New firms entry, labor reallocation, and institutions in transition economies

In the transition from central planning to a market economy in the 1990s, governments focused on privatizing or closing state enterprises, reforming labor markets, compensating laid-off workers, and fostering job creation through new private firms. After privatization, the focus shifted to creating a level playing field in the product market by protecting property rights, enforcing the rule of law, and implementing transparent start-up regulations. A fair, competitive environment with transparent rules supports long-term economic growth and employment creation through the reallocation of jobs in favor of new private firms

Optimal speed of transition with a shrinking labour force and under uncertainty

In the 1990s – during the restructuring of large state enterprises – Central European economies experienced high unemployment. Social policy expenditures, particularly targeted to the non-employed, grew faster than expected due to the need to finance the out-of-the-labour categories. In 1992, after the Passive Labour Market Policies’ reforms, the pace of transition decelerated. Unemployment dynamics, speed of transition and non-employment policies are modelled based on the assumption that the labour force is shrinking over time. Dismissed workers have the opportunity to choose an outside-option alternative to labour force participation. Individual uncertainty is assumed in a first phase of transition, while aggregate uncertainty – generating opposition to restructuring – is modelled in a second phase. The model predicts a slowdown in the speed of transition

The Impact of Foreign Direct investment on Economic Performance in the Enlarged Europe

Foreign direct investment (FDI) inflows in 2011 increased in all major economic groups, developed, developing and transition economies (UNCTAD, 2012). Developing countries accounted for 45 per cent of global FDI inflows in 2011, of which East and South-East Asia accounted for almost half. Inflows to the transition economies of south-east Europe, the Commonwealth of Independent States (CIS) and Georgia accounted for 6 per cent. In fact, the overall increase was driven by East, South-East Asia and Latin America. In 2011 FDI outflows to developed countries also grew strongly, reaching $748 billion, up 21 per cent from 2010. FDI flows to Europe increased by 19 per cent, mainly owing to large cross-border mergers and acquisitions (M&As) by foreign multinational corporations (MNCs)

Institutional Determinants of New Firm Entry in Russia: a Crossregional Analysis

We analyse a micro-panel data set to investigate the effect of regional institutional environment and economic factors on Russian new firm entry rates across time, industries and regions. The paper builds on novel databases and exploits inter-regional variation in a large number of institutional variables. We find entry rates across industries in Russia are not especially low by international standards and are correlated with entry rates in developed market economies, as well as with institutional environment and firm size. Furthermore, industries that, for scale or technological reasons, are characterised by higher entry rates experience lower entry within regions affected subject to political change. A higher level of democracy enhances entry rates for small sized firms but reduces them for medium or large ones

The Two Disjointed Faces of R&D and the Productivity Gap in Europe

This paper explores the determinants of productivity gaps within the European Union in computing, chemicals, basic metals and food manufacturing – four sectors that vary in terms of the intensity of sectoral R&D. Our analysis reveals that the main causes of these productivity gaps are intensity of unembodied or disembodied R&D activity and R&D embodied in purchased equipment and machinery, and their interplay. While disembodied and embodied R&D are both associated positively to closing productivity gaps, the interaction between the two does not have the same effect. There is no complementarity between these technology acquisition modes, despite both disembodied and embodied technology are crucial for productivity catch up. In a policy context, this suggests possible lack of coordination between R&D policy and technology transfer (that is, foreign direct investment, trade and industrial policy). We show, also, that the productivity gap between ‘peripheral’ (southern and eastern) and ‘north’ EU countries is widening

Capital Flows to Converging European Economies: Crises, Reforms and Foreign Direct Investment

This paper examines the determinants of foreign private capital inflows in Europe. Using the Hausman-Taylor panel estimator and data for the 27 European Union members, yearly since 1990, it compares determinants of capital flows into old (EU15) vis-à-vis new Member States (NMS). In addition to standard factors (infrastructure, institutions, etc.), it focuses on the relative roles of economic crises and structural reforms. Three main conclusions emerge: (1) since 1990, NMS have received more inflows than the EU15, of which mostly is FDI, but the variance of these inflows is larger (until 2007) in NMS than in the EU15, (2) infrastructure, market size and institutions affect inflows to both EU15 and NMS, and (3) the negative effects of crises on FDI inflows are significantly stronger in the NMS than in the EU15

Quality of Life and Menopause in Women with Physical Disabilities

Objective: The goal of this cross-sectional study was to explore quality of life (QOL) in a sample of postmenopausal women with physical disabilities due to polio contracted in childhood. A structural equation model was used to confirm that menopause symptoms will have a minimal effect on QOL when disability-related variables are taken into account. Methods: A sample of 752 women who were postmenopausal completed a written survey. The structural equation model contained two measured predictors (age, severity of postpolio sequelae) and one latent predictor (menopause symptoms defined by four measured indicators). Functional status (defined by two measured indicators) was included as a mediator, with QOL (defined by three measured indicators) as the outcome. Results: The original model yielded acceptable fit indices (CFI = 0.96, RMSEA = 0.055) but resulted in a number of unexpected relationships that proved to be artifacts after model respecification. The respecified model yielded a nonsignificant chi-square value, which indicated no significant discrepancy between the proposed model and the observed data (chisquare = 18.5, dƒ = 13, p = 0.138). All fit indices indicated a good fit: CFI = 0.997, NNFI = 0.987, chi-square/dƒ = 1.43, and RMSEA = 0.024. Conclusions: When the effects of postpolio sequelae and functional status are included in the structural equation model, only the psychological symptoms of menopause play a prominent role in explaining QOL in this sample. The clinical implications of these findings suggest that attention to psychological symptoms and an exclusive focus on the physical aspects of menopause to the exclusion of other midlife life stressors and influences on a woman’s psychological well-being ignore the larger context of life in which they live. In particular, many women with disabilities may contend with additional or exacerbated stressors related to their disability.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/63153/1/jwh.2006.15.1014.pd

Resource orchestration in the context of knowledge resources acquisition and divestment. The empirical evidence from the Italian "Serie A" football

We investigate how resource orchestration influences performance within the ‘knowledge resource management’ approach by exploiting a novel database on the Italian Serie A top-professional football league spanning from the 1960-61 up to the 1991-92 season. We find that the acquisition of experience via newcomers has a U-shaped non-monotonic relationship with performance. Furthermore, we find that releasing co-specialized employees has a positive moderating role within the relationship between team experience and performance by suggesting that dismissing old routines positively influences the relationship between current routines and team’s performance

Technology Choices and Growth: Testing New Structural Economics in Transition Economies

We explore the relationship between development policies, finance and growth as approached by New Structural Economics (NSE) (Lin, 2012) with special reference to Transition Economies. On a sample of 164 economies for 1963-2009, our analysis generally confirms NSE’s propositions that the type of development policy, as captured by the Technology Choice Index (TCI), has significant effects on long-term growth. However, this differs for Transition Economies (TE) as a whole, and its sub-groups. Further to this, using a sample of 94 countries for 1985-2009, we provide a first empirical test of the relationship between growth, TCI and financial structure distortions and we show that there is a direct significant negative relationship between financial distortions and TCI on the one hand, and medium-term growth on the other hand. We also find that the negative effect of a higher ratio of TCI on medium-term growth could be partly mitigated, although not fully eliminated, by moderate level of financial sector distortions. This points towards some positive externalities of the complementarities between financial and industrial sector distortions, at least in the medium run. But again, transition economies are shown to differ from the rest of the sample investigated as in their case financial distortions are found to play a more pronounced direct negative effect on medium-term growth

Technology choices and growth: testing and expanding the propositions of new structural economics in transition economies

We explore the relationship between broad development policies, finance and growth as approached by New Structural Economics (NSE) (Lin, 2012) with special reference to transition economies. On a sample of 164 economies for 1963-2004, our analysis has confirmed Lin’s (2012) conclusions that the type of development policy pursued, as captured by the Technology Choice Index (TCI), has significant effects on long term growth. To complement this finding, we demonstrate a time variant effect of TCI on growth whereby TCI is especially relevant prior to the 1990s (more than prior to the 80s). We also show that the effects of TCI on growth differ for low and middle income countries as compared to high income countries. For the former two groups the relationship is negative and positive for high income countries. Further to this, we also show that there is a significant relationship between financial sector distortions and other economic distortions typical of comparative advantage defying strategies as captured by high values of TCI. These results are especially strong for the 34 countries with the highest TCI values in our sample. We also find that a larger deviation in actual financial structure from its estimated optimal ratio further reinforces the negative effect of TCI on growth. Overall our results offer a strong confirmation of NSE’s propositions regarding the relationship between growth and TCI and TCI and financial development, on average and for the most distorted economies. However, the basic propositions of NSE have not been confirmed as a general case for transition economies (TE). Indeed we find that the relationships investigated do not follow the same patterns for TE as a group, and we further identify different patterns for CEEB countries on the one hand and CIS on the other hand. We propose some possible explanations of why these countries might be behaving differently