Mature Market Economies Research Articles

Специфика предпринимательской деятельности в подсанкционной ресурсной экономике (кейс Исламской Республики Иран)

In the new conditions, it is necessary to rethink the concepts and models of various subsystems of the national economy’s activity, including small and medium-sized businesses, which makes study of the experience of the Islamic Republic of Iran as a resource country facing a high level of economic sanctions relevant. The aim of the article is to identify the features of the small and medium-sized enterprises’ activities of the Islamic Republic of Iran. The authors use methods of economic analysis, system-structural approach. The article establishes that the criterion for the classification of small and medium-sized enterprises is only the number of employees. Due to high inflation, the criteria of revenue and assets are not applied, industry affiliation is not taken into account. A significant proportion of small and medium-sized enterprises develop by replacing inaccessible goods and technologies, which leads to them having certain features. Firstly, small and medium-sized enterprises provide up to a third of the GDP of the Islamic Republic of Iran. At the same time, the falling behind of small and medium-sized enterprises in labor productivity is lower than in countries with mature market economies. Under the sanctions, a significant part of small and medium-sized enterprises of the Islamic Republic of Iran produce alternative imported products with high added value within the framework of small-scale production. However, the export potential of these products is limited. The specific ways of supporting small and medium-sized enterprises include the focus on the value chains creation (rather than the establishment of new enterprises) and the development of subcontract relations.

Economics of banks and financial markets (Nobel Memorial Prize in Economic Sciences 2022)

The article provides a brief introduction to the research on banks and finan- cial crises, for which the 2022 Nobel prize in economic sciences was awarded. Forty years ago, the works of Diamond and Dybvig highlighted the critical role banks play in maturity transformation and explained why this role makes banking crises a natural byproduct, thus providing a theoretical basis for modern banking regulation. The concurrent work by Bernanke on the Great Depression, the worst peace-time economic crisis in mature market economies, demonstrated that banks’ closures were a critical factor in making the depression so deep and prolonged.

State capital mobilization under soft budget constraints: Uneven growth and spatiality of China's public-private partnerships

This study examines the uneven growth and spatiality of the practicing of public-private partnerships (PPPs) in China where capital mobilization had until recently been monopolized by the Party-State. Two types of PPPs are identified, namely those formed for businesses and economic developments and others for the purposes of social welfare and environmental protection. PPPs are not prominent in the cities and regions with a mature market and advanced economy. Instead, they are strongly associated with some backward and remote areas where the degree of marketization is low and the legacy of state socialism remains high. Results of multi-variate modeling suggest that the spatial variation of China's PPPs is significantly correlated with neither the degree of marketization nor the level of fiscal pressure but instead the socialist legacy of soft budget constraints. The findings of this research foreground an interesting practice that blends the state-market binary and challenge the popular perception of the state and market as unambiguous theoretical coordinates.

Introducing Flexible Retirement: A Dynamic Model

Mature market economies steadily raise full-benefit retirement ages and add flexible (or variable) retirement age: early/late retirement is punished/rewarded to neutralize the budgetary impact of free choice within wide age limits. New EU member states also raise full-benefit retirement ages, but typically restrict downward flexibility, conditioning it on long enough length of contribution (e.g., Czechia) but sometimes even forsake the deduction (Females40 scheme in Hungary). In this paper, we shall study the costs of removing restrictions on flexibility. In our dynamic model, we show that even if early retirement is duly punished, diminishing the effective retirement age by 1 year raises the first year's and the total expenditures during transition by 8% and 70% of the original annual expenditures, respectively.

Развитие академического технологического предпринимательства в России

Technology entrepreneurs play a critical role in modern models of economic growth. At the same time, the features and development trajectories of technological entrepreneurship and gazelle firms in Russia differ from countries with mature market economies. The purpose of the article is to assess the state of academic technology entrepreneurship in Russian universities and to develop recommendations for its development. The methods of two-dimensional classification of universities according to two indicators of technological entrepreneurship development, correlation analysis, assessment of intergroup differences according to the Mann-Whitney U-criterion, qualitative analysis of entrepreneurial ecosystems in universities, methods of constructing algorithms were used. As a result, it was found that the number of start-ups and the likelihood of receiving commercial funding are practically not correlated. There is a group of universities that are not among the largest metropolitan universities, but have a high proportion of entrepreneurial projects that have successfully passed the seed stage and received commercial funding (business angel, venture fund). These top performing universities are distinguished not only by their innovative infrastructure, but also by a wide variety of community centers. Taking into account the results obtained an algorithm for the development of academic technological entrepreneurship on the basis of the university as an innovation hub has been developed. Its important elements are: pre-active marketing of scientific research groundwork, development of the social capital of the ecosystem, and collaboration practices. The results may be of interest to technology entrepreneurs themselves, as well as to universities interested in the development of academic entrepreneurship.

A Study on the Deepening Exploration Stage of the Reform of Socialist Market Economy System with Chinese Characteristics

The socialist market economy system reform with Chinese characteristics is one of the most important contents in China’s economic reform practice. From the reality of China’s economic development, the transformation of macroeconomic policies, and the academic discussion in the theoretical circles, it can be concluded that China’s market economy system reform entered the deepening exploration period since 2012, and it is urgent to change the economic growth mode to a higher quality socialist market economy with Chinese characteristics. This paper systematically studies the thought trajectory, policy practice and performance analysis of the socialist market economy system reform with Chinese characteristics entering the deepening exploration stage since 2012.At the thought level, China’s market economy system reform has achieved the multi-dimensional innovation and development since 2012. Among them, the basic understanding of the economic New Normal” is the era background and the thought premise of China’s deepening market economic reform. The proposal of New Development Concept” is its main line of thoughts and overall guidance of China’s deepening market economic reform, while the conception of Modern Economic System” and the initiation of Community with Shared Future for Mankind” are the thought expansion and extension respectively in internal direction and external direction. The thought trajectory of China’s market economy system reform’s deepening exploration is developing along this thought premise, the overall guidance, and the thought expansion in internal direction and external direction. These new ideas not only have theoretical breakthroughs and innovations in answering important questions such as what kind of development we want and how to achieve it”, what kind of world we want and how to achieve it”, but also provide an ideological and theoretical basis for China to deepen the practical practice of the market economy system reform.At the level of practices, based on the evolution of China’s reform thinking since 2012, the key policy practices for deepening reform in this period can be elaborated from two sides: one is the construction of six systems, one organization” guided by the concept of Modern Economic System”; the other is the construction of the Belt and Road” under the guidance of the community of human destiny”. These policy practices are the realistic manifestation of thought evolution, and at the same time provide a practical source for thoughts’ further development and innovation. The dynamic interaction between the two aspects promotes the deepening development of the socialist market economy system reform with Chinese characteristics, which has made remarkable realistic achievements in the economic structure, urban and rural regional development, people’s living standards, ecological civilization construction, and new international economic relations.Since the deepening exploration period of the market economy system reform in 2012, the organic combination and effective interaction between China’s reform thoughts and policy practices is not only the realistic embodiment of the basic logic of historical materialism of Marx’s social existence determines social consciousness, social consciousness counteracts social existence”, but also one of the most important experiences of China’s success in the socialist market economic reform since the founding of the People’s Republic of China. It is further one of the most important principles that must be adhered to cope with the current severe domestic and international challenges and to promote the construction of a more mature socialist market economy with Chinese characteristics.

Cooperative Innovation, Information Technology Application and Industrial Upgrading

During the period of economic transition, different cooperative innovation influencing mechanism on industry upgrading in China is more complicated than that in the mature market economies. This paper reassessed the cooperative innovation level to test the transformation effect of information technology application on cooperative innovation. We find that cooperative innovation shares a significant positive relation with industry upgrading, as do information technology application for upgrading. While the central and western regions benefit more from information technology. The conclusions can provide information on the strategy of collaboration innovation, Internet plus to promote regional development and upgrade industry.

An examination of return and volatility spillovers between mature equity markets

We examine price discovery and volatility spillover among equity markets of eight mature market economies (MMEs) – Australia, Canada, France, Germany, Italy, Japan, U.K. and U.S.A. – from January 2003 to July 2014, covering three sub-periods – prior to the 2007–09 global financial crisis (GFC), during crisis, and post-crisis. The results of price discovery indicate that the equity markets of Italy and the U.K. lead other markets in pre-crisis and crisis periods, respectively. No single market is dominant in post-crisis period. Dynamic cointegration results reconfirm our findings from Johansen’s co-integration test. For the full sample period as well as sub-periods, asymmetric dynamic conditional correlation (ADCC-EGARCH) coefficients are high between Australia and Japan, and among European Union MMEs. U.S. is negatively associated with other MMEs, except Canada with whom it seems to be uncorrelated. In the BEKK-EGARCH analysis, we find no long-term volatility spillovers for France and Germany with Italy, U.K. and U.S., in the post-crisis period. Our findings confirm reduced economic influence of the U.S. on other mature markets, as a result of the crisis. Further, regional patterns are observed in information linkages for the sample markets. The findings of the study have implications for policy makers and investors.

Information Transmission between Mature and Emerging Equity Markets During Normal and Crisis Periods: An Empirical Examination

In this paper, we examine the price discovery and volatility spillovers between eight mature market economies (MMEs) and eight emerging market economies (EMEs) from January 2003 to July 2014, covering three sub-periods—prior to the 2007–09 global financial crisis (GFC), during the crisis, and post-crisis. The results of price discovery indicate that MMEs lead EMEs in the pre-crisis and post-crisis periods. All MMEs are cointegrated with China in the pre-crisis period but not in the post-crisis period. Dynamic cointegration results reconfirm our findings from Johansen’s co-integration test. The asymmetric dynamic conditional correlation (ADCC-GARCH) coefficients suggest a regional pattern among MMEs and EMEs, except in the case of European MMEs with South Africa. Employing BEKK-GARCH model, we find that volatility spillovers of MMEs with China and of Italy with EMEs weakened in the post-crisis period as compared to the pre-crisis period implying that the GFC damaged the information transmission process, particularly for China and Italy. While China is a large economy with strong trade linkages with the rest of the world, Italy is one of the larger European economies which was in relatively greater distress during the EDC. The findings have implications for policy makers and investors.

Spatial proximity and location dynamics of knowledge-intensive business service in the Pearl River Delta, China

Western studies on location dynamics of knowledge-intensive business services (KIBS) suggest that KIBS firms tend to locate proximally to multinational enterprises and already established KIBS firms. This paper examines the location dynamics of KIBS firms in the Pearl River Delta (PRD) of China, one of the manufacturing centers and fastest-growing global mega-city regions in the world. This study reveals that KIBS in the PRD have become more spatially concentrated from 2004 to 2008. Both state-owned enterprises (SOEs) and foreign-owned enterprises (FOEs), two dominant players in the regional economy, play a positive role in attracting KIBS-births. This indicates that the presence of SOEs and FOEs has significantly shaped the location patterns of KIBS firms in the PRD, and the influence of SOEs is even stronger than that of the FOEs. Moreover, the new KIBS firms tend to co-locate with existing KIBS firms, which confirms that the cumulative causation mechanism matters in new KIBS firm formation process in the PRD. Other contextual factors, such as the state-governed developing zones (DZs), also have positive effects on KIBS-births. These findings suggest that more attention should be paid to the role of the state in restructuring the economic landscape of China where a mature market economy system is still lacking, although there are increasing signs of the influence of global firms.

How Do Bankruptcy Systems Perform in Eastern Europe?

For post-socialist countries that have undertaken long phases of economic and judicial transitions, an important aspect of attractiveness is based on the performances of their bankruptcy systems. Those performances are all the more essential in a context of non-mature capital markets. Precisely, bankruptcy procedures should, first generate substantial recoveries for the whole set of investors, and second share those recoveries in an adequate way – e.g. in a way that improves the investors’ individual incentives (in terms of monitoring, control, support, etc.).This article uses an original hand-collected database of 554 closed bankruptcy cases in three Eastern European countries (Hungary, Poland, and Romania) to evaluate the determinants of bankruptcy systems’ performances during the post-transition era (from year 2003 to 2010/11). In particular, we investigate whether the specificities of these local bankruptcy environments are significant enough to influence the creditors’ total recoveries. We also wonder whether those recoveries are impacted by the presence of private/public creditors and/or the concentration of their claims. This paper goes beyond a mere analysis of the creditors’ overall repayment, by focusing on the competition effects between them. Implementing competition is actually a core issue for post-transition economies, which have to mimic rivalry effects that usually prevail in more mature market economies. Precisely, we measure the priority order of repayment among competing classes of creditors (public, social, and private claims) and investigate the nature of competition (rivalry vs. ripple effects) among these classes.(1) We first confirm that the design of bankruptcy law “matters”: the creditors’ repayment is not independent from the type of bankruptcy procedure, and depends on the national environment in which such procedure is engaged. (2) On all three countries, the total recoveries do not benefit from the presence of public claimholders, even when those are in position of being residual claimants. Following Satjer (2010), this result suggests some passivity from the state, which has lost bargaining power under bankruptcy. On the contrary, the private claimholders exert a contrasting influence on total recoveries: positive for the junior ones (more involved under bankruptcy, to compensate their lack of protection), and negative for the secured ones (confirming the “lazy argument” attached to collaterals). (3) We also find that repayments are lower when the claims are concentrated: despite easier coordination, concentration may generate excessive influence from the largest creditors, willing to run bankruptcy adjudication in their sole interests. (4) We show that the Eastern European bankruptcy systems provide stronger protection for private secured claims than for public claims. From that angle, the post-socialist economies mimic the prioritization of secured creditors that characterizes most Western European bankruptcy systems. (5) Last, we confirm that Eastern European bankruptcy systems have successfully implemented competition among the classes of creditors, which we interpret as a sign of maturity.

Dental Services Funding and Affordability in Serbia - Decade-Long Perspective.

Global awareness of growing demand for oral health care services became prominent over past several decades (1). Far reaching consequences of clinical dentistry for overall societal welfare were more obvious to the governing health authorities in mature market economies at first (2). Eastern European and Balkan health systems suffered from serious development setbacks during painful transitional health reforms taking place in the region since 1989 (3). Some of the core challenges across the region were temporary worsened insurance coverage in most countries of the region and huge contribution of out-of-pocket payments by ordinary citizens (4). As in somany areas of curative medicine, dental care was undergoing the same evolution. The early stages of this process were quite challenging for the regional health sector, and successful adaptation to the increasingly globalized health care market took many years to happen (5). Peculiarity of dental medicine is reflected in strong demand for frequent services, initiated by common acute disorders and adverse consequences of treatment procedures (6). Preventive and conservative dentistry in pediatric populations has significant long-term impact to the dental expenditure across the region (7). In some other areas, such as restorative dentistry, these issues are particularly prominent (8). In many transitional health systems, financial constraints worsened by global economic recession reflected heavily on dental care, imposing further narrowing of existing reimbursement practices as it happened in Bulgaria (9).

Labor reallocation and firm growth: benchmarking transition countries against mature market economies

Abstract This paper uses firm-level survey data to study labor reallocation and firm growth in the transition countries over 1996–2005, including benchmarking against developed market economies. The data shows rapid growth of the new private sector and of the micro- and small-firm sectors, with the size distribution of firms moving towards the pattern observed in comparable surveys of developed market economies. Throughout, the regional patterns suggest greater convergence in the transition countries that joined the European Union in 2004 than in the other, lower-income transition economies. We also find evidence of Kuznet-Chenery type structural change across sectors. JEL codes L11, O12, P31.

Forest proximity impact on undeveloped land values: A spatial hedonic study

In the study we examine the impact of the Las Wolski forest in Krakow (Poland) on undeveloped land values using the hedonic regression method, using OLS (ordinary least squares), SAR (Spatial Autoregressive Model) and SEM (spatial error model).Although the discussion on the economic role of forests has been carried out for decades in mature market economies, there is scarce evidence based on data from emerging markets that were subject to a post-socialist transition. Another reason to undertake the study is the strong belief that new econometric tools (mainly spatial hedonic regression) can lead to more robust understanding of the influence of forest proximity on property values.We found strong evidence of a positive impact of forest proximity on undeveloped property transaction prices, although the importance of this variable is considerably smaller than that of other factors controlled for. On average a one hundred meter increase in distance from the forest decreases land value by 3%.

Corporate investment during the financial crisis: Evidence from China

China's growth model suggests that the 2008 financial crisis may have affected the Chinese economy differently from what one observes in mature market economies. In this paper, we examine how Chinese corporate investment responded to the financial crisis by using 1689 listed nonfinancial firms during Q12006–Q32010. We document that (1) the overall impact of the financial crisis on Chinese corporate investment is negative; (2) among three channels conveying the effect of the financial crisis, namely, the demand channel, the financial constraints channel, and the uncertainty channel, the demand channel dominates; (3) financial assets held by a nonfinancial firm are important in explaining the firm's fixed investment behaviour; (4) as compared to non-state firms, state-controlled firms are less affected by the financial crisis and more active in engaging in financial assets investment; and (5) foreign ownership can be seen as a buffer against the negative effect of the financial crisis and foreign-involved Chinese firms are less active in financial assets investment as compared to domestic firms.

Structural origins of debt-sustainability in mature and transition economies: Domar, Balassa–Samuelson and Maastricht

This paper analyses the relation between the structure of GDP and a country's debt sustainability. A two-sector model with endogenous relative sector sizes is developed to formally show that under certain conditions the debt sustainability, measured as the limiting value of the debt-to-GDP ratio, of transition economies exceeds that of mature market economies. This ‘advantage’ comes from structural factors: sectoral imbalances of growth and shifts in sectoral composition of GDP. Furthermore, among transition economies those with relatively higher structural flexibility can sustain relatively higher debt-to-GDP ratios. How much debt relative to GDP a country can sustain is shown to be highly context specific and depends on the economic structure, composition of growth, structural flexibility, and the prevailing incentives for restructuring. But should a country carry a high debt level relative to GDP just because it can? The paper answers this question by distinguishing between two categories of transition economies: Those that could and should and those that could but should not exploit their capacity to sustain high debt levels.

Korea-Japan Economic Cooperation Amid a New East Asian Integration

The purpose of this paper is two-fold: First, to examine a) ongoing East Asian integration in terms of intra-regional financial cooperation, b) the proliferation of intra-regional free trade agreements with extra-regional economies and cross-border foreign direct investment flows c) and structural changes in the Japanese and Korean economies in the past two decades and subsequent challenges faced by the two countries. Second, to suggest that Japan and Korea, as the two most mature and closest market economies in East Asia, should not wait to push mutually collaborative FDI until a formal FTA between them is effective. Despite historical legacies, the geographical proximity and the presence of high-tech manufacturing capacities in the two countries could be combined for immediate mutual benefits through engaging in increasingly emerging cross-border value chains. For this purpose, the active promotion of cross-border FDI flows between Japan and Korea is critical for both countries to overcome serious challenges. For the Japanese MNCs hollowing out Japan to respond to the “six difficulties” domestically, Korea could be reassessed as one of the most favored outbound destinations.

The Formation of Micro Grassroots Environmental NGO - The Best Choice for Non-Governmental Environmental Protection in China

With Chinas reform and opening up, the third sector which has universally grown up during the 1980s started to spread into China. Chinese environmental protection NGO is still at starting level although China possesses kinds of environmental protection NGO including official environmental organizations, the international environmental protection NGO institutions, grassroots environmental NGO, school environmental clubs and other forms of environmental NGO. Since we do not have mature democracy and free market economy in China, it is not a good choice to join in the environmental protection NGO for those Chinese citizens who hope to improve the situation of the environment through actions. A 3-5-person non-governmental micro environmental protection NGO will have more powerful efficiency, vitality and creativity because it can avoid defects such as inheritance, legitimacy and energy dispersion. The future of Chinese environmental protection consists in the citizens awareness of building the micro grass-root environmental protection NGO.

Identity, policy ideas, and Asian diplomacy: Japan’s response to the rise of China

This article examines Japan’s diplomatic efforts to retain regional influences in evolving regional environments represented by the Chinese ascendancy. It regards identity as a key variable that constitutes the base for Japan’s policy ideas, and examines the formation, application and limitations of specific policy ideas that derived from Japan’s identity in the political and economic domains. The main argument of this article is three-fold. First, the Japanese government formulated specific policy ideas – value-oriented diplomacy and Japan-tailored standards – on the basis of identities as a democratic nation and a mature market economy. Second, the Japanese government incorporated such policy ideas into diplomatic strategies and sought to realize them mainly through the creation of cooperative institutions. Third, domestic political instability and the limited validity of policy ideas constitute serious constraints on arresting further decline in Japan’s influence in Asia.

The impact of innovation activities on firm performance using a multi-stage model: Evidence from the Community Innovation Survey 4

The impact of innovation on firm performance has been a matter of significant interest to economists and policy makers for decades. Although innovation is generally regarded as a means of improving the competitiveness of firms and their performance, this relationship has not been supported unambiguously by empirical work. This paper presents one of the first attempts to assess the drivers of the innovation process in two different institutional settings: mature market economies of Western Europe and advanced transition economies from Central and Eastern Europe. A multi-stage approach to innovation is applied to the firm level data from the fourth Community Innovation Survey (CIS4), covering some 90,000 firms. The findings reveal a positive relationship between innovation activities and productivity. Firms decide to engage in innovation and on how much to invest under pressure of competition. In making these decisions firms rely on the knowledge accumulated from previously abandoned innovations and cooperation with other firms and institutions and other members of their group. Subsidies lead to additional spending on innovation by firms but do not lead to additional innovation output. The results also show that larger firms are more likely to embark on innovation activities and invest more in innovation but innovation output decreases with firm size. Finally, results reveal several differences in behaviour of firms in two groups of countries.