Economics of Transition and Institutional Change最新文献

A recent strand of the literature suggests that economic sophistication is a strong predictor of economic development. Given that this branch of literature is relatively young, the determinants of economic sophistication have not yet been fully explored. This study contributes to this literature by examining the effect of research and development (R&D) investments on economic complexity. By applying a dynamic panel model to a panel of 67 countries, the following results are established: First, the results showed that research and development investments are associated with greater economic complexity. Second, when analyzing R&D by sector, the results highlight the importance of research spending by higher education, business, public sector and private non-profit sector in improving economic complexity. In the same vein, investments in different R&D activities, including basic research, applied research and experimental research, increase economic complexity. In addition, we provided evidence that R&D spending in several fields, including medicine, engineering, natural sciences, social sciences and arts, also increases economic complexity. Third, we further analyze the heterogeneity of the results, highlighting the role of natural resource endowment and income level. However, investments in research and development remain associated with higher levels of economic complexity in resource-poor countries in contrast to resource-rich countries, where they have no effect. Based on these results, policy implications were discussed.

This paper empirically investigates whether zombie firms affect healthy firms' exporting. Using the 1998–2007 Chinese firm-level dataset, we provide strong evidence that zombie firms significantly decrease exports of healthy firms in each city-industry cluster, that is, both whether to export and export values are affected by zombie firms. Specifically, non-stated-owned enterprises (non-SOEs) are more vulnerable to the effect than their SOE counterparts. In addition, we also identify government subsidies, financial resources and total factor productivity as the sources of the effect, and the heterogeneous export performances of different types of firms are due to the variation in these sources.

In this paper, first, we measure Chinese time preferences as a whole and by region based on the Euler equation under an assumption of rational expectation. The calculating results show that the rates of Chinese time preference are markedly low for most hypothetical risk attitudes over the concerning period, and there exists heterogeneity in time preferences across regions in China. Second, compared with the estimates for other advanced and emerging countries under the same assumptions and same methodology, the rates of Chinese time preference are the lowest for any given risk preference, suggesting that Chinese are more patient during the time of our examinations. Third, our measured time preferences are powerful in predicting China's high saving rates and rapid growth rates of gross domestic product. In addition, the differences in economic growth rates between China and other sample countries can be partially explained by the differences of estimated cross-countries time preferences within our sample period. Fourth, we investigate the additional factors that affect the Chinese time preferences. Our study provides insights on the regional and international differences in economic growth rates and other economic outcomes.

This paper investigates the effects of zombie firms on Chinese manufacturing capacity utilization rate (CUR hereafter) from the perspectives of both the intra-industry and supply chain propagation. The results show that zombie firms not only significantly reduce the CUR of healthy firms in the same industry, but also inhibit the increase of CUR through the supply chain propagation. Specifically, if the supply chain propagation effect is not considered, the inhibitory effect of intra-industry zombie firms on the healthy firms' CUR would be overestimated on one hand, and the overall inhibitory effect of zombie firms on CUR would be underestimated on the other hand. The heterogeneity analysis demonstrates that the inhibitory effect of zombie firms on CUR is more pronounced for private firms, the firms in the industries with higher external financing dependence and the firms in the areas with a poorer institutional environment. In addition, this paper further studies the relationship among zombie firms, resource misallocation and the manufacturing aggregate CUR at the industry level, and finds that both intra-industry and upstream (downstream) zombie firms have significant inhibitory effects on the growth of manufacturing aggregate CUR. However, there are differences in the ways of influence that, specifically, the upstream (downstream) zombie firms inhibit manufacturing aggregate CUR growth mainly through the within-firm effect, while the intra-industry zombie firms are more likely to restrain manufacturing aggregate CUR growth through resource misallocation. Our study contributes to a profound understanding of the causes of overcapacity in a large transition economy and also expands the research perspective of assessing the economic effects of zombie firms.

This paper uses a novel dataset on investments by the European Bank for Reconstruction and Development to quantify a (sizeable) trade-off between the impact and financial objectives of a large lender. The unique feature of this dataset is ex ante records of impact. These are made at the early stages of work on each transaction alongside probability-of-default scores. Impact scores are further updated at the final approval stage with around 55 percent of transaction concepts translating into signed deals. We show that this approach delivers a simultaneous selection of debt investments on the quality of credit and impact with a sizable trade-off between pursuing commercial and development objectives. For commercially riskier investments, impact characteristics have a greater bearing on the probability of an investment going ahead. We further use machine-learning analysis to show that the impact of some investments is strengthened prior to project approval.

We estimate the effect of spending on festivities on various economic outcomes in an IV framework. The estimates show that ceremonial spending causes reduction in food expenditure. Households with higher spending on festivities are more likely to borrow money. Moreover, children are more likely to miss school in such households. One possible explanation for ceremonial expenditure despite its high economic cost is reliance on informal networks. Using the control function approach, we show that ceremonial spending is the means to maintain these networks. Moreover, ceremonial spending reduces the household's income variation. This suggests that these networks may serve the role of informal insurance. We also distinguish between events that are intertemporarily flexible (such as weddings) and intertemporarily inflexible (such as funerals). Intertemporarily inflexible ceremonial spending is less income elastic and thus may present the biggest financial stress to households.

By adapting a well-known model in the literature, the current paper sharpens the theoretical predictions on how competition intensity and institutional ownership interact to influence corporate innovation decisions, and adopts data from Chinese listed firms to empirically test the validity of two potential mechanisms. The split-share reform of 2004–2005, whose timing and speed were largely beyond the firms' control, is used as a quasi-natural experiment to address the potential endogeneity of institutional share. Similar to the existing results, we find support for the career concern mechanism rather than the lazy manager mechanism. But in addition to the complementary effects between institutional share and competition intensity on corporate innovation documented in their work, our findings also imply that competition discourages innovation when the share of institutional investors is low but encourages innovation when the institutional share is high. The opposite effects of competition on innovation with or without institutional shares is accounted for by the negative correlation between competition and innovation success, which is an assumption in our theoretical model that departs from the existing literature, but fits the reality of China's economic transition. Additional evidence relating listed firms' managerial turnover to their institutional shares is also in support of the career concern mechanism. Combined with the substantial increase in innovation after the split-share reform, these findings demonstrate the strong positive role of institutional investors in encouraging innovation, but also offer more insight into the complex process that determines corporate innovation, especially where ownership structure is still in flux.

‘What exactly’ can countries do to initiate an episode of growth surge? I identify 132 episodes of growth surges occurring between 1980 and 2010 in 117 countries. I find that disproportionate improvements in macroeconomic stability and external factors and endowments favour a higher probability of growth surge. They are followed by structural reforms, investments, labour and productivity, trade diversification and quality and, lastly, by institutions. Countries can maximize the likelihood of igniting growth surges if they jointly achieve significant improvements in macroeconomic stability and external conditions and endowments. Also, macroeconomic stability and to some extent, external factors and endowments may be considered as dominant strategies to ignite a growth surge, as no improvements in these determinants, generally constraint the other determinants to have a smaller effect on growth surges. There is a notable difference between decades, regions and levels of development, which calls for careful tailoring of policies aiming at igniting growth surges to local conditions.

Over the past millennium, Confucian culture has prevailed in China as a typical informal institution, especially its emphasis on human feelings and interpersonal connections (guanxi) that coincides with the incentives for corruption. In this paper, we test the hypothesis that Confucian culture can generate positive effects on the formation of bureaucratic corruption in China. Using the variation in the number of jinshi across Chinese cities as a proxy for the degree of Confucian culture, and using the number of bribery recipients to measure corruption, we find that regions with more jinshi are associated with more bribe recipients. To address the endogeneity, we employ the Confucian sages in a given city as our instrumental variable. The instrumented results are consistent with our baseline claim. The findings remain robust after using a variety of tests, including using the percentage of bribe recipients instead of the number of bribe recipients, using the number of Confucius temples, Confucian academies and chaste women as alternative Confucian cultural measures, and controlling the impact of the North–South differences. In addition, we find the shock of foreign culture can mitigate the positive effect of Confucian culture on corruption. Finally, mechanism shows that the effect of Confucian culture on corruption can be attributed to the attitudes towards income unfairness, the excessive pursuit of vanity and the emphasis on interpersonal connections.

We develop an open-city model in which the incentive for a local government to shut down zombie firms depends on the capacity of the most efficient firms in the city to re-employ the displaced workers in competition with the efficient firms in other cities. The model predicts that the local government has a greater incentive to shut down zombie firms when the city has better access to technology that enables the efficient firms to expand and re-employ displaced workers. Data from Chinese cities validate the prediction. Our developed model adds to the understandings of governments' roles in China's zombie firm problems and provides a more feasible solution for reducing zombie firms.