Transition Economies Research Articles

Tax Capacity and Tax Effort: Evidence From Albanian Economy

The potential tax capacity is very important for assessing the tax space for policy response, especially after the COVID-19 crisis. The main objective of this paper is to study the tax capacity of the Albanian economy, relative to other transition economies with the same patterns of development. We rely on a regression-based approach for the period of 1998-2022 to estimate the potential tax capacity and tax effort. The study found that the structure of the economy, per capita income, openness to foreign trade and corruption are the most consistent explanatory variables of the potential tax capacity. The study also found that tax effort is below one for the Albanian economy, and tax-to-GDP collections are below the average level of the transition economies. We conclude that the country should continue improving the governance quality and fighting corruption to improve tax collection. The study does not support further increases in the statutory tax rates.

Expanding the Areas of Attraction of Solutions to Singularly Perturbed Equations

The article analyzes the state and development prospects of the transport and logistics system of automobile transport in the Kyrgyz Republic. The authors consider the key features of the functioning of the automobile sector in the context of the country’s transition economy. The work assesses the current state of automobile transportation of goods and passengers, examines the main problems hindering the increase in the efficiency of the transport and logistics system. These include low technical equipment of the vehicle fleet, insufficient development of the logistics infrastructure, imperfection of legal regulation, personnel shortage. The authors propose a set of measures aimed at modernizing and optimizing the functioning of automobile transport in Kyrgyzstan. Among the key areas are the renewal of the vehicle fleet, the development of a network of logistics centers and multimodal transportation, the introduction of information technologies in transportation management, and the improvement of state regulation of the industry. According to the authors, the implementation of the proposed measures will contribute to increasing the competitiveness and customer focus of automobile transport in the Kyrgyz Republic, which in turn will have a positive impact on the development of the national economy.

Addressing endogeneity in the relationship between early entry and performance: The case of foreign market expansion

Addressing endogeneity issues has been identified as a key priority for ensuring continued progress in the field of strategic management. We contribute to this research agenda by developing a generalized method of moments (GMM) estimation approach that accounts for endogeneity in dynamic models. To illustrate how endogeneity bias impedes reliable interpretation, we examine the relationship between early mover strategies and performance using data on multinational enterprises entering transition economies. Our empirical results demonstrate that early mover advantages are significantly greater after controlling for endogeneity. Additionally, we find evidence that the level of institutional development weakens the advantages of pursuing an early mover strategy in transition economies. After accounting for endogeneity, the negative moderating effect of institutional development is far more pronounced. The magnitude of these two biases underscore the necessity for scholars to adequately address endogeneity and how GMM estimation can facilitate in better understanding the performance implications of strategic choices.

Retooling the regulation of net-zero subsidies: lessons from the US Inflation Reduction Act

Abstract The US Inflation Reduction Act (IRA) has heralded the advent of a new era of industrial policy within and beyond the USA. As the net-zero economy transition unfolds and national economic security paradigms entrench, industrial policy is here to stay. Net-zero subsidies are employed as multipurpose policy tools to promote domestic manufacturing, de-risk from China, and boost the net-zero transition. This new scenario prompts a fresh look at old questions surrounding environmental subsidies and their justification, actionability, and countervailability. This article makes three contributions. First, it articulates a conceptual framework to assess questions surrounding the justification of net-zero subsidies. It advocates a direct focus on their environmental effectiveness, drawing a distinction between justifiable trade-distorting effects and unjustifiable protective or discriminatory application associated with the pursuit of reshoring or geopolitical goals. Second, it employs a careful analysis of different IRA tax credits to operationalize the article’s framework and test its robustness. Third, it draws on legal and economic insights to shed some light on the environmental effects of different groups of net-zero subsidies. On these grounds, it advances a streamlined three-fold categorization and demarcates the boundaries within which different subsidies should be justifiable, non-actionable and non-countervailable.

Analyzing developmental strategies and the role of ICT in underdeveloped economies: implications for North Korea

We analyze developmental strategies in various sectors in countries with underdeveloped economies and their implications for North Korea. We investigate the development plans of four underdeveloped transitional economies during the 1990s using the World Bank’s engagement reports. We find an emphasis on energy, transportation, and agriculture in those countries, while development strategies in North Korea focused on ICT in addition to energy, transportation, and agriculture during the same period. Statistical regression analysis reveals that ICT has the greatest potential impact on economic growth. Historically, domestic and external constraints have limited the performance of North Korea’s ICT policy. However, we recommend that ICT should have high priority in North Korea’s strategic development plan for the following reasons: the socio-economic environment is changing; ICT service trade across borders has been increasing; the population is aging; and our analysis identifies disruptive

Energy transition for sustainable economy: What is the role of government governance and public concern?

The global imperative for sustainable development necessitates a deeper understanding of the factors driving energy transitions. This study examines how government environmental governance and public environmental awareness influence China's shift towards sustainable energy practices. Utilizing a comprehensive dataset from Chinese prefecture-level cities, we analyze the impacts of governmental environmental governance and public concern on energy transition intensity across regions. Our findings reveal that both proactive government investment and heightened public awareness significantly contribute to advancing energy transitions, with notable regional variations. The analysis uncovers complex relationships between local economic conditions, societal engagement, and transition progress, highlighting the need for tailored strategies. These insights contribute to the sustainable development discourse by elucidating the synergistic effects of governance and public engagement in driving energy transitions. Our research offers valuable policy implications for fostering sustainable energy futures, emphasizing the importance of coordinated efforts between governmental structures and public sentiment in achieving meaningful environmental progress.

Economic Diversification, Oil Revenue and Energy Transition in Oil Dependent Countries: A Wavelet Decomposition and Panel Data Approach

In oil-dependent countries, the energy transition process is ongoing and it appeals substantial and necessary adjustments in terms of diversification. We attempt to provide a systematic analysis of the connectedness between energy transition, oil revenue and economic diversification using novel econometric approach, wavelet decomposition and panel data estimation. Our attention will be focused on the dynamics and causal relationships between energy transition process and economic diversification by checking the role of oil revenue. We use second generation unit roots, and a particular attention is given to cross-sectional dependence of the series. Results show that correlations between wavelet components are absent in the short term, weak in the medium term, and moderate in the long-run. Causality tests support a bidirectional causality between economic diversification and energy transition and between economic diversification and net oil revenue, in the medium and long-run scale levels. Our results would have several prominent implications for policy makers, in oil-dependent countries, when designing energy transitions and economic diversifications strategies, and gives and insightful look about the future of these countries.

Unlocking Workplace Dynamo: The Impact of Internal Trust and Communication on Igniting Work Engagement

Research Question: This study delves into the intricate relationships among internal communication, internal trust, and work engagement within the context of a developing business environment undergoing cultural and economic transition. Motivation: The fundamental research inquiries seek to ascertain the interconnections between the studied phenomena and elucidate the nature of these relationships. Work engagement, identified through previous research and contemporary business practices, emerges as a pivotal force with profound implications for motivation, management, and personal development within organizations. Idea: The introduction sets the stage by emphasizing the study's focus on relationships in a transitioning business environment. Subsequent sections meticulously articulate research objectives, explore the existing literature, pose research questions, and delineate the chosen methodology, elucidating the importance of standardized instruments and the rationale behind the selection of the Serbian organizational context. Results are presented with a focus on the identified correlations, leading to the formulation of two models. The subsequent discussion critically compares these models, offering insights into the implications of trust-determined communication on work engagement. Limitations are candidly acknowledged, underscoring the need for interpretative caution. Data: The research methodology predominantly employs a quantitative approach to unravel the complexities inherent in internal communication, internal trust, and work engagement. The study encompasses a substantial sample size, consisting of 708 respondents representing 16 working organizations in Serbia. Tools: To gauge these phenomena, standardized instruments such as Internal Trust, a shortened version of the Utrecht Work Engagement Scale, and the Internal Communication Scale were employed. The anticipated results unveil robust correlations among the elements under scrutiny. Findings: The findings culminate in the proposition of two models, with structural equation modelling revealing a model where trust determines communication, subsequently influencing work engagement as the more fitting representation. This model presents a nuanced understanding of the intricate dynamics within organizational frameworks. Contribution: Despite acknowledging certain limitations in the study, the research underscores its importance in the quest for the most influential factors contributing to work engagement in organizations. The research serves as a valuable contribution to the broader discourse on organizational behaviuor, shedding light on crucial factors that influence employee engagement in evolving business landscapes.

Can institutional opening-up promote green development in cities? Evidence from China's Pilot Free Trade Zones

As a testing ground for China's institutional opening-up, Pilot Free Trade Zones (PFTZs) are of great significance in shaping a new global economic governance framework, addressing pollution and carbon reduction challenges, and fostering green economic development and transition. This study empirically assesses the influence of PFTZs establishment on urban green development (GD) using panel data from 284 Chinese cities between 2007 and 2020, using the asymptotic Difference in Differences (DID) method. The results indicate that the creation of PFTZs greatly encourages cities to develop green sustainably. In comparison to cities without PFTZs, the presence of PFTZs results in a notable average increase of 9.5% in urban green total factor productivity (GTFP). The impact of PFTZs on urban GD varies significantly across different geographical areas and city resource endowment conditions. Institutional innovation has a positive moderating effect on the PFTZs' promotion of urban GD. The influence mechanisms that PFTZs support urban GD mainly include the effects of green innovation, economic agglomeration, and environmental regulation. This paper provides crucial policy insights for advancing PFTZ construction, promoting urban green growth, and ultimately achieving the coexistence of human beings and nature in harmony.

Sports Facility Development and Politics in Budapest since 1945

The interaction between sports and politics has extensively contributed to shaping the sports system, which is evident in the creation of sports facilities and institutions in Hungary. The legal framework of sports organizations, potential of elite and grassroots athletes, incorporation of Hungarian sports into the international sports structure, and public financial funding of physical activity have been dependent on the dominant political powers and existing international diplomatic relationships. The history of sports facility development in Budapest and the role of capital in organising international sporting events faced new political challenges after World War II. During the socialist era, the main role of sports was to prove the excellence of the socialist system; therefore, political leadership provided funds to create a suitable environment for top athletes to train and compete. After the political and economic transition of 1989–1990, sports encountered the challenges of an unfamiliar market economy. After a decade of adaptation, from the beginning of the twenty-first century, sports assumed a new strategic role in creating a healthier society, which included significant investments in Budapest’s sports infrastructure.

Complex nexus: Economic development, rural-to-urban migration, and transition to adulthood in China

Transition to adulthood in low- and middle-come countries (LMIC) has increasingly been diversified and individualized. Economic development and migration are often cited as reasons for diversification but have been analytically examined interactively. To examine the complex linkages between development, migration, and transition to adulthood, we use China data to cover a decade when it has experienced rapid economic development, a large flow of rural-to-urban migration, and changes in the transition to adulthood. Applying the latent class analysis and multinomial logistic regression on the Chinese General Social Survey 2008 and 2017, we obtain three main findings. First, economic development increases the diversification of the transition to adulthood. Second, rural-to-urban migration has a greater impact on the postponement than on other pathways. Third, the joint impact of economic development and migration is not evident: the change do not differ between men and women as well as young adults of different migration experience. These findings collectively imply signs of the diversification of transition to adulthood in China, but also entail the individualization behind it.

Supply chain transformative capabilities and their microfoundations for circular economy transition: A qualitative study in Made in Italy sectors

AbstractIn today's rapidly evolving landscape, supply chains must develop specific dynamic capabilities for initiating and successfully governing their transformations toward new configurations to withstand pressures arising from competitions and global changes. Differently from dynamic capabilities that enable adaptation, supply chain transformative capabilities include four core dimensions: triggering, envisioning, navigating, and stabilizing capabilities. By using a multiple‐case study approach involving six Italian companies related to fashion and furniture sectors, we investigate these concepts and identify the microfoundations of supply chain transformative capabilities for circularity. They are classified with reference to individuals, processes, and structures. Our findings illustrate how supply chains can facilitate and effectively govern their circular transformation by developing the transformative capabilities and their microfoundations. This paper provides valuable theoretical insights and managerial perspectives, advancing the concept of transformative supply chain management.

New climate dis-economies: The political economy of energy transitions in fragile fossil fuel producers

A global energy transition from carbon-based fuels to renewable energy will have major political and economic ramifications around the world, especially for fragile fossil fuel-producing states, but these impacts are not yet well understood let alone prepared for. In many fragile fossil fuel-producing countries, an energy transition is not simply a transformation of the energy sector, but also a fundamental challenge to the political economy of the state and the way politics is practiced. This challenge is likely to be destabilizing, politically fraught, and perhaps even violent, yet the “new climate economy” literature does not fully consider the implications of what the loss of these revenues will mean, and the solutions offered do not speak to the realities of how these states operate. This article examines the different risks and opportunities of an energy transition for these states and outlines a research agenda to better understand and prepare for these outcomes.

Are the corporate voluntary disclosures and transparency in the transitional economy better than the pre-transitional economy? Evidence from developing country

The study’s goal is to explore the role of corporate voluntary disclosure and transparency as a strategic tool rather than corporate reporting techniques. This empirical study employs a comparative approach to identify the variations in corporate voluntary disclosure in the pre-transitional and transitional stages of a developing country. A paired sample of 307 annual reports of the Dhaka Stock Exchange (DSE) listed companies is considered to explore their reporting practices between the pre-transitional and transitional stages. Lately, a paired t-test has been conducted to examine whether corporate voluntary disclosure significantly differs between the pre-transitional economy and transitional economy. It is found that the corporate people disclose more information in the transitional phase of the emerging economy rather than the pre-transitional phase. The findings of the study will assist emerging countries in designing their corporate strategies to achieve the Sustainable Development Goal (SDG). The study suggests that using voluntary disclosure as a strategic tool can help retain and attract both existing and prospective investors. This study also helps the regulatory body shape its macro-level corporate strategy to successfully graduate from the LDC to the developing economy. Moreover, this study will assist the transitional economy to transform from an aid-based economy to a trade-based economy.

The interconnectedness of energy consumption with economic growth: A granger causality analysis

In considering today's energy challenges, the link between the usage of renewable and non-renewable energy sources and economic growth has gained substantial policy attention. This research examines the complex relationship between these three variables to understand how non-renewable energy consumption and renewable energy consumption interact and what that means for economic growth. This study uses the Granger causality approach to explore the relationships between non-renewable energy consumption, renewable energy consumption, and economic development. It draws on a comprehensive dataset from the Word Bank database, including 152 nations from 1990 to 2019. The analysis is further disaggregated by four subgroups of countries; least developed, developed, transitional economies and developing countries. The result of this study provides valuable empirical evidence of uni-directional causality running from renewable energy consumption to economic growth and non-renewable energy consumption to economic growth in transitional economies. Furthermore, policymakers should focus on both variables when making decisions because the results show that energy consumption and economic growth are interconnected. Implementing global energy efficiency standards, reducing fossil fuel usage, and adopting regulatory measures are all viable policies for limiting adverse effects on the environment while encouraging economic development.

Wild edible plants of the Yao people in Jianghua, China: plant-associated traditional knowledge and practice vital for food security and ecosystem service

BackgroundTraditional ecological knowledge (TEK) and practice associated with wild edible plants (WEPs) is an important part of local culture of the Yao people in Jianghua Yao Autonomous County, which possesses the biggest population of Yao ethnic group in China. Economic development, urbanization, and transition of lifestyle and changing interests of the younger generations risk loss of such valuable knowledge. However, no record had been reported about WEPs from the Yao communities of Jianghua County. It is urgent to assemble data on the major WEPs and their uses in Jianghua. This can be used to educate and stimulate new interest in these WEPs, to aid inheritance and improvement of cultural identity and confidence, to enhance local resilience to various changes and to suggest pathways for novel and value-added applications to create new local business opportunities.MethodsTo record WEPs associated with TEK and practice, we conducted field surveys in 2018, 2019 and 2023. The ethnobotanical methods such as free-listing, participatory observation, semi-structured interview, and market survey were adopted in the field investigations. Information about WEPs including vernacular names, parts used, ways of use, and collection time were recorded. Voucher specimens were collected, identified, and deposited in the herbarium at Minzu University of China, in Beijing.ResultsTotally, 81 Yao people from 12 villages were interviewed. WEPs traditionally play a crucial role in Yao peoples’ daily lives. A total of 130 plant species from 89 genera and 49 families were recorded. The plants collected showed great diversity and reflected unique local culture. Most (54.5%) WEPs were also used as medicines. Baba can be defined as a cultural identity food, and WEPs are commonly used as tea substitutes for their health benefits.ConclusionsWe conclude that WEPs use is facing great challenges in a rapidly changing era. Preservation of WEPs related practice and knowledge is not only important for conserving local biocultural diversity, but also valuable in providing potential functional and healthy materials for food security and future economic development. Cultivation of young generations’ interest in nature and biodiversity, combined with local policy to enhance public awareness are recommended.

The environment for a digitally enabled circular plastics economy in Africa: lessons from cross-sectional stakeholder engagements

PurposeThis paper aims to provide insights into the environment needed for advancing a digitally enabled circular plastic economy in Africa. It explores important technical and social paradigms for the transition.Design/methodology/approachThis study adopted an interpretivist paradigm, drawing on thematic analysis on qualitative data from an inter-sectoral engagement with 69 circular economy stakeholders across the continent.FindingsThe results shows that, while substantial progress has been made with regard to the development and deployment of niche innovations in Africa, the overall progress of circular plastic economy is slowed due to relatively minimal changes at the regime levels as well as pressures from the exogenous landscape. The study highlights that regime changes are crucial for disrupting the entrenched linear plastic economy in developing countries, which is supported by significant sunk investment and corporate state capture.Research limitations/implicationsThe main limitation of this study is with the sample as it uses data collected from five countries. Therefore, while it offers a panoramic view of multi-level synergy of actors and sectors across African countries, it is limited in its scope and ability to illuminate country-specific nuances and peculiarities.Practical implicationsThe study underlines the importance of policy innovations and regulatory changes in order for technologies to have a meaningful contribution to the transition to a circular plastic economy.Originality/valueThe study makes an important theoretical contribution by using empirical evidence from various African regions to articulate the critical importance of the regime dimension in accelerating the circular economy transition in general, and the circular plastic economy in particular, in Africa.

Does board gender diversity affect bank financial stability? Evidence from a transitional economy

Does board gender diversity affect bank financial stability? Evidence from a transitional economy

Impact of climate policy uncertainty on corporate green investment: examining the moderating role of financing constraints

Corporate green investment is the key driver for achieving low-carbon transition and sustainable marine economy. Existing literature has identified several influencing factors of corporate green investment, but there is still limited research on the relationship between climate policy uncertainty and corporate green investment. To fill this gap, this paper innovatively explores the nonlinear impact of climate policy uncertainty on corporate green investment, simultaneously focuses on the moderating role of corporate financing constraints and analyzes the coastal characteristic heterogeneity. Using the sample of listed companies in China from 2014-2020, we find that climate policy uncertainty has an inverted U-shaped impact on corporate green investment. From the perspective of heterogeneity, the inverted U-shaped effect is more significant in coastal areas. Moderating effect test indicates that corporate financing constraints strengthen the inverted U-shaped relationship and shift the turning point of curve to the left. Additionally, we further find that climate policy uncertainty has an inverted U-shaped impact on environmental performance of companies in coastal areas through green investment. Our research will provide some potential insights for China’s climate policy making and corporate green transformation, so as to contribute to sustainable marine development.

Mitigating economic losses and prospects for the development of the energy sector in the Republic of Kosovo

The purpose of the study was to analyse the current economic problems in the energy sector of Kosovo and to develop effective strategies to overcome them, in particular ways to minimise losses and increase the stability of the energy system, as well as to study opportunities for ensuring the country’s long-term development and energy security. The main focus was on the economic impact of implementing international energy standards, particularly European ones, within Kosovo’s national policy and development strategy. The analysis emphasised the financial benefits and challenges associated with aligning the country’s energy sector with EU directives, especially those related to renewable energy sources and energy efficiency. Key areas of the study included the economic potential of enhancing energy security, promoting renewable energy development, and reducing reliance on fossil fuels. Additionally, the study evaluated the economic implications of these reforms on Kosovo’s energy market and overall economic growth trajectory. The study also included an economic analysis that assessed possible economic losses associated with the transition to renewable energy sources. Risks were considered, including job losses in traditional energy sectors such as coal and the significant financial costs required to upgrade infrastructure. However, the study found that the long-term benefits of a green energy transition, including increased energy security, reduced dependence on energy imports and improved environmental conditions, outweigh the short-term economic costs. The results showed that although the economic transition is accompanied by significant financial costs, the long-term benefits, such as increased energy security and reduced emissions, are substantial. The study highlights the importance of further reforms and investments to ensure the sustainable development of Kosovo’s energy sector, as well as the country’s integration into the European energy environment