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on Transition Economics |
| By: | Yu, J. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, P. |
| Abstract: | The recently announced Independent Innovation Strategy (IIS) signifies the climax of China’s technology catch-up effort during the past 30 years. This paper investigates the efficacy of, and prospects for this effort by reviewing comments from the relevant literature, by conducting a theoretical analysis based on industrial economics and by testing hypotheses with the latest empirical evidence. Our results suggest a bleak prospect for IIS if the Chinese government retains its excessive administrative protection of state-owned enterprises, and a long struggle ahead for China to finally push further into the technology frontier. |
| Keywords: | state monopoly; R&D; independent innovation; state-owned enterprise |
| JEL: | L12 O38 P31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2008-9&r=tra |
| By: | Konstantin Gluschenko |
| Abstract: | Based on a relationship between price difference and demand difference among locations, the role of various market frictions in causing segmentation of the Russian goods market is analyzed. The spatial sample covers most of Russian regions (70 of all the 89); the data are yearly, spanning 1992 through 2000. Spatial disconnectedness of regions is found to be responsible for about 70 percent of average price differential, while the rest is caused by “artificial” impediments to market integration such as shipping conditions, regional protectionism, and organized crime. |
| Keywords: | Market integration, law of one price, market frictions, Russian regions. |
| JEL: | P22 R10 R15 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:21108&r=tra |
| By: | Fleisher, Belton M. (Ohio State University); Li, Haizheng (Georgia Tech); Zhao, Min Qiang (Ohio State University) |
| Abstract: | We study the dispersion in rates of provincial economic- and TFP growth in China. Our results show that regional growth patterns can be understood as a function of several interrelated factors, which include investment in physical capital, human capital, and infrastructure capital; the infusion of new technology and its regional spread; and market reforms, with a major step forward occurring following Deng Xiaoping’s “South Trip” in 1992. We find that FDI had much larger effect on TFP growth before 1994 than after, and we attribute this to emergence of other channels of technology transfer when marketization accelerated. We find that human capital positively affects output per worker and productivity growth. In particular, in terms of its direct contribution to production, educated labor has a much higher marginal product. Moreover, we estimate a positive, direct effect of human capital on TFP growth. This direct effect is hypothesized to come from domestic innovation activities. The estimated spillover effect of human capital on TFP growth is positive and statistically significant, which is very robust to model specifications and estimation methods. The spillover effect appears to be much stronger before 1994. We conduct cost-benefit analysis and a policy “experiment,” in which we project the impact of increases in human capital and infrastructure capital on regional inequality. We conclude that investing in human capital will be an effective policy to reduce regional gaps in China as well as an efficient means to promote economic growth. |
| Keywords: | China, TFP growth, economic growth, human capital, infrastructure |
| JEL: | O15 O18 O47 O53 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3576&r=tra |
| By: | Grosjean, Pauline (University of California, Berkeley); Senik, Claudia (University of Paris IV Sorbonne, PSE) |
| Abstract: | Using a new set of micro evidence from an original survey of 28 transition countries, we show that democracy increases citizens’ support for the market by guaranteeing income redistribution to inequality-averse agents. Our identification strategy relies on the restriction of the sample to inhabitants of open borders between formerly integrated countries, where people face the same level of market development and economic inequality, as well as the same historically inherited politico-economic culture. Democratic rights increase popular support for the market. This is true, in particular, of inequality-averse agents, provided that they trust political institutions. Our findings suggest that one solution to the recent electoral backlash of reformist parties in the former socialist block lies in a deepening of democracy. |
| Keywords: | democracy, income inequality, redistribution, market liberalization, trust |
| JEL: | D63 H1 H53 I38 O1 P26 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3527&r=tra |
| By: | Ofer Malamud; Cristian Pop-Eleches |
| Abstract: | This paper examines the relative benefits of general education and vocational training in Romania, a country which experienced major technological and institutional change during its transition from Communism to a market economy. To avoid the bias caused by non-random selection, we exploit a 1973 educational reform that shifted a large proportion of students from vocational training to general education while keeping average years of schooling unchanged. Using data from the 1992 and 2002 Romanian Censuses and household surveys from 1995-2000, we analyze the effect of this policy with a regression discontinuity design. We find that men in cohorts affected by the policy were significantly less likely to work in manual or craft-related occupations than their counterparts who were unaffected by the policy. However, in contrast to cross-sectional findings, we find no difference in labor market participation or earnings between cohorts affected and unaffected by the policy. We therefore conclude that differences in labor market returns between graduates of vocational and general schools are largely driven by selection. |
| JEL: | I21 J24 P20 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14155&r=tra |
| By: | Bruno, Randolph Luca (University of Bologna) |
| Abstract: | The focus of this paper is the analysis of the persistent lawlessness attitude observed in some transition and developing countries where an overall increase in the quality of institutions is recorded. The mechanism of information diffusion on institutional quality is explored using a model where the state confronts a continuum of agents prone to either strip assets or to invest. The model predicts that high uncertainty and potential sunk costs in a situation of rule of law enforcement push the economy towards anarchy, a Pareto-dominated equilibrium. Vice versa, if the assets' value and the cost of asset-stripping are high, this is instrumental to a rule of law enforcement, a Pareto-dominant equilibrium. High institutional quality can increase the likelihood of rule of law enforcement if there is enough information about the strength of institutions. On the other hand, if good institutions and good information about institutions do not come together, there is scope for the puzzled co-existence of advancement in reforms and poor property rights protection. |
| Keywords: | rule of law, institutions, global games |
| JEL: | D81 C72 K42 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3497&r=tra |
| By: | Rovelli, Riccardo (University of Bologna); Bruno, Randolph Luca (University of Bologna) |
| Abstract: | We compare labor market policies, institutions and outcomes for the EU member states, for the period 2000-2005. We document the main differences in Labor Market Policies across EU members, including new member states after 2004. We focus on indicators of policy generosity (expenditures relative to GDP) and relate these and other policy indicators to indicators of labor market outcomes and performance. Our results show that, on a cross-country basis, higher rates of employment are in general associated with: (i) higher expenditures on labor market policies, especially on active policies for countries with a high pro-work attitude; (ii) a lower degree of rigidity in labor market institutions and in product market regulation. |
| Keywords: | labor market policies, labor market outcomes, European social models |
| JEL: | J08 J38 J68 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3502&r=tra |