Policy In Transition Economies Research Articles

Вплив міжнародних економічних суб’єктів на державне регулювання економіки

Based on the concept of jointly-divided activities, the paper reveals the essence of the government’s regulation of economy as a sub-function of state’s economic functions, where the government is a bearer of society’s general economic interests. The work substantiates the positive and negative sides of the influence of international economic entities on economic policy by splitting up state’s own functions and state’s applied functions, so that the latter may contradict the former and be not corresponding to the essence of state. The author reveals the main interests of the triad of globalizers – TNCs, international organizations and developed countries. The study shows the asymmetric nature of the interaction between the open economies and the main international economic entities – international organizations and TNCs, which is due to the difference in their interests and opportunities to influence each other. The paper outlines the main causes and consequences of the negative influence of international organizations and TNCs on the government’s economic regulation in developed countries and other open economies. Revealed the problems of imposing unified rules on economic policy in transition economies by international organizations, of setting requirements for crediting, and of promoting the neoliberal concept and the austerity policy. The work analyzes the negative consequences of the influence of TNCs on state economic regulation, namely: the weakening of employees’ bargaining power and the fall of their incomes, the growth of inequality, the reduction of the tax burden on corporations, offshorization, the hypertrophied development of the financial sphere, etc. The study shows various methods to mitigate the consequences of the negative influence of TNCs on open economies. The paper highlights the main mechanisms of influence of international economic entities on state economic regulation. Revealed the main challenges of state economic regulation caused by the increasing influence of international economic entities and globalization in general. Based on these challenges, the paper highlights the following main necessary transformations of state economic regulation: (1) increasing the level of subjectivity of the state as a bearer of national interests, (2) ensuring institutional foundations for inclusive global development based on the principles of equality, justice and transparency, and (3) neutralizing the negative impact on national socio-economic security exerted by international actors.

Green fiscal policy and enterprise green innovation: evidence from quasi-natural experiment of China.

We aim to study the impact of green fiscal policy on enterprise green innovation by applying a time-varying difference-in-difference (DID) model, and treat the comprehensive demonstration city of fiscal policy for energy conservation and emission reduction (CPEE) in China as a quasi-natural experiment. The results show that the CPEE can significantly improve enterprise's green innovation performance of pilot area. This net policy effect is valid after a series of robustness tests to control for various potential confounding factors. Heterogeneity analysis reveals that the effect of CPEE is stronger for state-owned enterprises and enterprises in high energy consumption industries or industries with higher industrial concentration. In addition, the effect of CPEE is various among different categories of green patents, which is stronger for the types of alternative energy production category, waste management category, administrative supervision and design category. The mechanism test indicates that the CPEE can improve the green innovation performance by increasing enterprise' investment in research and development, promoting territorial industrial transformation and upgrading, and enhancing enterprise executives' environmental awareness. To achieve the carbon peaking and carbon neutrality goals, the green enabling role of fiscal reform pilot policy in transition economies and the applicability of localized policies should be excavated.

R&D and innovation policy in the Western Balkans: Are there additionality effects?

Abstract This article examines three types of additionality—input, output, and behavioural—in a cross-country framework. Besides conducting a systemic evaluation, which is scarce even in developed economies, this is among the first studies to investigate the effectiveness of R&D and innovation policy in transition economies. We estimate treatment effects for small and medium-sized firms in six Western Balkan countries. Empirical findings from matching estimators indicate no input and output additionality, while we find evidence of behavioural additionality. These results highlight the importance of conducting a systemic evaluation of innovation public support. We discuss theoretical and policy implications stemming from our empirical findings.

Sense making of policy processes in the transition economy of Vietnam

SummaryThis paper addresses the question of how reform policies come into existence in transition economies, in which democratic market institutions are in nascent stages. Data from two case studies in Vietnam suggest that the evolution of reform policies in transition economies involves significant sense‐making processes, rather than problem solving, and that sense making alters stakeholders' foundations for learning and power influence in policymaking. In the end, stakeholders' acceptance of identity changes is needed for a reform policy to be realized. This study offers important research and policy implications, and such issues as identity redefinition in the policy process warrant further study.

The transition process of Vietnam’s trade policy from closed economy to “servicification” economy

As one typical transition economy, Vietnam has sharply progressed from a centrally-planned system to a market economy due to the economic reform. Together with the socio-economic development strategy, trade policy has been fully consistent with the transformation. While the effects of trade policy have received much concern in the academia, the paper finds out deeply the change on strategies of trade policy in transition economies in the attempt to catching up the advanced countries. The finding is to draw on the whole picture of Vietnamese trade policy over the period (from 1986 to 2016) and to analyse the remarkable changes leading to successes and failures on these policies.

TREND INFLATION AND MONETARY POLICY IN EASTERN EUROPE

I use a two-country dynamic stochastic general equilibrium (DSGE) model with a nonzero steady-state inflation to study monetary policy in transition economies. In particular, my analysis focuses on whether inflation targeting is based on a consumer price index (CPI) or its producer counterpart, producer price index (PPI). This issue is specifically relevant for transition economies as they might be subject to Balassa–Samuelson effects arising from trading in international markets. Under these circumstances, domestic inflation is possibly higher than imported inflation, hence targeting PPI inflation may prove more effective in influencing domestic macroeconomic variables than targeting CPI inflation. Using a Bayesian methodology, I find that the central banks of three Eastern European countries (namely, the Czech Republic, Hungary, and Poland) are likely to target PPI inflation rather than CPI inflation. This result is in line with the theoretical predictions in the literature, and is robust across several Taylor-type rules.

Protectionist policy in transition economies

The article researches the features of application of protectionist policy in countries with transition economy. The positive and negative consequences of protectionism are considered. It is defined the protectionism measures special increase during the aggravation of the crisis in the world economy. The arising contradictions in the practice of protectionist policy in some countries with transition economy are analyzed. The specific features and characteristics of protectionist measures in the Central and Eastern European Countries are highlighted. The article determines that it is sufficiently difficult to identify the density of the correlation between the level of economic growth and economic policy in the fields of restriction measures or liberalization, because of the large number of factors of internal and external influences. The issues of individual and collective protectionism are investigated. The features of the implementation of the collective protectionist policy on the example of the countries of the former Soviet Union are considered. A set of necessary conditions for effective application of protectionist policy measures in the countries with transition economy is determined.

Comparative Analusis of Antitrust Policy Against Collusion in Some Transition Economies: Challenges for Effectiveness

This article focuses on the development of antitrust policy in transition economies in the context of preventing explicit and tacit collusion. Experience of BRICS, Kazakhstan, Ukraine and CEE countries (Bulgaria, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Czech Republic, Estonia) in the creation of antitrust institutions was analyzed, including both legislation and enforcement practice. This article analyzes such enforcement problems as: classification problems (tacit vs explicit collusion, vertical vs horizontal agreements), flexibility of prohibitions (“per se” vs “rule of reason”), design of sanctions, private enforcement challenge, leniency program mechanisms, the role of antitrust authorities etc. Main challenges for policy effectiveness in this field were shown.

Monetary policy options for transition economies

Implementation of an adequate monetary policy regime in transition economies has provoked an active debate in the past decades. There was a tendency to try to reach a 'one-size-fits-all' solution. However, differences in macroeconomic performances and institutional development have led to different choices in terms of applied monetary regimes. This debate is ongoing since none of the monetary regimes is ideal. If there are reasonable doubts whether the choice of monetary regime a transition economy has made was optimal, it is eligible to reconsider available alternatives. This paper is a contribution to this ongoing debate. A lot of emphasis is sometimes given to the role of monetary policy in transition economies, with high expectations in terms of the capacity of the right choice of monetary regime to generate high levels of economic growth. However, institutional development substantially overshadows the importance of the choice of monetary regimes for economic success of transition economies.

Determinants of Antimonopoly Policy Effectiveness in Transition Economies

The paper explores what factors influence an effectiveness of antimonopoly policy in transition economies on a local (territorial) level. The empirical evidence on national level suggests that an effective implementation of antimonopoly policy depends mostly on a number of macroeconomic factors. However, an enforcement role of antimonopoly bodies and a specific of regional level are not studied. To investigate the relationship between, firstly, an antimonopoly authority’s activity output and, secondly, local economic factors and the effectiveness of antimonopoly policy a survey of 151 top officials of 89 local antimonopoly offices and an ordinary least-squares linear regression across 89 local regions in Russia and Kazakhstanare used. The results indicate that on local level an openness of local economy matters as on national, however, a size of local economy and an intensity of local competition do not matter. Furthermore, the effectiveness of antimonopoly policy in transitional economies is empirically associated with the active stance against anticompetitive agreements (positively) and an abuse of a dominant position of market power (negatively). Additionally, a size of fines administrated by antimonopoly authorities positively influences the effectiveness of the policy.

The Real Exchange Rate Fluctuations Puzzle: Evidence For Advanced And Transition Economies

This paper tries to analyze the sources of the real exchange rate fluctuations for a set of advanced economies and Central and Eastern European transition economies. To address this, in a first step, we compute two measures of the share of the variance of the real exchange rate accounted for movements in the relative prices of traded goods between the countries. One measure is based on R2 coefficient and the other one is based on the mean-squared error (MSE) of the changes in the real exchange rate. In a second step, we estimate structural (identified) vector autoregression (SVAR) models, and decompose real and nominal exchange rate movements into those caused by real and nominal shocks. In a third step, we complete previous ones with an impulse-response analysis. Three central messages are derived from results: (1) for transition economies, under regimes of managed nominal exchange rates, the relative price of non-traded goods explain a large percentage of the variance of the real exchange rate; (2) there is evidence of instability in the variance decomposition of the real exchange rates for advanced economies across samples, and (3) as result of diverse fiscal and monetary policies in transition economies, real exchange rates in some economies are driven mostly by real shocks while in others are driven mostly by nominal shocks.

Using Extraneous Information to Analyze Monetary Policy in Transition Economies

Empirical macroeconomics is plagued by small sample size and large idiosyncratic variation. This problem is especially severe in the case of the transition economies. We utilize a mixed-estimation method incorporating prior information from OECD country data to estimate the parameters of a reduced-form transition economy model. An exactly identified structural VAR model is constructed to analyze monetary policy in the transition economies. The OECD information increases the precision of the impulse response functions in the transition economies. The method provides a systematic way to analyze monetary policy in the transition economies where data availability is limited.

Using extraneous information to analyze monetary policy in transition economies

Empirical macroeconomics is plagued by small sample size and large idiosyncratic variation. This problem is especially severe in the case of the transition economies. We utilize a mixed-estimation method incorporating prior information from OECD country data to estimate the parameters of a reduced-form transition economy model. An exactly identified structural VAR model is constructed to analyze monetary policy in the transition economies. The OECD information increases the precision of the impulse response functions in the transition economies. The method provides a systematic way to analyze monetary policy in the transition economies where data availability is limited.

Purchasing Power Parity in Transition Economies: Does It Hold in the Czech Republic, Hungary and Slovenia?

This article assesses the theory of purchasing power parity for the Czech Republic, Hungary and Slovenia in comparison with Austria, Germany, France and Italy, employing data from January 1992 to December 2006. The unit root tests applied fail to prove stationarity of the real exchange rate series. Although cointegration was found among nominal exchange rates and selected consumer price indices, the theory of purchasing power parity could not be confirmed for any of the three advanced transition countries. Following the literature on price movements and macroeconomic policies in transition economies, we list some arguments that substantiate our findings.

Services policies in transition economies: on the EU and WTO as commitment mechanisms

We analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms. GATS commitments are compared with the evolution of actual policy stances over time. While there is substantial variance across transition economies on both actual policies and GATS commitments, we find an inverse relationship between the depth of GATS commitments and the ‘quality’ of actual services policies as assessed by the private sector. In part this can be explained by the fact that the prospect of EU accession makes GATS less relevant as a commitment device for a subset of transition economies. However, for many of the non-EU accession candidates the WTO seems to be a weak commitment device. One explanation is that the small size of the markets concerned generates weak external enforcement incentives. Our findings suggest greater collective investment by WTO members in monitoring and transparency is needed to increase the benefits of WTO membership to small countries.

Enhancement of agro-industrial complex competitiveness through it-based information system in transition economies: Case for Ukraine

An issue of information system creating for agrarian sector and food-processing industry of Ukraine is considered in the paper. Essential failure of present agrarian policy of Ukraine is its orientation mostly on subsidizing of agro-producers. The majority of these producers are noncompetitive because of high transactional cost that is connected with their weak knowledge of a number of questions, beginning from the modern technologies up to information about the current market conjuncture. At the same time the government does not give enough support of the infrastructure development for agro-industrial complex (AIC), especially information one due to shortage of finance. The state support of the providing information services for the AIC subjects under market mechanisms is the key factor of effective agricultural policy in transition economies. The creation of efficient information system for AIC based on modern IT requires elaboration of special educational and training programs, especially for rural areas of Ukraine as well as industrial settlements where industry enterprises closure forces people to cultivate their own plots of land. In the paper basics of information system for AIC configuration is recommended and the main steps of its implementation in Ukraine are considered.

Impact of Currency Boards on Fiscal Policy in Central and Eastern European Countries

The paper focuses on the impact of currency boards on fiscal policy in transition economies. Starting with an overview of theoretical and empirical studies in the related area, it tests for the interaction between monetary policy regimes and fiscal policy in Central and Eastern European countries who aim for the membership in the European Union. The theoretical background of this study lies in the model of Tornell and Velasco (1998). They demonstrate that fiscal transfers do not ultimately depend on the chosen exchange rate and monetary policy, but only on the world's real rate of interest and the rate of time preference of the fiscal authority. A sample of 10 accession candidates constitutes a group of countries which go through similar macroeconomic stabilisation processes but have chosen different nominal anchors. The paper investigates whether there are any systematic differences between those countries with a currency board arrangement and those without. The empirical evidence suggests that currency boards enhance fiscal discipline in Central and Eastern European countries.

Wage and price control policies in transition economies

This paper studies the structural impact of wage and price control policies in transition economies using a two-sector three-factor small open economy model. It illustrates the results quantitatively via simulation exercises. At the earlier stage of the transition when labor is immobile, a strict control on the price of the nontradables and the wage rate minimizes the fall in employment and output. Also, a more severe control on the price of the nontradables than on the wage rate alleviates the fall in the real wage at negligible costs in lost employment and output. At the later stage of the transition when labor becomes mobile, the liberalization of the price of the nontradables can proceed faster than that of the wage rate. This policy combination increases employment and output and reduces the shortage for the nontradables, but lowers the real wage.

Environmental Policy in Transition Economies: Will Pollution Charges Work?

Many economists and analysts claim that extended use of pollution charges in environmental policy will have substantial efficiency advantages in transition economies. This article challenges this view and argues instead that the proposed policy presumes the existence of an already-functioning institutional framework. By focusing on the Russian case, the article discusses a number of reasons why it is difficult to implement pollution charges in an economic system in which Communist behavioral patterns and jurisdictions are still prevalent. The article identifies a number of institutional obstacles related both to enterprise behavior and to environmental regulation and enforcement. These obstacles suggest that it is appropriate to view environmental problems in transition economies primarily as the results of institutional inertia in the economic and political systems. The article ends by discussing alternative ways of controlling pollution in Russia and stresses the importance of improving the legitimacy and basic trust for environmental legislation.

Book Review: Economics for Environmental Policy in Transition Economies: An Analysis of the Hungarian Experience

Book Review: Economics for Environmental Policy in Transition Economies: An Analysis of the Hungarian Experience