate, the excessive welfare state can be considered as the main development burden in the case of Poland. In both analyzed countries poverty and inequality increased substantially during 1990s, to much bigger extent in Russia compared to Poland. While part of the income polarization was inevitably connected with departure from communist egalitarianism and part of poverty phenomenon reflected transition adaptation costs, other factors such as continuous structural distortions, incomplete liberalization, high inflation, insufficient competition, barriers to entrepreneurship, institutional weaknesses of the state captured by oligarchs, corruption, etc., played a significant role here.

Why did estonia perform best? the north–south gap in the post-socialist economic transition of the baltic states

After more than a decade of post-socialist political and economic transformation one can distinguish two groups of transition countries–‘successful’ (with a consolidated liberal democracy and working market economy) and ‘unsuccessful’ cases. The first group is represented by the countries of Central Europe and the Baltic states, and the second by the Balkan countries and most of the former Soviet republics. Today, all three Baltic countries belong to the first group. However, in 1994 Estonia was praised by foreign analysts as ‘a shining star from the Baltics’, whereas the economic performance and reputation of Lithuania was rather low. What was it that enabled Estonia to perform best during the first decade of market transition: was it better initial economic conditions, peculiarities in the political process (e.g. the exclusion of a significant part of the ‘non-ethnic’ Estonian population who could have been the potential electorate for a post-communist party like the Lithuanian ‘Laborists’), a Protestant cultural legacy, or perhaps even better public relations? This article discusses alternative answers and elaborates on a Weberian explanation.

The Two Transitions in Central and Eastern Europe as Processes of Institutional Transplantation

In the euphoria of the early 1990s the former socialist countries of Central and Eastern Europe (in the following: CE and EE) were generally expected to quickly turn into democracies with market economies. The experience of the last 15 years, however, has shown that only some of them (the Baltic States, Poland, Hungary, the Czech Republic, Slovakia and Croatia) have done so. With Russia, Belarus, Bulgaria, Moldavia, the Ukraine, Romania, and Serbia and Montenegro it is not yet clear where the journey goes. The increasing gap between the two groups of transition countries with regard to both their economic and political orders (see Kitschelt 2003) cannot be explained by their different starting conditions after the breakdown of the Soviet Union alone.' Rather it also has its causes in the cultural and historical circumstances shaping their particular traditions and societal environments. The experience of transition has strongly challenged the neoclassical paradigm (see Murrell 1991), and it has led to a growing awareness of the role of informal institutions in the process of institutional change, not only in institutional and evolutionary economics, but also increasingly in the mainstream. In view of the variety of transitional trajectories, the countries of CE and EE are now sometimes seen as prime examples of historical path dependence with the performance of individual countries dependent on informal rules carried over from the pre-communist past (Winiecki 2004, 143). As much as the idea of path dependence has contributed to a better understanding of transition in CE

Trade integration and synchronization of shocks*

AbstractAccording to the European Commission (1990), closer integration leads to less frequent asymmetric shocks and to more synchronized business cycles between countries. However, for Krugman (1993) closer integration implies higher specialization and, thus, higher risks of idiosyncratic shocks. Drawing on the evidence from a group of transition countries, this paper tries to determine whose argument is supported by the data. This is done by confronting estimated time‐varying coefficients of supply and demand shock asymmetry with indicators of trade intensity and exchange rates. We find that (i) an increase in trade intensity leads to higher symmetry of demand shocks: the effect of integration on supply shock asymmetry varies from country to country; and (ii) a decrease in exchange rate volatility has a positive effect on demand shock convergence. The results confirm ‘The European Commission view’ and also the argument by Kenen (2001) according to which the impact of trade integration on shock asymmetry depends on the type of shock.