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The strife for more incredible and sustainable human development is often associated with compromised environmental standards. Early growth may increase pollutant emissions that can be regulated later. Human development, the main ingredient of sustainable development, may increase emissions or reduce them through technological improvements. The emerging seven (E7) economies provide an intriguing case to test the direct and indirect impact of human development on CO2 emissions to confirm the nexus in the early stage of industrialization. The study applies the structural equation approach to investigate the relationship between the human development index (HDI), green technological innovations, and CO2 emissions in E7 economies over the period 1990–2021. Our findings indicate that HDI increases consumption-based CO2 emissions both directly and indirectly, where even the mediating impact of innovations is also positive, thereby confirming the fact that HDI and innovations both may have deteriorated implications for environmental performance at the earlier stages of development. The study findings imply that the policymakers of the transition economies need to rethink their policy choices regarding controlling pollution and safeguarding the environment. The study's conclusion has essential ramifications for reducing pollution through enacting HDI and supporting innovations. [ABSTRACT FROM AUTHOR]

Drawing on the imprinting theory, this study examines the role of entrepreneurs' Tizhi system experience in corporate innovation. Using survey data from 4276 Chinese private firms, we find that entrepreneurs' early experience within the Tizhi system exerts a positive impact on corporate innovation. This effect is more pronounced in entrepreneurs with pro-social value, firms with party branch, and provinces with strong preference for innovation. Further channel tests provide evidence that entrepreneurs with Tizhi system experience have sharper policy perception and that makes them have stronger confidence and motivation for innovation. These findings shed light on how an entrepreneur's early experience affects corporate behavior in transitional economies, and contribute to the literature in the field of corporate innovation. [ABSTRACT FROM AUTHOR]

As economic development moves to the stage of urbanization and knowledge-orientation, consumption is increasingly important for economic efficiency. This study proposes a Learning by Consuming Model which divides consumption into daily consumption and human capital consumption, combing consumption and human capital to measure consumption's effect on economic efficiency. We compare trends in international consumption and conduct empirical tests using a fixed effects model based on panel data for 118 countries from 1970 to 2019. The results suggest that consumption can be regarded as an approach of human capital accumulation, thereby improving economic efficiency and leading to increased growth. Human capital consumption is key to growth model's transition to the developed economy. [ABSTRACT FROM AUTHOR]

This study investigates whether the impact of firm-level corruption on growth varies based on origin of the firm. More specifically, I examine how corruption in the business environment affects growth for privatized former state-owned enterprises (SOEs) and originally private firms in transition economies. Employing Business Environment and Enterprise Performance Survey (BEEPS) data and using a sample of 15,103 unique firms in 30 Eastern European and Central Asian countries, I find that corruption hampers growth for private firms, but it is not detrimental to privatized firms' growth. In fact, some evidence suggests that corruption helps privatized firms growing faster. [ABSTRACT FROM AUTHOR]

The creation of a new venture is at the heart of entrepreneurship. Chinese governments at different levels are proactive in promoting the entrepreneurial ecosystem (EE) and fostering new venture creation (NVC). However, it is still far from clear how governments as focal actors in the EE affect and regulate the process and pattern of NVC. This study borrows from the theory of temporary organization and conducts a comparative case study of two entrepreneurial projects in the Hangzhou Dream Town EE. This study proposes an integrated conceptual framework to illustrate NVC in two dimensions of projectification (the process of NVC) and partnering (a pattern of NVC) and specifies that the main role of local governments is as a sponsor, feeder, and endorser in that order. The three functional roles enable local governments to catalyze the creation of new ventures through projectification and partnering. Our study not only contributes to the literature on entrepreneurship, governance theory, and the theory of temporary organization but also provides an actionable approach for governments to foster new ventures, especially in transition economies such as China. [ABSTRACT FROM AUTHOR]

We present three conditions for a demography-driven middle-income trap and show that many economies in East, South, and Southeast Asia satisfy all of them. The conditions involve (1) the support ratio of workers to consumers has an impact on economic growth, (2) economic development accompanies more investment in human capital and lower fertility due to the quantity-quality trade-off, and (3) a current low level of fertility corresponds to very low support ratios for keeping up with frontier economies in the long run. Panel analysis for 178 countries shows that (1) and (2) are satisfied for Asia with higher elasticity than others. As for (3), we set up a dynamic model for simulations, showing that approximately two-third of Asia’s developing countries have an unsustainable level of support ratios, implying possibility of a middle-income trap due to future demographic headwinds. [ABSTRACT FROM AUTHOR]

Asia’s rapid population aging fortifies the case for strengthening human capital investments. Further, the experience of the newly industrialized economies suggests that human capital investments will be a vital ingredient of the transition from middle income to high income. Those investments can also affect equity and public finances. In this article, we use data from the National Transfer Accounts to empirically analyze the effect of human capital investment in Asian countries on economic growth, inequality, and fiscal balance. Our empirical evidence suggests that human capital investments have a positive effect on labor productivity and, hence, output. The positive effect is stronger for poorer households and, hence, beneficial for equity. We also find that such investments can generate sufficient tax revenues to improve the fiscal balance. Overall, our evidence points to a positive effect of human capital on growth, equity, and fiscal balance in Asia. [ABSTRACT FROM AUTHOR]

Developing Asia has undergone a dramatic shift over the past five decades from a region of mainly low-income economies toward one that is largely middle income. The region faces the challenge of moving further to high income particularly because, as this study shows, it takes longer for economies to move from upper middle to high income than shifting from lower middle to upper middle income. The study finds that developing Asian economies transformed more quickly than the rest of the world, whether the transition is from lower middle to upper middle income or from upper middle to high income. [ABSTRACT FROM AUTHOR]

Finance theory implies equity returns should be positively related to financial leverage. However, a recent article decomposes the book-price ratio into financing and operating components and report a negative association between financial leverage and returns. We shed new light on this puzzle by examining a region in which previous research has established that firms’ financial leverage choices are motivated by factors other than maximizing shareholders’ wealth: we hypothesize that this must be reflected in both how financial leverage is priced and the book-price ratio. We show that the relationship between equity returns and financial leverage for stocks in our sample is indeed very different to the findings of previous research, and this is reflected in the decomposed elements of the book-price ratio. [ABSTRACT FROM AUTHOR]

We empirically test the dependence of the Russian stock market on the world stock market and world oil prices in the period 1997:10–2012:02. We also analyze countries that can be considered to be relatively similar to Russia, e.g., Poland, the Czech Republic, and South Africa. First, we apply a rolling regression to identify periods when oil prices or stock indices in the United States and Japan were important. Surprisingly, oil prices are not significant for the Russian stock market after 2006. Second, we employ a TGARCH-BEKK model to assess the degree of correlation between the markets in question, taking into account the global market stochastic trend. Correlation between markets increased between 2000 and 2012. [ABSTRACT FROM AUTHOR]

This article advances the literature on economic growth and Foreign Direct Investments (FDI) in transition economies by incorporating data on “absorbtive capabilities” of the host economy including R&D indicators and by enhancing the quality of data on FDI. We explore whether countries with accumulated technological and innovative capabilities gain significantly more from FDI. We find that FDI exerts an exogenous positive impact on economic growth, while FDI tends to have a larger impact on economic growth when there is sufficient absorptive capacity and when occurring in technologically more advanced transition economies. The results are robust to different specifications and consideration of endogeneity. [ABSTRACT FROM PUBLISHER]

Using a new approach, we estimate the speed of cash-holding adjustment for a typical transitional economy by using Chinese listed firms’ samples over 1999–2011. First, we use model-averaging techniques to identify reliably important cash-holding determinants. Second, we conduct Monte Carlo simulation using the real finance data to evaluate appropriateness of the empirical estimator from a variety of dynamic estimation methods and suggest an optimized system of generalized method of moments (OPT-GMM) as an appropriate econometric approach for speed estimation. Finally, we get the speed of 46 percent, which is significantly lower than the contemporary speed in the United Kingdom and the United States. [ABSTRACT FROM PUBLISHER]

In this study, we investigate the determinants of labor productivity dynamics in transition economies using data from Croatian manufacturing industries. Capital intensity growth and human capital accumulation have been significant contributors to stronger productivity gains. Private-sector development has positively affected productivity growth—but mostly through the increasing role of new private companies. Still, unfinished privatization represents a significant obstacle to stronger productivity gains. The effect of increasing trade openness is significant but negative, most likely owing to weak export competitiveness of Croatian companies. Neither greenfield nor (predominant) brownfield foreign direct investment inflows have contributed to higher labor productivity growth. Further privatization and structural reforms seem to be the most promising policy measures that need to be undertaken in order to achieve higher productivity gains. [ABSTRACT FROM PUBLISHER]

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. [ABSTRACT FROM AUTHOR]

Employing a nonlinear logistic smooth transition autoregression system and comovement analysis, we find that the German business cycle has acted as a common driver affecting the cyclical behavior of unemployment rates in Central and Eastern European countries. In addition, we identify two convergence clubs in unemployment dynamics. The first comprises the Baltic States, Hungary, and Poland, and the second group of countries is composed of the Czech Republic and Slovakia. Interestingly, this classification matches the labor market policies and institutional divergences observed among these countries. [ABSTRACT FROM PUBLISHER]

In this study, I examine the relationship between banks’ decisions to go public and various macroeconomic, financial development, bank-level, and regulatory control variables in transition economies (TEs). Using a sample of 208 large banks in twenty TE markets, I find that the levels of development and maturity of capital markets has a positive effect on the probability of a bank being listed. While some researchers find positive effects of foreign banks in emerging markets, this study shows that foreign subsidiaries in host countries are less likely to go public, which has implications for market discipline and the development and growth of capital markets in transition economies. [ABSTRACT FROM PUBLISHER]

In this paper, I examine the contingent claims approach (CCA) to measuring sovereign risk. Specifically, I extend previous work in this area and apply the CCA framework to three emerging markets-Brazil, Mexico, and Turkey-over the period 2001-10. I find that the CCA underestimates credit default swap spreads and default probabilities. Consequently, I point out the shortcomings of the CCA and suggest some remedies. [ABSTRACT FROM AUTHOR]

We examine one effect of a firm's ownership-control disparity on foreign investors in emerging markets by investigating how the disparity influences foreign investors' shareholdings in Korean firms. Using a panel sample of 192 firms from 2005 to 2009, we find that foreign shareholders invest less in companies with high ownership-control disparity, which suggests that distorted ownership structure negatively affects foreign investors' shareholdings. We also find that foreign industrial investors invest less in companies with high disparity than do foreign financial investors. This study emphasizes the role of foreign investors in a globalized emerging market to the extent that foreign investors influence firms' governance with their investment decisions. [ABSTRACT FROM AUTHOR]

Although there is a large body of literature examining the negative effects of the global financial crisis on transition economies, the global financial bubble that preceded the crisis had a large positive impact on the productive capacity of these countries, both by increasing the pace of capital formation and by accelerating the growth of productivity. At the same time, through different channels, the global bubble also ensured that there was sufficient demand for the goods produced by the new capacity, thus creating a temporary high-output equilibrium. In the future, a new growth model, one based more on domestic resources, will be needed in transition economies, and policymakers should be cautious in judging the ability of their past policies to promote good economic performance. [ABSTRACT FROM AUTHOR]

We explore the nexus between South-North migration and trade in a cross-country framework over the period 1990-2005. In addition to the relatively unexploited cross-country framework, our main contribution resides in the search for heterogeneous responses of trade to migration according to different goods typologies. Besides the usual distinction between homogeneous and differentiated products dictated by the information channel, we also investigate the effects of migration on trade in primary and final goods and in labor- and capital-intensive goods with the aim of assessing the preference and technology channels as well. Our results show that, as expected, migration enhances the import of primary and final goods (preference channel) and the export of differentiated, low elasticity of substitution goods (information channel). However, there is some evidence that the increase in the presence of migrants from the South enhances the export of labor-intensive goods (technology channel). [ABSTRACT FROM AUTHOR]

This paper investigates the performance impact of bank diversification on loan and asset portfolios in transition economies. We find that asset diversification is associated positively and loan diversification negatively with bank performance. We also examine the relationship between institutional changes and the performance impact of bank diversification. Our results indicate that different types of institutional reforms play different roles. Banking liberalization and corporate governance restructuring significantly enhance profit gains from loan and asset diversification. Legal reforms, however, tend to reduce profit gains and usually entail a diversification discount. Our findings on the differential impact of various institutional measures on bank performance contribute to a better understanding of the role of institutional reforms of the past two decades in transition countries. [ABSTRACT FROM AUTHOR]

Analysis of thirty inflation episodes in sixteen European transition economies, using the probit panel model with fixed effects, uncovers inflation triggers that overlap with those obtained in either developing or developed countries or both. However, we found some transition-specific features. Thus, the relative contribution of the triggers evolves as transition progresses, such that the early dominance of the output gap, the fiscal deficit, and elections are subsequently subdued by a rise in food and oil prices, the exchange rate regime, and the current account deficit. The last two triggers could be linked to deep financial integration in Europe and the consequent large flow of capital toward European transition economies in the 2000s, a phenomenon not observed in any other part of the world. In addition, the exchange rate regime as an inflation starter in transitional Europe may be due to its convergence with developed Europe and the resulting real appreciation of currency. [ABSTRACT FROM AUTHOR]

This 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 nonparametric methodology and then regressed on a number of bankspecific, 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, whereas banking reforms had an adverse effect. The Treaty of Accession and EU membership were associated with significant efficiency improvements. [ABSTRACT FROM AUTHOR]

In highly dollarized banking systems, the high level of foreign currency assets or liabilities on banks' balance sheets may create a currency mismatch risk, which could lead to bank failures when faced with sudden exchange rate movements. Central banks in such economies have to adjust their currency policies accordingly. This paper uses probit and ordered probit models to forecast central banks' direct interventions in the foreign currency markets as a result of exchange rate volatility using data from three transition economies with varying dollarization ratios. We show that, in these three economies, central banks' interventions can be predicted to a degree by measuring dollarization as the ratio of dollar-deposits to M2 monetary base. Investors could potentially use this ratio as an investment signal. [ABSTRACT FROM AUTHOR]

Predictive models of financial distress are developed using the two-stage method applied to listed Taiwanese firms. Firm-specific financial ratios and market factors are adopted to measure the probability of financial distress based on the discrete-time hazard models of Shumway (2001). The Kim (1999) credit cycle index is further established using macroeconomic factors to determine the cutoff indicator of financial distress. The results demonstrate that performance improves as the distressed cutoff indicators are adjusted according to the credit cycle index in the two-stage models, suggesting that the model effectively predicts financial distress, particularly in emerging markets. [ABSTRACT FROM AUTHOR]

The imputation of reinvested earnings from foreign direct investment (FDI) as a debit in the balance of payments exaggerates the current account deficit. This phenomenon is of major importance for transition economies because they received massive inflows of FDI in the late 1990s. We model the FDI financial life cycle to describe the evolution of profits, reinvested earnings, and repatriated dividends for an FDI project to show that this inflow of investment to transition economies has caused large distortions in their current account deficits. We verify the workings of the FDI financial life cycle and estimate its duration using a sample of eight transition economies. [ABSTRACT FROM AUTHOR]

We analyze the effects of currency crises on the industrial sectors of Korea, Turkey, and the Czech Republic. We find that the interval for the effect of the currency crisis on the industrial sector to disappear is around four years for Korea after the 1997 currency crisis; around five and seven years for Turkey following the 1994 and 2001 currency crises, respectively; and around five years for the Czech Republic following the 1997 currency crisis. For all three countries, the effects of the currency crises on the industrial sector disappear in a longer interval than does the effect of any other economic issue. [ABSTRACT FROM AUTHOR]

We investigate the effects of regional and industrywide foreign presence and foreign direct investment (FDI) on the export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996-2000. Foreign presence through FDI may have negative competition effects on domestic firms' performance; at the same time, domestic firms' productivity may be increased by technology transfer or training and demonstration effects. From a Cournot competition model that includes negative competition and positive technology spillover effects, we hypothesize that foreign presence and FDI might positively affect domestic firms' output and exports. Our estimation results support these hypotheses, suggesting in particular that large firms and durable goods producers benefit most from foreign presence and investments. [ABSTRACT FROM AUTHOR]

Voluminous theoretical and empirical literature examines the relation between financial-sector development and economic growth. However, previous studies have largely ignored progress in former Soviet Central Asian republics engaged in transition from socialist command economies to market economies. This paper seeks to fill this gap in the literature by considering Kazakhstan's experience with financial-sector liberalization and the socioeconomic effects of these reforms. We summarize the prereform economic circumstances prevailing in Kazakhstan, outline the major characteristics of its postcommunist financial system, and provide a detailed chronicle of financial-sector reform measures from 1993 to 2006. The paper focuses on the evolution of Kazakhstan's banking structure, policies adopted by the National Bank of Kazakhstan, and the approach taken to the privatization of state banks, as well as the steps taken to improve bank accounting standards and banking supervision. The development path of nonbank financial institutions and capital markets is also examined. We consider the outcomes of financial-sector reforms and their effects on the economy as a whole. [ABSTRACT FROM AUTHOR]

This paper derives and analyzes the selectivity and market timing performance of the mutual funds for the Turkish economy for the financial crisis period by employing high-frequency data. The determinants of these derived abilities are investigated within a regression analysis. The results suggest weak evidence about selection ability and some evidence about superior market timing quality. They also indicate that management fees are negatively correlated with the ability measure, which is quite surprising. Experience emerges as an important factor, especially for market timing ability. [ABSTRACT FROM AUTHOR]

This paper summarizes theoretical and empirical research on the roles and functions of emerging derivatives markets and the resulting implications on policy and regulations. Previous studies revealed that commodity derivatives markets offered an effective and welfare-improving method to deal with price volatility. Financial derivatives markets have helped to support capital inflows into emerging market economies. On the other hand, the use of financial derivatives has led to exacerbated volatility and accelerated capital outflow. There is a consensus that derivatives are seldom the cause of a financial crisis but they could amplify the negative effects of the crisis and accelerate contagion. Previous studies of derivatives markets have supported the hedging role of emerging derivatives markets. Empirical results from a few emerging countries suggest a price discovery function of emerging futures markets. The findings on the price stabilization function of emerging derivatives markets are mixed. Finally, recent research has documented that constructive development of derivatives markets in emerging market economies needs to be supported by sound macroeconomic fundamentals as well as updated financial policies and regulations. [ABSTRACT FROM AUTHOR]

Fiscal consolidation has become a central policy prescription for many highly indebted emerging market countries (EMCs). Although prudent fiscal policies tend to reduce vulnerabilities, their implementation is usually postponed. This paper is one of the first attempts in the literature to quantify the costs of delaying fiscal consolidation in an EMC. Using the International Monetary Fund's Global Fiscal Model, we find that early consolidation through expenditure cuts results in a substantial increase in Israel's long-term output growth over delayed fiscal adjustment. Moreover, the more flexible are the factor markets, the larger is this output gain. [ABSTRACT FROM AUTHOR]

This paper examines whether a large geopolitical event, such as the war in Iraq, can affect foreign bank lending from developed countries to emerging markets. Using country-level data, the paper analyzes the effects of economic shocks and the Iraq war on the availability of foreign bank credit to five countries in the Middle East and North Africa. The war has had a nonuniform effect on foreign banks: Although the war has led to higher U.S. lending, it has also discouraged British and Italian banks from lending to the region. Implications concerning the stability and reliability of foreign bank credit in the face of increased geopolitical risks are identified and discussed. [ABSTRACT FROM AUTHOR]

The ability of simple technical trading rules to forecast future stock market movements is considered for seventeen emerging markets, sampled from January 1986 to September 2003. Some of the trading rules considered generated significant returns; this information could be exploited profitably on occasion. Market conditions and trading volume are found to be important to determining the usefulness of technical trading rules. [ABSTRACT FROM AUTHOR]

We find that momentum strategies yield profits in Latin American emerging markets. Both stock type and country play a major role in explaining the momentum effect in these markets, but stock type is much more important. For risk-averse investors, winner portfolios stochastically dominate loser portfolios in these markets, implying that there are no asset-pricing models consistent with risk-averse investors that can rationalize the momentum effect. The results obtained via the bootstrap procedure without replacement also uphold this conclusion. [ABSTRACT FROM AUTHOR]

The role of agency ratings as a market-disciplining device, through the production of information on default risk, should grow within Pillar 3 of the Basel II reform. For the role to be efficient, the rating must be effectively consistent with the counterpart's default probability, particularly for emerging markets, where less-developed financial markets, banking-sector accrued opacity, and an inadequate regulatory, institutional, and legal environment affect banks' risk-taking behavior and therefore default risk. This paper uses scoring and mapping methods to study the consistency of bank ratings with their default probabilities in emerging market economies. Results show a correct quantification of agency rating grades, and thus, their consistency. However, mapping results also show that the rating tends to aggregate banks' default risk information into intermediate-low rating grades. [ABSTRACT FROM AUTHOR]

This paper analyzes the initial output decline in transition economies by estimating a cross-sectional model stressing two major factors: conflicts and the legacies of the Soviet period. We link the Soviet legacies in place at the outset of transition to the subsequent path for the development of market-related institutions. Institutional development, as proxied by measures of corruption, is used as an intermediate variable. An instrumental variable approach is followed to derive estimates that are not biased by the possible endogeneity of corruption with respect to output developments. Assuming that the extent of Soviet legacies was positively correlated with the length of communist rule allows us to use years under the Soviet regime as an instrument. [ABSTRACT FROM AUTHOR]

This study examines whether domestically owned firms in Central and Eastern European countries (CEECs) confronted higher financial constraints in their investments than did foreign-owned enterprises, and whether the domestic enterprises' financial constraints were caused by incoming foreign direct investment (FDI). In theory, foreign investment may be needed to bring in capital only initially; the subsequent investment can be financed locally. On the other hand, foreign-owned companies may be more attractive borrowers, crowding out domestic firms from imperfect host-country capital markets. Both hypotheses, however, are rejected, as the results are not consistent across different dependent variables and verification methods. There is some evidence that FDI reduced foreign subsidiaries' constraints without increasing the constraints suffered by the domestic enterprises. Tests are performed with regressions based on two alternative firm-level models, a direct one using perception-based assessment of the constraints, and an indirect one with financial indicators. [ABSTRACT FROM AUTHOR]

Realizing the benefits of stock markets in real economies, the Jordanian capital market—the Amman Stock Exchange (ASE)—was established in 1978. After more than two decades, the manual trading system of the market was replaced by a computerized trading mechanism on March 27, 2000. The primary objective of the new system is to offer investors more protection and transparency. This paper examines the efficiency of the ASE vis-à-vis the date of its automation. Based on a multifactor model with time-varying coefficients, the results show that the moved to electronic trading system had no significant impact on the ASE's efficiency. For volatility, however we found evidence that suggests there was an increase in volatility after the introduction of automated trading. [ABSTRACT FROM AUTHOR]

This paper examines the cost efficiency and scale economies of banks operating in Poland and the Czech Republic during the period from 1995 to 2000. A common cost frontier with country-specific environmental variables is estimated for a panel of fifty-four banks. A stochastic frontier model is used to estimate the cost efficiency and economies of scale. The results show the importance of environmental variables in the definition and specification of the common frontier. It is found that Polish banks are, on average, more efficient than Czech banks. The results further suggest that foreign banks operating in the Czech banking sector have significantly higher efficiency levels than those of domestic banks. Finally, there is evidence of significant economies of scale for small and mediumsized banks, but diseconomies of scale for large-sized banks. [ABSTRACT FROM AUTHOR]

In this article, we study the fundamental macroeconomic determinants of both the inflation-based (i.e., CPI) and the tradable price-based (i.e., PPI) real effective exchange rate in five acceding countries from Central and Eastern Europe, that is, the Czech Republic, Hungary, Poland, Slovakia, and Slovenia. The article is based on the combination of two approaches widely used for transition economies, namely, the behavioral equilibrium exchange rate and the structural vector autoregression. Indeed, a cointegration approach is adopted, and an estimated vector error correction model attempts to connect in a structural way the real effective exchange rate to labor productivity, the relative price of nontradable goods, public deficit, and the current account position. Impulse-response functions are subsequently employed to investigate how shocks in the underlying fundamentals impact on the effective real exchange rates. [ABSTRACT FROM AUTHOR]

The paper examines the macro economic performance of S transition economies using a comparable data set In order to see whether transition to a market-based economy increased economic efficiency, technical progress, and total factor productivity (TFP), we estimate efficiency measures for Eastern European and Baltic countries and the republics of the former Soviet Union using stochastic frontier analysis (SFA) and data envelopment analysis as a confirmatory analysis. According to the SFA estimates, the average annual efficiency level for the 25 transition economies is 0.548, and the average annual rate of growth in technical efficiency is 1.8percentfor the 199] -2000 period. The average annual technical change in transition economies is -4.3 percent for the period examined. That is, there is no technological progress, but over the period there has been a technological re-egress. The sum of the rate of change in technical efficiency and technical change implies a 2.5 percent decline in the average annual TFP These results suggest that, on average, change in technical efficiency is outweighed by the technical regress. [ABSTRACT FROM AUTHOR]

This paper explores the causal relationship between stock prices and volume figures for stock markets in the Czech Republic, Hungary, Poland Russia, and Turkey. Prior to running causality tests, the time series properties of the data are carefully invest- gated and special attention is given to the choice of optimal lag order Granger causality tests, based on the Toad-Yamamoto (1995) procedure, reveal that there is no causal real- tionship between the variables in the Czech Republic. In Hungary, there is a bi directional causality irrespective of volume or market turnover tested. In Poland, while there is bi directional causality between stock prices and volume, there exists a unidirectional causality running from market turnover to stock prices. The stock prices unidirectional cause both volume and market turnover without any feedback in the case of Russia and Turkey. These results have important implications regarding market efficiency and the effects of different market characteristics on the stock price/volume relation. [ABSTRACT FROM AUTHOR]

The article presents editor's opinion about emerging global market economies. There have been unprecedented changes in the global economy during the past two decades, as economic linkages between developed and developing countries have become much stronger. Recent crises in emerging market economies have shown that understanding the sources and transmission channels of business cycle fluctuations and economic crises, which could be regarded as particularly dramatic episodes of cyclical volatility, is critically important in an increasingly integrated world economy.

The change of economic, social and political orientation in Central and Eastern European countries (CEEC) together with the accession of a first group into the European Union in 2004, has raised a number of challenging questions. One object of interest has been the implications of Eastern openness in terms of international capital reallocation. This paper concentrates on the issue of foreign direct investment (FDI), a major channel of economic integration. In fact, in the particular case of these countries, a dramatic change in the pattern of FDI inflows took place in recent years. A number of studies have surveyed the determinants of FDI to this region, but the issue still remains relatively unexplored from the empirical point of view. Using a random effects panel data model in the analysis, we try to empirically uncover the main determinants of FDI and to examine the probability of FDI diversion from the EU periphery to these transition economies. This issue is especially interesting for the EU periphery in general, and for cheap labor suppliers such as Portugal in particular because there are reasons to believe that some diversion of funds from the South to the East may be taking place. [ABSTRACT FROM AUTHOR]

This paper makes use of the International Monetary Fund's (IMF) Database for Monitoring Fund Arrangements (MONA) to investigate whether transition countries that more successfully implement the conditionality of IMF programs in the early transition years show a better performance in recovery and growth. The results indicate that the level of compliance with structural benchmarks in IMF programs does not explain growth in program countries. However, the paper finds a definite, positive relationship between the index of compliance with quantitative performance criteria and growth, even after controlling for the extent of initial stabilization in transition countries. [ABSTRACT FROM AUTHOR]

The paper analyzes the opportunity costs of current agricultural policies in Turkmenistan. It argues that the opportunity costs of continuing with these policies is very high for the budget, the average farmer and the economy as a whole. The paper calls ,for the development of nontraditional agricultural crops, which are more profitable than wheat and cotton in the international commodity markets, and a comprehensive and sustained strategy for the agricultural sector. [ABSTRACT FROM AUTHOR]

This study assesses how developing and transition economies have fared in profiting from changes in the telecommunications market and examines the policy challenges that remain. It pays special attention to the global market and regulatory milieu fostered by the WTO Agreement of 1997. The study asks what this latest transformation has taught us about wise management of this vital part of the infrastructure of the world's economy. It focuses on the economics of managing the transition to competition, the design of proper regulatory policies and processes, and the embedding of domestic telecommunications in the world market. [ABSTRACT FROM AUTHOR]

It is conventionally thought that to develop competition in a transition economy, privatization, restructuring, and creation of new firms should take place first. Bulgaria's experience raises the question of whether its chosen methods of privatization reform, and the pace of this reform, are sufficient to promote competition in such a market. To answer this question, we explore the barriers and the incentives, that foreign multinational enterprises (MNEs) have faced during their participation in the Bulgarian privatization programs. This paper investigates those questions on the basis of survey data. It was determined that Bulgarian privatization deals have been accelerated since 1997. On the other hand, Bulgaria still lacks transparency and abolishment of monopolies; at the same time, its bureaucratic procedures and small progress are in the transition process. [ABSTRACT FROM AUTHOR]

The results of this study confirm that Russian geopolitical and economic dependencies are strongly reflected in the investment decisions that Russia takes to develop its transport infrastructures. Instead of using and expanding the existing facilities available in the new independent states, in the Baltics, Belarus, and Ukraine in particular, Russia prefers costly investments in construction of new direct outlets for its oil transports through the Baltic Pipeline System and for its gas transports from the Barents Sea to Central Europe. The study also contains new statistics about transit transport flows as well as their distribution by various transit transport corridors. [ABSTRACT FROM AUTHOR]