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The workshop focused on entrepreneurship, innovation, and local-level policy initiatives aimed at stimulating economic development in post-communist countries of Central and Eastern Europe. After the demise of the socialist regimes the countries of Central and Eastern Europe followed quite different policy approaches. The papers contained in this Special Issue are a selection of contributions presented originally at a two-day workshop that took place in November 2019 at the University of Information Technology and Management in Rzeszow, Poland. Over the last decades, Special Economic Zones (SEZ) were popular instruments of government intervention in numerous countries, including Poland. [Extracted from the article]

The benefits of good procurement practices in the healthcare sector are well known. Indeed, the importance of transparent, effective and efficient procurement of medical goods and services has gained momentum even more in light of the recent Covid-19 pandemic. However, there is little evidence of how traditional factors occurring on a procedure or contract level affect the effectiveness of public purchases when they take play in different institutional environments. This paper, therefore, contributes to this evidence using a large sample of public contracts in healthcare sectors awarded in 11 Central and East European Countries. The results support the previous evidence on the important role of transparency and open competitive bidding. Procedures with a prior call for competition and allowing for an unrestricted number of competitors lead to cost-effective contracts and higher direct savings. Effective government and lessening corruption have proven to facilitate better procurement outcomes, considering the financial aspects of awarded contracts. Moreover, the results on the effects of institutions contribute to the current academic debate by providing insight into the mechanism of obtaining cost-effectiveness and showing that strong institutions can play an important role in mitigating the adverse procurement outcomes related to less transparent and competition-restricting procedures. [ABSTRACT FROM AUTHOR]

For the past three decades, Eastern European countries have exhibited a noticeable decline in their share of the industrial production sector overall, but not uniformly. Simultaneously, trade liberalisation and integration in international production networks were intensified, bringing different export sophistication levels and economic development to countries in this region. This paper aims to examine the real effective exchange rate (REER) impact on the deindustrialisation or reindustrialisation process in 25 post-communist Eastern European countries. The paper employs a heterogeneous panel common factor approach for the period 1995–2018 to exploit the effect of diverse levels of export complexity, stage of economic development and intensity of participation in global value chains on the REER–industrial production relationship. The results establish a heterogeneous yet significant negative relationship between currency strengthening and industrial production. Our findings also indicate that this negative effect of appreciation is less pronounced with the country's higher economic complexity and its broader participation in global value chains. [ABSTRACT FROM AUTHOR]

This paper provides empirical evidence on the association between decentralisation and budget deficits of the general government for a panel of 11 former transition countries during 1991–2018, controlling for the effects of various demographic, institutional, and macroeconomic variables. We provide evidence that decentralising government activities in Central and Eastern Europe (CEE) has favourable effects on the fiscal position of general government. Also, we show that the greater reliance on intergovernmental grants as a source of finance of local governments does not have detrimental effects on the overall fiscal discipline. Therefore, we cannot support the so-called 'common pool' hypothesis, which predicts that intergovernmental transfers lead to higher public expenditure, thus exacerbating the fiscal imbalances of the general government. On the other hand, we show that the effects of revenue decentralisation depend critically on the specific measure of local government revenue. [ABSTRACT FROM AUTHOR]

The aim of this paper is to propose and evaluate a new institutional theory explanation for patients making informal payments for health services in Central and Eastern Europe. This views informal payments by patients to healthcare professionals as arising when formal institutional failures lead to an asymmetry between the laws and regulations of formal institutions and the unwritten rules of informal institutions. Reporting a 2013 Eurobarometer survey of the prevalence of informal payments by patients in Central and Eastern European countries, a strong association is revealed between the level of asymmetry between the formal and informal institutions, and the propensity to make informal payments. The association between informal payments and various formal institutional imperfections is then explored to evaluate which structural conditions might reduce this institutional asymmetry, and thus the propensity to make informal payments. The paper concludes by exploring the implications for tackling such informal practices. [ABSTRACT FROM AUTHOR]

Our paper contributes to the literature on modern economy financialisation and relies on national and regional data on wages and employment distribution in the F&I and Industry sectors in Central and Eastern European (CEE) countries. We evaluate the effects of financialisation in this part of Europe, focusing on different levels of aggregation. By focusing on NUTS-2 and NUTS-3 regions, we extend the analytical strand beyond the national level and fill the gap in regional research on financialisation. Central and Eastern Europe is a beneficiary of the financialisation process and the transfer of financial services from the West to the East. This process changes social, economic, and political relationships in both parts of Europe. In CEE countries, financialisation has resulted in two types of positive aggregate effects: job creation in the financial sector and the increase of wages, which close the pay gap between Old and New EU. However, these processes at the regional level led to higher regional disparities. We then examine the disparities between regions with the highest concentration of F&I, so-called 'global cities', and other regions. This process of spatial segregation is the most striking phenomenon of financialisation in CEE countries. [ABSTRACT FROM AUTHOR]

This article describes an investigation of the relationship between farm size and the growth of farms. Theories about the association between farm size and the growth of farms give mixed results by country and over time. The former relationship is tested by assessing the validity of Gibrat's Law for Hungarian and Slovenian farms in the period 2007–2015. The use of a sample of farms from Farm Accountancy Data Network datasets makes it necessary to avoid biases due to heterogeneous structures across farming systems. Thus, we use quantile regressions to control for farm-size-related heterogeneity in the samples. Results suggest rejection of the validity of Gibrat's Law for farms in Hungary and to a lesser extent for Slovenian farms when the growth of farms is measured by growth of output per farm (where smaller farms grew faster than the largest farms), but not in the case of an increase in farm inputs (i.e. land and labour per farm). We provide evidence for Hungarian farms that smaller, mostly individual farms grew faster than larger, mostly corporate farms throughout the period of analysis. [ABSTRACT FROM AUTHOR]

This article investigates the impact of institutional variables on economic activity (GDP) in 19 Central and Eastern Europe (CEE) countries, covering the period 1999–2016. We utilise Principal Component Analysis (PCA) to construct a hybrid measure of economic freedom, and the Random Effect model to estimate the causalities. The analysis shows that many CEE countries have improved their institutional setting, especially the control of corruption. The regression results indicate that the control of corruption and democracy have a positive and significant impact on the GDP. Also, political stability promotes growth, while the quality of regulation is statistically insignificant. Finally, the rule of law and economic freedom accelerate economic growth. Overall, the legal framework, political stability and economic freedom shape the economic reality in the CEE region. We conclude that institutions matter for growth in the CEE countries. [ABSTRACT FROM AUTHOR]

The main goal of this article is to investigate the source of productivity growth for the Central and Eastern Europe (CEE) countries, at the industry level, based on the Schumpeterian creative destruction mechanisms. Our study provides valuable insights into productivity drivers for the CEE countries, which are vital for the policy makers. To measure productivity, we calculate the Total factor Productivity (TFP) measure based on the raw labour, at the industry level. There is a substantial productivity gap at the industry level between the CEE and core European countries (EU14). The result of econometric analysis suggests that the further a country lies behind the frontier, the higher is the rate of TFP growth, i.e. the convergence process. [ABSTRACT FROM AUTHOR]

We acquired firm-level data from 27 post-communist economies in Eastern Europe and Central Asia during 2002–08, and we estimated financial constraints' longitudinal impacts on firms' innovating activities. Overall, we found financial constraints to significantly impede firms' innovation input and output, as we had expected. Through further studies, we also found the impacts of financial constraints to be contingent on multiple factors, such as an overall economy's development level and firms' exporting statuses. After grouping firms based on their countries' income levels, we found financial constraints to significantly reduce innovations in developing countries, but not in developed countries. Meanwhile, we found financial constraints to significantly impede innovations in non-exporting firms, but not in exporting firms. On an extended timeline, financial constraints still significantly affect firms' long-term innovation outputs, but not inputs. [ABSTRACT FROM AUTHOR]

Financial institutions have embraced the idea of corporate social responsibility (CSR) over the past decade, particularly in the banking sector, even as they have faced challenges in their core business model and an uncertain economic environment. Has the addition of CSR helped banks in their effort to become more stable via diversification, or has it squandered resources which could be utilised elsewhere? Using a sample of 319 commercial banks from 21 transition countries in Central and Eastern Europe and the former Soviet Union from 2002 to 2014, we find that there is a heterogeneous effect of CSR on bank stability, with total commitment to CSR contributing to the stability the most. Environmental capabilities, on the other hand, appear to influence stability only for those firms which are already the highest performing. We conjecture that, for financial sector firms in a transition environment, CSR is a further commitment for firms which have attained a certain level of stability but can be destabilising for weaker banks. [ABSTRACT FROM AUTHOR]

This article analyses the relationship between banking sector efficiency and economic growth using a panel data analysis of six South-eastern European countries during the period 1995-2005. The analysis is concentrated on the banking sector because other segments of the financial market are underdeveloped in our sample of countries. We measure the qualitative development in the banking sectors by using the margin between lending and deposit interest rates as well as the share of non-performing loans. By applying the panel data method in a growth-type equation setting, we confirm that improvements in banking sector efficiency, measured through the decreasing interest rate spread, exerted a positive influence on the growth rate of the countries in the region. [ABSTRACT FROM AUTHOR]

A growing literature has identified a coherent economic model associated with populist governments in Central and Eastern Europe. This model runs counter to some aspects of the former neoliberal consensus in the region and to established theories of good governance. Considering three cases which are representative of these developments – Poland (since 2015), Hungary (since 2010), and Romania (2016–19) – we argue that a major unexplained puzzle is the relatively good economic performance of such governments. We develop three interrelated explanations for this apparent puzzle and test them using quantitative data. First, macroeconomic data show that the populist rhetoric of these parties is not associated with classical macroeconomic populism. Second, government accounting data show that public spending has been targeted towards specific groups and has not led to increasing tax burdens. Third, firm-level data on business confidence and institutional perceptions show no obvious negative effects associated with these governments. [ABSTRACT FROM AUTHOR]

This article quantifies the effects of bank levies after the financial crisis for Central and Eastern European countries (Hungary, Latvia, Romania, Slovakia and Slovenia) from a pooled perspective and country-specific perspective. The results of the analysis emphasise the importance of these bank levies as regulatory tools and the negative externalities they have on other relevant outcomes for the economy. In particular, while these taxes were mostly designed to increase the governments' budgets, the additional revenues were marginal. They also had a significant negative impact on credit (especially on a short run) and affected foreign direct investment (FDI). The country-level results emphasise the heterogeneity of the impacts of these taxes on the analysed outcome, a heterogeneity that was driven by the way these levies were implemented. [ABSTRACT FROM AUTHOR]

It is a common belief that small towns of formerly socialist countries of Central and Eastern Europe (CEE) are suffering a substantial decline due to the better offerings in bigger metropolitan areas and in western countries. This belief has been reinforced by a long transformation process: firstly, the transition from a command economy to capitalism and secondly, the move from manufacturing to service. To investigate this issue, a concentrated research on one territory was conducted, which gives a more intimate picture of the status of rural municipalities in a typical post-communist area of CEE. This information was compared to secondary historical and current data concerning economics, infrastructure, and demographics giving us a picture of the municipalities' viability by creating a multi-criteria analysis. This research indicates that small towns are not suffering precipitous declines, which is a common belief. [ABSTRACT FROM AUTHOR]

Although economists have long studied the impact of bribery on firms' development, the debate continues as to whether bribery 'greases' or 'sands' the growth of businesses. For this investigation, we acquired data from the Business Environment and Enterprise Survey conducted by the World Bank; this panel data include firm-level information, every three years from 2002 to 2008, in transition economies in Central Asia and Eastern Europe. Then, we estimated the longitudinal impact of bribery upon firms' development over a period of time. We found that bribing firms were more likely to bribe again three years later. In addition, we found that bribery could increase a firm's output and employment growth significantly, while simultaneously deterring that firms' labour productivity and innovation. After grouping the countries based on their income level, we found that significant positive impacts of bribery on output and employment only exist in developed countries, while its negative impacts on productivity and innovation are consistent in all types of countries. Interestingly, bribery can only significantly decrease a firm's time spent on waiting for resource connections in developed countries. When we extended our time horizon from three to six years, the significant longitudinal impacts of bribery no longer lingered. [ABSTRACT FROM AUTHOR]

The purpose of the present study is to incorporate geographic analysis of FDI into the classic IDP model. By supplementing the traditional analysis of the net outward investment (NOI) position with an analysis of geographic patterns in inward and outward FDI, the authors strive to offer a better explanation of Poland's current NOI position and provide more in-depth support to some necessary policy recommendations. Hence the main contribution of this study to the international business scholarship is two-fold. It (1) further develops the IDP research methodology; and (2) provides a better understanding of the idiosyncratic nature of the IDP of Poland. [ABSTRACT FROM AUTHOR]

Following the massive entry of foreign banks into the Central and Eastern European (CEE) banking markets, one may wonder whether their competitive behaviour differs from that of their domestic counterparts, possibly leading to the segmentation of these markets at the regional and national levels. We find that the competitive behaviour of foreign and domestic banks differs, with foreign banks having less market power until the recent financial crisis and more market power after this financial turmoil. Despite this difference, banks tend to behave similarly, and their market power converges to a similar level. The tendency towards similar competitive behaviour is observed at the regional and national levels and for both foreign and domestic banks, although foreign institutions that enter these markets through the acquisition of domestic banks have slightly more market power. Our findings suggest the regional integration of CEE banking markets and no segmentation between foreign and domestic institutions. [ABSTRACT FROM AUTHOR]

This article assesses whether the intensity of product market competition is a factor affecting economic growth (measured by the growth rate of real GDP per capita) and whether this impact depends on the model of capitalism. The study covers the 1997–2015 period and all EU28 countries. Product market competition is measured by two types of variables: product market regulation indicators and the number of enterprises. New elements in the analysis include, among others, nonlinear impact and overlapping observations. The regression equations are estimated on the basis of Blundell and Bond’s GMM system estimator. The results generally indicate that stronger product market regulations (and theoretically lower product market competition) are linked with faster growth of output. However, the impact of product market competition on economic growth depends on the type of capitalism. For post-socialist countries, unlike the Western European model of capitalism, more regulation tends to reduce the rate of economic growth. [ABSTRACT FROM PUBLISHER]

To explain participation in the undeclared economy, the conventional supply-side approach evaluates the reasons people work in this sphere. This article, for the first time in Central and Eastern Europe, explains the undeclared economy using a demand-side approach which evaluates citizens’ motives for purchasing undeclared goods and services. Here, three potential explanations for purchasing undeclared goods and services, grounded in rational economic actor, social actor and institutional imperfections theoretical perspectives, are evaluated. Reporting data from 11,131 face-to-face interviews conducted in 11 Central and Eastern European countries in 2013, the main finding is that all three explanations are used by consumers, demonstrating the need for a synthesis of these approaches. A multinomial regression analysis identifies the specific groups variously using the undeclared economy to obtain a lower price, for social or redistributive rationales, or due to formal institutional imperfections. The implications for theorising and tackling the undeclared economy are then explored. [ABSTRACT FROM PUBLISHER]

This article explores the economic performance of state ownership in the largest non-financial enterprises operating in 13 post-socialist Central and Eastern European (CEE) countries over the period 2007–2013. The largest state-owned enterprises (SOEs) are selected based on the ‘Coface – 500 Top Companies in CEE’ list in 2013. Of these 500 enterprises, 69 were identified as state-owned. All originated in the socialist period. The majority of them are from Poland and Ukraine. SOEs hold a dominant position in energy supply, the oil and gas sector, and transport. We find that the persistence of state ownership in post-socialist countries is caused by incomplete privatisation and the presence of SOEs within strategic sectors. The economic performance of the largest state-owned companies is, on average, comparable to their private counterparts. [ABSTRACT FROM PUBLISHER]

This study examines the characteristics of organisational structures in Central and Eastern Europe using the example of Estonia. In particular, the formalisation level of the structures as a subject of path-dependent developments is observed. Quantitative and qualitative research methods are combined for the empirical evidence and data from three different sources are employed: the European Social Survey, the survey of Estonian managers and interviews with managers from Estonian software companies. The authors show that the communist past still affects organisational life today. The path this past created affects the organisational structures in the present in two ways: first, a kind of structural inertia can be observed, where the Soviet style of management with its high formalisation is still present today and limits employees' freedom to deal with their work. Second, an opposite trend can be revealed for the other actors in the same game, the managers, as another kind of path dependency exists – a process where the past has caused a powerful response, forcing the actors to react against the Soviet management style. We demonstrate that this path dependency can be perceived differently by different actors in an organisation and we show that the path dependency is a complex issue with many nuances within it. [ABSTRACT FROM PUBLISHER]

This article will focus on household access to essential social services provision (in particular examining access to public utilities) in countries of Southern, Central and Eastern Europe (SEE/CEE) and the Commonwealth of Independent States (CIS). The article uses original household data from two rounds of theLife in Transition Survey(LiTS) of the European Bank for Reconstruction and Development (EBRD) and the World Bank, conducted in 2006 and 2010, and from theSocial Exclusion Survey,which the United Nations Development Programme (UNDP) conducted in late 2009. We will focus our analysis on differentiation according to the locality where households were residing, in rural and urban areas. Large differences in access to essential public utilities (such as piped tap water, sewerage systems, telephone and internet) are shown between urban and rural areas, combined with marked inequalitywithinrural areas. In addition, issues of social exclusion (including access to social services) and life satisfaction are investigated. While objective gaps in access are wide, subjective satisfaction with the quality of life is still higher in rural areas, including among those who are found to be socially excluded, indicating greater resilience of the rural population. [ABSTRACT FROM AUTHOR]

This article traces Romania's development to a low-tax country among the member states of the European Union by analysing the major tax law changes in corporate taxation since 1992. We compute and compare the effective company tax burdens of a European model company at different points of time which constitute milestones in the development of corporate taxation in Romania. We find that the significant reduction of the corporate income tax rate from 45% in 1992 to 16% since 2005 has not been accompanied by a comprehensive broadening of the corporate income tax base as it has been in many longstanding member states of the EU and the OECD. Since 1992 the average company tax burden of the underlying model company has dropped by almost 65%. As a result, Romania holds second position among the group of Central and Eastern European EU member states. [ABSTRACT FROM AUTHOR]

In the last two decades a broad process of labour market reforms towards more flexible and liberal models has been taking place in Europe. For Central and Eastern European countries this evolution was an important dimension of the wider process of institutional change which accompanied their transition to market economies. This article presents the complex picture of EU countries at the outset of the recent crisis (2007) in terms of the components of earnings differentials, with particular emphasis on the dimensions of labour market flexibility identifiable with contractual arrangements (temporary versus permanent employment) and self-employment. Our main focus is on Central and Eastern European countries but we keep old EU members as benchmarks. Results highlight that different factors lie behind permanent/temporary and permanent/self-employed earnings gaps in the two regions. The dualism between regular and flexible jobs in the CEE labour market is mainly based on workers' attributes; in the Western EU the dualism is instead mainly driven by discrimination associated with labour positions. [ABSTRACT FROM AUTHOR]

This article studies the within-country regional effects of trade liberalisation in Central and Eastern European countries. CEE countries liberalised their trade with the European Union from the mid-1990s, while also receiving substantial foreign investment in the process. The first part of the period witnessed strong agglomeration effects in all of the countries, leading progressively to core-periphery type specialisation, and increasing regional wage differentials. In the second part of the period, however, there is notable evidence of a reversal in the relative regional specialisation, pointing to a U-shaped pattern of relative regional wages. Using the regional data for five CEE countries in 1990-2004 we argue that FDI inflows can be an important factor accelerating the observed regional adjustment process in the host country. First, we show that in four out of five CEE countries there is a significant U-shaped adjustment pattern of regional wages after they opened up to foreign trade. Second, we find robust econometric confirmation that in three of the five countries FDI has contributed significantly to faster adjustment of relative regional wages. [ABSTRACT FROM AUTHOR]

This analysis attempts to integrate international business theory on foreign direct investment (FDI) with institutional theory on intellectual property rights (IPR) to analyse FDI in Central and Eastern Europe, a region with an IPR regime gap vis-a-vis Western Europe. Starting from the premise that FDI plays a crucial role for technological catching up in Central and Eastern Europe (CEE) via technology and knowledge transfer, this article assesses the role played by IPR regimes as a factor for corporate governance and control of foreign-invested subsidiaries, for their own technological activity, their trade relationships, and networking for technological activity. As a specific novelty to the literature, the influence of the strength of IPR regimes on corporate control of subsidiaries is analysed. The results suggest that IPR-sensitive foreign investment tends to have lower functional autonomy, tends to cooperate more intensively within its transnational network and is still technologically more active than less IPR-sensitive subsidiaries. [ABSTRACT FROM AUTHOR]

This article addresses the question of how the institutions of the new EU member states match with the institution types previously worked out for the old member states, and whether they resemble any of the broadly accepted four models of capitalism (Anglo-Saxon, Nordic, Continental European and Mediterranean) or represent a new type of model. Amable's work was regarded as the starting point of this study, which underpinned the existence of the four models with statistical analysis. As for the new member states, our cluster analysis indicated that a new, fifth model of Central and Eastern Europe could be determined. The characteristics of the Central and Eastern European model may be derived from three main factors: the lack of capital, weak civil society and the impact of the European Union and other international organisations influencing the new member states. Also owing to these factors, a special division of labour has developed between the old and the new, post-communist member states since the systemic change two decades ago, in which the present asymmetric interdependency can be long-lasting. This could also make the Lisbon-type strategies, which aim to develop the European integration into a set of innovation-driven economies, illusory in the long run. [ABSTRACT FROM AUTHOR]

While most of the inequality literature focuses on income inequalities by Gini coefficient, this article develops an alternative index that measures the extent of poverty disparities across geographical regions. In contrast to trends in income inequalities, there is little evidence that regional poverty disparities have peaked and are falling in Central and Eastern Europe and Eurasia. Using panel data for the transition countries, we find that high levels of regional poverty disparity have a positive impact on macroeconomic performance. Further evidence suggests this result may be driven by the positive effect of disparities on both saving and the pace of economic reforms. However, it appears that disparities are beneficial to progress on both economic and democratic reforms only for countries with per capita income levels above USD3000. [ABSTRACT FROM AUTHOR]

This article discusses property rights, corporate governance frameworks and privatisation outcomes in the Central-Eastern Europe and Central Asia (CEECA) region. We argue that while CEECA still suffers from deficient 'higher order' institutions, this is not attracting sufficient attention from international institutions like EBRD and the World Bank, which focus on 'lower order' indicators. We discuss factors that may alleviate the negative impact of the weakness in institutional environment and argue for the pecking order of privatisation, where equivalent privatisation is given a priority but speed is not compromised. [ABSTRACT FROM AUTHOR]

This article attempts to wrap up the thorny road of studies and students of systemic change in Central and Eastern Europe. It analyses how a relatively backward part of the economics profession has been confronted with issues that count among perhaps the most complex, in terms of both understanding and applications, within and for the entire academic discipline. An attempt is made to integrate some broader methodological and narrower political economy insights in the approach of sustainable development and economic theory in general. [ABSTRACT FROM AUTHOR]

This article reports the first cross-national evaluation of the prevalence of a little discussed wage arrangement where formal employers pay their formal employees two wages, one declared and the other an undeclared 'envelope wage'. Analysing the results of a 2007 survey conducted in the 27 European Union member states, the finding is that some 5% of employees in formal employment receive an additional undeclared wage from their formal employer which amounts on average to some two-fifths of their wage packet. However, this employment practice is found to be markedly more prevalent in East-Central European countries, where some 11% of formal employees receive an undeclared wage and this is more often paid for their regular employment hours, which is in stark contrast to Continental Europe and Nordic countries, where such wages are less common and received mostly for overtime or extra work performed. The article concludes by discussing how this neglected but nevertheless significant practice might be tackled. [ABSTRACT FROM AUTHOR]

The recent literature dealing with the determinants of foreign direct investment (FDI) has increasingly emphasised the importance of technological aspects, as both attractive factors and FDI-related technological transfer effects. Focusing on the second perspective, this article explores the theoretical and empirical relationships between innovative inputs (particularly FDI) and innovative outputs in the EU-27 countries, focusing in particular on the Central and Eastern European countries (CEECs). Findings provide evidence of strong East/West specificities, but also of marked heterogeneity within the CEECs, thus supporting our approach, which emphasises complexity and the specificities of production and economic conditions. [ABSTRACT FROM AUTHOR]

During the 1990s air pollutant emissions declined dramatically in many of the transition economies in Central and Eastern Europe including the Czech Republic. Various reasons may explain these reductions, such as (1) a decline in production, (2) the exit of older, more polluting firms, along with the entry of new, less polluting firms, (3) more stringent environmental policies etc. To assess these reasons, this study analyses firm-level air pollutant emissions from a panel of Czech firms over the years 1993-98. By controlling for the level of production, this study eliminates the potentially confounding factor of reduced economic activity over this transition period. By tracking a fixed set of firms over time, one part of this study controls for the exit of older firms and the entry of new firms. Based on an assessment of the analytical results and an examination of reasons for the reduction in air pollutant emissions, we conclude that tighter environmental protection policies proved the most important reason behind the dramatic reduction in Czech air pollutant emissions. [ABSTRACT FROM AUTHOR]

There is a general consensus that human capital is a major determinant of economic development. However, the range of available human capital variables is very wide in both a technical and a theoretical sense, so that different human capital measures are sometimes only loosely correlated. This is partly because they capture different aspects of human capital ranging from the resources devoted to human capital creation (without taking account of market forces) to attaching a monetary value based on the market value of labour. Hence, different measures can lead to very different results and conclusions. This difference is especially prevalent in Eastern Europe, which experienced a massive expansion of formal education in the twentieth century which was not always matched by demand from the market or the efficiency of institutions. Consequently, if we look at the attainment figures only, we find that Eastern Europe had about 70-80% of the USA's human capital in per capita terms in the 1990s. Using methods that measure the market value of human capital, however, reduces this estimate to 10-20%. [ABSTRACT FROM AUTHOR]

Unemployment is still disappointingly high in most Central and East European countries, which may be a reflection of the ongoing adjustment to institutional shocks resulting from systemic transition, or may be caused by high labour market rigidity or aggregate demand that is too weak. This article investigates the dynamics of unemployment and output in those eight post-communist countries which entered the EU in 2004. We use a model related to Okun's Law; i.e. the first differences in unemployment rates are regressed on GDP growth rates. We estimate country and panel regressions with instrument variables (TSLS) and apply some tests to the data and regression results. We assume transition of labour markets to be accomplished when a robust relationship exists between unemployment rate changes and GDP growth. Moreover, the estimated coefficients contain information about labour market rigidity and unemployment thresholds of output growth. Our results suggest that the transition of labour markets can be regarded as completed since unemployment responds to output changes and not to a changing institutional environment that destroys jobs in the state sector. The regression coefficients demonstrate that a high trend rate of productivity and a high unemployment intensity of output growth have been observable since 1998. Therefore, we conclude that labour market rigidities do not play an important role in explaining high unemployment rates. However, GDP growth is dominated by productivity progress and the employment-relevant component of aggregate demand is too low to reduce the high level of unemployment substantially. [ABSTRACT FROM AUTHOR]

This article examines whether subjective economic assessments have any impact on support for further market reforms among China's urban population, utilising a large survey of 10,716 people across 32 cities. The effect of subjective economic well-being on support for market reforms is an important issue for the Chinese government as it seeks to sell the benefits of increased globalisation and marketisation to its citizens. Our main finding is that people's assessment of the overall economic situation helps to explain support for market reform, although the relationship is weak, while people's assessment of their own economic circumstances does not influence support for reform. The findings are compared with those of similar studies for Central and Eastern Europe. [ABSTRACT FROM AUTHOR]

The economic liberalisation which has occurred in Central and Eastern Europe (CEE) over the past 15 years has aimed at integrating markets into the global economy and realising the benefits of competition. This article examines a three-way pooled sample of annual data for 13 industry sectors in five CEE countries to explore the determinants of real exchange rate effects on domestic prices. Changes in the sensitivity of domestic markets to international shocks, as reflected in these exchange rate effects, may be viewed as a proxy for competitive pressures in these markets. We find that market reforms have played an important role in integrating a country's markets into the global economy, with a lesser impact of infrastructure development. [ABSTRACT FROM AUTHOR]

The analysis presented in this article focuses on seigniorage revenues in five Central and Eastern European Countries: Bulgaria, the Czech Republic, Hungary, Poland and Romania. A comprehensive discrete period accounting framework for measuring the sources and uses of seigniorage in the 1990s is presented. The framework is based upon the gross concept of seigniorage that defines seigniorage in the broadest possible sense as the sum of revenues resulting from the monopoly power to issue money. Legal, institutional and operational details which are relevant for the creation of base money in a country are taken into account. The article reveals similarities and differences in seigniorage wealth between the countries under scrutiny, evaluates the magnitude of seigniorage and shows that accession to the European Monetary Union will create significant once-and-for-all gains of seigniorage wealth for the countries resulting from redistributing seigniorage wealth. [ABSTRACT FROM AUTHOR]

This article interprets Central and Eastern European transition through the lenses of the post-Washington consensus. It searches for what has proved to be original and theoretically novel in the region if measured against development theory. To what extent does the mainstream remain relevant as an analytical instrument of policy issues? Is it possible to establish a pure economics of transformation? [ABSTRACT FROM AUTHOR]

This article analyses the activities of Japanese investors in Central and Eastern Europe since the beginning of the region's transition. The use of firm level data on Japanese foreign direct investment (FDI) in the region allows us to focus on the industry, location and timing of affiliate establishment at a level of detail previously unexamined. This enables us to compare Japanese investment with overall regional inward investment as well as investigate country specialisation patterns within the region. We also characterise the type of investing parent, and determine how investments in CEE fit into the European-wide investment patterns for these firms. Finally, we investigate the entry mode choices of investing firms, finding a shift from minority-owned joint ventures and limited participation in the region in favour of wholly-owned subsidiaries and larger involvement in the region. [ABSTRACT FROM AUTHOR]

This article uses cluster analysis to construct a typology of regions for East Germany and Poland on the basis of indicators for economic capability and their determinants. The results show that, in both countries, the most capable regions are those with or in the vicinity of the largest agglomerations. Besides high income, low unemployment and population gains from migration, these regions have comparatively large stocks of qualified labour and participate in technical progress. Two regional types in particular could be established as problematic: (1) rural regions peripheral to the agglomerations and (2) old industrialised regions. Indicators of investment are not very well suited to indicating the future economic capability of regions under the circumstances of transformation. [ABSTRACT FROM AUTHOR]

This article conveys an understanding of the scope and pattern of foreign involvement in the overall privatisation programmes of three prominent countries in transition: the Czech Republic, Hungary and Poland. It starts with a short description of the respective privatisation programmes, singling out property rights at the onset of transition and what imprint the interests of company insiders had on privatisation policies. It combines this with quantitative and qualitative data and arguments on foreign involvement in the different phases of the privatisation programmes to come to an assessment of foreign involvement in the Czech, Hungarian and Polish privatisation programmes as a whole. [ABSTRACT FROM AUTHOR]

The development of active investors has been argued to be a major factor in achieving efficiency in enterprises in transition economies. This article analyses the role of venture capital firms as active investors in Hungary, Poland and Slovakia. It outlines the development of the venture capital markets in each country and provides evidence on the extent, nature and constraints upon the active investor role of venture capital firms in each country. The article discusses the policy implications for the development of venture capital firms as active investors in the three countries concerned, notably suggesting the need to develop appropriate legislation, enhance financial reporting systems, develop the range of skills of venture capital executives and define carefully the role of public sector providers of venture capital. [ABSTRACT FROM AUTHOR]

Framework issues in privatisation include the alternative of commercialisation of state-owned enterprises without privatisation, the scope and sequence of divestiture by branch of the economy, the organisational structure for privatisation, the choice among standard and non-standard methods, and problems in the administration of privatisation, such as valuation, transparency and corruption. For each issue, the study analyses major aspects and compares relevant experience of the Czech Republic, Hungary and Poland. The concluding section draws some general lessons from the theoretical analysis and empirical comparisons. [ABSTRACT FROM AUTHOR]