http://repub.eur.nl/res/concept/jel-P2/ Recent publications classified by JEL Code P2 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/16213/ 2009-06-25T00:00:00Z In contemporary literature on changing urban systems, it is often argued that the traditional central place conceptualisation is outdated and should be replaced by a network view that emphasises the increasing criss-crossing pattern of interdependencies between spatial units. This paper tests for urban network development by looking at commuting patterns in the Greater South East UK. The analysis is based on census commuting interaction data for three points in time during the past three decades (1981, 1991, and 2001). Although the empirical results indicate that the Greater South East UK can still not be characterized as a polycentric urban region or integrated urban network, there is some evidence for urban network development at the local, intra-urban, level as well as a decentralization of the system at the regional, inter-urban, level. Goei, B. de Burger, M.J. Oort, F.G. van Kitson, M. http://repub.eur.nl/res/pub/12059/ 2008-01-01T00:00:00Z We investigate productivity convergence of domestic firms in a transition economy, Ro- mania. In estimating total factor productivity we allow for varying returns to scale and control for both the endogeneity of the productivity shock and the omitted price variable bias linked to heterogeneous firms' market power. Consistently with our priors, we find that without controlling for the omitted price variable bias absolute convergence estimates are biased upwards. In terms of conditional convergence, we find that the speed of convergence across firms depends mainly on technology transfers from the frontier and, less markedly, by a number of regional and industrial characteristics such as the distance to the capital region, the minimum efficient scale and the absorptive capacity. Altomonte, C. Pennings, H.P.G. http://repub.eur.nl/res/pub/10885/ 2007-12-17T00:00:00Z This paper investigates the determinants of new venture creation across industries and locations for 103 Italian provinces between 1997 and 2003. We allow for differences in regional opportunities across industries and investigate the impact of a range of factors on entrepreneurship in different industries: manufacturing, retailing and wholesaling, hotels and restaurants. Our results show that wage costs deter entry in manufacturing and that regions with industrial districts are characterized by higher start-up rates. Firm entry in commercial sectors appears higher in large cities and areas with strong economic progress. For hotels and restaurants we find that tourism positively influences new firm formation. In terms of policy we do not find a significant effect of recently introduced regional laws promoting new firm formation. Verheul, I. Carree, M.A. Santarelli, E. http://repub.eur.nl/res/pub/7577/ 2006-03-10T00:00:00Z Bearing the legacy from central-planned system, the tax system in local China still lacks transparency and, in many cases, the liabilities of firms, especially those with extensive influences, are subject to negotiation despite the new tax-reform 1994. Applying Hirschman’s Exit-Voice theory, we construct a game model of interplay between firm and local government, in terms of exit and voice for preferential tax treatments, thereby revealing dynamics of these two options under rational entrepreneurship of economizing transaction cost. Suggested by the model, exit not only induces firm to opt for voice, it also underpins firm’s voice that forces local government to compromise. Particularly, when holding private information of exit cost, firm is able to mimic behaviors of those with high mobility so as to boost the effectiveness of voice. The empirical cases fully illustrate such rational entrepreneurship of exit plus voice to profit from local preferential policy. Zhu, Z. Hendrikse, G.W.J. Krug, B. http://repub.eur.nl/res/pub/7188/ 2005-12-21T00:00:00Z China like other transition economies needs to establish a tax system compatible with a market economy, in particular, an efficient tax administration system with capable tax bureaucrats. The paper singles out the general and China-specific features by which central government attempts to accompany economic transformation via tax farming to tax bureaucratisation in tax administration. Based on empirical study in two provinces this paper shows that without including local government agencies and their budgets, China’s fiscal federalism cannot be analysed and argues that China’s emerging tax system depends on the institutional and organizational design that shapes the interaction between central government, local governments and economic agents. Zhu, Z. Krug, B. http://repub.eur.nl/res/pub/7175/ 2005-12-19T00:00:00Z (Last revised version December 2005) To address the problem why China, as a communist country, moves in the opposite direction when the public sector has undergoing a continuous growth in most Western economies since the World War II, we offer a new approach that the de facto fiscal decentralization curtails government size in transition China in addition to conventional explanations. Meanwhile, by analyzing panel data and various variables used by previous empirical studies, this paper tests the Leviathan hypothesis for vertical decentralization, horizontal fragmentation and intergovernmental collusion at central-provincial and provincial-local level. Our empirical results not only explain Chinese shrinking government size, but also lend support to Leviathan hypothesis, especially, under the condition of the absence of traditional democratic electoral constraint. Zhu, Z. Krug, B. http://repub.eur.nl/res/pub/7231/ 2005-10-01T00:00:00Z We develop a simple test to assess whether horizontal spillover effects from multinational to domestic firms are endogenous to the market structure generated by the entry of the same multinationals. In particular, we analyze the performance of a panel of 10,650 domestic and multinational firms operating in Romania in the period 1995-2001. Controlling for the simultaneity bias in productivity estimates through semi-parametric techniques, we find that changes in domestic firms’ TFP are positively related to the first foreign investment in a specific industry and region, but get significantly weaker and become negative as the number of multinationals that enter in the considered industry/region increases. We can thus recover evidence of changing marginal effects in domestic firms’ TFP, the sign of which depends on a specific threshold in the presence of foreign firms. Altomonte, C. Pennings, H.P.G. http://repub.eur.nl/res/pub/1821/ 2004-12-10T00:00:00Z This paper offers a new data set and window to empirically test Leviathan theory in the sense of China's transition economy. By combining time series and cross-section regression analysis and various variables used by previous empirical studies, we test the Leviathan hypothesis for vertical decentralization, horizontal fragmentation and intergovernmental collusion at national and provincial level, respectively. Our empirical results lend support to Leviathan hypothesis, especially, under the condition of absence of traditional democratic electoral constraint. Zhu, Z. Krug, B. http://repub.eur.nl/res/pub/1842/ 2004-01-01T00:00:00Z This paper attempts to explain how institutions in the reform era of China have evolved by looking into the FDI policies and regulations. As history matters, we don’t look solely into the previous direct stage to the reform era, and rather look into a longer history starting from prior to the 14th century. The study shows that a dimension of time is crucial to understand institutional change in China. Though the initiation of the open-door policy in the reform era is commonly regarded as path-break event, we claim that this institutional change is a path dependent event from a longer historical view. The path takes a zigzag that is shaped by interaction among interested parties: the central government, local governments and economic agents (foreign investors in terms of the open-door policies). The historical study shows that mutual needs and their behaviours influence their attitudes which further influence institutional building. This also further implies how Chinese institutions may evolve in the future and what we should concern more about institutional changes in transitional economies. Zhang, X. Krug, B. Reinmoeller, P. http://repub.eur.nl/res/pub/6704/ 2003-07-09T00:00:00Z This paper evaluates the strength of social and economic forces that affect the pressure to emigrate 'out of Africa' for four distinctly different African countries (Morocco, Egypt, Senegal and Ghana). In general, great expectations about attaining a higher living standard and expected low job search costs abroad are strong forces that drive emigration intentions out of Africa, especially in Ghana and Senegal. Signs of positive selection with respect to the level of education of potential migrants are only present in Ghana and Egypt. The differences in intentions by age and sex are also quite noteworthy, although the influence of sex differs quite distinctly across countries. Return migrants are on average more set to emigrating judging from their stated intentions although there are signs of negative selection within the group of return migrants in Ghana and Egypt. The network effects of potential migrants turn out to be less important than one might expect from actual migration behaviour. Both ties within the household with household members who have international migration experience and ties with current migrants affect intentions only in Ghana and Egypt and it affects the intentions of women far stronger than that of men. The implication of these findings is that due to the slow growth prospects of these African countries the pressure to emigrate 'out of Africa' can be a long lasting phenomenon. Dalen, H.P. van Groenewold, G. Schoorl, J.J. http://repub.eur.nl/res/pub/6808/ 2002-06-11T00:00:00Z Here the author empirically estimates if the different monetary and exchange rate frameworks observed in the Accession Countries of Central and Eastern Europe and the Baltics do yield different outcomes in terms of level and variance of a set of nominal and real variables. The author follows and extends the methodology developed by Kuttner and Posen (2001), who perform a combined analysis of the individual effects of exchange rate regimes, central bank independence and announced targets in nominal variables, for a large set of developed and developing countries, and estimate that a setup that combines a free float, an independent monetary authority and inflation targeting yields an outcome that mimics the price stabilization advantages of a hard peg without its drawbacks in terms of extreme volatility. This sample of countries, not covered by the Kuttner and Posen study, supports their conclusions, for both nominal and real variables, testing for both the individual and combined effects of the frameworks, indicating that a flexible exchange rate regime, coupled with a independent monetary authority and inflation targeting, would be Pareto-improving when compared to harder regimes. Vinhas de Souza, L. http://repub.eur.nl/res/pub/6809/ 2002-06-04T00:00:00Z This paper studies the connection between trade and growth in the context of a partial and inconsistent liberalization process in a specific Eastern European country in transition towards market economy, namely, the Republic of Belarus. The analysis of the country trade patterns during the USSR period and the years since independence revealed that unlike its close neighbors (the Baltic States and Poland) Belarus did not succeed in changing the commodity or the geographical structure of its trade. It is almost a good representation of reality to say that Belarus trades with Russia. The assessment of the rationale for the closer integration with Russia and the impact of this process on Belarus growth led us to the conclusion that the integration in the form of a non-exclusive Free Trade Area and within the framework of a wider set of international connections rather than the move towards a Customs Union (and a Union State) with Russia would be a more optimal policy for Belarus. This conclusion is supported by the results of country-specific growth regressions and of a counterfactual "free trade experiment" via a small CGE model. This paper is partially based on the work by the Authors for the World Bank Global Development Network (GDN) Research Project "Explaining Growth in the CIS Countries". Bakanova, M. Vinhas de Souza, L. http://repub.eur.nl/res/pub/150/ 2001-01-21T00:00:00Z It seldom happens that new firms, new industries, and new business systems need to be developed simultaneously. This, however, is the situation in transition economies such as China. Irrespective of product and technology used, incentives and governance structures need to be formulated that give business endeavours an organisational form. The survivability of firms depends further on the ability to start and maintain long-term business relations between contracting parties, while only a broad consensus within the community of entrepreneurs and firms on the procedures that co-ordinate business relations and sanctions transgression promises a decline in transaction costs sufficiently enough to trigger off the quick expansion of markets. Krug, B. Belschak, F.D. http://repub.eur.nl/res/pub/151/ 2001-01-21T00:00:00Z Recent years have seen the introduction of markets and a system of private property rights in China with a view to changing the composition of production and demand and enhancing welfare. Central to the success of these reforms is the rise of entrepreneurship with its potential to set the economy on a higher growth path by supplying the products which consumers need and want, creating new employment opportunities, and introducing new and more efficient technologies of production. But to what extent can we expect to see entrepreneurs in China behaving like their counterparts in the advanced industrial economies of Western Europe, Japan, and the United States? This is the question we address in this chapter. In our view, the reform programme has, indeed, opened up new opportunities for private enterprise activity; but idiosyncrasies of the business environment are at the same time generating novel institutional arrangements in support of entrepreneurs' investments. We agree, therefore, with Herrick and Kindleberger when they assert that "Development ought not to be viewed as a monotonic, stylized path, ever onward and upward, historically established and invariably repeated" (1983, p.62). Krug, B. Mehta, J. http://repub.eur.nl/res/pub/142/ 2001-01-09T00:00:00Z The development of entrepreneurship and a private business sector in China pose various challenges to analysis. On the one hand, neo-classically based New Institutional Economics aims to find evidence that long-term investment and long-term commitment in and around firms can not be expected without deeply entrenched and state guaranteed private property rights. On the other hand, empirical studies within the China field concentrate on the political processes, in particular the interaction between the central state and local governments, at the danger of neglecting market forces, economic interests, and economic problems at stake. The empirical study on which the following is based took a different path by using a set of framing assumptions. Krug, B. Hendrischke, H. http://repub.eur.nl/res/pub/143/ 2001-01-09T00:00:00Z Die ?konomie ist so kultur- wie geschichtslos. Das ist ihre St?rke, vermag sie doch deshalb Gemeinsamkeiten auch dort zu entdecken, wo Historiker, Anthropologen, und nicht zuletzt die Bewohner eines Landes, Einzigartigkeit beanspruchen. Es ist auch ihre Schw?che, weil nur das sein kann, was gem?ss des analytischen Instrumentariums, sein darf. Eine positive wirtschaftliche Entwicklung muss durch funktionierende M?rkte hervorgerufen worden sein. Eine Zunahme der Faktorproduktivit?t deutet auf das Funktionieren des Preismechanismus hin, wenn nicht gar Korruption als Pareto-superiore L?sung und subversiver Weg mit administrativen Vorschriften umzugehen, gewertet wird. China gibt deshalb konzeptuelle wie empirische Probleme auf. Das sind auf der einen Seite die hohen Wachstumsraten der Wirtschaft, die durch einen verbesserten Ressourceneinsatz, aber auch die Mobilisierung zus?tzlicher Ressourcen hervorgerufen wurde. Da ist aber auch die Transformation eines Wirtschaftssystems weg von einer Planwirtschaft hin zu einer arbeitsteiligen Konkurrenzwirtschaft, die im Vergleich zu den ehemals sozialistischen Staaten in Mittel- und Osteuropa von geringerer Arbeitslosigkeit, geringeren Inflationsraten und hohen Exporterfolgen begleitet wurde. Das herk?mmliche Instrumentarium der ?konomie kann hier nur wenig befriedigende Erkl?rungen bieten. Deshalb scheint die Literatur, die in der Kultur die Ursache f?r den chinesischen Wirtschaftserfolg sieht, vielversprechender zu sein. Diese Interpretation kann zus?tzlich als Beleg anf?hren, dass mit Korea, Taiwan, Hongkong und Singapur weitere chinesische Staaten mit ebenso beeindruckenden Wirtschaftsleistungen aufwarten k?nnen. Krug, B. http://repub.eur.nl/res/pub/19091/ 2001-01-01T00:00:00Z Adamchik, V.A. Bedi, A.S. http://repub.eur.nl/res/pub/283/ 2000-12-01T00:00:00Z The paper describes the emergence of entrepreneurship in Shanxi province based on fieldwork in the last 6 years. Employing institutional and evolutionary economics shows that both the kind of firms that emerge and the individual behaviour of entrepreneurs reflect a systematic response to the situational constraint all would-be entrepreneurs face, namely a high level of uncertainty and weak institutions. In this situation to establish firms with a weak organisational identity allows to flexibly respond to new opportunities, while a strong reputation for accountability of the owners and managers is needed to get long term business relations started. As the Shanxi sample shows accountability can be achieved by a mix of reviving old economic institutions, hijacking social organisations, and building new business practices. To the extent that old institutions, social organisations and business practices do not spread equally across China, different forms of firms and different forms of entrepreneurship can be expected within China. In short, local cultures matter. Krug, B. http://repub.eur.nl/res/pub/59/ 2000-12-01T00:00:00Z The Chinese economy has developed rapidly despite two major constraints: ill-functioning markets and a socialist past, both of which caused an environment of unenforceable contracts. In this situation the need to pool resources and to govern relational risk was paramount to the development of a private sector. While modern organisation (transaction cost-) theory can explain why and to which extent entrepreneurship in China is based on collective agents, an analysis of the (local) political market is needed to explain why China's villages provide the much needed (and valuable) public goods in form of property rights protection and contractual security. Decentralisation and jurisdictional competition facilitate the writing of a new "common law" as well as the "discovery" of new forms of collective action. Krug, B.