Browsing by Subject "O43"

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  • Lyubimov, Ivan (2016)
    BOFIT Discussion Papers 12/2016
    ​We study a developing economy in which the representative firm’s production function exhibits complementarities between human capital and the available level of technology. The firm invests in the acquisition of new technology, while employees decide how much human capital to acquire. The rate of human capital accumulation positively affects the economy’s growth rate, and therefore in our baseline case a reform that improves the educational system boosts growth. An important caveat, however, is that the absence of robust institutions may lead to lax enforcement of property rights and limit the incentives for firms to invest in new technology. The lack of investment in technology constrains demand for human capital and undermines the success of the education reform. It can even lead to a brain drain as individuals take advantage of the education reform and then move to an economy with higher demand for their acquired skills. We also consider our model findings with respect to the real-world case of Russia. Our main conclusion is that measures to improve the school system need to be accompanied by other institution-building measures that enhance property rights, promote good management practices and reduce incentives to engage in corrupt behaviors.
  • Hasan, Iftekhar; Wang, Haizhi; Zhou, Mingming (2008)
    BOFIT Discussion Papers 28/2008
    Published in Managerial Finance, Vol. 35 Issue: 2, 2009, pp.107-127
    The pace of transition in China over the last two decades has led to great variation across the country in terms of institutional and financial development. In this paper, using a panel of Chinese provinces during the period 1993-2006, we empirically investigate the determinants of the efficiency of the banking sector from an institutional perspective. The most important institutional developments in China are the emergence and gradual dominance of the market economy, financial deepening, the growth of a private sector, the establishment of secure property rights, and rule of law. We find that institutional variables play an important role in affecting banking efficiencies, and that banks tend to operate more efficiently in those regions with a greater private sector presence and more property rights awareness, while the role of financial deepening and rule of law is less straightforward. JEL classifications: G21, O43 Keywords: Institutional development, Bank efficiency, Chinese banks
  • Virén, Matti (2012)
    Bank of Finland Research Discussion Papers 29/2012
    This paper deals with economic growth in Europe. The special emphasis is in key institutional factors that are commonly assumed to affect aggregate growth: functioning of labor markets, availability of labor and capital, and the size of government. For more explicit measures, we use the data on profit rates, average working hours, dependency ratios, tax rates and other measures of the size of government (e.g. employment shares), measures of price competitiveness, and finally the structure of production. The data also include the terms of trade, interest rates, and foreign demand as control variables. Empirical analysis makes use of cross-country panel data for EU15 countries for 1971-2010. The results suggest that profitability and competitiveness do indeed constitute the main determinants of growth. However, also other variables like working hours and the size of government appear to affect growth in an important manner. All in all, slowdown of growth in Europe does not appear to be a paradox but at least with some margin something can be done in achieving more ambitious growth rates. JEL classification: O40, O43 Key words: growth, working hours, taxes, competitiveness
  • Yakovlev, Andrei; Freinkman, Lev; Makarov, Sergey; Pogodaev, Victor (2017)
    BOFIT Policy Brief 10/2017
    Tight budget constraints confronting the Russian authorities since the 2008 crisis urge the federal government to adjust the traditional system of its relations with the regions. The paper presents the case of the Republic of Tatarstan (RT) to analyze potential regions’ response to the emerging, considerably harsher “rules of the game.” Our main conclusion is that Tatarstan and other stronger Russian regions can take advantage of the current crisis for transitioning to a new economic development model resembling developmental states in Southeast Asia. This conclusion draws on analysis of the strategies recently implemented by the RT elites in response to external shocks the republic had to cope with in the post-Soviet period. Special focus is on identifying key factors that helped the republic successfully tackle the previous shocks, such as effective mechanisms of aligning the interests of the main regional elite groups and forming a consensus regarding the republican developmental priorities and the instruments for their attainment. The actual prospects for the formation of a developmental state model in Tatarstan will depend upon the success of the current regional elite in finding a consolidated response to new challenges facing the republic in recent years, as well as the constructiveness of the federal policy towards the regions. One of specific obstacles for Tatarstan to follow on Asian experience of catching up relates to a need to accelerate opening up of the regional economy for new, domestic and foreign, players.
  • Méon, Pierre-Guillaume; Weill, Laurent (2008)
    BOFIT Discussion Papers 20/2008
    Published in World Development 38, 3, 244-259, 2010
    This paper tests whether corruption may act as an efficient grease for the wheels of an otherwise deficient institutional framework. We analyze the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 developed and developing countries. Using three measures of corruption and five measures of other aspects of governance, we observe that corruption is consistently detrimental in countries where institutions are effective, but that it may be positively associated with efficiency in countries where institutions are ineffective. We thus find evidence of the grease the wheels hypothesis. Keywords: governance, corruption, income, aggregate productivity, efficiency JEL Classification: C33, K4, O43, O47.
  • Xue, Jianpo; Yip, Chong K. (2017)
    BOFIT Discussion Papers 22/2017
    This paper examines the effects of China's One Child Policy (OCP) in a stylized unified growth model where demographic change plays a central role. Introducing a population constraint into Galor and Weil (2000) model, our theoretical analysis shows that parents are willing to invest in the education of their children immediately after the OCP intervention. Raising the education level, in turn, boosts rates of technological progress and economic growth over the short run, but the low population mass resulting from the OCP hampers the natural economic evolution. This eventually reduces the education gain and technology growth, retarding economic growth in the steady state. We next calibrate our model to match the key data moments in China. A permanent OCP is found to accelerate economic growth by up to 60% over the short run (40 years, or two generations under our assumed generation length), but depress long-run growth to 6:95% (8:94% under natural evolution). For a temporary OCP lifted after two generations, the economic growth shows an immediate decline of about 27%, followed by a gradual recovery to the steady state under natural evolution. While the OCP reduces welfare, the welfare loss from a temporary OCP is less than that from a permanent OCP. This suggests that the recent decision of the Chinese government to abandon the OCP and move to a two-child policy is likely to improve economic growth and welfare over the long run.
  • Hartwell, Christopher A. (2014)
    BOFIT Discussion Papers 6/2014
    The volatility of financial markets has been a relevant topic for transition economies, as the countries of Central and Eastern Europe and the former Soviet Union have seemingly en-dured high levels of volatility in their financial sectors during the transition process. But what have been the determinants of this financial volatility? This paper posits that institutional changes, and in particular the volatility of various crucial institutions, have been the major causes of financial volatility in transition. Examining 20 transition economies over various time-frames within the period 1993-2012, this paper applies the GARCH family of models to examine financial volatility as a function of institutional volatility. The results from the EGARCH and TGARCH modelling supports the thesis that more advanced and more stable institutions help to dampen financial sector volatility at their levels, while institutional volatility feeds through directly to financial sector volatility in transition. Keywords: institutions, financial sector, volatility, transition, GARCH, EGARCH, TGARCH JEL Codes: G20, O43, P30
  • Buggle, Johannes C.; Nafziger, Steven (2018)
    BOFIT Discussion Papers 22/2018
    This paper examines the long-run economic consequences of Russian serfdom. Employing data on the intensity of labor coercion at the district level in just prior to emancipation in 1861, we document that a greater legacy of serfdom is associated with lower economic well-being today. Our estimates imply that increasing historical serfdom by 25 percentage points reduces household expenditure today by up to 17%. The analysis of different types of labor coercion reveals substantial heterogeneity in the long-run effects of serfdom. Furthermore, we document persistence of economic development measured by city populations over the period 1800 - 2002 in cross-sectional regressions and panel estimations. Exploring mechanisms, our results suggest that the effect of serfdom on urbanization in Imperial Russia was perpetuated in the Soviet period, with negative implications for structural change, the spatial distribution and productivity of firms, and human capital investment.
  • Kilponen, Juha; Virén, Matti (2008)
    Bank of Finland Research Discussion Papers 13/2008
    Published in Empirica, Volume 37, Number 3, July 2010, pp. 311-328
    We estimate a standard production function with a new cross-country data set on business sector production, wages and R&D investment for a selection of 14 OECD countries including the United States. The data sample covers the years 1960-2004. The data suggest that growth differences can largely be explained by capital deepening and an ability to produce new technology in the form of new patents. The importance of patents is magnified by the openness of the economy. We find some evidence of increasing elasticity of substitution over time, all though the results are sensitive to assumptions on the nature of technological progress. Keywords: growth, R&D, production function, patents JEL classification numbers: O40, E10, O43