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We examine sources of income and wage inequality in three transition countries. Our results reveal that much lower inequality of disposable income in Slovenia than in Croatia and Serbia can mainly ...

Purpose This paper aims to investigate the effect of the flat tax system on self-employment by necessity and by opportunity. Specifically, the paper examines whether individuals decide to switch from wage-employment to self-employment by necessity or by opportunity when government imposes a flat tax system. Design/methodology/approach To analyze the association of a flat tax system with occupational choice this paper uses both multinomial and ordinary logit models. In the multi-nominal logit model, this study separates dependent variables into three categories: wage employee, self-employed by necessity and self-employed by opportunity. In the second step of analyzes using the ordinary logit model, this paper studies only self-employed individuals by distinguishing them according to their preferences. Findings The results suggest that, in countries with the imposed flat tax system, the probability of being self-employed by necessity is low, while the probability of being self-employed by opportunity is high. Moreover, better economic growth in the country also elevates the chances of individuals to be self-employed by opportunity. Originality/value Out novel contribution is documenting that flat tax system in transition countries increases the number of individuals self-employed by opportunity compared to self-employed by necessity.

PurposeAnalyze how peer effects and social influences affect attitudes and responses to corruption in tax systems, identifying factors that improve tax morale.Design/methodology/approachLife in Transition Survey (LITS III, 2016) data are analyzed using ordered probit models of corrupt tax officials, Heckman-style selection models of the extent of corruption, probit models of reasons given for not reporting corruption and ordered probit models of the frequency of informal payments to tax officials.FindingsPeer effects and social influences significantly affect perceptions of and responses to corruption. Tax morale is supported in communities where people trust one another, where there is greater respect for the law and where people can achieve greater life satisfaction.Research limitations/implicationsResults are specific to transition countries represented in the data.Practical implicationsFindings can help improve tax morale and stabilize fiscal systems in transition countries.Social implicationsEnhanced tax morale can be facilitated by building inclusive, respectful and transparent institutions.Originality/valueThis study uses the latest LITS III data with a focus on peer effects and social influences, with improved empirical strategies.

The objective of this paper is to investigate the nexus between the labor share and globalization in transition economies, with a reference to the skill intensity. We put these developments in the context of the structural and reform developments in transition economies. We rely on the predictions of the efficient bargaining model, whereby globalization forces are set to affect workers’ market bargaining power, which then produces certain developments in the labor share. We use industry-level data for 23 transition economies of Central and Southeast Europe and the Commonwealth of Independent States over the late transition period of 2000–2015. Results robustly suggest that globalization forces played important role for the stagnant labor shares in transition economies, mainly in low-skill industries. Workers’ shares in high-skill industries largely remained intact. Results further suggest that the negative effect has been the strongest for the low-skilled workers in the early transition phase and then lessened or vanished as countries turned a higher development stage. The key finding advises that if governments of transition countries attempted to or undertook steps to seize globalization by offering ‘cheap labor’, then it has been the wrong strategy.

We present empirical evidence that large structural shocks are followed by changes in labor market inequality. Specifically, we study short-run fluctuations in adjusted gender wage gaps (unequal pay for equal work) following episodes of structural shocks in the labor markets, using several decades of individual data for a wide selection of transition countries. We find that for cohorts who entered the labor market after the onset of transition. Labor market shocks lead to significant declines in the gender wage gap. This decrease is driven mostly by episodes experienced among cohorts who enter the labor market during the transition. By contrast, we fail to find any significant relation for cohorts already active in the labor market at the time of transition. We provide plausible explanations based on sociological and economic theories of inequality.

In many low-income transition countries, where formal institutions such as courts do not function effectively, informal institutions are often used by firms to minimize transaction risks. We examine the role of informal institutions, in the forms of relational contracting and social networks, in determining the risks that firms are willing to bear in their transactions with their suppliers and customers, and whether firms that bear such risks have higher productivity. Our country context is Myanmar, a country which is making a transition from a socialist to market-oriented economy. Using a unique dataset of 2496 micro, small, and medium firms, we find that firms that engage in risk taking are significantly more productive than firms that do not, and such firms are more likely to utilize informal institutions, such as acquiring information from informal interaction with customers, and social networks, including information received from business networks by firms, talking to other suppliers of customers, and being a member of a business association. Our findings suggest that informal institutions can be effective substitutes for formal institutions that are often absent or not effective in low-income transition economies.

The nexus between trade conflict and monetary policy is of great importance in international political and economic analysis. By employing data from a panel of global countries covering the period 2000–2015, this paper empirically analyzes the impact of trade conflict on monetary policy and how it works. We document the evidence that trade conflict has caused targeted countries to implement loose monetary policy. We also find that the impact of trade conflict is not only effective in the current year, but also continues in the next five years. In addition, we show that the significant impact on monetary policy is manifested in non-OECD countries and transition countries but not in OECD countries and non-transition countries. Consequently, we believe our findings should shed light on those policy makers in target countries, who can hopefully prepare for potential trade conflict and avoid similar disputes from interfering with the effectiveness of monetary policies in the domestic economy by providing practical currency and valuation strategies.

In this paper we employ a Global Vector Autoregressive Model (G-VAR) to examine macroeconomic and international monetary spillovers within the South Eastern European Countries over the period 2002–...

The aim of this paper is to highlight the determinants of environmental innovation of manufacturing firms in European Transition countries. Following an established literature, the analysis relies ...

Over the past 10 years, we have observed a significant growth in open data adoption in governments across the globe. Potential barriers and enablers of open government data have been well-documente...

Why do some societies fail to adopt “good” economic institutions? Recent literature points to the role of complementarities between social norms and proposed formal rules in advancing institutional change. To shed light on one potential mechanism, we track election performance of executive parties in up to 18 post‐communist democracies over 1991–2015 to test whether cultural attitudes influenced voters' response to market reform. We show that in more individualistic cultures, reform is associated with greater reward for the incumbent in the next election. The implication is that in democracies, voters select policies and institutions that are in line with prevailing culture. (JEL O17, P35, Z1)

We study how the problem of the ‘missing rich’, the underrepresentation of the wealthiest in household surveys, affects wealth inequality estimates for the post‐socialist countries of Central and Eastern Europe (CEE). The survey data from the second wave of the Household Finance and Consumption Survey (HFCS) are joined with the data from the national rich lists for Estonia, Hungary, Latvia, Poland and Slovakia. Pareto distribution is fitted to the joined survey and rich lists’ data to impute the missing observations for the largest wealth values. We provide the first estimates of the top‐corrected wealth inequality for the CEE region in 2013/2014. Despite a short period of wealth accumulation during the post‐1989 market economy period, our adjustment procedure reveals that wealth inequality in the Baltic countries is comparable to that of Germany (one of the most wealth‐unequal countries in Europe), while in Poland and Hungary it has reached levels observed in France or Spain. We discuss possible explanations of these findings with reference to the speed and range of privatization processes, extent of income inequality, and the role of inheritances and wealth taxes in the region.

This study investigates whether the competence of central bank governors affects the stability of the financial system they are responsible for. Using publicly available information about central bank governors from 2000 to 2016 together with data on financial stability and the macroeconomy, the findings reveal that central bank governors’ competence promotes financial stability, depending on how competence is measured. Specifically, the findings reveal that the financial system is more stable when the central bank governor is older and male. The financial system is also stable during the tenure of a central bank governor that has a combination of cognitive ability, social capital and technical competence in economics. The gender analyses reveal that the financial system is also stable during the tenure of a female central bank governor that has high social capital or high cognitive abilities while the financial system is relatively less stable during the tenure of a male central bank governor that has high social capital or high cognitive abilities. Comparing developed countries to developing and transition countries, the findings reveal that the financial system of developed countries is more stable during the tenure of a central bank governor that has high cognitive ability, social capital and technical competence in economics while the financial system of developing and transition countries is less stable during the tenure of a central bank governor that has high cognitive ability, social capital and technical competence in economics. Also, there is evidence that the financial system of developing and transition countries is more stable during the tenure of a central bank governor that has knowledge in disciplines other than economics. The findings are consistent with the view that certain characteristics of central bankers shape their beliefs, preferences and choice of policy, which in turn, are consequential for policy outcomes during their tenure.

This paper uses individual-level data covering 30 transition countries that account for over one-quarter of the worldwide immigrant stock to assess the impact of risk aversion on willingness to migrate. It extends the previous literature by allowing the effect of risk aversion to depend on the level of risk in the sending country. Consistent with theories of individual-level migration decisions, we find that risk aversion has a robust and statistically significant negative impact on willingness to migrate within countries as well as abroad. As predicted by theory, this impact is robustly less negative in riskier sending countries. Furthermore, this negative impact is significantly larger for willingness to migrate abroad than willingness to migrate internally. We also find that, even after controlling for an extensive set of control variables, willingness to migrate internally and abroad are highly correlated. This suggests that internal and international mobility decisions are closely linked.

This paper evaluates the effects of foreign direct investment (FDI) on the economic development of Ukrainian regions based on selected indicators (gross regional product, change of gross regional p...

This study investigates the effect of personal remittance inflows and financial development on the economic growth of 29 economic transition countries for the period of 2000–2015. Dynamic panel sys...

The paper seeks to empirically explore the variations and changes in the degree of International Financial Integration (IFI) between the European Transition countries and Post-Transition countries between 2000 and 2016. The estimation of parameters was made using the Generalized Method of Moment (GMM) approach. The findings of the study reveal that European Post-Transition countries have relatively more developed financial systems compared to European Transition countries, where private credit market is still playing an overwhelmingly important role in a financial system while stock markets are in an early stage of development constituting a relatively small share of the financial system. Even though in Panel 3 there are significant control variables, our findings reveal that IFI in European transition countries are affected neither by stock market capitalization and private credit markets. Consequently, they can’t be used in this stage of financial development for explanation of variations and changes in the degree of IFI.

We provide an overview of housing privatization policies and outcomes in transition economies. Our primary aim is to collect and systematize key information concerning the institutional features of housing privatization in individual countries: we identify the initial conditions, the timeframe of housing privatization and its culmination, the extent of housing privatization, who decided about its terms and conditions, who was entitled to privatize the housing, and at what price. Furthermore, using micro-data covering all transition countries, we present new estimates of the extent of housing privatization, its dynamics during the second half of the 2000s, and the resulting housing tenure structure.

The objective (aim) of this paper is to explore the impact of the Ease of Doing Business Indicators on FDI on transition economies in Europe. Authors have used the dynamic panel methodology, by using three methods: Pooled Ordinary Least Square (POLS), Fixed Effect (FE), and Two Step-System Generalised Method of Moments (GMM) estimation techniques. By referring to the GMM technique, it can be seen that variables such as: Starting a Business, Registering property, Getting electricity and Resolving insolvency have a positive and significant impact in attracting FDI in 16 European transition countries, while variables as: Dealing with construction permits, Getting credit, Paying taxes, Protecting minority investors, have shown negative impact, whereas Trading Across Border and Enforcing contracts have not shown any impact on attracting FDIs in European transition countries. This paper contributes to the enrichment of existing literature in this field by using these three methods.

Legal uncertainty represents one of the major impediments to sustainable economic growth of transition countries. Inadequate legal framework is often the source of legal uncertainty and strong impediment to effective rule of law and efficient judiciary. The purpose of this paper is to investigate the effect of penal policy on the prevention of tax indiscipline. The improvement of legal framework and tax discipline creates a synergistic effect for attraction of FDI, enhanced allocation of resources and higher economic growth. The analysis of the shortcomings of the existing legal solution is accompanied by the assessment of the prevailing case law and tax evasion criminalization in the selected European countries. Holistic approach to research allowed for the development of a specific proposal for the enhancement of legal framework and, consequently, the increase of legal certainty with positive effects on the economic growth of Serbia in the medium and long term.

Although the transition period for post-socialist countries began almost thirty years ago, still little is known about the determinants of changes in labour market institutions during that time. Th...

The disproportionate increase of bank lending to households relative to businesses is a central trend in the financial sector of many countries. In this paper, we provide evidence that credit information sharing has strongly contributed to this trend. Specifically, using a sample of 25 European countries, we show that credit information sharing is associated with a significant tilt in private bank lending towards household debt. That result is robust to various estimation techniques and control variable sets, as well as to instrumental variable estimations.

This paper examines the agency model of dividends where the importance of dividends depends on the level of investor protection. The importance of dividends is presented by the dividend smoothing concept, while the level of investor protection is determined by the legal origin. Within this, the sensitivity of dividends to earnings changes was analyzed to examine the universality of the dividend smoothing phenomenon. Subsequently, the difference in proportions of dividend smoothing firms within the common law and civil law countries was tested to determine which of these two systems attributes more importance to dividends. Finally, the application of Lintner’s model was examined in transition countries as well as in United States. Research results show that dividend smoothing is a globally widespread phenomenon, but the likelihood to reduce or cut dividends is greater in civil law countries. Also, the largest percentage of dividend smoothing firms was recorded in common law countries.

This paper contributes to the literature on military spending by analyzing the relationship between military spending and income inequality in a panel of transition economies over the period 1990–2...

As participatory governance approaches find their way into the development agendas in transition countries, a key question is how to increase citizens' participation rates. This study examines how social trust and mental models inherited from the communist past shape individual decisions to participate in rural collective action. Using unique data from rural Ukraine, I approach these questions empirically distinguishing different types of participation. I find that social trust and mental models about the roles of communities and the state stemming from the Soviet past affect participation with some reservations. Results suggest that community-driven initiatives should invest more in educational and awareness-raising activities.

This study tests the impact of banking sector reform and competition on bank stability based on unbalanced data from 22 transition countries from 1998 to 2016. The initial results not only ...

The focus of this paper is the analysis of the relationship between tax enforcement, tax compliance and tax morale within countries characterised by rapid introduction of market institutions and slow evolution of political regimes, such as transition economies. The paper investigates a coordination game in which the government is ex-ante committed to tax enforcement and can observe the proportion of tax-compliant agents in the economy. In turn, two groups of agents (third-party reporting and self-reported income) are keen to evade taxes unlawfully but have limited information on how many others evade taxes; their tax morale is therefore an endogenous function of agents' perception on tax compliance. The model predicts that the lower the quality of political institutions and the weaker tax morale, the less tax compliance can be achieved. The third-party reporting group will also be bearing higher tax burden than the self-reported income group. The model entails that having political institutions of good quality is not a sufficient condition to conduce to tax enforcement or tax compliance. Due to the endogenous role of tax morale, the government could be pushed ex-post towards poor or no tax enforcement. If good political institutions are not accompanied by good information about the enforcement of tax collection, there is scope for co-existence of poor tax enforcement, low tax compliance and weak tax morale. As such, this model well describes the tax evasion behaviour observed since the outset of transition from planned to market economy.

The purpose of this paper is to investigate causal relations between the insurance market development and economic growth in ten transition European Union member countries in the period between 1993 and 2013. The analysis is conduced with the use of bootstrap panel causality approach proposed by Konya (2006), which allows for simultaneous inclusion of both cross-sectional dependence and country-specific heterogeneity. Various types of dependencies between economic growth and the insurance market development (both in terms of the global insurance market and in the division into life insurance and non-life insurance) are identified in the study, and these findings confirm the results obtained in the majority of other papers, which report differences in the role of insurance and benefits various economies derive from the insurance market.

The neoliberal model of economic development implemented by the most developed countries of the West in the recent years has caused great financial world crisis; it also led to a slowdown in the world economic growth as well as huge social inequality in the world. On the other hand, certain countries, with China as a distinct representative, have been developing their economies independently, according to the tradition and their own experience, where the government institutions, in addition to the market, have an important role in the issues of economic development. Transition countries, Serbia among them, have mainly accepted the neoliberal model of development, with an even greater lag behind the world most developed countries as a result. This paper indicates the need for the implementation of individual models of economic development, based on the specific development potentials and adjusted to the countries‘ conditions. It is better to introduce social and economic reforms gradually, in order to achieve rapid and sustainable economic development, according to the appropriate opportunities, rather than follow the trends blindly and implement reforms at any cost.

The adoption of market orientation practices at the Higher Education Institutions is a rising trend, since the challenges of changing the global higher education environment raise a growing issue for meeting the needs of the global market. Developing an appropriate strategy to cope with all of the requirements of the global education market changes and competitive pressures is especially challenging for University Business Schools in transition countries. The paper is based upon an identification of a variety of theoretical perspectives about the global education market, its trends and influences on those schools in the aspects of market orientation. Conceptual Framework analysis was used to characterise the market orientation of Business Schools as an opportunity for the strategic business model of University Business Schools in transition countries. Key factors and indicators for understanding their environment were identified, structured and categorised within a theoretical framework. These factors reflect the evolving context of reformation of the existing business model of University Business Schools in transition countries in a comprehensive way, since the framework outlines the complexity of their adaptation, considering the linkages and dependencies of all the crucial global external in internal environment trends and aspects. The authors suggest that, in order to align their business model more adequately to the global market needs and develop a sustainable competitive position, University Business Schools from transition countries have to follow the market orientation principles, taking into account also the limitations and challenges from a wider social and institutional environment.

In this paper we investigate the impact of environmental taxes on CO2 emissions in the context of emerging market economies. An attempt has been made to identify what role environmental policy and specific tax policy measures play in understanding the relationship between economic development and environmental degradation. The empirical analysis covers ten Central and Eastern European countries in the period from 1995 to 2015. The latest data on environmental taxes are available only from 1995. We contribute to recent literature in two respects. First, we study this relationship within a dynamic framework in which we take into account the issues of serial correlation and endogeneity in the regressors due to the cointegration relationship. Specifically, we rely on the fully-modified least squares (FM-OLS) estimation technique to model the long-term relationship between income and carbon-dioxide emissions. Second, this paper advances our understanding on the effectiveness of tax policy measures in curbing CO2 emissions, on which we have scarce empirical evidence. The results of this analysis provide rather strong evidence in support of an inverted U-shaped relationship between economic growth and the environment. However, environmental taxes do not seem to be effective in modifying the behaviour of economic agents and in protecting the environment. The results are robust to different models.

Migrations as an inevitable fact of socioeconomic trends pose a security challenge for migrant countries, transition countries, and the countries where migrants come as to the ultimate destination. They are realized in a large area with a large number of participants and global consequences. This paper, through the basic determinants of migrations, statistical indicators on migrations, security challenges, risks and threats, migration policy and international security, provides answers to the questions about the numerical movement of migrants from the seventies of the last century to today on a global scale. Responses are also given about the reasons for triggering migrations, the most desirable migrant destinations, and the impact of migrations on security in departure, transit and destination countries. Particular attention is given to the last migration crisis that has largely affected the European Union.

Transition to the market economy and the related restructuring of welfare systems has produced new vulnerabilities in the formerly communist countries of Eastern Europe and Central Asia while simultaneously aggravating the existing ones. Given the limited fiscal capacities of the transition countries, this brings to the fore the issue of which of the new and old vulnerable groups of people are considered to be deserving of public support. Using data from the third round of the Life in Transition survey (2016), this article explores the perceived welfare deservingness of five groups: the elderly, the disabled, the unemployed, the working poor and families with children. We find that with some exceptions, the hierarchy of deservingness of these groups is similar to that systematically identified in Western welfare states. However, there is also a large variation in the deservingness levels across countries, some of which appear to be related to the differences in the levels of economic development. We also find that in transition countries, individual self-interest and ideological predispositions largely have the same effects on people’s deservingness perceptions as those found in Western welfare states in previous studies.

In this paper, we use the Life in Transition (LiTS) survey micro- data to estimate the gravity model of life satisfaction in seven post-transition countries. We use precise localization data and a very rich set of controls to estimate the effect of the duration of Ottoman rule on similarities in life satisfaction between pairs of primary sampling units. On average, being under the Ottoman rule for more than 100 years reduces the dissimilarity in life satisfaction between two primary sampling units. Further, we find that institutional heritage plays an important role in this interaction. Our results show that areas with a shared history of Ottoman rule are more similar in their institutional setting and life satisfaction. The results suggest that the analysis of life satisfaction in transition countries is often oversimplified by focusing on the transition process and ignoring potentially significant historical discontinuities.

This article investigates the rationales for the successful economic transition in a transition country through the lens of organizational ecology theory and institutional theory. Initially, the new private sector emerges and survives because of “legitimacy spillovers” from the legitimized transitional mixed sector and some market-oriented identity overlap. Over time, as the private sector builds its own legitimacy, it competes with the state and the mixed sector and challenges their existence. Finally, the Schumpeterian “creative destruction” process replaces the old out-of-date sectors with the new dominant sector. Consistent with organizational ecology theory, the evolution and dynamics of the three economic sectors take place through their interactions, which determine the emergence, prominence, decline, and exit of firm populations in each sector. Depending on whether a centrally planned or market-oriented political legacy plays the dominant role in the regional environment where the transition takes place, local institutions play a moderating role in stimulating or hindering this evolution process. Empirically, we test this mechanism using census data for firms operating in Vietnam between 2000 and 2013, applying Blundell and Bond’s generalized method of moments (GMM) estimation technique and the piecewise exponential hazard model to study the interaction effects of economic sectors in terms of profitability and survival.

PurposeThe purpose of this paper is to provide empirical evidence on the presence of gender-based discrimination in formal credit markets during the global financial crisis. Specifically, the study tests for gender differences in the probability of being credit-rationed, in the likelihood of being a discouraged borrower and in the price conditions of bank financing.Design/methodology/approachThis paper uses the fifth wave of the Business Environment and Enterprise Performance Survey (BEEPS), which provides detailed micro data on firms from 26 transition economies in Europe and Central Asia. The empirical analysis employs linear and non-linear sample selection regression models and extended Blinder-Oaxaca decomposition techniques to assess gender differences in access to credit.FindingsControlling for a large set of observable firm characteristics and for endogenous selectivity, we find that female-led firms are more likely to face financing constraints and to be discouraged from applying for credit than their male counterparts. Conditional on having obtained a loan, female-led firms also face significantly higher interest rates. Furthermore, the observed gender gaps are mainly due to unexplained factors, supporting the hypothesis that banks discriminate against women-led firms in their credit-granting decision.Originality/valueThis study provides new insights on gender discrimination in formal credit markets, highlighting that gender differentials in access to credit significantly vary across countries and strongly depend upon the definition of the firm's gender structure. From a policy perspective, the evidence obtained stresses the need for policies aimed at promoting the role of women in the economic environment in order to reduce discrimination and raise competition in credit markets. Moreover, public interventions should support lending to creditworthy female enterprises in order to improve their perceptions about banks' willingness to grant credit and reduce their propensity to be discouraged from applying.

This paper investigates the effects of corruption on the performance of newly established enterprises. Using longitudinal data from enterprise surveys containing virtually all firms over the period from 2011 to 2015 in Vietnam, we find that corruption deteriorates firm financial performance, and subsequently exposes them to a greater failure probability. We further find that, while corruption imposes more harmful effects on the performance and survival of private domestic firms, it exerts no significant impact on state-owned firms. On the other hand, foreign firms are also able to take advantage of corruption to enhance their performance and survivability. In addition, our results suggest that the more mature firms are better at dealing with corruption and can eventually take advantage of it to enhance their performance. The results are robust after various model specifications as well as alternative classifications of newly established firms. Publisher PDF

The authors would like to make the following corrections to the published paper (Lehmann and Benner 2015) [...]

Our paper examines the potential effect of different types of entrepreneurship (in particular, early-stage entrepreneurship, opportunity-driven entrepreneurship, and necessity-driven entrepreneurship) on economic growth at a national level and aims to identify whether the contribution of entrepreneurship to economic growth differs according to the stage of economic development of a country. Our empirical analysis is based on the panel data, which covers 17 years (2002&ndash, 2018) and 22 European countries, classified into two groups. The results suggest that all three types of entrepreneurship have a greater impact on economic growth for the entire sample of European countries, and some types of entrepreneurship are more important than others. We find that opportunity-driven entrepreneurship and early-stage entrepreneurship would be key factors in stimulating economic growth across the sample of European countries. Our estimations also show that opportunity-driven entrepreneurship would have a greater impact in transition countries, while necessity-driven entrepreneurship would have a stronger influence in the innovation-driven countries. The results of our research could be of interest to policymakers, as it can help in identifying and implementing the most appropriate measures to eliminate the obstacles in the macroeconomic environment that entrepreneurs face, and measures to support innovative entrepreneurial activities.

Earlier research focused extensively on political parties as promoters and users of clientelism. However, previous studies have also revealed that parties are not monolithic organizations and they can be seen through the lenses of several faces or components. As such, it is unclear which of the party features is more conducive to clientelism than others. This article analyses several party features in relation to clientelism and tests their explanatory power. Our analysis is driven by a differentiation between several features of the political parties: performance in office, public funding, territorial coverage and notoriety of local political leaders. We rely on data from an original expert survey conducted for 15 parties in Georgia, Moldova and Ukraine between February and June 2018.

This article offers an empirical analysis of determinants of inflation in 28 European economies that belonged to the transition group of countries in the end of the last century. We rely on dynamic panel methodology and find that economic and structural variables, including economic openness, unemployment, real wages, institutional effects, as well as external factors, such as prices of food and oil, determine the short-run inflationary dynamics in these countries. The obtained results also indicate that inflation rate is autoregressive in the observed period (2005-2015), confirming that contemporaneous inflation rate is determined by the entire history of these determinants. Our further investigation reveals long- term effects of the majority of these variables on price dynamics. Interestingly, distinction between the current EU and transition countries in the model does not lead to different conclusions.

This study investigates the importance of the country of origin (COO) effect in German consumers’ perception of chocolate quality using the example of chocolate made from Ecuadorian raw cocoa. From...

This special issue argues for the applicability of the conceptual framework of Multi-Level Governance to the political–administrative regime of China, provided significant adaptations and qualifications are developed. The application of Multi-Level Governance to China enables to account for global influences as well as for the involvement of non-governmental actors in public policy making. More radically, we suggest in this introductory article that the development of Multi-Level Governance may be interpreted as a way of enhancing the societal legitimacy of the political regime under the conditions of new authoritarianism. We conclude this article by drawing a fascinating yet possibly hazardous and overstretched parallel; that is, the development of Multi-Level Governance may be part and parcel of a process of building political legitimacy in China, just as it may be a way of exploring paths for the renewal of beleaguered traditional liberal democracy in Europe. Albeit along profoundly different trajectories, China and Europe might adopt Multi-Level Governance arrangements for a very purposive course of action: enhancing the legitimacy of the respective and very diverse political systems and buttressing their very foundations. This suggests a strongly normative and purposive application of Multi-Level Governance.

We look at the growth experience of 25 transition countries over the 25 years since the dissolution of the USSR. The initial collapse in income was much more severe in 12 former Soviet Union countries (FSU12) than in the 10 transition countries that joined the EU in 2004 and 2007 (EU10). In 2015, FSU12 income levels were further behind EU10 than they were at the start of transition, despite more rapid growth in the last 15 years. Compared to predictions from a parsimonious growth model, the region as a whole is ‘normal’ in terms of growth performance since the 2000s. However, the FSU12 over‐perform and the EU10 under‐perform relative to model predictions for the last 15 years.

In this paper, we analyse the life satisfaction of adolescents in transition countries, comparing their life satisfaction with that of their peers in non-transition countries. We find that, at the start of transition, ceteris paribus, the life satisfaction of the adolescents in our sample of transition countries is somewhat smaller, but not significantly so, than the life satisfaction of the adolescents in our sample of non-transition countries. With the economic crisis of the early 1990s, however, the difference increased dramatically, but, by the beginning of the 2000s, this gap had again become fairly limited. From that point, respondents’ health situation, their material wealth and their school experience mattered much more than whether they lived in a transition country or not. Unlike the literature on adults, we do not find that after controlling for individual level variables, macro variables play an important role in adolescent happiness.

Responding to a number of longstanding challenges such as poverty, wide-ranging inequalities, environmental problems, and migration, requires new and creative responses that are often not provided by traditional governments. Social innovations can oer socio-ecological and economic solutions by introducing new practices that reduce social inequalities, disproportionate resource use and foster sustainable development. Understanding the role of social innovations is especially complicated in unstable institutional environments, e.g. in developing countries and countries in transition. This paper analyses nine social innovations in rural areas in Serbia, based on in-depth interviews and document analysis. This analysis reveals factors that facilitate or constrain social innovations whilst simultaneously identifying related formal and informal institutional voids, for example, poor law enforcement, a lack of adequate infrastructure, lack of trust, as well as norms and values that bolster patriarchal systems. The results that emerged from this research show that social innovations are operating in spite of these challenges and are facilitating improvements in a number of the aforementioned challenging areas. Some innovators engage in social entrepreneurship activities because of subsistence-oriented goals, while others follow idealistic or life-style oriented goals, thus creating new social values. Moving beyond these observations, this paper also identifies means to overcome institutional voids, such as creation of context-specific organisational structures, improved legal frameworks, and innovative financial mechanisms.

This article is based on a panel discussion on the future of transition countries 25 years after the dissolution of the Soviet Union. All the contributors have long professional and personal experience of various aspects of the transition process so far and provide different perspectives on what to expect for the region in the future. However, the need for continued reform in many areas of the respective economies are highlighted to ensure inclusive and sustainable growth in the future. A continued focus on enhancing productivity is the key to future economic success. Investments in human and physical capital need to be complemented with strengthening the fundamental institutions that make such investments possible and desirable for all relevant stakeholders. It will not be an easy reform process, but the alternatives are much less desirable for the vast majority of people in these countries.

This paper analyzes the extent of employer‐provided training in Armenia, Azerbaijan, Georgia and Ukraine and investigates its relationship with innovation, having international business contacts, use of computers at work, reported skills shortages and other firm characteristics. It contributes to the literature by examining different types of training – initial on‐the‐job learning, more formal in‐house training and external training, which is provided by firms to two categories of workers – white‐ and blue‐collar workers. After controlling for a range of firm characteristics, we find a positive link between technological innovation and intensity of training of all types provided to white‐collar workers that points to the technology‐skills complementarity. Furthermore, the level of computer use at work is a significant determinant of the incidence and intensity of external training provided to white‐collar and blue‐collar workers.

We analyze the exports trade margins dynamics for ten transition countries, both at the industry and product level, during the period of accession to the EU. We find that trade along both margins was driven by only about 1% of almost 5000 (HS 6-digit) products. Moreover, the largest intensive and extensive margin gains were mostly concentrated around the same subset of sectors. Last, we find a positive correlation between productivity growth and the extensive margin across the transition economies.

Previous literature has shown substantially lower levels of self-reported health in transition countries. The current paper provides the most recent estimates of the size of the transition gap in self-rated health by using up to 241,698 observations from the World Values Survey and the European Values Study collected between 1989 and 2014. The estimated gap is in the range of 12.7–23.7 percentage points lower probability of reporting ‘Very Good’ or ‘Good’ self-rated health which indicates that the process of transition is far from completion at least based on a subjective evaluation of health.