Structural Change during Transition: Is Russia Becoming a Service Economy?
Albrecht Kauffmann
Volkswirtschaftliche Diskussionsbeiträge der Wirtschafts- und Sozialwissenschaftlichen Fakultät, Universität Potsdam, Nr. 80,
No. 80,
2005
Abstract
This paper analyses the structural change in Russia during the transition from the planned to a market economy. With regard to the famous three sector hypothesis, broad economic sectors were formed as required by this theory. The computation of their shares at GNP at market prices using Input-Output tables, and the adjustment of results from distortions, generated as side effects of tax avoidance practices, shows results that clearly reject claims that Russia would be on the road to a post-industrial service economy. Instead, at least until 2001, a tendency of “primarisation“ could be observed, that presents Russia closer to less-developed countries.
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Financial Openness and Business Cycle Volatility
Claudia M. Buch, Jörg Döpke, C. Pierdzioch
Journal of International Money and Finance,
No. 5,
2005
Abstract
This paper discusses whether the integration of international financial markets affects business cycle volatility. In the framework of a new open economy macro-model, we show that the link between financial openness and business cycle volatility depends on the nature of the underlying shock. Empirical evidence supports this conclusion. Our results also show that the link between business cycle volatility and financial openness has not been stable over time.
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Non-market Allocation in Transport: A Reassessment of its Justification and the Challenge of Institutional Transition
Ulrich Blum
50 Years of Transport Research: Experiences Gained and Major Challenges Ahead,
2005
Abstract
Economic theory knows two systems of coordination: through public choice or through the market principle. If the market is chosen, then it may either be regulated, or it may be fully competitive (or be in between these two extremes). This paper first inquires into the reasons for regulation, it analyses the reasons for the important role of government in the transportation sector, especially in the procurement of infrastructure. Historical reasons are seen as important reasons for bureaucratic objections to deregulation. Fundamental economic concepts are forwarded that suggest market failure and justify a regulatory environment. The reasons for regulation cited above, however, may be challenged; we forward theoretical concepts from industrial organization theory and from institutional economics which suggest that competition is even possible on the level of infrastructure. The transition from a strongly regulated to a competitive environment poses problems that have given lieu to numerous failures in privatization and deregulation. Structural inertia plays an important role, and the incentive-compatible management of infrastructure is seen as the key element of any liberal transportation policy. It requires that the setting of rules on the meta level satisfies both local and global efficiency ends. We conclude that, in market economies, competition and regulation should not be substitutes but complements. General rules, an "ethic of competition" have to be set that guarantee a level playing field to agents; it is complimented by institutions that provide arbitration in case of misconduct.
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Quality of Service, Efficiency, and Scale in Network Industries: An Analysis of European Electricity Distribution
Christian Growitsch, Tooraj Jamasb, Michael Pollitt
IWH Discussion Papers,
No. 3,
2005
Abstract
Quality of service is of major economic significance in natural monopoly infrastructure industries and is increasingly addressed in regulatory schemes. However, this important aspect is generally not reflected in efficiency analysis of these industries. In this paper we present an efficiency analysis of electricity distribution networks using a sample of about 500 electricity distribution utilities from seven European countries. We apply the stochastic frontier analysis (SFA) method on multi-output translog input distance function models to estimate cost and scale efficiency with and without incorporating quality of service. We show that introducing the quality dimension into the analysis affects estimated efficiency significantly. In contrast to previous research, smaller utilities seem to indicate lower technical efficiency when incorporating quality. We also show that incorporating quality of service does not alter scale economy measures. Our results emphasise that quality of service should be an integrated part of efficiency analysis and incentive regulation regimes, as well as in the economic review of market concentration in regulated natural monopolies.
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East German economy: Catching up in tiny steps
Wirtschaft im Wandel,
No. 6,
2005
Abstract
Trotz der allgemein schwachen Inlandsnachfrage in ganz Deutschland ist die gesamtwirtschaftliche Produktion im Ostteil der Republik 2004 das dritte Jahr in Folge gestiegen. Kräftig erhöht hat sich die Nachfrage des Auslands nach Gütern aus Ostdeutschland. Die Warenausfuhren sind überdurchschnittlich in die alten EU-Länder gestiegen, Impulse aus dem Vollzug der Osterweiterung lassen sich dagegen für die neuen Bundesländer kaum nachweisen. Nach dem Fall der letzten Handelsschranken hat es auch keinen Importboom aus den neuen Mitgliedsländern gegeben. Der Anstoß aus dem Ausland hat zwar die Exportindustrien und ihre Zulieferzweige erreicht, aber infolge des geringen Gewichts dieses Sektors war die Wirkung auf die Gesamtwirtschaft gering....
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The MCI as a Monetary Policy Guide in a Small, Open Emerging Market Economy
Philippe Burger, Tobias Knedlik
South African Journal of Economics,
No. 72,
2004
Abstract
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Why do banks hold capital in excess of regulatory requirements? A functional approach
Diemo Dietrich, Uwe Vollmer
IWH Discussion Papers,
No. 192,
2004
Abstract
This paper provides an explanation for the observation that banks hold on average a capital ratio in excess of regulatory requirements. We use a functional approach to banking based on Diamond and Rajan (2001) to demonstrate that banks can use capital ratios as a strategic tool for renegotiating loans with borrowers. As capital ratios affect the ability of banks to collect loans in a nonmonotonic way, a bank may be forced to exceed capital requirements. Moreover, high capital ratios may also constrain the amount a banker can borrow from investors. Consequently, the size of the banking sector may shrink.
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Competition Policy in Central Eastern Europe in the Light of EU Accession
Jens Hölscher
Journal of Common Market Studies,
No. 2,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Competition Policy in Central East Europe in light of EU Accession
Johannes Stephan
Journal of Common Market Studies,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Investment, Financial Markets, New Economy Dynamics and Growth in Transition Countries
Albrecht Kauffmann, P. J. J. Welfens
Economic Opening Up and Growth in Russia: Finance, Trade, Market Institutions, and Energy,
2004
Abstract
The transition to a market economy in the former CMEA area is more than a decade old and one can clearly distinguish a group of relatively fast growing countries — including Estonia, Poland, the Czech Republic, Hungary and Slovenia — and a majority of slowly growing economies, including Russia and the Ukraine. Initial problems of transition were natural in the sense that systemic transition to a market economy has effectively destroyed part of the existing capital stock that was no longer profitable under the new relative prices imported from world markets; and there was a transitory inflationary push as low state-administered prices were replaced by higher market equilibrium prices. Indeed, systemic transformation in eastern Europe and the former Soviet Union have brought serious transitory inflation problems and a massive transition recession; negative growth rates have continued over many years in some countries, including Russia and the Ukraine, where output growth was negative throughout the 1990s (except for Russia, which recorded slight growth in 1997). For political and economic reasons the economic performance of Russia is of particular relevance for the success of the overall transition process. If Russia would face stagnation and instability, this would undermine political and economic stability in the whole of Europe and prospects for integrating Russia into the world economy.
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