Growth In Transition Countries Research Articles

The Effect of Financial Innovation on Economic Growth in Transition Countries

The Effect of Financial Innovation on Economic Growth in Transition Countries

The Impact of Globalization on Economic Growth in Transition Countries

The Impact of Globalization on Economic Growth in Transition Countries

The impact of IFRS adoption on economic growth in transition countries: Evidence from CIS

Abstract International financial reporting standards (IFRS) have become a worldwide common accounting language which most countries have adopted. However, there are no studies obtained based on transition economies in a particular geographic zone. Thus, this study is carried out to observe the influence of IFRS adoptation on the economic growth of 11 CIS countries from 2005 to 2018. To examine the actual effect of the variables, the regression model was divided into two sub-models based on the category of variables. There is a difference between the economic growth in adopted and non-adopted states. The adoption of IFRS showed negative and insignificant relation to GDP per capita. The number of observations after fully adopting IFRS was low, the data on IFRS adoption was challenging, and an advanced econometric model should be selected. The study compared CIS results with Eastern European countries to see a clear pattern and generate an efficient suggestion for policy implementation. The policy implementations related to Uzbeki-stan were also provided.

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.

The Role of Innovation and Branding on Enterprise Sales Growth in Transition Countries

The aim of the study is to assess the role of innovation and branding on enterprise sales growth in transition countries with Kosovo being the case study for the research. The CEO of 300 business enterprises from diverse business sector were interviewed alongside other staff such as human resource managers, sales and marketing managers, and financial managers. The study revealed that service delivery, technology, business model, branding, and age of entrepreneur were significant factors. The result of the study indicates that innovation and branding have a significantly positive effect on enterprise sales growth. The research concluded by noting that brand awareness must constantly maintained through international product advertising and engaging in promotional activities to raise awareness of the product, so as to have a competitive chance of survival in the local and international market. Technological advancement should be welcomed as it forms the foundation of the initiation of innovation in business enterprises.
 
 
 Received: 14 February 2023 / Accepted: 19 April 2023 / Published: 5 May 2023

Financial Development, Human Resources, and Economic Growth in Transition Countries

This study explored the linkage between financial development, human resources, and economic growth in a group of twenty-five transition countries during the period 1995–2019. The author applied a range of estimations such as Ordinary Least Squares (OLS), fixed effects model, and two-step GMM methods in order to estimate the empirical research model. Different from previous research, financial development in this paper was a proxy variable that was assessed based on the level of outcomes of financial institutions and the financial market in three aspects: depth, access, and efficiency. In addition, the labor force participation rate and the human development index were employed as the comprehensive proxies for human resources. Generally, financial development and human resources exert positive impacts on economic growth. Financial access and financial efficiency boost economic growth, while financial depth does not. Human development was also documented as the driver of economic growth. In addition, the interaction between aggregate financial development and the human development index demonstrated a robust spur to economic growth. These findings contribute to the literature on economic growth and have considerable implications for policymakers in transition economies.

The impact of pension fund assets on economic growth in transition countries, emerging economies, and developed countries

<abstract> <p>In this study, the authors aim to analyze the impact of pension asset investments on the economic growth of selected non-OECD countries, taking into account the controlling effect of gross fixed capital formation, domestic credit to the private sector, inflation, public debt and population. To conduct the econometric analysis in this study, the authors relied on secondary data published in the annual reports of the OECD, the World Bank and the IMF. Based on the econometric results of this study, the authors conclude that the investment of pension fund assets has positively impacted the economic growth of selected non-OECD countries (2002–2018). This study is of scientific importance because it provides detailed empirical evidence regarding the investment of pension funds in international financial markets and the effects of these investments on the economic growth of non-OECD countries. Moreover, the authors of this study through this scientific paper provide new scientific evidence to governments and policymakers in these countries on how to design appropriate strategic investment policies so that pension funds invest their pension assets at a safe rate of return from investments to ensure economic growth and efficiency in the capital markets. Given that most non-OECD countries are emerging and transition economies, the importance of this study lies in the fact that the authors, through empirical findings, highlight the importance of pension fund investments in global financial markets and the effects of these investments on the economic growth of these countries.</p> </abstract>

External Debt and Economic Growth in Transition Countries: Case of Kyrgyzstan

In many developing countries out of shortage of savings and capital external resources as external debt, foreign direct investment and transfers are play significant role in the fostering economic growth and development. Goal of this paper is to investigate the impact of external public debt, current transfers and foreign direct investments on GDP in the Kyrgyz Republic. Using quarterly data for the period 2000Q1-2017Q3 and the ARDL cointegration approach it was found that a cointegration relation between current transfers, external debt, FDI and GDP. According to results, current transfers’ contribution to the country’s economy is more than government debts. It is suggested that the government should focus more on foreign direct investments than foreign debts and current transfers by considering the long term.

Insurance market development and economic growth in transition countries: some new evidence based on the bootstrap panel granger causality test

The purpose of this paper is to investigate causal relations between the insurance market development and economic growth in ten transition European Union member countries in the period between 1993 and 2013. The analysis is conduced with the use of bootstrap panel causality approach proposed by Konya (2006), which allows for simultaneous inclusion of both cross-sectional dependence and country-specific heterogeneity. Various types of dependencies between economic growth and the insurance market development (both in terms of the global insurance market and in the division into life insurance and non-life insurance) are identified in the study, and these findings confirm the results obtained in the majority of other papers, which report differences in the role of insurance and benefits various economies derive from the insurance market.

FINANCIAL MANAGEMENT IN ECONOMIC GROWTH OF TRANSITION COUNTRIES IN KOSOVO WILL BE SPECIAL

The link between financial management and economic growth is a matter that is constantly being studied and discussed by various authors. The banking industry is an important source of economic development in the country, both in the private and public sectors. The lack of data for a multi-annual period remains a continuing problem for Kosovo's economy. Through multiannual data researchers and scholars will be able to draw the most accurate conclusions for transition countries.Through this study, we will show the empirical link between financial management, the banking system, economic growth in transition countries, and especially data from Kosovo. We will domenstrate throw the Regression Model (OLS) and three explanatory variables: Inflation, Credit to Household Economics and Credit Enterprise, we will reach the hypothesis conclusion.The results of regression show a positive and negative correlation between financial management, credit, and economic growth. From the results obtained, lies the hypothesis: where credit to households has a negative impact on economic growth. But the hypothesis is based: where the credit of the enterprise has a positive economic growth, while the offspring turns negative with economic growth.The purpose of this work is to fill this poor gap. New and ongoing research makes data completion, delivering the most accurate results and scope for improving financial policies.Various banking functions point to their importance for an effective and stable banking system as indispensable for the country's economy. Therefore, bank supervisors have an increased responsibility for monitoring and maintaining the healthy operation of a banking industry in a country. Moreover, individual entrepreneurs or investors usually lack sufficient capital to continue with their projects. Commercial banks provide mediation services that unite savers and investors by channeling theoretically investment funds for uses that bring the highest rate of return, increasing the specialization and division of labor (Todaro, 2003). The neoclassical growth model tells us that an increase in effective savings investments in new and innovative projects is one of the main economic growth generators (quoted in Armenta). The provision of credit is of utmost importance because mobilized assets can be rationally utilized, using them in the sphere of production, speeding up the reproduction process, turnover and other sectors, which are accounted for as sectors that accelerate economic development. Loans are very important and one of the main factors in stimulating economic development in the region, so the focus in the first part of this paper will be analysis of the role of loans and their impact on economic growth (credit growth in GDP) , where the main interest in this paper will be Kosovo.

Does it payoff to research economics—A tale of citation, knowledge and economic growth in transition countries

There are many economic theories that promote human capital as a key driver of a country’s economic growth, but it is challenging to test this theory empirically on a country level and causally interpret the coefficients due to several identification problems. We tried to answer this particular question by using a quasi-natural experiment that happened quarter century ago – the fall of communist block in Eastern Europe. We use a shock to a particular scientific field – economics, to test whether the future investment into that particular field resulted in increased welfare and economic growth. The economics paradigm that was governing all of the communist block ceased to exist. Human capital depreciated over night and all communist countries had to transit from planned economy to a market economy. In the following years countries had to adapt to market economy through additional investment in human capital and research. We find that countries which lack both of the two fourth mentioned components had 25 years later a relatively lower economic growth and wealth. Unlike economics, other fields such as physics and medicine did not go through the same process so we use them as a placebo effect for our study. We find that the relative ratio of citations between economics and physics in post-communist countries is increasing only 15 years after the “paradigm” shock which gives a suggestive evidence that timing of investment into particular scientific field matters the most.

An analysis of biomass consumption and economic growth in transition countries

In this paper, the relationship between biomass energy consumption and economic growth was analysed for some European Transition Countries. Two econometrical methods, which are time series (Autoregressive Distributed Lag (A.R.D.L.) bounds testing approach and Granger Causality) and Panel data methods (Pedroni test, Panel Johansen test and Panel Causality test) were used to determine the cointegration relationship between the variables. A.R.D.L. and Granger Causality methods were practiced for Albania, Bulgaria and Romania for the 1981–2014 period. Panel Cointegration and Causality methods were applied for Bosnia and Herzegovina, Czech Republic, Hungary, Macedonia and Slovak Republic for the 1991–2014 period; and Croatia, Estonia, Latvia and Slovenia for the 1995–2014 period. According to the results, while short-run and long-run causality results demonstrate that the conservation hypothesis is valid for Albania and the countries in group 1, evidence of the growth hypothesis is supported for Bulgaria, Romania and the countries in group 2. In strong causality results, evidence of bidirectional causality for all countries is found.

Capital Market and Economic Growth in Transition Countries: Evidence from South East Europe

Influence of capital market on economic growth has been proven to be positive by majority empirical studies up to now. Throughout these studies, only secondary capital market indicators were usedwas extended with eight countries from Central and Eastern Europe to stabilize the model. A country dummy variable was used to distinguish between two regions. Data for panel regression was taken from GFDR, WDI (both from World Bank database) and one variable from UNECE. Results show that only market capitalization indicator is found to be significant, which is contrary to preliminary expectations. It was hard to expect secondary market activities to spur growth in transition countries, where primary issues almost do not exist. However, this result could be explained LSDVC regression tested endogeneity and reverse causality, and no significant reverse relationship was detected. The main conclusion of this study is that more qualitative research has to be done to discover the main limitations to capital market development in transition countries with more emphasis on primary issues, what could be of better use for policymakers.

Capital Market and Economic Growth in Transition Countries: Evidence from South East Europe

ABSTRACT The South American trade bloc, Mercosur, is made up of the four countries of Brazil, Argentina, Uruguay, and Paraguay, with associate members, Chile and Bolivia. Mercosur has recently experienced a number of setbacks that have called into question their stability and effectiveness as a preferential trade bloc. Brazil's dominant self-motivated leadership role and unilateral actions have weakened the unstable union. Argentina's severe recession and the devaluation of the Brazilian real have also contributed the downward spiral. The recent decision of Chile to forgo full membership in Mercosur due to the high common external tariffs for non-member countries, should serve as blatant warning that Mercosur needs to change its ways. Although the early 1990's proved to a successful period, the recent downward trends require immediate action if Mercosur is to continue to be the dominant trade area of South America. This paper discusses the need for Mercosur to define itself multilaterally, as well as its future ambitions as a full customs union. Examination of an alternative trade bloc, a free trade area, as a feasible option for increasing growth and stability in the member countries is also discussed. Three critical steps are outlined that Mercosur must take to overcome its current unrest and instability, so that it can continue as the dominant trading power in South America. LITERATURE REVIEW The four South American countries of Brazil, Argentina, Uruguay, and Paraguay formed the trade bloc Mercado Comun del Sur or Southern Common Market--commonly known as Mercosur-in March of 1991. The primary objective of Mercosur was to create an integrated regional market whose members were committed to liberalizing trade with one another while imposing a common external tariff (CET) on goods and services imported from non-members (Connelly, 1999). In 1996, Mercosur extended its boundaries to include Chile and Bolivia as associate members. This type of regional trade bloc is known as a customs union (CU). The other type of regional trade bloc is known as a free trade area (FTA). In an FTA arrangement, there is free trade among country members, but each member sets its own tariffs with the rest of the world (Bandyopadhyay & Wall, 1999). Typically, FTAs are wide in scope and set up parameters for activity in fields as diverse as the free flow of capital goods, monetary policy, treatment of intellectual property, dispute resolution, anti-dumping, and rules of competition (Stinson, 1999). The North American Free Trade Agreement (NAFTA) between Mexico, the United States, and Canada is one of the largest and most sweeping economic agreements of this type. Customs Union (CU) The two most important characteristics of a customs union are the total or partial elimination of monetary and non-monetary trade barriers within the borders of the union, and the adoption of common tariffs and trade policies on products originating outside of the union (Nakos, 2001). The membership of a nation within the customs union could influence the trade of that nation in a variety of ways. Depending on the state of the international economy, the country could increase their trade with member countries because of the lower tariffs and yet receive higher costing lower quality products. A country could also be forced to reduce trade with a non-member partner due to the high tariffs mandated by the union while creating shortages of essential products that member countries do not have available for trade. On the other hand, the customs union could be a favorable move by neighboring countries to increase trade between them without jeopardizing trade with non-members. Under either scenario, the customs union theory differentiates between two sources of increased trade: trade creation and trade diversion. Trade creation can occur when there is a restructuring of the production facilities with the member countries of the customs union such that a more efficient mode of operation is achieved (Nakos, 2001). …

Macroeconomic model of institutional reforms’ influence on economic growth of the new EU members and the Republic of Croatia

The aim of this paper is to research, theoretically and empirically, the impact of institutional reforms on economic growth in transition countries (new European Union members) and Croatia, in the period from 1996 to 2012. In order to prove the hypothesis, we will use panel analysis of transition economies and Croatia, namely the Arellano–Bond dynamic panel analysis. The analysis includes two dependent variables (gross domestic product per capita [G.D.P./p.c.]and the share of export in G.D.P.) and five independent variables (total Heritage Index of Economic Freedom, Worldwide Governance Indicators (W.G.I.) government effectiveness indicator, W.G.I. rule of law indicator, corruption perception index and the index of institutional reforms in transition countries). The results show that there is a significant positive impact of institutional reforms on the economic growth of transition countries and Croatia, which creates preconditions that are essential for the future growth rate of the Croatian economy.

Institutions and economic growth in transition countries — new experiences and implications from financial crisis 2007–2010 (Part 2)

Motivation: Cross-country growth regressions indicate that institutions are important for growth. Some institutions are created, protected and enforced by the government — they are the institutions of state. The most important for economic growth are: economic freedom and protection of property rights, political freedom (or democracy), quality of governance and the rule of law. Institutions are especially important in transition countries. Two questions arise: were institutions important for economic growth in transition countries during the financial crisis? What happened to the institutions of state during the financial crisis? Aim: The aim of the second part of this article is to verify two hypothesis about institutions and economic growth in transition countries, which were put forward in the first part of this article. In order to estimate the relationship between institutions and economic growth in transition countries during the crisis, a cross-sectional regression was conducted. Additionally the Granger causality test was conducted. Results: The obtained results indicate that during the recession, in countries were before the crisis the institutions were worse, the pace of the economic growth was greater (hypothesis 1 should be rejected). In order to verify hypothesis 2 that the economic growth contributes to changes in state institutions in such a way that the faster the pace of growth the greater the improvement in state institutions a cross-sectional regression was used and the Granger causality test was conducted. Obtained results do not confirm the hypothesis 2. The estimates of parameters were in line with the expectations but statistically insignificant.

Institutions and economic growth in transition countries — new experiences and implications from financial crisis 2007–2010 (Part 1)

Motivation: Cross-country growth regressions indicate that institutions are important for growth. Some institutions are created, protected and enforced by the government — they are the institutions of state. The most important for economic growth are: economic freedom and protection of property rights, political freedom (or democracy), quality of governance and the rule of law. The changes that took place after 1989 in the countries of Central-Eastern Europe were not only political but also economic. The post-socialist transition was, above all, a change of the institutions of state. It was a kind of the so-called ‘quasi-natural experiment’. Therefore, my intention is to answer the question: how the institutions of state affect economic growth in transition countries. Aim: The aim is to identify the impact state institutions had on the economic growth in transition countries during the financial crisis of 2007–2010. Results: In the first part of this article I review the literature and present hypothesis about dependency of economic growth and institutions during the financial crisis in transition countries. In the relevant literature there is a consensus that without an appropriate institutional background, market incentives do not lead to optimal resource allocation. Institutions have a particularly crucial impact in the case of post-socialist countries which have undergone political and economic transition. A significant and positive impact on economic growth rate is exercised by such institutions as: protection of property rights and political stabilization, government efficiency and rule of law. The experiences of transition countries confirm also the significance of economic freedom for economic situation.

Tripartite decomposition of labor productivity growth, FDI and human development: evidence from transition economies

This study investigates the relative contribution of technological change, technological catch-up and capital deepening as drivers of labor productivity growth in 14 transition economies during the period 2000–2012. In addition, the study extends the usual decomposition of labor productivity growth by encompassing the impact of foreign direct investment (FDI) on labor productivity growth in transition economies. To illustrate the relative contribution of FDI as a driver of labor productivity growth, we present a simple theoretical model that augments Kohli [Labour productivity vs. total factor productivity. IFC Bulletin 20 (April), Irving Fisher Committee on Central Bank Statistics, International Statistical Institute, 2005] and Grosskopf et al. (Aggregation, efficiency, and measurement, Springer, New York, pp 97–116, 2007) decomposition of the labor productivity. The insights derived in this model provide an underpinning to the empirical analysis in this study. Using Blundell–Bond dynamic panel General Method of Moments estimators, the main finding of dynamic panel data regressions shows that technological catch-up, technological change, and human development level, trade and demographic of population ageing are the main factors that affect labor productivity growth in transition countries. Furthermore, the findings of dynamic panel data regressions show insignificant positive impact of FDI on productivity growth in transition economies. One explanation is that the 14 transition economies that are included in this study do not reach a minimum human development threshold level.

Development Aid and Growth in Transition Countries

Empirical studies normally analyze diverse and heterogeneous groups of countries, producing very mixed evidence on the effectiveness of development aid in promoting growth. We focus on whether aid promotes economic growth in transitional economies. We find that aid, on average, has had a positive impact on growth for this specific group of countries. This result is robust to samples, estimators, and the use of alternate instruments to address endogeneity. Aid effectiveness is not conditional on good policy and there is little evidence of non-linear growth effects arising from aid.

FDI and Economic Growth: The Case of Baltic Countries

During the early stages of transition from socialism to capitalism, transition countries experienced a sudden and big initial recession. In the transition period, they look for substantial amounts of finance in order to reverse their negative growth performances. In this context, foreign direct investments (FDI) can be seen as one the most important factors to foster economic growth in transition countries. FDI-economic growth relationship is a much studied topic but it has not lost its importance. Since there are few studies about Baltic countries, this paper explores the interactions between FDI and economic growth of Baltic countries. This is an empirical study which uses panel data method for the 1996-2008 period. At the end, it is founded that FDI has a positive effect on economic growth in Baltic countries.