Ex ante and ex post institutional convergence: Case of the post-Soviet space

Abstract: The paper discusses the interaction of ex ante and ex post institutional convergence in the post-Soviet world, i.e. 12 members of the Commonwealth of Independent States. It starts with analysing empirical evidence for institutional convergence in the CIS, and then considers two channels of convergence: institutional competition for mobile capital and ex ante harmonization via interaction in political sphere. In both cases the paper points out potential positive and negative features of the processes from the point of view of institutional transformation. The influence of institutional competition is ambiguous, as both factors of “demand for good institutions” and “demand for bad institutions” influence corporate behaviour. The ex ante harmonization is much less influential and seems to be most successful in preserving semi-authoritarian regimes from potential competitors and therefore supports inefficient equilibrium. Finally, the paper focuses on interaction between ex ante and ex post harmonization, i.e. demand for harmonization from businesses and support of institutional competition environment from the governments. For the governments ex post harmonization could be an attractive way to avoid long and costly bargaining: this factor is probably relevant for the current support of business expansion of Russian corporations by Russian government. For the businesses the situation is more difficult: since historically post- Soviet business did not express significant interest in formal integration (associated with ex ante harmonization), the paper discusses three variables (lobbying, changes in market structure and preferences of the demand side) able to influence their decisions.Institutional convergence, institutional competition, regionalization

Gambling Policy in the European Union: Monopolies, Market Access, Economic Rents, and Competitive Pressures among Gaming Sectors in the Member States

This study examines the conflicts within the European Union regarding protected status accorded to legal commercial gaming industries and the principles of harmonization that direct EU economic policy. Member States are permitted to constrain competition for gambling services as long as the primary purpose is to protect citizens from unintended negative consequences associated with the activities. Also, because of monopoly status, high tax rates, or government ownership, many EU gaming industries have become major contributors to government coffers or for funding for “good causes.” Legal challenges by private companies trying to participate in these protected markets have led to decisions by the European Court of Justice that have questioned such protected status. A number of key economic metrics for European gaming industries are presented, and competitive dimensions of EU casino industries are examined in comparisons to trends elsewhere.regulation, gambling, European Union, harmonization

The origin principle and the welfare gains from indirect tax harmonization

The purpose of this paper is to establish a parallelism between the analyses in Keen (1987,1989.a) referred to indirect tax harmonization when taxes are levied according to the destination principle and its counterpart when taxes are imposed on an origin basis. Using a simple two-country model of international trade it is argued that indirect tax harmonization under the origin principle, considered as a movement of domestic taxes towards an appropriately designed "average" tax structure, is potentially Pareto improving, in the sense that the welfare of a given country can be increased provided that the other country's welfare is kept unchanged with the aid of an international transfer. In the same vein, it is shown that if the initial position is a Nash equilibrium, there are situations under which the above-mentioned reform may generate an actual Pareto improvement, so that both countries improve their welfare without any need for a compensating international transfer. As stated above, the definitive system will be a mixed one, so that the pure origin case is not the most realistic framework from a policy point of view. However, it may be useful in yielding indications that, coupled with the results that have been obtained under the destination principle, provide insights on the effects of the definitive system

Regionalism in standards - good or bad for trade?

Regional agreements on standards have been largely ignored by economists and unconditionally blessed by multilateral trade rules. The authors find, theoretically and empirically, that such agreements increase trade between participating countries but not necessarily with the rest of the world. Adopting a common standard in a region-that is, harmonization-boosts exports of excluded industrial countries to the region. But it reduces exports of excluded developing countries, possibly because developing country firms are hurt more by an increase in the stringency of standards and benefit less from economies of scale in integrated markets. Mutual recognition agreements are more uniformly trade promoting unless they contain restrictive rules of origin, in which case intra-regional trade increases at the expense of trade with other, especially developing, countries. The authors propose a modification of international trade rules to strike a better balance between the interests of integrating and excluded countries.Labor Policies,Economic Theory&Research,Trade Policy,Environmental Economics&Policies,Health Economics&Finance,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade and Regional Integration,Economic Theory&Research,Health Economics&Finance

The Political Ecology of Takeovers: Thoughts On Harmonizing the European Corporate Governance Environment

Economic policy debate in the United States during the 1980s focused on the dynamics of bidder and target tactics in hostile takeovers. Confronted with the largest transactions in business history, financial economists took advantage of developments in econometric techniques to conduct virtually real time studies of the impact on firm value of each new bidder tactic and target defense. For courts and lawyers, hostile takeovers subjected standard features of corporate law to the equivalent of a stress x-ray, revealing previously undetected doctrinal cracks. Congress held seemingly endless hearings on the subject, although managing to enact only relatively innocuous tax penalties on particular defensive tactics the public found especially offensive. State legislatures, closer to the political action, acted more substantively, if less wisely. Whether or not takeovers created new wealth they did result in its transfer, and at least one of the parties from whom wealth was transferred – target management – had remarkable influence in state legislatures. When labor also came actively to oppose hostile takeovers, the coalition was virtually unstoppable. The decade saw some thirty-four states pass more than sixty-five major laws restricting corporate takeovers, including states discouraging partial offers and front-end loaded offers. The 1980s have now closed transactionally as well as chronologically. The first quarter of 1991 marked the lowest level of merger and acquisition activity since the first quarter of 1980. The passing of this remarkable decade invites a broader perspective, which can be helpfully thought of as the political ecology of takeovers. An ecological perspective builds on the proposition that phenomena are embedded in interactive systems – a rich web of mutually dependent relationships. Thus, a seemingly independent event cannot be fully evaluated without understanding how it relates to the environmental forces to which it was a response and which, in turn, respond to it. What the narrow focus of the 1980s debate missed was an appreciation of the complex economic corporate governance and political environments in which hostile takeovers are embedded. Corporate acquisitions are a response to real conditions in the economic environment. The choice among acquisition techniques, most importantly between friendly and hostile transactions, depends both upon the economic motivation for the transaction and upon conditions in the corporate governance environment. Finally, conditions in the corporate governance environment are directly influenced by politics; both what is allowed and prohibited is defined, in the first instance, by legislation. My goal in this article is two-fold. I begin by sketching the political ecology of takeovers in the United States – the interaction of economics, corporate governance and politics that shaped the experience of the 1980s. I then make a tentative effort at applying the insights gained from an ecological perspective to the current endeavor to change dramatically the European corporate governance environment through the harmonization of takeover and company law in the European Community. Sheltered by the cloak of political naivete commonly allowed those attempting comparative analysis from a distance, I will argue that an ecological understanding of takeovers suggests a different approach than that reflected so far in the debate over the terms of harmonization. This approach is based on what I term the mutability principle

INTERNATIONAL FINANCIAL REPORTING STANDARD FOR SMALL AND MEDIUM-SIZED ENTITIES- A NEW CHALLENGE FOR THE EUROPEAN UNION

In the context of the global economic crisis, small and medium enterprises are most affected. That is why the problem that arises more frequently is the harmonization of national legislation with the European legislation. The necessity to implement specific standards for SMEs appeared in order to provide them a beneficial framework for better economic and financial market positioning. In this respect, the International Accounting Standards Board issued in 2009 IFRS for SMEs, a referential aiming to the simplification of accounting procedures, reconciliation and increase of confidence of potential investors (stakeholders). The question of compatibility of these standards with the European Accounting Directives appears in situations where they may choose to use IFRS for SMEs. The aim of this paper is to evaluate the incompatibilities between IFRS for SMEs and the European Accounting Directives and to analyze the results concerning the implementation of the IFRS for SMEs in Europe. Through this article we want to contribute to the SME accounting area of knowledge.IFRS for SMEs, compatibility, European Accounting Directives, harmonization, reconciliation, implementation

Partial Harmonization of Corporate Taxes in an Asymmetric Repeated Game Setting

This paper investigates the conditions under which partial harmonization for capital taxation is sustained in a repeated interactions model of tax competition when there are three heterogenous countries with respect to their capital endowments. We show that regardless of the structure of the coalition (i.e., any group of countries), whether partial tax harmonization is sustainable or not crucially depends on the capital endowment of the median country relative to those of the large and small countries. The most noteworthy finding is that the closer the capital endowment of the median country to the average capital endowment of the large and small countries, the less likely is the tax harmonization including the median country to prevail and the more likely is the partial tax harmonization excluding the median country to prevail.tax coordination, asymmetric countries, repeated game, tax competition

Impact of the European Clinical Trials Directive on prospective academic clinical trials associated with BMT

The European Clinical Trials Directive (EU 2001; 2001/20/EC) was introduced to improve the efficiency of commercial and academic clinical trials. Concerns have been raised by interested organizations and institutions regarding the potential for negative impact of the Directive on non-commercial European clinical research. Interested researchers within the European Group for Blood and Marrow Transplantation (EBMT) were surveyed to determine whether researcher experiences confirmed this view. Following a pilot study, an internet-based questionnaire was distributed to individuals in key research positions in the European haemopoietic SCT community. Seventy-one usable questionnaires were returned from participants in different EU member states. The results indicate that the perceived impact of the European Clinical Trials Directive has been negative, at least in the research areas of interest to the EBMT

"Subsidiarity, Federalism and Regulatory Competition: A Political Economy Perspective"

This paper shows different effects implied by the subsidiarity principle as viewed from a rational choice perspective. It is conceived as a survey of ideas and of relevant literature. The article gives an overview of theoretical approaches relevant to the issues which bridge the dichotomy of economics and of political science. A main focus is on the link between institutional features and policy outcomes. In this contribution, three main aspects of subsidiarity are looked at. Firstly, the allocation of decision-making power to lower political levels will have repercussions on the behavior of member states and on actors on the sub-national levels (such as national interest groups). In the absence of decisions by institutions of the Union, many policy areas will basically constitute collective action problems: mutually beneficial outcomes (or public goods) can only be secured if member states have no incentives to free ride and if special interest groups are prevented from obtaining benefits to the detriment of the "public interest". Such aspects are considered in Section II. Secondly, subsidiarity may lead to a redistribution of policy competences between the Union institutions and the member states. This has implications on the degree of centralization within the Union (and on political legitimacy). Very prominently, it may to a certain degree introduce competition between national bureaucracies. These issues are addressed in Section 111. Finally, enhanced legislative power for the member states will by necessity lead to the maintenance of a divergence in the laws and the regulations of member states with respect to several policy areas. From an economic perspective, within a common market framework, this implies that national rules and regulations will be in competition with each other -- an effect also provoked by the introduction of the "new approach" in the framework of the internal market program. Section IV provides an overview of theoretical approaches cornected to regulatory competition and illustrates selected evidence from EU practice