Facilitating trade in intermediate goods: case of EU

A side effect of economic globalisation and new information and communication technologies is the increasing fragmentation of the production process across different countries and continents, contributing to the rise of trade in intermediate goods, which has increased to almost 2/3 of total world trade. Most of this trade, i.e., intermediate goods, are transported by sea. Maritime trade is one of the most economical but also complex ways of trading and transporting goods, requiring good coordination, various stops and controls, transhipments, storage, ICT technology to track the cargo, etc. Therefore, the objective of this paper is to quantify the impact of trade facilitation on trade in intermediate goods on the sample of EU28 countries, using biennial data for the period 2010-2018. We estimate augmented gravity model on bilateral trade data using a Poisson Pseudo Maximum Likelihood (PPML) estimator. Our results suggest that, as expected, logistics, and in particular ICT development, has a significant and positive effect on trade in intermediate inputs, when controlling for other variables in the gravity model such as GDP of trading partners, distance, contiguity, existence of a free trade agreement, exchange rate, and common cultural proxies. Our results support the global trend of development and investment in logistics, and, in particular, new ICT technologies, which can not only contribute to the continued growth of trade in intermediates, but also help mitigate the negative effects of recent global economic shocks

MACROECONOMIC DETERMINANTS OF WINE PRODUCTION IN THE EUROPEAN UNION

This paper focuses on the determinants of wine production in the European wine industry. In the last two decades, the European wine industry has undergone many changes due to the entry of new countries into the world wine market. Although increasing competitiveness became the priority of the European Common Agricultural Policy, wine production and consumption in the EU have decreased in the last two decades, and therefore the aim of this research is to analyse and identify the macroeconomic determinants of wine production, i.e. what factors besides the price influence wine production in selected EU countries and in how they can be controlled. Empirical research was conducted using data for EU member states traditionally engaged in wine production. Panel data on wine production, wine consumption, average wine price, wine imports, wine exports and EU support to the wine sector were collected from secondary sources for 15 wine-producing EU countries and for the period 2009-2018. We estimated the econometric model using pooled OLS, as diagnostic tests indicated that this estimator was the best fit for our data. Our results suggest that domestic demand and domestic (EU) subsidies are the main drivers of wine production. To keep up with New World wine producers, even more emphasis should be placed on promoting the wine drinking culture

EUROPSKA UNIJA I NJENE REGIJE – PERSPEKTIVE RAZVOJA DUBROVAČKO-NERETVANSKE ŽUPANIJE

Izgradnja Europske unije odvija se tijekom razdoblja duže od šest desetljeća. To je dinamičan proces koji je satkan od snažnih centripetalnih i centrifugalnih silnica. EU je laboratorij u kojem se sukobljavaju nadnacionalni, nacionalni i regionalni (i lokalni) interesi. Proces integriranja njenih zemalja članica, započet zonom slobodne trgovine, nastavljen carinskom unijom i zajedničkim tržištem, nalazi se u stadiju tzv. Unutarnjeg tržišta, koje je rezultat kompleksnog procesa u kojemu su, uz liberalizaciju kretanja proizvodnih čimbenika, snažno mjesto zauzele i regije kao nukleus razvoja i opstanka EU-a. Kako su regionalna i socijalna politika okosnica održivosti Europske unije, pri čemu se procesom konvergencije stvaraju pretpostavke ekonomske, socijalne i teritorijalne kohezije, dakle ravnomjernijeg razvoja Unije, u ovom se radu istražuje pozicija regija NUTS III razine u kontekstu ostvarivanja ciljeva regionalne i socijalne politike EU-a. Kao novoj članici Unije, koja se ujedno svrstava u njezina slabije razvijena područja, Hrvatskoj se nameće potreba kvalitetnoga i pravovremenog integriranja u kohezivne procese kako bi iskoristila prednosti članstva i osigurala preduvjete za održivi razvoj, posebno svojih županija, nositelja regionalnog razvoja Hrvatske. Dubrovačku-neretvansku županiju, klasificiranu u NUTS III razinu, treba promatrati s više aspekata, i to kao: (1) rubnu, (2) izoliranu, (3) pograničnu, (4) otočnu, (5) ruralnu regiju. Te posebnosti dodatni su izazov u regionalnom i održivom razvoju, što u kontekstu europske integracije znatno utječe na okvire ekonomske, socijalne i teritorijalne kohezije. U radu se analiziraju apsorpcijski kapaciteti Dubrovačko-neretvanske županije temeljem, pregleda sekundarnih statističkih izvora, te se pri tome koristilo podacima o apsorpciji sredstava iz pretpristupnih fondova. Također se pruža uvid u potencijalne prilike koje bi Županija, uz pomoć strukturnih fondova EU-a, mogla iskoristiti za svoj gospodarski rast i razvoj

Economics or History: Preferences of Croatian Voters in the 2016 Parliamentary Elections

Cilj je ovog rada istražiti determinante izbornih pobjednika u Republici Hrvatskoj. Temeljna hipoteza rada jest da u Republici Hrvatskoj događaji iz 1990-ih godina, odnosno Domovinski rat, imaju snažniji utjecaj na pobjednike parlamentarnih izbora u odnosu na gospodarske performanse jedinica lokalne samouprave (JLS). Zbog raspoloživosti podataka usredotočujemo se na parlamentarne izbore održane 2016. godine te procjenjujemo pobjedu dviju vodećih stranaka u Republici Hrvatskoj – Hrvatske demokratske zajednice (HDZ) i Socijaldemokratske partije (SDP) – na razini jedinica lokalne samouprave (JLS). U radu razvijamo model logističke regresije s varijablom "pobjednik izbora" na razini JLS-a kao zavisnom varijablom, koju objašnjavaju sljedeće varijable: gospodarska razvijenost JLS-a, Domovinskim ratom obuhvaćene JLS, transparentnost proračuna JLS-a, izlaznost na izborima te financijska pomoć JLS-a iz državnoga proračuna. Rezultati pokazuju da određena općeprihvaćena mišljenja, poput onoga da glasači u gospodarski razvijenijim JLS-ima u prosjeku više glasaju za SDP, da u ratom pogođenim JLS-ima glasači u prosjeku više glasaju za HDZ, imaju empirijsku potvrdu.The aim of this paper is to investigate the determinants of election victory in the Republic of Croatia. The main hypothesis of the paper is that in the Republic of Croatia the events of the 1990s, i.e., the Homeland War, had a stronger impact on the winners of the parliamentary elections in terms of the economic performance of the local self-government units (LSGs). Due to the availability of data, we focus on the 2016 parliamentary elections, and we model the victory of the two leading parties in Croatia – the Croatian Democratic Union (HDZ) and the Social Democratic Party (SDP) – at the level of LSG. We develop a logistic regression model with the variable "election victory" at the LSG level as a dependent variable explained by the following variables: economic development at the LSG level, Homeland War covered LSGs, transparency of LSG budgets, election turnout, and government budget support to the LSGs. The results show that certain commonly accepted opinions, such as that voters in more economically developed LSGs vote more for the SDP on average, and that voters in war-affected LSGs vote more for the HDZ on average, have empirical confirmation

Insight into students’ perception of teaching: Case of economic higher education institution

The aim of this paper is to analyse students’ perceptions of teaching from three different perspectives: students’ interest, teacher and course assessment. We use ordinal logistic model to quantify the effects of grade, pass rate and class size on results of evaluation of undergraduate and graduate courses held during the summer and winter semesters in the academic year 2016/2017. The data were collected using a standardised online questionnaire. Research results indicate that on the observed economic HEI, both teacher and course assessment is positively and significantly affected by student’s achieved grade, and by class size. Moreover, we find large and significant difference between students’ interest in study programmes delivered in Croatian and those delivered in English. Students enrolled in English study programme value pass rate over grade, as opposed to students enrolled in Croatian study programme. We attribute this to the different motivation of students, that is, students enrolled in English programme are more prone to participation in student mobility programmes

CREDIT RATING AGENCIES AND THEIR IMPACT ON SPREADING THE FINANCIAL CRISIS ON THE EUROZONE

Credit rating agencies are an important part of the globalized financial system and thus influence the global economy. Their role is to assess the level of credit worthiness of debt issuers for potential investors in private and public sector. Yet, after every financial crisis and/or defaults of particular companies and sovereigns, the credit rating agencies become the focal point of criticism by economists, politicians, media, etc. The reason for this lies in the inability of the credit rating agencies to do the job they are supposed to do i.e. risk signaling. This paper builds on that assessment, while focusing on three biggest credit rating agencies – Standard & Poor’s, Moody’s Investors Service and Fitch Ratings and their influences on spreading the financial crisis on the Eurozone

THE IMPACT OF OWNERSHIP AND CAPITAL STRUCTURE ON THE FLUCTUATION OF AGENCY COSTS: CASE STUDY OF LOW CONCENTRATED OWNERSHIP COMPANIES OF THE REPUBLIC OF CROATIA

Matematički model izračuna agencijskih troškova postavljen u radu potvrdio je postavke agencijske teorije o utjecaju vlasničke strukture na zaduživanje te negativnoj korelaciji između financijske poluge i agencijskih troškova. Model je razvijen na uzorku skupine poduzeća Velike Britanije te, unatoč njegovim nedostatcima, od kojih je najočitiji stavljanje u uzorak poduzeća s velikom razlikom u prosječnim agencijskim troškovima, isti je predložak korišten i kod izračuna agencijskih troškova u poduzećima Republike Hrvatske. Zbog istaknutog ograničenja model je u jednom svom dijelu modificiran, a u analizu je uvedena bazna i ciljana skupina poduzeća. Pretpostavka da bazna skupina poduzeća nema agencijskih troškova jer su u vlasništvu malog broja vlasnika trebala je omogućiti procjenu istih kod ciljane skupine poduzeća. Nakon provedenog izračuna izabranih varijabli uključenih u model te ocjene ovisnosti nezavisnih varijabli modela sa zavisnom, potvrđene su hipoteze agencijskih troškova o utjecaju kapitalne strukture na agencijske troškove poduzeća, kao i postojanje agencijskih troškova u poduzećima kod kojih je vlasnička struktura raspršena na više vlasnika i interesnih skupina.The mathematical model of calculating agency costs, as presented in this paper, confirmed the hypothesis of agency theory on the impact of ownership structure on borrowing, and on a negative correlation between financial leverage and agency costs. Model was developed on a sample of companies in Great Britain, and despite its shortcomings out of which the most obvious is including those companies with a large difference in average agency costs, the same template was used to calculate the agency costs in Croatian companies. Because of the noticeable limitation, the model was partly modified, and the basic and target group of companies was introduced in the analysis. The assumption that the base group of companies has no agency costs, because they are owned by a small number of owners, should provide the estimate of the same within the target group. After the calculation of selected variables of the model, and after the dependency evaluation of independent variables of a model with the dependent one, the hypotheses about agency costs on the impact of capital structure on agency costs of companies, as well as the existence of agency costs in companies where the ownership structure is dispersed on multiple owners and interest groups were confirmed

The role of regional economic integrations for trade margins: A case of Croatia

Cilj ovog rada je istražiti razvoj intenzivnih i ekstenzivnih trgovinskih marži na razini proizvod-država za slučaj Hrvatske od 2000. do 2012. godine. Hipoteza istraživanja je da će liberalizacija trgovine, potaknuta sklapanjem regionalnih trgovinskih sporazuma, imati heterogene učinke na različite skupine proizvoda, uz indirektne učinke na nacionalno blagostanje. Koristi se statički i dinamički gravitacijski model koji se primjenjuje na panel podatke koji obuhvaćaju preko 90% ukupne trgovine u promatranom razdoblju. Ocjene gravitacijskog modela pokazuju da, iako su SAA i CEFTA sporazumi imali pozitivne učinke na intenzivne i ekstenzivne trgovinske marže, posebice na izvoz i uvoz potrošačkih proizvoda, učinci na trgovinu intermedijarnim i kapitalnim dobrima su relativno ograničeni. To ukazuje da su navedeni sporazumi imali snažniji učinak na zadovoljenje potreba potrošača, a ne na porast učinkovitosti domaćeg trgovinskog sektora. Pri usporedbi rezultata učinaka sporazuma koristeći dinamički model, jasan je snažniji utjecaj SAA sporazuma na potrošačka dobra, dok su učinci CEFTA sporazuma ujednačeni za sve skupine dobara. Zaključak je da bi se, u srednjem roku, nositelji hrvatske vanjske politike trebali izboriti za preferencijalni status Hrvatske na CEFTA tržištu, uzimajući u obzir njegovu važnost za hrvatsko gospodarstvo.The goal of this investigation is to research the development of intensive and extensive trade margins on product-country level data for Croatia during the period 2000–2012. Hypothesis of our paper is that RTAs-induced trade liberalization will have heterogeneous effects on particular product groups with indirect implications on national welfare. Static and dynamic gravity trade models are used on panel data accounting for over 90% of total trade during the observed period. Estimations of the trade gravity model and trade margins showed that while SAA and CEFTA arrangements positively affected different measures of intensive and extensive trade margins, specially exports and imports of consumption products, effects on trade in intermediate and capital goods were relatively subdued. This suggests a tendency for market-seeking rather than efficiency-seeking behaviour of Croatia’s trade sector. When comparing the results for two trade agreements using dynamic model, we find that SAA primarily affected trade in consumption goods while effects of CEFTA are more evenly dispersed across different product groups. Main conclusion of the paper is that Croatia’s policy makers should try to keep the preferential status of Croatia within the CEFTA market in the medium term, focusing on the Croatian econom

COHESION POLICY INSTRUMENTS AND ECONOMIC GROWTH: DO INSTITUTIONS MATTER?

The EU Cohesion policy is based on a complex system of fiscal transfers, their main goal being to accelerate economic and social cohesion. In this paper, the contributions of the Structural funds and Cohesion fund (SFCF) to economic growth on national level while controlling for the institutional quality are tested. Aim of the paper is show whether institutional quality is a bottleneck for effective usage of SFCF. The analysis is based on the country-level data during 2000-2013 period. In the presented econometric models, we emphasize the importance of the institutional quality on the economic growth. The results show that when Institutional Quality Indicator as a regressor is included together with the size of inflows from SFCF, SFCF inflows have no influence on economic growth. Moreover, we found that neither the institutional quality separately or in interaction with SFCF inflows, is a statistically significant factor for economic growth in the EU-27. The results are signifincantly different when we apply the same methodology on two subsamples, where we distinguish between countries with high and low level of institutional quality index

COHESION POLICY INSTRUMENTS AND ECONOMIC GROWTH: DO INSTITUTIONS MATTER?

The EU Cohesion policy is based on a complex system of fiscal transfers, their main goal being to accelerate economic and social cohesion. In this paper, the contributions of the Structural funds and Cohesion fund (SFCF) to economic growth on national level while controlling for the institutional quality are tested. Aim of the paper is show whether institutional quality is a bottleneck for effective usage of SFCF. The analysis is based on the country-level data during 2000-2013 period. In the presented econometric models, we emphasize the importance of the institutional quality on the economic growth. The results show that when Institutional Quality Indicator as a regressor is included together with the size of inflows from SFCF, SFCF inflows have no influence on economic growth. Moreover, we found that neither the institutional quality separately or in interaction with SFCF inflows, is a statistically significant factor for economic growth in the EU-27. The results are signifincantly different when we apply the same methodology on two subsamples, where we distinguish between countries with high and low level of institutional quality index