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The Northeast region has struggled to restructure and modernize its economy during China’s transformation into a global power, missing the opportunity to benefit from foreign trade and investment. ...

Import demand has been a major research topic in international economics for the past 80 years because of its importance for analyzing trade and evaluating trade policies. The goal of this paper is to survey the literature and conduct a meta-analysis of empirical studies on import demand with the intention of clarifying the effect of economic development on income elasticity. In particular, we test the hypothesis that higher income levels are associated with a more elastic import demand. We apply a combination of parametric and non-parametric methods on estimates from a sample of 152 papers published over the period 1975-2014 and find that this relationship is significant and robust. Specifically, kernel densities of income elasticity estimates for high-income countries in North America and Europe are shown to exceed those for poorer parts of the world. The results from quartile regressions confirm this pattern and establish its robustness when controlling for the effect of model specifications.

Regional economies in emerging countries vary greatly in terms of their global integration. External shocks, therefore, require adjustment mechanisms that reflect local conditions. This paper focuses on the role of real exchange rates (RER) in the economic performance of regions. In particular, we use monthly data to construct RER for 77 Russian regions over the period 2000–2016. The results validate the adoption of a regional perspective by showing nontrivial differences across regions. Oil-producing and resource-based regional economies experienced much larger RER movements and higher volatility. Overall, RER appreciated steadily until a major drop in 2008, and then, again in 2014. Growth regressions show that RER depreciations have a stimulating effect on regional performance but only in the short run. These results confirm previous findings indicating that RER are a key facilitating factor but not a major determinant of growth and are thus unlikely to produce sustainable development.

Due to the considerable distances from the major sales markets of Russia, the Far East has close ties with markets of the countries in the Asian-Pacific region (APR). The current expansion of trade and economic interactions with these countries has a positive effect on the economic development of the Far East. Reducing various barriers to trade with the APR countries can increase the scale of bilateral trade, acting as a source of growth and development for the economy of the Far East. To determine the ranges for increasing trade, the potential for trade interactions arising from the leveling of various barriers was quantified. It is shown that for the Far East a gradual change in the intensity of foreign trade relations was observed in favor of geographically close foreign markets, the Asia-Pacific countries. Based on the constructed gravity dependence, trade barriers for interactions between the Far East and Asia-Pacific countries were estimated and decomposed into the ad valorem equivalent. It was determined that the major source of tariff barriers was the tariff burden on exports and imports, formed by the Russian side. The decomposition assessment showed that the comparative institutional barriers between the Far East and the Asia-Pacific countries were significantly greater than the comparative tariff barriers. This circumstance indicated the insufficiency of reducing tariff barriers for intensifying the bilateral trade between the Far East and the Asia-Pacific countries. The analysis made it possible to assume that the introduction of various types of weakly motivated trade restrictions by the Russian side led to a shift in the customs burden from tariff barriers to institutional ones. In addition to the Republic of Korea, a general vector of intensification of trade between the Far East and the Asia-Pacific countries was observed for China. The estimates obtained suggest that the comparative institutional barriers between the Far Eastern regions and China will continue to decline. It is shown that the leveling of comparative institutional barriers between the Far East and Japan can significantly increase trade interactions between the Russian macroregion and the APR market.

Rapid growth in large emerging economies has been spread unequally across their regions leading to growing income disparities. This paper examines the distribution of regional output per capita and the evolution of its shape in Brazil, China, India, and Russia from the mid-1990s to the mid-2010s. A comparative analysis of convergence is conducted using a nonparametric methodology. The results reveal different distribution dynamics across the four economies. Chinese regions with below-median output per capita have the highest probability of transitioning toward higher-income levels, while their Brazilian counterparts are trapped at the bottom of the distribution. Although India has the lowest and Russia one of the highest regional income inequalities, they display similar divergence patterns exemplified by high persistence at both ends of the distribution. Our findings indicate that government spending and the rule of law are the major driving forces behind regional convergence, except in Russia where they have the opposite effect. Innovation and property rights also promote convergence in China, but cause regional divergence in India.

The lack of developed financial markets and well-functioning transmission channels assigns monetary aggregates in emerging economies the potential role of nominal anchor, intermediate target, or informational variable for monetary policy. The effectiveness of this approach relies crucially on the correct measurement of money, which is not fulfilled by the conventional index based on the simple sum of financial assets. This paper calculates alternative Divisia monetary aggregates for Russia over the period 1998-2019, which account for the level of liquidity of a given monetary asset by assigning weights according to the usefulness of that asset for transaction services. Divisia is found to follow a growth pattern markedly different from the simple sum, whereby deviations between the two series are even more pronounced when foreign-currency accounts are included. We conduct three empirical exercises to demonstrate the advantages of Divisia over the simple sum. Divisia confirms the stability of the money demand function and reflects portfolio shifts in response to changes in the opportunity cost of money. Divisia-based GDP nowcasting performs better in times of financial turmoil than the simple sum. Lastly, Divisia mitigates the price puzzle phenomenon relative to the conventional measure. We conclude that Divisia monetary aggregates would improve the effectiveness of monetary policy in Russia.

Because of its significant remoteness from the main markets of Russia, the Far East region is closely tied to the markets of the Pacific Rim countries. Expanding trade and economic interactions with them has a positive influence on the development of the Far Eastern economy. Reducing trade barriers with the Pacific Rim countries could increase the value of bilateral trade, becoming a source of growth and development for the economy of the Far East region. To determine the scope of the trade increase, we evaluate the potential of bilateral trade interactions occurring as a result of lowering various barriers. The findings indicate that the Far East region has gradually deepened its trade interactions with neighboring Pacific Rim countries. Based on the gravity model, we evaluate and decompose trade barriers in ad valorem equivalent for trade interactions between the Pacific Rim countries and the Far East region. The main source of tariff barriers between the Far East and the countries of the Pacific Rim were the export and import customs duties imposed on the Russian side. The decomposition shows that the comparative institutional barriers between the Far East and Pacific Rim countries were significantly above the tariff barriers. This suggests that the lowering of tariff barriers was not sufficient for the purpose of intensifying bilateral trade. Our analysis implies that trade limitations initiated by the Russian side have caused a shift from tariff barriers to institutional ones. The trade between the Far East region on the one hand and China and the Republic of Korea on the other hand has intensified. The findings suggest that the relative institutional barriers with China will continue decreasing. Reducing the institutional barriers between the Far East and Japan could significantly increase trade interactions between the region and the Pacific Rim market

Over the past decade, the Russian government has embarked on an ambitious program of economic development in the Russian Far East (RFE), envisioning the transformation of the region into a hub for trade with the Asia Pacific. This paper explores the extent of RFE’s trade integration with both key partners around the world and the rest of Russia. In particular, we calculate the region’s trade potential on the basis of mean predicted values from a gravity model using three samples that offer different perspectives. Actual trade flows are then evaluated relative to the potential and the resulting index is analyzed for various years and countries. Based on the findings of the paper, we can draw several conclusions. First, RFE exports to Northeast Asia have intensified over the period 2008–2017, allowing the region to surpass its potential, although there seems to be room to grow with respect to China. The Russian government could facilitate cross-border trade by further reducing non-tariff barriers and improving transnational infrastructure links. Second, the deepening integration with Northeast Asia has been achieved at the expense of trade links with the rest of Russia. This might appear worrisome, given the geostrategic importance of RFE for Russia. At the same time, it might simply reflect the fact that RFE’s natural resource exports are increasingly diverted to the Asia Pacific, which is more efficient than to ferry them to Western Russia, where they might end up being re-exported to Europe. Similarly, it might be more efficient for RFE to import from China than from more distant parts of Russia. Third, imports from Japan and Korea are far below potential, although these two countries can play a key role in promoting the economic development of RFE

The present study assesses the extent of institutional barriers to trade between the Russian Far East (RFE) and Northeast Asian countries by decomposing the overall costs of cross-border trade. The results indicate that the duties imposed by Russia on RFE exports are the main determinant of tariff hurdles between RFE and Northeast Asia. The institutional barriers between RFE and China are shown to have decreased, while those with Japan have increased. Over the 2002–2017 period, institutional impediments to trade between RFE and China halved, whereas those between RFE and Japan almost doubled. The findings suggest that, in terms of mitigating institutional barriers, there was a divergence between almost all RFE regions and Japan, and convergence with China and South Korea. For most RFE regions, institutional barriers with China have decreased, indicating a general convergence of the RFE economy with China. In general, China has inevitably emerged as an intermediary and an indispensable factor in the trade of RFE regions with Japan. Russian raw materials are processed in China and exported to the Japanese market. Japanese companies produce goods in China and export them to the Russian market. A similar model of economic interactions certainly exists for South Korea, but so far on a much smaller scale.

Closer integration between Central and Eastern Europe (CEE) and the EU has opened up channels facilitating the propagation of economic shocks from the core to the eastern periphery. This paper examines the effects of such shocks to economic activity and monetary conditions originating in the Euro Area (EA) on output, prices, money, and interest rates in 10 CEE countries over the period 2005–2018 using a bilateral restricted VAR framework. In contrast to previous studies, we use Divisia monetary aggregates and compare the effects of EA spillovers to domestic shocks. The results indicate that EA shocks explain the majority of variation across all macroeconomic indicators, with money supply shocks playing the most prominent role. Despite some heterogeneity, the impulse response of monetary aggregates to domestic and EA monetary shocks is almost identical across countries. The impact of the EA shock increases over time and persists, while the domestic shock dies out relatively quickly. Accordingly, we find no meaningful monetary independence in the majority of CEE countries. This is likely to prove detrimental to the effectiveness of monetary policies in CEE.

Odisha is one of the major rice producing states of the eastern region of India. But, the adoption of modern agricultural technologies like modern varieties (MVs) of paddy is still low and skewed across regions and farmer groups in the state even after five decades of inception of green revolution in India. The state has two distinct ecosystems because out of 6.5 million hectares of gross cropped area of the state, 49% is still rainfed and 51% is irrigated. The patterns of adoption of MVs of rice and constraints in adoption process differ in both ecosystems. On this background, the present paper tries to analyze the intensity of adoption of MVs of rice and its determinants in irrigated and rainfed rice ecosystems of the state. The study is based on the primary data at the household level collected by a multistage purposive sampling method. The sample included 300 farm households from six villages of two districts, i.e., Cuttack and Khordha. These two districts represent the irrigated ecosystem and rainfed ecosystem, respectively. The study found that the total study region shows an increasing trend in the adoption intensity with the rise in the size of operational landholding even though the absolute area for large farmer group is the lowest. This positive association is higher in the irrigated region than in the rainfed ecosystem. There is no huge difference in adoption intensity of MVs across the farmer groups in the irrigated region as compared to their counterparts in the rainfed ecosystem. From the tobit model regression results, the study has found a glaring difference between the specific factors influencing the adoption intensity in both ecosystems. Factors like education, farm size, land position, extension visits, credit accessibility, local market, seed availability, perception about taste of MVs and shorter maturity of MVs were significantly influencing the adoption intensity in irrigated ecosystem. But, in the rainfed ecosystem, variables like non-farm activities, soil quality, land position, seed availability, perception on shorter maturity and higher yield of MVs were the significant determinants of adoption intensity. The pooled sample regression results reveal that the ecosystem dummy variable plays a significant role in the adoption decision. Therefore, the study pitches for the development of irrigation facilities along with rigorous implementation of farmer field school program and strengthening of agricultural extension networks.

The CFA franc area is one of the oldest currency unions, but it has come under intense criticism recently for failing to promote economic growth and income convergence between member states. This paper examines the growth experience of the 14 member countries relative to a common benchmark over the period 1960–2011. In particular, we use a combination of parametric and non-parametric methods to study convergence patterns as well as growth dynamics and to identify the factors responsible for changes in relative per-capita income. The results indicate divergence tendencies that result in a bimodal distribution in the long run. The sharp devaluation of the CFA franc in 1994 increases intradistributional mobility which is directed towards lower income levels. The regression analysis suggests that openness, FDI, and financial development have a positive and robust effect on convergence in the currency union. info:eu-repo/semantics/publishedVersion

Import demand has been a major research topic in international economics for the past 80 years because of its importance for analyzing trade and evaluating trade policies. The goal of this paper is to survey the literature and conduct a meta-analysis of empirical studies on import demand with the intention of clarifying the effect of economic development on income elasticity. In particular, we test the hypothesis that higher income levels are associated with a more elastic import demand. We apply a combination of parametric and non-parametric methods on estimates from a sample of 152 papers published over the period 1975-2014 and find that this relationship is significant and robust. Specifically, kernel densities of income elasticity estimates for high-income countries in North America and Europe are shown to exceed those for poorer parts of the world. The results from quartile regressions confirm this pattern and establish its robustness when controlling for the effect of model specifications.

In the late 1990s, the World Bank and the International Monetary Fund (IMF) initiated a series of debt relief programs for highly indebted poor countries (HIPCs) based on the idea that high levels of indebtedness impede growth by discouraging domestic and foreign investment. This paper examines the relationship between external debt and growth with a focus on the effects of multilateral debt relief. In particular, we use a sample of 33 least developed countries (LDCs) over the period 1970-2010 to explore the impact of indebtedness on growth before and after participating in the debt relief initiatives. In contrast to previous studies, we employ a combination of parametric and non-parametric methods to investigate the linear and nonlinear aspects of the debt-growth relationship. In the non-parametric analysis, we model growth as a discreet-time Markov process and estimate the transition probabilities for HIPCs. The results show that lower debt levels stimulate economic growth. The average impact of debt on growth in HIPCs becomes negative at about 64 -78% of GDP depending on the initial growth conditions. In the period after joining the debt relief initiatives, HIPCs generally exhibited a higher chance of moving towards or persisting in the positive range of growth. However, this process was related to lower debt levels mostly in countries that had initially exhibited moderate to rapid growth, while debt relief seems to have been less relevant for future growth in countries that started off in a state of moderate economic decline. Furthermore, the results of the regression analysis show that the marginal effect of public and publicly guaranteed (PPG) debt on growth is negative and significant. Debt relief programs were found to mitigate the negative impact of debt, both after their initiation in 1996 and after the HIPCs reached their decision point. Generally, the overarching policy that can be drawn from this paper is that LDCs, and HIPCs in particular, should strive to reduce their PPG debt levels to at least below 64%-78% of GDP in order to experience and maintain positive growth rates, ceteris paribus . Notwithstanding, our findings also suggest that if HIPCs, and LDCs in general, want to reduce or maintain their debt to sustainable levels, they should adopt some of the conditions imposed by the international financial institutions on HIPCs as part of their macroeconomic policy framework, such as developing and implementing a poverty reduction strategy through a broad based participatory process.

The rise in electronic communications and the recent liberalization of the postal market in the European Union have put national postal-service providers in Central and Eastern Europe (CEE) under pressure to restructure and optimize their operations. The paper employs non-parametric methods to measure the relative technical and cost efficiency of CEE postal operators in terms of quantity-based and quality-based output indicators. The results indicate that inefficiency varies between 20% and 30%. Regression analysis attributes efficiency gains to increased competition, institutional reforms, less burdensome customs procedures, and population density, while use of electronic mail was negatively related to postal-service efficiency.

Using bilateral trade data for 16 service categories, this paper examines the patterns, evolution, and determinants of comparative advantage (CA) in U.S. services trade with China and India from 1992 to 2010. The results indicate that the U.S. has a CA in most services, except in more traditional ones, such as travel and transportation. However, India, and more recently China, gained a CA in modern services, such as computer and information services during the period considered in this paper. An examination of the distributional dynamics indicates that the likelihood of U.S. gaining CA over an initial position of comparative disadvantage (CDA) in its trade of a particular service with India is higher than the probability of losing its initial dominance. In contrast, the U.S. CA or CDA vis-a-vis China exhibits high levels of persistence over time. The regression results suggest that relative abundance of sector-specific labor, human capital, and FDI inflows have been significant sources of CA for the U.S. over both China and India.

This study analyzes the relationship between information and communication technologies (ICTs) and labor productivity growth in sub-Saharan Africa over the period 1975–2010. The results show that fixed-line and mobile telecommunications have a positive and significant impact on growth after penetration rates reach a certain critical mass. The thresholds are identified using nonparametric methods. Penetrations rates of between 20% and 30% for telephones and 5% for internet usage trigger increasing returns. FDI and openness are found to improve productivity and to help ICTs boost growth. Financial development serves as a possible transmission channel for the growth-enhancing effects of ICTs.

Russia’s trade with China has been steadily increasing over the past decade. But in recent months the economic cooperation between the two countries experienced a sudden boost that involved high-level meetings, a long-term multi-billion dollar contracts to deliver Russian gas to China, a ten-fold rise in the yuan-ruble trade on the Moscow Exchange, and the revival of a plan to build a bridge across the Amur River linking the two countries. The regions in Russia’s Far East located along the Chinese border are best placed to benefit from this intensification of cross-border ties. But are they really? In her book, Ryzhova is highly skeptical about such prospects and draws a bleak picture of Russia’s border regions where overly centralized decision making, bureaucratic rent-seeking, and informal hurdles impose trade barriers that impede economic integration with China. In fact, the author is so pessimistic that she does not see any sense in offering policy recommendations as is customary in economic studies. Restricting or eliminating informal networks that dominate cross-border trade is nearly impossible because the rent-seeking bureaucrats that design the relevant policies are themselves involved in these activities. In addition, decreasing the extent of centralization in economic decision making depends on politicians at the center who are not interested in ceding power to the regions. In the long run, Ryzhova sees no rational alternative to the full liberalization of cross-border ties

This chapter employs parametric and nonparametric methods to examine the impact of aid (quantity and quality) on growth in the former British and French colonies of Africa over the period 1975–2010. The quantity of aid is proxied by a quadratic term of the aid variable while the quality, by different source of aid. Results indicate that foreign aid exhibits diminishing returns when a countries’ legal origin is taken into account. Bilateral aid is found to be effective only in the former British colonies, while multilateral aid generates growth regardless of legal origin but only above a certain threshold. Moreover, good governance is shown to stimulate growth and improve aid effectiveness.

Sub-Saharan Africa (SSA) has long suffered from lagging productivity and excessive levels of indebtedness. Using both parametric and non-parametric techniques, this paper examines the impact of external debt on labour productivity growth and convergence across SSA economies over the period 1970–2010. The results indicate the presence of debt-overhang effects, regardless of model and sample specification. Debt reduction through the Heavily Indebted Poor Countries and Multilateral Debt Relief initiatives enhanced growth but was not successful in offsetting the debt-overhang effects. Moreover, excessive levels of external debt were responsible for divergence in output per worker over the early 1990s. Although this trend was reversed over the 2000s, reduction in debt through the debt relief initiatives seems to have been insufficient in helping heavily indebted countries in SSA catch up with the labour productivity levels of the best-performing economies in the region.

La comparaison des politiques economiques adoptees par la Roumanie et la Bulgarie de la fin du regime communiste a la periode recente fait ressortir les divergences qui distinguent les deux pays voisins balkaniques. Un accent particulier est mis sur l’evolution de leurs politiques monetaires. La perspective de l’adhesion a l’UE a ameliore dans un premier temps la performance de l’ancrage monetaire et du ciblage d’inflation, respectivement dans ces pays candidats. Cependant, par la suite la certitude de l’integration europeenne a augmente l’alea moral et a conduit a une hausse rapide de la dette privee surtout en Bulgarie et de la dette publique en Roumanie.

This paper traces the origins of the different monetary regimes adopted in Bulgaria and Romania in 1996–97 and examines their performance during the EU accession. The findings indicate that the constraints of the currency board in Bulgaria shifted economic activity towards the private sector, while the discretionary policies in Romania turned public finances into both a contributor and a response mechanism to economic imbalances. While the prospects of EU accession initially enhanced the performance of the monetary anchors, the implicit insurance of EU membership increased moral hazard and led to a rapid rise in private and public debt. The paper also explores the historical parallels between the monetary regimes of Bulgaria and Romania in 1996–97 and 1925–1940.

This paper examines labor productivity growth in the three main sectors in China in the context of regional convergence by employing a novel methodology and new sectoral data over the period 1978–2006. The results show that all sectors experienced major shifts in productivity but with different patterns. In agriculture and services, the uniform distribution has given way to a bimodal one. The secondary sector exhibits less polarization across regions despite higher mobility. Research and development (R&D) spending, human capital, and infrastructure are found to amplify regional divergence, while physical capital and foreign trade are identified as the key drivers of convergence.

The recent pressure on public finances in Bulgaria has exposed the need for a performance-based system of public funding for higher education. This article estimates the relative technical and cost efficiency of Bulgarian universities and explores the correlation between public funding and efficiency levels. In particular, a recent government proposal to use university rankings for the allocation of funds is evaluated with regard to efficiency. The results indicate that public universities are less efficient than private institutions, especially in teaching-related aspects. A larger share of the education market, fewer fields of study and more science-related majors result in efficiency gains. Efficiency is not a significant determinant of the amounts of subsidy allocated to a university, while the rankings of efficiency and funding are found to be negatively correlated. However, the rankings to be used under the proposed policy are positively related to cost efficiency, suggesting that the reform effort ...

In 2009, Korea Institute for International Economic Policy (KIEP) launched "Visiting Fellows Program (VFP)" with the view of advancing cross-border exchanges of knowledge, information, insights and expertise. Since its inception, the VFP has demonstrated that sharing thoughts and ideas through face-to-face contacts and dialogue works as a catalyst for enhancing mutual understanding among scholars and professionals with diverse background. By successfully implementing the VFP for the past 8 years, KIEP has been motivated to assume the role as a hub for international economic research in the region. As a host of the program, KIEP has many mandates. One of those tasks is to let more people know what has been accomplished through the program and how valuable it is. In an effort to do so, KIEP has published series of research every year. This volume, the 7th of its series, contains eight research papers contributed by 2015 Visiting Fellows. Publication owes many debts. Here I acknowledge just a few of them. First of all, I must express my deepest gratitude to the 2015 visiting fellows for their outstanding performances. My special thanks also goes to Ms. RIM Jeewoon and the staffs of the KIEP Publishing Team who worked very hard for the publication of this volume. The views expressed in this publication are the views of the author and do not necessarily reflect the views or policies of KIEP. KIEP does not guarantee the accuracy of the data included in the publication.

Following their EU accession, the new member countries from Central and Eastern Europe (CEE) must achieve sustainable price stability as one of the pre-conditions for joining the Economic and Monetary Union (EMU) and adopting the euro. This article examines the distribution dynamics of inflation rates in ten new EU members from CEE relative to the EMU accession benchmark inflation over the period 1990–2009. In contrast to previous studies, we use nonparametric methods to test for convergence in inflation rates between CEE and the EMU benchmark as well as within the CEE sample. Over the entire sample period, we detect a general shift in the CEE inflation distribution toward the EMU benchmark along with intradistributional convergence. However, this process is not uniform. In the early years, it was equally likely for CEE inflation rates to move toward or away from the benchmark. The resulting multimodal distribution gave way to a unimodal distribution in the years leading up to the EU accession, accompanied by a marked shift toward the EMU benchmark. In more recent years, emergence of a bimodal distribution signaled the stratification of relative inflation in CEE into two convergence clubs, which has intensified since the start of the global economic crisis.

Intra-industry trade (IIT) has gained in importance across Asia as a result of the rapid growth of Asian economies and their key role in the international fragmentation of production. This paper examines the level of IIT for 22 countries in East, Southeast, South, and Central Asia in 2003. IIT is measured as a multilateral trade-weighted index and is reported for ten different categories of goods in the primary and secondary sectors. In addition, the determinants of IIT are investigated using a Tobit regression model. The results indicate that ASEAN and the high-income countries in East Asia exhibit the highest levels of IIT, followed closely by China and India. R&D spending, openness, and a higher share of manufactured exports were found to promote IIT, while geographical distance and the difference in economic size had an adverse effect, especially for manufactured goods. The ASEAN free trade area was most prominently associated with IIT across all SITC categories. Central and South Asian regional trade agreements had a positive influence on IIT in primary products.

We perform a comparative analysis of regional growth and convergence in China, Russia and India over the period 1993–2003 by means of non-parametric methods and kernel density estimates. Our results indicate that wealthy regions were largely responsible for the rapid growth in all three countries. For China and India, capital dissipation was identified as the major determinant of regional growth. In Russia, capital deepening impeded positive changes in labour productivity, leaving technological change as the only source of regional growth. Furthermore, we find that the increasing regional income inequality in all three countries was driven by technological change which more than offset the convergence resulting from capital deepening in China and India.

We use nonparametric production-frontier methods to decompose the growth of labor productivity of Chinese provinces in the post-reform period. These techniques, combined with kernel density estimates, allow us to decompose the shift in the distribution of labor productivity without the need for many assumptions common in the empirical growth literature. We find that (1) the distribution of output per worker across Chinese provinces is multimodal, (2) technology change is decidedly nonneutral, (3) physical capital accumulation has been the major driving force behind the growth performance of Chinese provinces and (4) it attempts to drive convergence between provinces, but (5) minimal technological progress and human capital accumulation are key factors responsible for the regional disparities in China.

Interregional transfers can smooth shocks to regional revenue and prevent spending from varying across time. This paper estimates the amounts of expenditure smoothing provided by interregional net transfers to China's provinces over the 1952–2001 period. The findings indicate that net transfers minimized the volatility of provincial expenditure by cushioning a relatively large fraction of province-specific revenue shocks. However, aggregate shocks to revenue diminished the amount of smoothing, and extrabudgetary funds increased expenditure volatility. Rich provinces were better insured against province-specific revenue shocks than poor provinces. The cross-sectional disparity in expenditure smoothing widened dramatically after 1994.

Using bilateral trade data for 16 service categories, this paper examines the patterns, evolution, and determinants of comparative advantage (CA) in U.S. services trade with China and India from 1992 to 2010. The results indicate that the U.S. has a CA in most services, except in more traditional ones, such as travel and transportation. However, India, and more recently China, gained a CA in modern services, such as computer and information services during the period considered in this paper. An examination of the distributional dynamics indicates that the likelihood of U.S. gaining CA over an initial position of comparative disadvantage (CDA) in its trade of a particular service with India is higher than the probability of losing its initial dominance. In contrast, the U.S. CA or CDA vis-a-vis China exhibits high levels of persistence over time. The regression results suggest that relative abundance of sector-specific labor, human capital, and FDI inflows have been significant sources of CA for the U.S. over both China and India.

After more than two decades of transition and integration, countries in Central and Eastern Europe (CEE) still exhibit income levels that are significantly lower than the European Union (EU) average. This paper examines convergence in per-capita GDP between CEE and the EU over the period 1990-2012 by employing a combination of parametric and nonparametric methods, which provide more detailed insights than previous studies. The results indicate that the first decade of transition has been marked by divergence from the EU benchmark. In contrast, CEE countries experienced strong convergence over the 2000s, even in the face of the global financial crisis. However, the distribution of relative income evolved from a unimodal to a multimodal one, revealing growing disparities within CEE. Human capital accumulation and progress in economic reforms are identified as the key determinants of convergence, while financial deepening and price instability had a negative effect, especially in the past decade.

Following their EU accession, the new member countries from Central and Eastern Europe (CEE) must achieve sustainable price stability as one of the pre-conditions for joining the Economic and Monetary Union (EMU) and adopting the euro. This paper examines the distribution dynamics of inflation rates in ten EU members from CEE relative to the EMU accession benchmark inflation over the period 1990-2009. In contrast to previous studies, we use nonparametric methods to test for convergence in inflation rates between CEE and the EMU benchmark as well as within the CEE sample. Over the entire sample period, we detect a general shift in the CEE inflation distribution towards the EMU benchmark along with intradistributional convergence. However, this process is not uniform. In the early years, it was equally likely for CEE inflation rates to move towards or away from the benchmark. The resulting multimodal distribution gave way to a unimodal distribution in the years leading up to the EU accession, accompanied by a marked shift towards the EMU benchmark. In more recent years, emergence of a bimodal distribution signaled the stratification of relative inflation in CEE into two convergence clubs, which has intensified since the start of the global economic crisis.

Following their EU accession, the new member countries from Central and Eastern Europe (CEE) must achieve sustainable price stability as one of the pre-conditions for joining the Economic and Monetary Union (EMU) and adopting the euro. This paper examines the distribution dynamics of inflation rates in ten EU members from CEE relative to the EMU accession benchmark inflation over the period 1990-2009. In contrast to previous studies, we use nonparametric methods to test for convergence in inflation rates between CEE and the EMU benchmark as well as within the CEE sample. Over the entire sample period, we detect a general shift in the CEE inflation distribution towards the EMU benchmark along with intradistributional convergence. However, this process is not uniform. In the early years, it was equally likely for CEE inflation rates to move towards or away from the benchmark. The resulting multimodal distribution gave way to a unimodal distribution in the years leading up to the EU accession, accompanied by a marked shift towards the EMU benchmark. In more recent years, emergence of a bimodal distribution signaled the stratification of relative inflation in CEE into two convergence clubs, which has intensified since the start of the global economic crisis.

Bulgaria and Romania are neighbouring countries, which have always been rivals. Following the decision on EU enlargement to include Bulgaria and Romania (late 1999) and with membership negotiations already started (2004), the race between the two countries gained momentum and comparisons of performances in the areas of economy and democracy became a regular practice. Around late 1990s the two countries took different trajectories, although in the direction of EU and market economy. The great divergence is lying primarily in the choice of monetary regime. While Romania continued to pursue and enhance its discretionary monetary policy and since 2005 has moved to inflation targeting, Bulgaria made an abrupt turn in mid-1997 and introduced a currency board arrangement. In this paper, we investigate how the monetary regimes choice shaped the structure of both economies and the behaviour of the public and private sector, how they modified the mechanisms of adjustments and how they concentrate risks. We discus the institutional compatibility of monetary regimes with EU accession and EU membership using the theoretical insights form Dooley (1997, 2000) insurance model hypothesis. One of the main hypotheses, which we illustrate empirically, says that Currency board concentrate all economic activity and risks in the private sector, hence increasing of the private debt, while discretionary monetary policy leads to greater public debt growth and lower fiscal discipline. EU integration as well as the current crisis has different effects when combination with different monetary regimes.

Following their EU accession, the new member countries from Central and Eastern Europe (CEE) must achieve sustainable price stability as one of the pre-conditions for joining the Economic and Monetary Union (EMU) and adopting the euro. This paper examines the distribution dynamics of inflation rates in ten EU members from CEE relative to the EMU accession benchmark inflation over the period 1990-2009. In contrast to previous studies, we use non-parametric methods to test for convergence in inflation rates between CEE and the EMU benchmark as well as within the CEE sample. Over the entire sample period, we detect a general shift in the CEE inflation distribution towards the EMU benchmark along with intradistributional convergence. However, this process is not uniform. In the early years, it was equally likely for CEE inflation rates to move towards or away from the benchmark. The resulting multimodal distribution gave way to a unimodal distribution in the years leading up to the EU accession, accompanied by a marked shift towards the EMU benchmark. In more recent years, a bimodal distribution signaled the stratification of relative inflation in CEE into two convergence clubs, which has intensified since the start of the global economic crisis.

The paper examines the efficiency of Bulgarian banks and its determinants over the period 1999-2007. The levels of technical, allocative, and cost efficiency are estimated using a non-parametric methodology and then regressed upon a number of bank-specific, institutional, and EU-related factors. The findings indicate that foreign banks were more efficient than domestic private banks, although the gap between them narrowed over time. State-owned banks ranked last but their privatization resulted in efficiency gains. Capitalization, liquidity, and enterprise restructuring enhanced bank efficiency, while banking reforms had an adverse effect. The Treaty of Accession and EU membership were associated with significant efficiency improvements.

The paper examines the efficiency of Bulgarian banks and its determinants over the period 1999- 2007. The levels of technical, allocative, and cost efficiency are first estimated using a nonparametric methodology and then regressed upon a number of bank-specific, institutional, and EU-related factors. The findings indicate that foreign banks were more efficient than domestic private banks, although the gap between them narrowed over time. State-owned banks ranked last on average but their privatization resulted in efficiency gains. Capitalization, liquid ity, and enterprise restructuring enhanced bank efficiency, while banking reforms had an adverse effect. The Treaty of Accession and EU membership were associated with significant efficiency improvements.

Transition, integration et rattrapage : la convergence des revenus entre l’Europe centrale et orientale et l’Union europeenne Cet article examine la convergence du PIB par habitant entre les pays d’Europe centrale et orientale et l’Union europeenne sur la periode 1990-2012 en utilisant une combinaison de methodes parametriques et non parametriques, qui donnent un apercu plus precis que les etudes precedentes. L’accumulation de capital humain et le progres dans les reformes economiques sont identifies comme les principaux determinants de la convergence, tandis que l’approfondissement financier et l’instabilite des prix ont eu un effet negatif, en particulier dans la derniere decennie.