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Based on Schumpeterian theoretical considerations, this paper investigates the innovation behavior of firms during the severe economic crisis of the year 2008/2009. It focuses on transition countries of Central and Eastern Europe and Central Asia, which have completely restructured their innovation systems through the course of transition from planned to market economies a relatively short time ago. As a result of the crisis, we observe a strong decline of innovation activity in all transition economies. In line with the literature, there is, however, empirical evidence for both creative destruction as well as creative accumulation. This underlines two key findings: firstly, the universality and durability of Schumpeterian assumptions, and secondly, a call for anti-cyclical innovation policy.

African attitudes to income inequality have hardly been studied. As a result, we may have been missing a crucial part of the answer to the question why Africa is so unequal. This paper presents evidence that, across all self-identified class categories, African respondents in 16 African states, representative of all the regions of the continent, are on average considerably more tolerant of inequality than respondents from 43 comparable developing and transition countries. The aim of the paper is to try and explain these differences. It concludes that (a) a modified version of Albert Hirschman's notion of the ‘tunnel effect’ and (b) religious devotedness in the African context provide explanations for the observed variation between African respondents and their counterparts elsewhere. Experienced inequality, in contrast to overall income distribution, influences the tunnel effect more widely than economic growth. Religious belief shapes inequality tolerance in Africa more than the observance of religious practices.

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 ...

This paper aimed to investigate the FDI determinants in 27 transition countries within the 2002 – 2018 period by employing system GMM analysis. One of the results of our research is that an uncertain political situation and civil liberties violations have a significant negative impact on foreign investors’ confidence. Generally, the erosion of democratic institutions acts as a deterrent to FDI inflows. Transition countries which experienced prolonged periods of central planning also recorded lower levels of FDI inflows. The results show that creating conditions for stimulating foreign investors through the improvement of institutional quality embodied in the control of corruption and voice and accountability impacted positively on FDI inflows. The interplays between overall institutional quality, voice and accountability, regulatory quality, government effectiveness and GDP growth are positive and significant. Hence, macroeconomic development has an important impact on the marginal effect of institutional quality. Therefore, we concluded that the influence of governance on FDI inflows is conditional on the transition countries’ macroeconomic performance. Our findings also reveal that of the governance dimensions, control of corruption and voice and accountability have a significant influence on the decision of multinationals to undertake investment., Cilj ovog rada bio je istraživanje odrednica izravnih stranih ulaganja u 27 tranzicijskih zemalja u razdoblju od 2002. do 2018. godine, uz pomoć sistemskog GMM procjenitelja. Otkrili smo da neizvjesna politička situacija i kršenje građanskih sloboda imaju značajan negativan utjecaj na povjerenje stranih ulagača. Općenito, erozija demokratskih institucija odvraća priljev izravnih stranih ulaganja. Zemlje u tranziciji koje su imale duža razdoblja centralnog planiranja također su zabilježile niže nivoe priljeva SDI. Rezultati pokazuju da je stvaranje uvjeta za privlačenje stranih ulagača, uz pomoć poboljšanja institucionalne kvalitete u vidu kontrole korupcije i glasa i odgovornosti, pozitivno utjecalo na priljev SDI. Međudjelovanje ukupne institucionalne kvalitete, glasa i odgovornosti, regulatorne kvalitete, učinkovitosti Vlade i rasta BDP-a su pozitivna i značajna; prema tome, makroekonomski razvoj ima značajan utjecaj na granični učinak institucionalne kvalitete. Stoga smo zaključili da utjecaj upravljanja na priljev SDI ovisi o makroekonomskim performansama tranzicijskih zemalja. Naši rezultati također otkrivaju da, među upravljačkim dimenzijama, kontrola korupcije i glas i odgovornost imaju značajan utjecaj na odluke multinacionalnih kompanija o poduzimanju investicija.

Motivation: Economic growth is the product of many interrelated shallow and deep (fundamental) determinants. The deep ones include the geographical conditions of development, institutional conditions and the openness of the economy. Research on the impact of fundamental factors on economic growth and their importance were carried out for various groups of countries, primarily developing as well as developed ones. Aim: The study continued the analysis of the fundamental factors of economic growth in selected transition countries carried out in 2010. The focus was on determining the changes that have occurred over time in the area of fundamental determinants of growth in order to perform a comparative time analysis after the next decade of functioning of these countries. Results: The analysis shows that the geographical factors that formed one of the elements of the initial conditions turned out to be important for the analysed economies. Institutions are also very important, and the change in their quality in the analysed period was the smallest in the group of the poorest countries.

This section is examined statistically whether the importance of the motives for act and the acceptances for lower wage and labor incentives is different between each age group. Above results shows young age group is “self-actualization” as important motive, old age group is “moral” as it. And old age group has higher labor incentives when it is suggested higher wage than the wage according to my ability, and when it is the lifetime employment system. Older age group think “moral” as important motive. They think that want to rewarded with the lifetime employment system and higher wage. It checked that action motives differed according to a generation.Moreover, Prospect Theory, the efficiency wage hypothesis, and the relative wage hypothesis were satisfied, and it was checked that the influences differ in his twenties as compared with other generations. Moreover, the rate of desiring lifelong employment system as a senior was large, and his twenties had many people who do not desire lifelong employment system strongly. This shows that consciousness change and a behavioral change may have arisen in that time in 1990 which shifted to the market economy bordering on people who were his teens, i.e., his present twenties, and his 30's. It is shown that there is no big difference the results of transition country, the results of advanced nations, especially the result of Japan.Keywords. The efficiency wage hypothesis; The relative wage hypothesis; Lifelong employment system; Mongolia.JEL. P20; P22; P25.

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.

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.

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 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.

Civil society organizations (CSOs) in the scientific literature have been studied broadly from various aspects such as cultural, political, social and economic. But as far as the last one is concerned, there is still a research gap because there is a lack of study about their contribution to economies under development, such as Kosovo, and which must be filled because of its importance. This paper tends to analyze the present situation of CSOs in Kosovo and their potential contribution to economic activity. Highlighting the activities, the structure and the place of these organizations in the economy will be the approach, in the beginning, to pave the way for further study of specific areas related to them. The methodology established contains analyses of secondary sources that are done by using data from the Ministry of Public Administration of Kosovo, Kosovar Index of Civil Society which is a regular report of the Kosovar Civil Society Foundation (KCSF), and other supplementary data. However, this will proceed after the scientific conceptual issues of CSOs and their place within the economy. Finally, the results show that civil society in Kosovo is very diverse with organizations in different sectors, and the economic activity sector consists of mostly agricultural NGOs. In transition countries, CSOs are seen as an alternative that improves a particular sector. Thus far, there are over 10,000 organizations established in Kosovo, but relative studies suggest only 1000 to be active. Furthermore, their activity and contribution to economic development is little known so far, while the main problem of the economy remains unemployment.

Aligning with the European standards implies open-mindedness. Without a cultural base which keeps us deeply connected to what is happening both in the East, and in the West, it would be rather hard to understand the easy way our country interacts with other countries. As a national state or as a company, disregarding the existence of Globalization and being out of this process means being sentenced to isolation and stagnation. We emphasize the role of our own effort within the framework of developing and transition countries. Alongside our integration in EU, several changes occurred and still do in all fields of activity, including in the educational one. In conclusion, direct marketing through promotional techniques can ensure education on a bottom-line basis in the European Union and beyond.

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.

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.

In this paper there were two types of international financial adjustment patterns identified: type-A, where highly independent monetary policy and low domestic currency stability was the preferred path; and type-B, where monetary policy independence was given up and currency stability was acquired. We argue that whichever type of external financial adjustment the preferred path may be, the ability to resist major external shocks simultaneously depend on a handful of other macro prudential factors (e.g. fiscal and debt service performance), too. A country may not be euro-zone member and still do well in the shock resistance department, like the Czech Republic. For Hungary, euro-zone membership would sure bring better shock resistance capabilities, yet, it would in no way offer solution to the existing deficits in its levels of international competitiveness and productivity.

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.

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.

Purpose: This study is carried out to study the relationship between FDI and economic growth of developing countries. Approach/ Methodology/ Design: The study used data from 2000 to 2019 for 113 developing and transition countries. The study used Hausman fixed effect and instrumental variables two stage least square region to trace the results. Findings: The result of the study found a positive relationship between FDI and economic growth. An increase in FDI inflow will result and upsurge in economic growth of developing country. The relationship between unemployment and economic growth is found negative. The overall results show that FDI and economic growth has a positive relationship in developing countries. Practical Implication: This study used annual data of pre pandemic. It is concluded in the study that future studies have to check the impact in post pandemic scenario. Originality/Value: Though the relationship between FDI and economic growth is studied widely in different studies. As mentioned that COVID-19 pandemic changed the world economic situation there is much more aspects of FDI and economic growth is remaining to study. The issue of FDI and economic growth for a cluster of 113 countries is addressed in this study.

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.

The chapter compares the Polish society to its international peers to determine the extent to which FTA attitudes are country-specific, and to what extent they fit and connect with the pan-European perspectives. We look closer at the values relevant from the perspective of international trade and the processes of globalisation. How similar or how different are the Poles from other Central-Europeans? How specific is the perspective of transition countries compared to the states with established democracy? Prior to presenting the analyses that could get us closer to these answers, we are pointing to the consequences of the 2008 financial crisis noted and analysed by many sociologists. Especially interesting for us are the conclusions of Alain Touraine and Miroslawa Marody. Then we analyse the results of international social surveys and find that the Polish society quite widely shares the image of living on the “underdeveloped” side of Europe and agrees that Poland is still “catching up” with the world’s more successful parts. This comes together with quite a high level of legitimisation of income inequalities that suggests that Poles are generally quite optimistic about their chances to finally succeed in this “catching-up” process and believe it is possible to do by individual effort.

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 aim of this paper is to define the meaning and the role of distance in determining cross-border investment transactions. Specifically, it aims to use Serbia as an individual country case demonstrating the implementation of a model based on Ghemawat’s culture, administrative, geographic, and economic distances (CAGE) framework for testing the key distance-related determinants of the foreign direct investment (FDI) inflows to a country. Since 2000, Serbia has embarked on an extensive political and economic reforms program, having achieved democratic stability by now. Its economic growth has been mainly driven by foreign direct investments. This paper analyzes how each one of distance dimensions, i.e., cultural, administrative, geographic, and economic, affects FDI inflows to Serbia. The empirical application of the model shows that cultural distance affects FDI flows negatively, while administrative, geographic, and economic distances have a positive effect on FDI inflows to Serbia.

The linkage between income inequality and citizens’ support for democracy has widely been discussed in the literature (e.g. Acemoglu and Robinson, 2001; Andersen, 2012). However, drawing inequality can further be decomposed into two components drawing on the theory of inequality of opportunity (IOp) proposed by Roemer (1998). Inequality arising due to differences in effort is perceived as ”fair”, while inequality due to differences in circumstances (e.g. unequal starting conditions) is regarded as ”unfair”. Using multiple state-of-the-art estimation methods comparable IOp measures for 27 former communist countries (”transition countries”) and 3 Western democracies are calculated. Incorporating these IOp measures into the individual-level attitude formation process reveals that higher levels of IOp correspond to higher levels of support for the concept of democracy while overall income inequality has no statistically significant effect. This observation can be rationalized by citizens regarding democracy as a means to achieve equality of opportunity rather than simply as a vehicle for redistribution.

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...

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.

In this article we analyse the impact of the interaction between cross-border mergers and acquisitions and the quality of the institutional setting on domestic investment using panel data for 22 European transition countries from 2000 to 2014. We investigate whether the progress and durability of institutional reforms have a crucial influence on the economic performance of cross-border mergers and acquisitions in transition countries. Our empirical findings indicate that contemporaneous cross-border mergers and acquisitions have a crowding-out effect on domestic investment in the year of merger or acquisition, but the influence of their lagged level has a strong crowding-in effect one year later. We find that the overall quality of the institutional setting and the rule of law negatively and significantly affect the relation between this type of foreign direct investment and domestic investment, both in the short and long run. Political stability exhibits a positive and significant impact on domestic investment in the current period and over time.

In terms of the lack of domestic accumulation, foreign investments represent a significant source of additional capital to accelerate economic development. Political developments on a global scale and instability which they bring, as well as instability in commodity markets and reducing economic growth in developed countries led to the fact that foreign investors have become more cautious when making investment decisions. These developments have led to a decrease in investment activity, which is particularly reflected in the transition countries, and thus in Republika Srpska. Although Republika Srpska conducted a series of reforms, the situation at the global level leads to the need to review investment policy and its harmonization with the new situation. The aim is to analyze the volume of foreign investment in the world, the region and in Republika Srpska, as well as the factors influencing investment decisions and to find solutions for increasing the volume of foreign investments based on this analysis, in order to accelerate the economic development of Republika Srpska. The analysis showed that although Republika Srpska conducted a series of reforms in order to attract new investments, it is necessary to conduct e-business registration, improve the business environment, with special attention paid to reducing the tax burden on labor, education reform and carry out targeted attracting of investors, not only in the agricultural sector - fruits and vegetables, but also in other sectors.

One of the key goals of the economic policy makers of every country is to achieve internal and external balance. An unavoidable segment of the analysis concerning the achievement of internal and external balance is certainly the influence of the exchange rate regime applied in a country. European transition countries, despite their similar initial problems and final objectives, applied different exchange rate regimes adapted to the economic circumstances and needs of the country. The paper aims to examine and demonstrate the impact of the applied exchange rate regime on the internal balance of the transition countries. The research encompasses 10 representative transition countries, in the period from 2000-2014. The results of the research, from the aspect of internal balance, confirmed the justification of the application of the floating exchange rate regime in more developed, but not in less-developed, European transition countries. The application of floating exchange rate regimes in less-developed transition countries is associated with a considerably higher average inflation rate, which may be explained by the higher import dependence of lessdeveloped countries and by the consequent transfer of depreciation to price growth.

The purpose of this paper is to further the research of the connection between material well-being and happiness in transition economies. We analyzed panel data obtained from the World Database of Happiness and Eurostat. Our results indicate that out of all the major macroeconomic variables (GDP, employment, inflation, taxes etc.), the most significant (and the only stable) predictor of changes in happiness in transition countries is the level of employment. The results are consistent with a hypothesis of a still prevalent “socialist mentality” in the analyzed sample of countries which are all formerly socialist economies that typically place high (or full) employment as the highest economic priority (as opposed to GDP growth, low inflation etc.). Our results differ from the conclusions of the few studies done on this sample of countries, which suggests additional research on the subject is likely required.

This paper studies how the local governance reforms carried out between 1997–2014 shape state-society relations at Georgia’s local level. Drawing on Foucault’s concept of governmentality, I...

The role of formal and informal institutions is crucial in forming growth aspirations. Firms use their resources and personal network, trusting to overcome or compensate for inadequate informal institutions. Transition countries can unlock their growth potential by targeting entrepreneurs with high growth aspiration through policy measures (increasing their level of human capital through a higher quality of educational system, aligning formal and informal institutions, promoting well-functioning and impartial courts). Entrepreneurs use the informal institutions to complement deficient or inadequate formal institutions. Firm size as an indicator of better access to resources moderates positively the effects of informal institution barriers by having a positive influence on growth aspiration. Training, networking, and trust have a positive effect on growth aspiration and entrepreneurs use these practices in response to institutional deficiencies (inadequate educational systems, inefficient courts and other formal institutions). Policy initiatives should consider small firms as being affected by formal institutions.

The balance-of-payments (BoP) can act as a constraint on the output growth rate because it limits the growth of demand. This article focuses on verifying whether the hypothesis that BoP constrains growth is suitable for explaining the growth performance of several transition economies in Central and Eastern Europe that joined the European Union after 2004. According to Thirlwall’s law, the BoP equilibrium growth rate in an economy is determined using the ratio of the income elasticities of demand for exports and imports and the growth in foreign demand. The results obtained are compared with the multisector version of Thirlwall’s law as an alternative approach that considers the structure of the economy and how specialization affects BoP-constrained growth. The results show that almost all the transition countries in the sample grew at a higher rate than is consistent with the BoP equilibrium and that the multisector version of this approach predicts actual growth in these countries.

The purpose of the paper is to evaluate the performance of mutual funds operated in selected post-transition countries and to analyse their return variability and dispersion. The study sample consists of 294 equity funds (domestic and foreign ones) from the Czech Republic, Hungary and Poland. By using classic measures of return as well as popular measures of risk, it was possible to examine if equity funds from the CEE countries possess the ability to outperform. It was observed that funds generally obtained mean returns, which were below the corresponding benchmark. In most cases, however, the results were statistically insignificant. Fund returns compared to equity indices were characterised by lower ups and downs, especially during significant market changes. The analysis of performance variability and dispersion showed that there are entities which achieve marginally better return than their competitors at a relatively low risk level. The test for equality of variances applied in the study revealed evidence for the heterogeneity of return variabilities, which could be caused by sample selection bias.

The purpose of this paper is to address a relation between governance quality and long-run growth using a case of post-soviet transition countries. Alternative approaches to the growth theory emphasize the role of formal institutions, in particular, political and economic institutions. Based on literature overview, a positive effect of governance quality can be assumed. Governance quality is represented by concept of World Bank's Governance Matters and its influence is estimated within panel data analysis. The results confirm the assumptions. Furthermore, they indicate the importance of political stability and negative impact of voice and accountability.

This study empirically investigates the short- to medium-term effects of fiscal policy on output and other macroeconomic variables in European Union countries between 1995 and 2012, with particular reference to transition countries. It applies Panel Vector Auto Regression with recursive identification of government spending shocks as the most appropriate method for the aim of the study and the sample used. The main results indicate that expansionary spending shocks have a positive, but a relatively low effect on output, with the fiscal multiplier around one in the year of the shock and the following year, and lower thereinafter. There are indications that this result is driven by the recent crisis, as multipliers are considerably lower in the pre-crisis period. Effects of fiscal policy are strongly dependent on country structural characteristics. Fiscal multipliers are higher in new European Union member states, in countries with low public debt and low trade openness. Further, spending shocks are followed by rising debt levels in old member states, which could be related well to the recent European debt crisis. Finally, the analysis of the transmission mechanism of fiscal policy yields results that are consistent with both extended Real Business Cycle models and extended New Keynesian models.

The first part discusses the consequences of the deficit of real institutional changes in post-socialist SEE countries, and their substitutions by the various anti-developmental institutional imitations, which essentially had the character of alternative quasi-institutions and were in a function of enrichment for the privileged individuals. It points to the importance of neo-institutional economic theories (NET), which provide a sound grounds and recommendations for explanation of the imitation changes, which had anti-institutional and anti-development character. Theoretical explanations of antiinstitutional changes confirm the conclusion that real institutional changes can not be developed on its opposites, in the conditions of feigning the economic freedom and democracy, the governement stability, and the accompaning development of social pathology. The present paper is dedicated to the formation of a theory of institutional modelling that includes principles and ideas that reflect the laws of societal development within the framework of institutional economic theory. The scientific principles of institutional modelling, increasingly postulated by the classics of institutional theory, are discussed. Scientific ideas concerning institutional modelling are proposed on the basis of the results of original design, formalisation and measurement of economic institutions. Applied aspects of the institutional theory of modelling are considered. © 2017, Economic Laboratory for Transition Research. All rights reserved. 15-18-00049 The study was financially supported by the Russian Science Foundation at Udmurt State University (Izhevsk, Russia), project No. 15-18-00049.

Labour markets in post-transition countries have undergone radical changes, with a shift away from full employment and strong legal protection for employees, though the extent of these changes has differed between countries. I show that the loosening of employment protection went in parallel with growing income inequality and widening poverty levels, which led to a rise in household debt. This enabled additional consumption in the short term, but later deepened recession by hampering consumption. Following the financial crisis, the tendencies to make labour markets more flexible were confirmed and strengthened. This was facilitated by the weakness of trade unions, conditioned by structural changes brought about by transition.

Today, more and more authors are involved in researching the economic phenomenon of corruption and its impact on many macroeconomic indicators. Nevertheless, transitional surroundings have offered a unique opportunity in history to explore the relationship between corruption and economic growth in entirely different environment from the one in developed western economies. Researching of, at first sight, two unrelated social phenomena gave additional light on the causes of economic growth in Croatia. The researching paper also gives Croatian position among ten transition EU member countries. The corruption perception index was used as the best measuring method of corruption in Croatia and other countries while economic growth was measured by GDP per capita instead of growth rates. We explained reasons why we did so. The time period covered by the research was from 1999 to 2009 for Croatia and from 1995 to 2009 for ten transition EU member countries. Total of 137 cases were evaluated. The researching paper demonstrates the negative impact of corruption on economic growth where the strength of its influence is relatively obvious. It is also evident that the impact of corruption on economic growth is substantially a direct one and that it takes place without a significant time delay. Results for the period of research related to Croatia, more closely fit the observed data of other transition countries. Corruption could be an additional explanation (certainly not the only one) for low or high level of GDP per capita in Croatia. Misunderstanding of all the factors that encourage the economic growth may lead to macroeconomic structural misbalances in Croatian economy.

This paper examines the relationship between FDI inflow per capita and unemployment rates in 17 transition countries over the period 2000-2014. It aims at testing the premise, usually suggested by policy makers, that higher attraction of FDI in transition countries results in inevitable unemployment reduction. The empirical analysis contributes to the existing literature applying panel cointegration approach in testing and assessing long-run impact of FDI on unemployment, as an alternative to typical panel analysis that examine contemporaneous relations. The evidence from seven performed panel cointegration tests provide the mixed results, while the Fully Modified and Dynamic OLS panel estimations indicate that FDI and unemployment are most likely not cointegrated. The inconclusiveness of the empirical evidences gives the argument in support of the general conclusion that long-run impact of FDI on unemployment in transition countries is either very loose or does not exist.

High-quality annual reports and their good presentation to the users can contribute significantly to the company's success. The main aim of this paper is to analyze disclosure quality of annual reports for listed companies in selected European transition countries (Croatia, Montenegro, Romania, Serbia and Slovenia) using constructed disclosure quality index (DQI) and applying relevant statistical analysis. Obtained results suggest that there are significant differences in disclosure quality of annual reports between observed countries and Slovenian companies have the greatest level of disclosure quality. These findings could be of interest to all potential investors and to management and regulators in the process of financial reporting quality improvement.

Motivation: Cross-country growth regressions indicate that institutions are important for growth. Some institutions are created, protected and enforced by the government — they are the institutions of state. The most important for economic growth are: economic freedom and protection of property rights, political freedom (or democracy), quality of governance and the rule of law. The changes that took place after 1989 in the countries of Central-Eastern Europe were not only political but also economic. The post-socialist transition was, above all, a change of the institutions of state. It was a kind of the so-called ‘quasi-natural experiment’. Therefore, my intention is to answer the question: how the institutions of state affect economic growth in transition countries.Aim: The aim is to identify the impact state institutions had on the economic growth in transition countries during the financial crisis of 2007–2010.Results: In the first part of this article I review the literature and present hypothesis about dependency of economic growth and institutions during the financial crisis in transition countries. In the relevant literature there is a consensus that without an appropriate institutional background, market incentives do not lead to optimal resource allocation. Institutions have a particularly crucial impact in the case of post-socialist countries which have undergone political and economic transition. A significant and positive impact on economic growth rate is exercised by such institutions as: protection of property rights and political stabilization, government efficiency and rule of law. The experiences of transition countries confirm also the significance of economic freedom for economic situation.

The authors investigate changing attitudes towards privatization of land and enterprises in Ukraine. The support of privatization declined dramatically in Ukraine from 1992 to 2018. Such a reversal of initial positive attitudes towards privatization has been observed in some transition countries. The literature suggests two hypotheses to explain this reversal. According to the shadow of communism hypothesis, people who were socialized during the period of communist regimes internalized specific ideas critical to privatization. The second one implies that people in social strata who have been disadvantaged by transition hold more negative views toward privatization. The authors review the previous literature and present new data from the Ukrainian Society survey. The data suggest that the shadow of communism hypothesis explains the case of Ukraine quite well.

In many developingcountries out of shortage of savings and capital external resources as externaldebt, foreign direct investment and transfers are play significant role in thefostering economic growth and development. Goal of this paper is to investigatethe impact of external public debt, current transfers and foreign direct investmentson GDP in the Kyrgyz Republic. Using quarterly data for the period2000Q1-2017Q3 and the ARDL cointegration approach it was found that acointegration relation between current transfers, external debt, FDI and GDP.According to results, current transfers’ contribution to the country’s economyis more than government debts. It is suggested that the government should focusmore on foreign direct investments than foreign debts and current transfers byconsidering the long term., Birçokgelişmekte olan ülkede tasarruf ve sermaye yetersizliğinden dolayı dış borç,doğrudan yabancı yatırımlar ve transferler gibi dış kaynaklar ekonomik büyümeve kalkınmanın desteklenmesinde önemli rol oynamaktadır. Bu çalışmanın amacı,Kırgız Cumhuriyeti’nde dış kamu borcunun, cari transferlerin ve doğrudanyabancı yatırımların GSYİH üzerindeki etkisini araştırmaktır. 2000Q1-2017Q3dönemi çeyrek verileri ve ARDL eşbütünleşme yaklaşımı kullanılarak caritransferler, dış borç, DYY ve GSYİH arasında eşbütünleşme ilişkisi olduğu tespitedilmiştir. Sonuçlara göre, cari transferlerin ülke ekonomisineolan katkısı devlet borçlarından daha yüksektir. Hükümetin uzun vadeyi gözönünde bulundurarak dış borçlara ve cari transferlere göre doğrudan yabancıyatırımların artırılmasına daha fazla odaklanması gerektiği önerilmektedir.

Opportunely in the time of globalization, female entrepreneurs, including those doing business in countries in transition, are moving towards the booming of their businesses. Apart from the advantages they have in the period their countries are transitioning, female entrepreneurs also are faced with many challenges. These challenges are faced by female entrepreneurs who are doing business in Kosovo, which is in a transition period. The challenges faced by female entrepreneurs in the state of Kosovo, apart from economic factors, are also cultural factors. Given the role of small businesses in the country's economic development, a number of these businesses are run by women, ventures also known as small businesses. Through this research paper, we will try to highlight the main challenges of female entrepreneurs are facing in countries in transition, and especially in the state of Kosovo, where through the recommendations collected by this research paper, we believe that we will contribute to female entrepreneurs of this country. Key words:Challenges,Women,Female,Transition,Entrepreneurship,Factors.

Osnovni cilj rada je empirijski izmjeriti utjecaj terorizma i ostalih (institucionalnih, ekonomskih prirodnih) čimbenika na zalihe izravnih stranih ulaganja (FDI) tranzicijskih zemalja svijeta. Metodologija podrazumijeva primjenu sistemskog GMM procjenitelja (Generalized Method of Moments) u dva koraka dinamičke panel analize. Istraživanje obuhvaća grupu od 16 zemalja od 2000 do 2016. godine. Rezultati istraživanja potvrđuju kako teroristički incidenti, ekonomske i institucionalne varijable utječu na zalihe FDI-ja tranzicijskih zemalja globalnog gospodarstva. Može se zaključiti kako su institucionalne varijable (učinkovitost vlade, borba protiv korupcije) zabilježile najznačajniji utjecaj na zalihe FDI-ja u tranzicijskim zemljama globalnog gospodarstva. Iz rezultata se može vidjeti kolika je međunarodna konkurentnost tranzicijskih zemalja u pogledu utjecaja varijable terorizma i ostalih relevantnih varijabli modela na izravna strana ulaganja (FDI)., The main aim of the paper is to empirically measure the impact of terrorism and other (institutional, economic, natural) factors on the foreign direct investments (FDI inward stock) of transition economies in the world. Methodology includes the application of two-step system GMM (Generalized Method of Moments) estimator of dynamic panel analysis. The research covers a group of 16 countries from 2000 to 2016. Research findings confirm that terrorist incidents, economic and institutional variables affect FDI inward stock of transition economies. It can be concluded that institutional variables (Government effectiveness, control of corruption) recorded the most significant impact on the inward FDI stock in the transition economies of the global economy. From the results, we can see the international competitiveness of transition countries about the influence of the variables of terrorism and other relevant model variables on foreign direct investments (FDI).

We study how the problem of the ‘missing rich’, the under-representation 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 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 in-equality, and the role of inheritances and wealth taxes in the region.

The paper focuses on the presence of a strong relationship between the level of education and unemployment in the EU and the OECD countries. A graphic confirmation of the change in the relative wages of employees depending on the level of education is given. The authors noted that in recent years there has been an expansion of the mass character of higher education, however, the latter has undergone transformations, in particular, the emergence of universities of a new format - University 21, School 35 and others. The author identifies the key features inherent in the field of higher education under the influence of the 4th Industrial Revolution. Of particular importance are the results on the existing imbalances in the field of higher education in the context of the transition to the new stage in the development of society - the 4th Industrial Revolution and the existing strategic gaps in the economies of the countries of the world depending on the level of development. The most optimal strategy for eliminating the existing imbalances in the field of higher education in the context of the 4th Industrial Revolution for the transition countries is proposed.