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After the dissolution of USSR the Soviet republics' economies were resource-driven, but only few of them were rich in highly tradable natural resources. They were Russia, Azerbaijan, Ukraine and Kazakhstan. These countries had registered an important economic growth due to natural resources exports, but became prisoners of the so called "Dutch disease". Moldova, Georgia, Armenia, Belarus or Baltic States hadn't any highly tradable natural resources such as oil or gas and had to focus on developing other sectors of economy and have set as a priority the development of ICT sector. The purpose of my study was to find out who has performed better in developing the ICT sector from exSoviet republics, what is the correlation between the ICT sector development and the abundance in natural resources. Will the thesis that countries rich in natural resources are less open to knowledge and innovation be confirmed?

According to the European Commission, Romania is still facing significant mismatch between the skills of graduates of tertiary education and the market needs. This paper is highly relevant for the future implementation of HEIs, since they have a strong economic role and they can significantly influence long-term national social and economical development. Romania did not manage to materialize community funds allocated for the 2007-2013 programming period to its full potential. Accordingly, the proposed thesis intends to analyse how Romanian HEIs were able to manage community resources attracted by grants and how the implemented projects achieved their set objectives. According to the data collected so far, the results will show that the performance of the projects is directly dependent on the proportion of fully dedicated staff in organizational design of the project. The originality of the undertaken study is that it starts from a realistic approach, according to which the rules of the game should be adapted, depending on the players (in our case – HEIs).

The evolution over time of subjective well-being (SWB) in transition countries exhibit some peculiarities: greater variations which are more strongly correlated with the trends of GDP relative to other countries. What is the possible role of social trust in predicting such variations? We compare the capacity of the trends of GDP and of social trust to predict the trends of SWB. We find that the strength of the relationship between social trust and SWB over the medium-term is comparable to that of GDP. Our conclusion is that in the medium-term, even in countries considered as an extreme case of relevance of material concerns for well-being, social trust is a powerful predictor of the evolution over time of SWB. However, in the short run the relationship between social trust and SWB does not hold and GDP stands out as the only significant correlate of SWB.

This paper reviews labor market developments in the countries of Eastern Europe and the former Soviet Union since the beginning of transition. The paper examines the relationship between aggregate employment and macroeconomic developments in these countries, emphasizing the changing interaction between aggregate output and employment, the role of wages and of labor market flexibility in determining the ability of these economies to provide suitable employment for their citizens. Attention is also given to the role of starting conditions and how the excess employment of the Communist period was either liquidated or accommodated. The second part of the paper deals with microeconomic issues pertaining to labor market performance in the region. The role of the nature and extent of privatization on employment outcomes is examined as is the role of sectoral restructuring. The role of entrepreneurship and the creation of new SMEs, capital formation and the emergence of new labor market institutions are also described.

In this work we develop a framework for statistical testing of significance of contributions to changes in economic growth rates (and productivity changes) in the Solow¡¦s growth accounting framework, which is the main contribution of the paper. We then also illustrate the developed methodology for testing significance of the impact of information and communication technologies capital on the labor productivity distribution of developed countries in 1980¡V1995.

1989-ben a Föld 36 országát marxista-leninista pártok irányították. Ma már csak Észak-Koreát és Kubát. Ez világtörténelmi jelentőségű változás, amelynek Magyarország is részese volt. A Kelet-Európában és a Szovjetunióban 1989-1990-ben végbement változások 25. évfordulója alkalmából a washingtoni Peterson Institute for International Economics és a Közép-európai Egyetem Politikatudományok Tanszéke 2014. május 6-7-én közösen rendezett konferenciát Budapesten Transition in perspective címmel. E tanulmány egyfelől ennek a konferenciának a főbb megállapításait foglalja össze, másfelől pedig a szerző saját kutatásai alapján számszerűsíti és minősíti is a 36 egykori szocialista ország gazdasági teljesítményét. Journal of Economic Literature (JEL) kód: P21, P14, P26, P27., In 1989, 36 countries in the world were ruled by Marxist-Leninist regimes. Today there are two: Cuba and North Korea. This is a historic change by any measure. Celebrating the 25th anniversary of the 1989/1990 change of regime in Eastern Europe and the Soviet Union, the Peterson Institute for International Economics, a Washington think tank, and the School of Public Policy at the Central European University held a joint conference in Budapest on 6-7 May 2014. The paper gives an extended summary of the main conclusions, and of additional research by the author into growth performance by the 36 former socialist countries

After twenty-five years of economic transition economic performance varies considerably in transition countries, while in most cases current outcomes show that the desired effects have not been achieved. In this paper we elaborate on why industrial policy has been a key missing element in the transition and has greatly contributed to the unexpectedly small and slow pace of economic recovery. After discussing the achieved level of economic development we undertake an empirical analysis in order to define the role of several important factors of growth, as seen at the beginning of transition (reform progress, macroeconomic stabilisation, initial conditions) and those that attracted particular attention during the global crisis (industrial/manufacturing output, exports). The analysis shows that the growth model in transition economies has altered both over time and in relation to the progress of transition reforms. The most important change concerns the share of industrial output in GDP, which is found to be one of the most important factors of growth after the initial phase of reform. These results suggest that transition economies should implement industrial policy measures as an integral part of their reform strategy instead of just speeding up reforms as the key (if not the only) element of government policy. Based on these results, we explore what would be a viable and proper industrial policy in transition countries, particularly what should be done in current conditions after the damaging effects of the recurrent global recession, and make some policy suggestions.

This study adopts data envelopment analysis with Tobit regression analysis to measure the efficiency and investigate the influence of corporate governance on the efficiency of the biotechnology and medical equipment industries in Taiwan. The empirical results show that while inside equity influences the efficiency of profitability in the pharmaceutical industry, both inside and outside equity influence the efficiency of profitability in the medical equipment industry. Moreover, both inside and outside equity influence the efficiency of marketability in the pharmaceutical and medical equipment industry. The proportion of shares held by foreign institutions is significantly positively correlated with the efficiency of profitability and negatively correlated with the efficiency of marketability, implying that the short-term profit goal of the foreign institutional investors is to sell their holdings. Besides, the number of board members and transparency of information are significantly positively correlated with both the efficiency of profitability and the efficiency of marketability.

The aim of this research is to reveal the direction of change the cultural dimensions of companies in AP Vojvodina, when the Republic of Serbia – as a country in transition – was being included in the European division of labor. Foreign direct investments from EU countries are used as a method of transposing cultural patterns. The research methodology used here included the application of the Mann Whitney and the Chi square tests to compare the attitudes of the managers of these two groups of companies in AP Vojvodina. The results indicate that there is no statistically significant difference in the attitudes of managers of the two groups of companies, in terms of the questionnaire items that explore the power distance dimension. In AP Vojvodina, masculinity and individualism are still valued to a greater extent by the managers of companies with foreign capital than by those with domestic capital. Managers of the companies with foreign capital show a higher degree of uncertainty avoidance than those with domestic capital, which is contrary to authors’ expectations, though explicable in the context of the recessionary business conditions under which the research was conducted.

This study investigates the link between bank lending behavior and country-level instability. Our dynamic model of bank's profit maximization predicts a non-monotonic relationship between bank lending and macroeconomic uncertainty. We test this proposition using a panel of Ukrainian banks over the 2003Q2–2008Q2 period. The estimates indicate that banks decrease their lending ratio in times of substantial economic volatility, which could be explained by higher risk aversion of bank managers. Additionally, small and least profitable banks are less likely to be affected by changes in the macroeconomic environment compared to their large and most profitable peers. This outcome is robust with respect to the different measurements of macroeconomic uncertainty.

The financial performance of a responsibility center is measured on the basis of specific indicators of the nature center. To obtain a relevant and consistent images relating to the performance of an entity is required to use a system of indicators. Performance indicators of the structure it needs to capture at the same time, at least the following aspects: the objectives of the entity, its strategy, efficacy and effectiveness of activities carried out, the entity's ability to adapt to the requirements of the market in which they operate. Financial indicators of performance are the most objective, because most businesses give important resources for the activities of audit and control.

This study deals with important issues related to the new political macroeconomics and its appliance to the economic movements in Serbia, which is a country of ?new democracy? as well as with transition economy. In political macroeconomics, it is a known fact that the economic policy instruments can be used for political purposes - simulated improvement of economic indicators to win the elections. These options assume specific features in transition economies, such as the Serbian economy. The political instability in Serbia, reflected in frequent elections, as well as in the diversity in political and economic goals of the key political parties leading to increasing political uncertainty in both the pre-election and post-election periods, weakened the economic system. Simultaneously, using the economic policy for political purposes to support the ?pro-democratic? and ?pro-European? parties proved to be paradoxically justified.

Shortly after the transition started an important debate was initiated over the length of the process and on the factors that influence advancement of a country in transition reforms. It appeared that transition progress has to be understood as an endogenous phenomenon that is affected by the initial conditions of the country in question. Moreover, economic performance also depends on inherited conditions as well as on the transition progress of a country while the latter should be also regarded as endogenous in itself. From this standpoint the case of the Montenegrin economy is analysed, since Montenegro is among transition lag¬gards, predominantly because of a substantially delayed start of reforms. Firstly, broader assessments on transition progress are presented, mostly based on the EBRD indicators. Since the actual success of reforms conducted as well as their speed and pace of implementation, cannot be estimated correctly unless inherited conditions are taken into consideration, several models have been specified and estimated that could show how and to what extent initial conditions affect the transition progress of transition economies. The results obtained for the entire set of transition countries are subsequently applied to the case of Montenegro. The results lead to a conclusion that reforms in the country proceeded at a faster pace after the 1999 but were primarily directed to privatisation and liberalisation issues while institution building is slightly delayed and stays below an accessible level regarding initial and inherited conditions in Montenegro.

There are at least three reasons why many transition economies succeeded by pursuing policies that are very different from radical economic liberalization (shock therapy), which is normally credited for the economic success of Central European countries. First, optimal policies are context dependent, specific for each stage of development, so what worked in Slovenia cannot be expected to work in Mongolia. Second, even for countries at the same level of development, reforms needed to stimulate growth are different; they depend on the previous history and on the path chosen. The reduction of government expenditure as a share of GDP did not undermine significantly the institutional capacity of the state in China, but in Russia and other CIS states it turned out to be ruinous. It is the growth diagnostics that should reveal the missing ingredient of economic growth. Introducing this “missing ingredient” should not, however, result in the destruction of other pre-conditions for growth. The art of the policymaker is to create markets without causing government failure, like it happened in many CIS countries. Third and most importantly, there are long-term trajectories of development that are path dependent: once the country gets on a particular trajectory, it is sometimes better to stay on track because the costs of a transition to a seemingly superior trajectory may be prohibitively high.

Economic success is ever more based upon the effective utilization of intangible assets such as knowledge, skills and innovative potential as the key resource for competitive advantage. For transitional countries, such as Romania and Bulgaria, the efficiency of research and development activities is particularly important, since technological progress is one of the core aspects of economic growth. In this article we describe the common features of the two countries, but also the existing differences with respect to the knowledge based economy. There are significant regional differences within the countries and marginal regions must also close the gap with the more developed regions. This paper analyzes research efficiency at the regional level for NUTS2 regions from Romania and Bulgaria between 2003 and 2005, applying a DEA framework. Our main finding is that Bulgarian regions are more efficient in R&D activities compared to Romanian ones. The only Romanian efficient region is Bucuresti Ilfov, while the other two efficient regions are rather small Bulgarian regions, with fewer resources. They show a remarkably high level of research efficiency, whereas some of the larger regions (both from Romania and Bulgaria) lag behind.

This paper examines driving forces of economic growth in the second transition decade, by testing which determinants from the first decade remain dominant, and which new factors appear in explaining growth. To this end a panel simultaneous equation model is estimated based on a sample of 27 transition countries in the period 1999- 2009. According to the main findings of the paper initial conditions do not play a role in determining economic growth in the second decade, but macroeconomic stabilization and structural reforms still matter. However, in contrast to the first decade, the overall impact of structural reforms is not positive, indicating that difficult progress with reforms in the second decade could slow down economic growth. Moreover, EU membership seems to have the additional effect of slowing down the growth of the accessing countries, meaning that once a transition country becomes an EU member it has a similar growth path to other EU countries in terms of lower growth rates. All this indicates that only countries that undertook fast reforms in the early phase of transition experienced significant benefits from reforms, achieving higher levels of economic development and becoming closer to developed EU countries. Finally, investments and openness of the economy appear as new important determinants of growth.

Eastern European Countries have attracted large FDI in the last decade, so, accordingly to the theoretical literature, they should receive significant gains from inward foreign direct investment in terms of economic growth. However, often it is neglected the fact that the benefits of FDI vary greatly across sectors: primary, manufacturing and services. This paper, starting from a critical review of recent studies, proposes an empirical analysis of the role of FDI, broken down by sectors, in promoting growth in 12 Eastern European Countries (EEC) for the period 1999-2006. - Nell’ultimo decennio i paesi dell’Europa dell’Est hanno attratto ingenti flussi di Investimenti Diretti per cui, in linea con un ampio filone della letteratura, significativi dovrebbero essere i benefici derivanti in termini di crescita economica. Tuttavia, spesso non si tiene in considerazione il fatto che tali benefici variano fortemente tra settori: primario, manifatturiero e terziario. Questo lavoro, partendo da una rassegna critica degli studi sul tema, propone un’analisi empirica del ruolo degli Investimenti Diretti, considerati a livello settoriale, nel promuovere la crescita in 12 paesi dell’Europa dell’Est per il periodo 1996-2006.

The paper demonstrates why the transition process is taking more time than predicted and why many countries are still far away from the projected goal: a developed market economy. Analyzing the causes and re-examining the endogenous character of the transition progress, the authors conclude that the majority of reforms were implemented at a pace conditional on the initial, pre-transition conditions. The results obtained show a significant impact on the economic and institutional heritage of a country, which lasts much longer than was predicted on the eve of the reform process: initial conditions strongly and significantly affect the speed of transition throughout the entire observed period (1989-2007). They also affect the performance of a country: in the first years the transition progress may affect growth in a positive way, but later it becomes insignificant. This can explain some growth peculiarities previously remarked when transition countries were analyzed by means of long-run growth models. Using Barro and Levine-Renelt models the authors show that despite somewhat better results for the second decade of transition many peculiar patterns remain, which could temporarily block poorer transition economies in their attempts to catch up and cause unnecessary losses since transition policies were not properly adjusted to the initial conditions.

The transition of former socialist countries to capitalist economic system is modelled. The transition is entirely defined by three empirical parameters and the model describes only the evolution of real GDP per capita since the start of the disintegration of socialism. It is found that the transition has practically finished in many Central and Eastern European countries and their economic evolution is driven by forces associated with capitalist system. In the long run, the future evolution of the former socialist countries has to follow the same path as observed in other developed countries in the past. Even in the case of perfect economic performance, the studied countries will never catch up the most advanced countries. In Russia and some countries of the Former Soviet Union, the transition process has not been completed.

This paper uses the 2002 Albanian Living Standards Measurement Survey to model whether an individual has attempted to migrate conditional on having previously considered migrating. The study addresses the methodological concerns that arise from potential selection bias and empirical issues associated with gender differences. We test for the presence of selection bias using a bivariate probit and apply an Oaxaca-style decomposition technique to analyse gender differentials in the conditional probability of attempted migration. We focus on the roles an individual’s living standard, geographic location and local labour market conditions exert on the attempt to migrate. Our empirical findings suggest that there are significant differences in both the conditional probability of attempting to migrate and the relative importance of determining factors across gender.

Most economics journals take no substantive measures to ensure that the results they publish are replicable. To make the data and code available so that published results can be checked requires an archive. Top economics journals have been adopting mandatory data+code archives in the past few years. The movement toward mandatory data+code archives has yet to reach the open access journals. This is paradoxical; given their emphasis on making articles readily available, one would think that open access journals also would want to make data and code readily available. Open access economics journals should adopt mandatory data+code archives en masse. Doing so will give them a competitive advantage with respect to traditional economics journals.

Using Solow-Törnqvist residuals as well as two alternative measurements, we present the estimates of total factor productivity (TFP) growth in a sample of 30 European economies for the period 1994–2004. In most of Western Europe, we find a deceleration of TFP growth since 2000. However, the economies of ‘New Europe’ exhibit a higher level of TFP growth overall and have slowed less than those of ‘Old Europe’. In the new market economies of Central and Eastern Europe, we find both high TFP growth as well as acceleration in the second half of the sample. Regression evidence from Western Europe suggests that product market regulation may adversely affect TFP growth and may thus impair convergence.

All forecasts for transition countries - the 29 EBRD countries of operation - since mid-2008 have been repeatedly downgraded. The latest forecasts (May 2009) envisage an average income decline of 5 per cent in 2009 and only a small recovery of 1.4 per cent in 2010; performance is very diverse. In general, transition countries faced two shocks: a sudden stop and reversal of capital inflows, and an exports collapse due to the global slump. More specific factors include: 1) Home made sub-primes (domestic loans to households, enterprises and governments originally denominated in foreign currency); 2) External imbalances; 3) Worsening terms of trade for primary products exporters; 4) Fall or reversal of FDI and portfolio investment inflows; 5) Funds withdrawal by foreign banks; 6) External demand reduction; 7) Differences in initial positions and policy response. Earlier membership of the Euro by the new member states through a relaxation of Maastricht rules might have been beneficial, but the current crisis is no time for changing or bending rules. By comparison with the transition recession of the 1990s, the current recession is much smaller and shorter, it benefits from more generous assistance from the international community, and from the more enlightened fiscal and monetary policies now uncharacteristically recommended by International Financial Organizations.

The collapse of previously existing socialism was due to causes embedded in its economic mechanism, which are not inherent in all possible socialisms. The article argues that Marxist economic theory, in conjunction with information technology, provides the basis on which a viable socialist economic program can be advanced, and that the development of computer technology and the Internet makes economic planning possible. In addition, it argues that the socialist movement has never developed a correct constitutional program, and that modern technology opens up opportunities for democracy. Finally, it reviews the Austrian arguments against the possibility of socialist calculation in the light of modern computational capacity and the constraints of the Kyoto Protocol.

This paper evaluates the usefulness of business sentiment indicators for forecasting developments in the Chinese real economy. We use data on diffusion indices collected by the People's Bank of China for forecasting industrial production, retail sales and exports. Our bivariate vector autoregressive models, each composed of one diffusion index and one real sector variable, generally outperform univariate autoregressive models in forecasting one to four quarters ahead. Similarly, principal components analysis, combining information from various diffusion indices, leads to enhanced forecasting performance. Our results indicate that Chinese business sentiment indicators convey useful information about current and future developments in the real economy. Moreover, the results could be seen as support for the reliability of the official data on the real economy, as both survey and real sector data seem to reflect the same underlying economic dynamics. … But historically, we always observed in the past that the...

Im Dezember 2008 jährt sich der Beginn der wirtschaftlichen Öffnung Chinas zum dreißigsten Mal. Der Wachstumsspurt der Volksrepublik China seit 1978 übertrifft alles bisher Bekannte. Diese Dynamik ist umso beachtlicher, blickt man auf den gesamten Zeitraum seit der Gründung der Volksrepublik im Oktober 1949 zurück: Obwohl die Jahre 1949 bis 1978 einer Katastrophe gleichkamen, die Ausgangslage für die folgenden 30 Jahre kaum ungünstiger sein konnte, wird die Bilanz zur 60- Jahr-Feier der Volksrepublik zumindest aus ökonomischer Sicht außerordentlich positiv ausfallen. Seit der Öffnung und dem wirtschaftlichen Aufstieg zur zweitgrößten Wirtschafts- und Handelsmacht hat China Japan überholt und aufgeschlossen zur Europäischen Union als wichtigstem wirtschaftspolitischen Entscheidungsträger nach den Vereinigten Staaten. Diese Bedeutung Chinas spiegelt sich noch nicht in den Quoten von Weltbank und Währungsfonds oder der G8-Grupppe wider, aber dies ist nur eine Frage der Zeit. Wenn China das Wachstum der vergangenen Jahrzehnte aufrechterhalten kann, wird es in weniger als 15 Jahren die Vereinigten Staaten als größte Wirtschafts- und Handelsmacht der Welt ablösen. Die Voraussetzungen dafür sind vorhanden. China hat noch große ungenutzte Arbeitsreserven, ist Nettogläubiger der restlichen Welt und verfügt daher über Devisenreserven in einer bislang unerreichten Größenordnung, ist bald der größte Binnenmarkt der Welt und bleibt weiterhin attraktiv für ausländische Direktinvestoren. Reformen des Finanzwesens und Liberalisierung der Zahlungsbilanz können zusätzliche Wachstumsschübe auslösen. Die gegenwärtige Finanzkrise lässt China nicht unberührt, hat aber keinen nachhaltigen Einfluss auf die langfristige Entwicklung.

This paper examines the efficiency of the large-scale manufacturing sector of Pakistan using parametric as well as non-parametric frontier techniques. Production frontiers are estimated for two periods─1995-96 and 2000-01─for 101 industries at the 5-digit PSIC. The results show that there has been some improvement in the efficiency of the large-scale manufacturing sector, though the magnitude of improvement remains small. The results are mixed at the disaggregated level: whereas a majority of industrial groups have gained in terms of technical efficiency, some industries have shown deterioration in their efficiency levels. The results from both the approaches are consistent, and in line with similar studies.

Conventional wisdom suggests that the stocks of human capital were one of the few positive legacies from communism. However, if factories under communism were so inefficient, why would the education system not have been? Using the education production function approach and new data on educational inputs and outcomes from 1960 to 1989, we find evidence suggesting that the official human capital stocks figures were 'over-estimated' during the communist period. In other words, we find that the official human capital stock numbers are significantly higher than those predicted not only in relation to countries at similar levels of development, but also on the basis of educational systems with comparable features and efficiency levels.

A magyar versenyképesség tényezőiről és alakulásáról az elmúlt években számos elemzés született, de az üzleti környezet egyes elemeinek versenyképesség-rontó hatásait csak alig vizsgálták. A tanulmány ezek összefoglaló elemzésére vállalkozik, kiemelve a vállalkozások működéséhez alapvető termékek és szolgáltatások piacának versenykorlátozó működési zavarait, a hatósági eljárások túl magas költségeit, illetve a korrupcióellenes küzdelem és a versenyképesség néhány összefüggését. Journal of Economic Literature (JEL) kód: E26, H30, H83, K20, P27., A string of analyses has been made on the factors and development of Hungarian competitiveness, but far less attention paid to some elements of the business environment that are counterproductive in competitiveness terms. The study surveys these, especially market failures in the availability of essential products and services, excessive costs of administrative procedures, and links between increasing competitiveness and fighting corruption.

Zusammenfassung Aufwind im Westen der MOSOEL In den mittel-, ost- und südosteuropäischen Ländern (MOSOEL) klafft der Ausblick für das Wirtschaftswachstum auch weiterhin auseinander für die meisten der neuen EU-Mitgliedstaaten (NMS) wird eine langsame Beschleunigung des BIP-Wachstums beginnend mit diesem Jahr erwartet. Für 2015 soll das Wachstum durchschnittlich auf 3% ansteigen, um 0,2 Prozentpunkte mehr als im Vorjahr. Die Erholung erfolgt um ein Jahr früher als erwartet. Wesentlicher Faktor ist die bessere Entwicklung in der Eurozone. Auch am Westbalkan wird eine (wenn auch weniger dynamische) Verbesserung der Wachstumsaussichten für die gesamte Prognoseperiode 2015-2017 erwartet. Die wirtschaftliche Entwicklung 2015 in Weißrussland, Kasachstan, Russland und der Ukraine wird düster ausfallen und zum Teil noch schlechter sein als bisher erwartet. Für diese Länder sind die mittelfristigen Wirtschaftsaussichten auch mit substantiellen Risiken behaftet. Insgesamt sollte aber das verstärkte Wachstum in den MOSOEL für die österreichische Wirtschaft als Nachfrageimpuls dienen. Insbesondere die NMS sind für Österreich von zunehmender Bedeutung. English Summary Western CESEE countries in the ascendant The outlook for GDP growth in the Central, East and Southeast Europe (CESEE) region remains divergent we expect a gradual acceleration of GDP growth for most of the EU’s new Member States (NMS) starting this year. For 2015 growth is expected to increase to 3% on average, by 0.2 pp more as compared to last year. The recovery comes a year earlier than expected mainly based on favourable developments in the euro area. In the Western Balkans growth prospects will also improve over the whole forecast period 2015-2017, though slightly less dynamically. Growth performance in Belarus, Kazakhstan, Russia and Ukraine in 2015, however, will be dismal and partly worse than expected; the medium-term outlook for these countries is also fairly uncertain with considerable downside risks. Overall though, we should expect stronger CESEE growth to act as a demand stimulus for the Austrian economy. The NMS in particular are of increasing importance for Austria.

This paper focuses on the debate held in the twenties and thirties of the last century between libertarian economists and socialist economists, following the denial by the first ones of the feasibility of a socialist economy. This controversy is well known to specialists and has been widely commented. It seemed to me useful to initiate non-specialists in an original way: by having the controversy speaking by itself. We review the main contributions and summarise their arguments with, initially, the bare minimum of personal comments. Walrasian general equilibrium serves as a reference for the defenders of market socialism in the controversy. But the concept of competition behind this theory is very incomplete; it is purely passive. It follows that the market socialism which emanates from it is not really a MARKET socialism. It is lacking the competition which innovates. Markets for capital goods are also lacking in theses models. Our paper then turns to a new generation of socialist models involving this real competition. We review two models proposed by Bardhan and Roemer and then exhibit a personal model. This type of model is facing a modern criticism whose central concept is the "soft budget constraint".

Growth in the CESEE region will follow the unimpressive pattern displayed by the euro area. The longer-term convergence of income levels in the CESEE countries can no longer be expected to be as rapid as was assumed a decade or so ago. Growth in the period 2015-2017 is not going to deviate substantially from the pace recorded in 2014. For the new EU Member States growth is expected to remain slightly below 3% in the years to come. This implies an average growth differential of about 1.5 percentage points as compared to the euro area – about half of what it was before the global financial crisis. On the other hand, most of the countries in the region are also expected to evade the dangers of runaway inflation, fiscal deficits or excessive foreign borrowing that often plagued them in the past. These are the main results of the newly released medium-term growth forecast for the region by the Vienna Institute for International Economic Studies (wiiw). Depressed aggregate domestic demand has been the major factor behind anaemic growth. This is evidenced by disinflation (or even mildly deflationary tendencies) across much of the region, as well as the persistence of fairly high unemployment. There is some evidence of a ‘race to the bottom’ in terms of wage setting. While wage moderation strengthens profitability and external competitiveness, it also weakens disposable household incomes and thus slows down growth in domestic demand. Apparently, there is a trade-off between improvements in the trade balance and more rapid growth in domestic demand. Overall, GDP growth is being held ‘on a short leash’. Growth in public investment may be supporting economic growth, especially in those new EU Member States (NMS) that have access to EU funds. However, a proper rebound in private-sector investment is still lacking. Weak private-sector investment cannot be attributed to a ‘profit squeeze’ in the corporate sector. On the contrary, the corporate sector has been doing very well, at least in those NMS for which relevant data are available. The corporate sector as a whole still tends to lend rather than borrow. The means available to the corporate sector appear to be plentiful at present – but the sector still prefers to lick its wounds inflicted by former excessive borrowing or extend loans (primarily to the public sector) rather than to invest productively. Loans are stagnant even in those instances where interest rates are relatively low. With a few exceptions (largely on the region’s periphery) the stocks of loans to the non-financial corporate sector increased marginally at best in 2014. This may reflect firms’ pessimistic assessment of future growth in demand, increased ‘liquidity preference’ or the relative abundance of the means at their disposal. Non-performing loans are linked to a high share of borrowing in foreign currencies. The recent strengthening of the Swiss franc will bear some negative consequences for those firms and households that borrowed heavily in that currency in the past. New evidence supports the claim that the countries with floating exchange rates fare better in the medium to long term. They tend to avoid irreversible currency overvaluation, whereas the countries with fixed exchange rates do not quite avert it. It is argued, however, that despite the rigidity of the exchange rates, overvaluation can be avoided – at least in the medium term. All the CESEE countries are running up fiscal deficits. Current account deficits are still depressed. Net national lending in the NMS tends to be positive. This is a consequence of current savings in the private sector in the NMS generally running ahead of gross fixed capital formation in that sector. On average, output growth across the NMS will become more uniform in 2015 – albeit not any faster. Average growth will remain at 2.7% in 2015. Some acceleration in marginal growth is to be expected in the biennium 2016-2017. Unemployment in the NMS will recede only gradually. Low inflation will prevail in 2015, but it will gradually return to more normal levels in 2016. Under sustained – albeit rather anaemic – growth, the current account balances will deteriorate (although they will still remain comparatively low). Growth is hardly accelerating in the (current and potential) EU candidate countries either. Output in those countries is not expected to grow faster than in the NMS. Turkey, Macedonia and Kosovo may fare slightly better than the rest of the group, with growth rates of above 3% in 2015. However, with the exception of Turkey, those countries seem to have put high inflation behind them. Nonetheless, their unemployment figures continue to be dismal (less so only in Turkey). They will also run high (or even very high) current account deficits. Most of the successor states to the Soviet Union will perform rather badly in 2015. Ukraine’s output will continue its free fall as many of the country’s industrial centres have become battlefields. A drop of 5% in economic growth is expected for 2015. The decline in world market prices for energy carriers will negatively affect both Kazakhstan and Russia, with real output in the latter country dropping sharply by almost 4% in 2015. A similar fate will befall Belarus a country that relies heavily on exports to Russia and Ukraine. However, assuming a peaceful resolution to the Ukrainian conflict in 2015, it is expected that all the successor states will resume moderate growth in 2016 or 2017.

This paper is a reinterpretation of the work done of the authors several years ago and it underlines the political risk of the countries that are member of the EU11 (European Union segmented at 11 countries that have geographical and strategic similar positioning) zone shaped by the World Bank in the year 2013. The research paper is targeted to underline the evolution between the peak of the crisis financial output’s slope and the result of the reforms implemented at the level of the European Central Bank and at the level of external regulators like the European Commission, the International Monetary Fund and the World Bank. The authors followed this path redundant to the fact that the three of them have specific backgrounds, from ecology, corporate governance and business related, and for that the authors tried to develop a path that shows the development of general risk at country level and macro-zone level using also Business Intelligence practices.

The global crisis, which first emerged in 2007–2008, has remained the major factor determining the socioeconomic development of the world’s leading countries, Russia including. In this case, we view a crisis not as a phase in the cyclical fluctuations between growth and decline (or acceleration and slowdown) as part of the development of a given country or group of countries. Instead, we are speaking of a sufficiently lengthy turbulence period when, as a result of some profound shifts, a new economic growth model comes to the fore and begins to strongly influence the socioeconomic situation and the global economic and political equilibriums.

Durch Vergleich aggregierter Statistiken und ausgewahlter empirischer Studien zeigt dieser Beitrag, dass 25 Jahre nach der deutschen Einheit sich die Merkmale und Ergebnisse der Arbeitsmarkte in West- und Ostdeutschland in mancher Hinsicht weitgehend angeglichen haben, andererseits aber immer noch deutliche Unterschiede bestehen. Wahrend bei den Arbeitsnachfrageentscheidungen der Firmen und bei der Vertretung von Arbeitnehmern durch Betriebsrate und Gewerkschaften keine substanziellen Unterschiede festgestellt werden konnen, liegen die beiden Teile des Landes beim Arbeitsangebot, der Arbeitsproduktivitat, den Lohnen und der Tarifbindung weiter auseinander, und sie unterscheiden sich deutlich in der Arbeitslosenquote. Diese Unterschiede durften beobachtbare und unbeobachtbare Merkmale okonomischer Akteure wie auch Unterschiede im Verhalten, bei Normen und bei individuellen Einstellungen widerspiegeln.

We examine the role of financial development in economic growth in the former Communist countries of Central and Eastern Europe and the Commonwealth of Independent States during the first two decades since the beginning of transition. These countries, which had undeveloped financial systems under Communism, provide an interesting test of the relationship between financial development and growth. Our study is the broadest in terms of coverage and time period. We find that measures of financial market efficiency and competitiveness are more important than the size of the market in terms of promoting economic growth.

We evaluate the effect of the 1989 shock over economic development in four Eastern European countries. We apply a counterfactual approach and define the shock alternatively as the trigger for economic openness, political competition, or both. The main result is an effect of economic freedom large than the one of democratization. In Poland and Bulgaria we find a positive impact of economic freedom, while in Bulgaria there is also a smaller effect of democratization. In Albania, after an initial recession, economic freedom helps recovery. Finally, Romania does not show any robust effect.

Este artículo analiza el crecimiento económico de las economías en transición de Europa y Asia Central en 1989-2005, y señala los factores que ayudan a explicar las diferencias. El ejercicio econométrico muestra que los índices más conocidos de derechos de propiedad, corrupción, libertad económica, incidencia tributaria y libertades civiles no son estadísticamente significativos. Las variables estadísticamente significativas son el grado de fraccionamiento étnico y el índice de democracia, ambos correlacionados negativamente con el crecimiento del PIB. El análisis muestra la necesidad de instituciones nacionales efectivas que hagan cumplir las normas legales y generales del juego económico, cosechen los efectos positivos de la democracia, ayuden a resolver los conflictos internos y superen el legado económico negativo de las divisiones étnicas.

Employing a probit and Logit model, this paper demonstrates that small firm development, conceived of in terms of structural, behavior and performance features, is correlated with regional location in Poland. Regional GDP is also shown to be polarizing. The paper uses original data that samples the small firm stratum in two contrasting regions, Gdansk and Lublin. The following variables were shown to be significantly correlated with regional location: legal structure, subcontracting, technological level of the products of the firm, average wage and intention to expand turnover. Policy implications are discussed including the desirability of a regionally differentiated small firm policy that reflects the level of small firm development in a particular region.

In this editorial statement we summarise some of the discussions we have had in the last months regarding the risks associated with the use of indicators for the measurement of research outputs, and how these risks should affect the management of the European Journal of Government and Economics. In particular, we focus on the consequences of the so-called Goodhart’s law, which states that when a measure becomes a target, it ceases to be a good measure. We also explain the latest developments in the journal in the light of our previous editorial statements, and present our strategy for the upcoming years.

Summary Despite near stagnation in the euro area and the negative impact of the Ukraine crisis, in most of the NMS economies and some of the Western Balkan countries growth prospects are viewed as positive. While the NMS economies will preserve their positive growth differential vis-à-vis the EU-28, Russia and Ukraine are facing a deterioration of their economic performance. External factors have had a major impact on growth performance in the CESEE region. Financial transfers from the EU have lent essential support to economic growth in the European Union’s new Member States (NMS). Investment and operational costs funded via those transfers have become an integral and increasingly important part of aggregate demand in the NMS economies. 2013 and 2014 have been among the strongest years in terms of transfers in the framework of the EU cohesion policy. Their impact is comparable to that of fiscal stimuli, albeit better inasmuch as they do not give rise to new debt. A possible disadvantage compared to classic fiscal stimuli is that transfers have no steerable relation to business cycles. In the eastern part of the CESEE region, the Ukraine conflict has had a pronounced negative impact on economic growth. 25 years after the fall of the Iron Curtain, the current crisis in relations between Russia and the West is evolving into a dangerous geopolitical conflict. In Ukraine, the main victim of the conflict, the economy may decline by 8% over the current year. In Russia, the costs of the conflict are estimated to be to the tune of about 1% of GDP, primarily on account of increased investment risks and the financial sanctions. The impact on the individual EU countries differs according to their exposure to the Russian market. The Baltic States and some other NMS will be those most affected on account of their trade channels with estimated losses in the order of up to 0.4% of GDP. The global financial crisis has shattered the rapid expansion of financial intermediation in nearly all of the countries in the region; recovery of crediting activities is still fragmentary and weak. High levels of non-performing loans are a major concern throughout much of the region. There seems to be a justified concern over the region having entered a period of ‘creditless recovery’ which threatens to be much slower than a recovery with strong credit growth. The outlook for GDP growth in the CESEE region is again fairly diversified. Compared to 2013, the growth performance is expected to improve in twelve and deteriorate in nine of the twenty-one countries in the region in 2014. The general medium-term trend for the NMS as a whole is seen to be positive in most of these countries, we expect a gradual acceleration of GDP growth; exceptions are Hungary and Slovenia where a deceleration is forecast, and Poland where the relatively high GDP growth rate will remain practically unchanged. For the current year, the assumption is that the NMS will grow by 1.8 percentage points higher than expansion in the euro area and 1.3 pp above the EU-28 average. In 2015, the gap in favour of NMS growth performance will become somewhat narrower 1.5 pp relative to the euro area and 1.1 pp to the EU-28 average. For some of the countries in the Western Balkans, growth prospects will only improve over the period 2015-2016, closely related to the damage caused by the floods this summer. Turkey will continue to register remarkable economic growth. Growth performance in Kazakhstan, Russia and Ukraine will worsen in the current year compared to 2013; the medium-term outlook in Russia and Ukraine is, depending on the evolution of the political crisis, fairly uncertain with considerable downward risks. As for our forecasts for 2015 and 2016, a further weakening of performance in the euro area poses a downward risk, while a longer lasting drop in oil prices will represent an upward risk, except for energy exporters Russia and Kazakhstan.

The objective of the paper is to contribute to an explanation of Russia's economic decline during its transition to capitalism. The authors argue that, to an important degree, the dismal performance of the Russian economy stems from the overall vision underpinning the transition to capitalism, and to the specific economic policies emanating from that vision. The paper gives first an account of the basic facts regarding Russia's economic depression in the 1990s, followed by the authors' understanding of some of the main economic policies applied, stressing important peculiarities generally overlooked in most studies. The third section analyzes the impact of some of the main economic policies of the Russian transition and ponders whether better alternatives existed. The fourth section briefly assesses the return of economic growth from 1999 onwards. The last section presents conclusions. JEL Codes: E65, O52, P21, P24, P27, PSL Quarterly Review, V. 58, N. 232 (2005)

The paper gauges export demand elasticities for Russia using an Error Correction technique within a cointegration framework. An extended version of the Imperfect Substitutes Model has been implemented to estimate the sensitivity of Russian exports without oil components to price and to Russian and world income. Our results suggest a robust and negative long run cointegration relationship between the real effective exchange rate, defined as the weighted average of the rouble's exchange rates versus a basket of the three currencies with the largest share in the trade turnover adjusted to incorporate inflation rate differences (the ratio of the domestic price indices to the foreign price indices), and Russian exports. An increase in exports by 24 % is caused by a real depreciation by 10 %. Furthermore, a 10 % growth in world income leads to a 33 % rise in exports. Finally, exports drop by 14 % whenever a 10 % increase in domestic income occurs.

This paper examines the changes in regional and sectoral inequality that accompanied economic transformation in Russia and China throughout the 1990s. The experiences of the two countries are widely viewed as having been polar opposites. While the Soviet collapse had adverse consequences for many parts of the post-Soviet population, the Chinese experience produced a continuing rise of average living standards. Nevertheless, both countries experienced a drastic increase in economic inequality. In both cases, regional inequalities rose more sharply than inequalities across sectors but within regions. In particular, major urban centers gained dramatically relative to the hinterlands. Also, in Russia as in China, those sectors exercising the largest degrees of monopoly power gained the most (or lost the least) in relative terms. In both countries, the respective position of finance improved greatly, while that of agriculture declined. The decline of agriculture in China, however, was not as precipitous as in Russia, and certain sectors, such as education and science, maintained their position in China in a way that was not possible for them in Russia.

This paper analyzes the national and regional (NUTS-2) employment performance and convergence for various aggregations of 27 European countries (EU-25, plus Romania and Bulgaria), mainly using the three employment rates (total, female, older worker) adopted by the European Employment Strategy (EES). At the national level, this analysis confirmed the existence of considerable differences in employment performance between and within the various country aggregations. Empirical analysis highlighted the remarkable net job creations in the EU-15 (and EMU-12) for the period 1997-2003, accompanied by a (national) convergence for all three employment indicators. As regards total employment rates, significant converging trends also emerge at the regional level for both EU-15 and EMU-12 aggregations. In the eight Central European Countries, new EU members (8 CEC-NM), a  diverging trend in the total employment rate began in 1999, whereas converging dynamics were limited to the employment rate of older workers in the period 1998-2001. Regional analyses showed significant  diverging dynamics in the total employment rates (1999-2003) for the eight CEC-NM regions. At the national level of analyses, the relationship between “progress in transition” and employment performance was also briefly examined. Results show that a simple, stable correlation does not exist. However, a weak U-shaped relationship existing in 1998 shifted downward and evolved toward a positive link in 2003. The main results of cluster analysis of the 53 regions of the ten CECs confirmed a high level of regional labour market diversification, and the fact that sector structure affects employment performance significantly

The article attempts to define the relevant yardsticks that can be used to delineate the end of the transition process or, alternatively, a second stage in the post-socialist economic transformation into market capitalism. A first benchmark is EU accession, but it does not apply to non accession transitional economies. Moreover, a delay is going to appear between accession and the full benefit of common policies – a second transition period will open in May 2004. Convergence criteria are likely to postpone the end of transition for decades, if not for ever. Institution building varies significantly among transition countries, but the non accession countries are trapped for a long time in a no man’s land between the former system and a market economy with its necessary institutions. Our privileged analysis is that transition ends when the economic phenomena that are specific to transition will vanish (and the associated concepts will disappear). These are assumed to be transformational recession, transitional unemployment, barterisation, the typical informal sector and managerial entrenchment. They are not going to fade away without a second stage of transition.

This paper tests whether there is a macroeconomic cost of a reform reversal during transition. A reform reversal is defined as a downgrading in the level of an average reform indicator. This is important both from an empirical and a theoretical point of view. In the standard empirical framework the current level of reform affects growth negatively, while the lagged level affects growth positively. This nonlinear effect is shown to imply a counterintuitive, short-lived, or at best an insignificant, positive effect of a reversal. From a theoretical point of view however, most models assume a reversal to be costly. The existence of reversal costs is even crucial for gradualist strategies to dominate big bang strategies in the presence of aggregate uncertainty. In a simultaneous equation system with growth and the level of reform as dependent variables we explicitly introduce a reversal parameter. Empirical results suggest that a reversal generates an immediate negative contribution to real output growth. Taking into account the level of reform a country achieved, a reversal is found to be more costly at higher levels of the reform indicator.

This article starts with the increasing differences between Central and Oriental economies since the beginning of the transition process. The countries that are most favorable to Foreign Direct Investment (Hungary, the Czech Republic and to a lesser extent Poland) enjoy better results than the other countries: they have reaped substantial benefits and many new companies have been set up. As a result all Eastern Europe transition economies are now turning to practices favoring Foreign Investment. In this respect Balkan countries are following suit, with some delay but with a lot of determination, and could learn from the Hungarian experience.

The differences in the transformation process have resulted in a diverging economic development in Hungarian and Romanian regions while their contacts have intensified. The less developed part of a more developed country meets the more developed part of a lesser-developed country. A firm- survey carried out on the two sides of the border between Hungary and Romania shows that firms take advantage of the closeness of the other region, at least in terms of foreign trade. We find no evidence for the migration of the workforce from the lower-salary region toward the higher-salary one. The sample supports the hypothesis that Hungarians from the border region invest in the nearby Romanian region. Although the time of EU accession is far away compared to the time-horizon of firms, substantial changes can be foreseen for the time when Hungary becomes a member but not Romania. Hungary may lose its attractive- ness for Romanian firms as a bridgehead and easily accessible country.