Fiscal performance and elections in the context of a transition economy

It is widely accepted that, in democratic societies, incumbent governments may use various means, such as discretionary spending, to increase their chances of re-election. In the context of potential budget constraints (e.g., large debt), the incumbent might consider alternative means. Tax collection performance could be one such means that is prone to incumbents’ electoral manipulation, particularly in transition countries with a weak institutional framework. Investigating Albania, we show that fiscal performance, measured by monthly tax revenues, is poor before elections, especially in elections that result in political change. Before all elections, we observe a reduction in tax collection ranging from 3.2 percentage points in the twelve months before elections to 4.0 percentage points in the six months before elections. This implies a drop of more than half in fiscal performance compared with its long-term “natural” or average rate. Moreover, the deterioration in performance is considerably larger, by two- to threefold, before “change elections” (i.e. elections that result in a change of the governing party). After these elections, fiscal performance improves. The key to reducing deterioration in fiscal performance associated with elections is to establish rules and institutional oversight (independent or bipartisan) that reduce the discretion of tax authorities.     

Attitudes and Preferences of Kosovar Consumer Segments Toward Quality Attributes of Milk and Dairy Products

ABSTRACT

The dairy market is one of the fastest growing agri-food sectors in Kosovo, yet the farm structure is fragmented. The level of productivity is lower compared with European Union levels and shows potential for improvements. The consumption of dairy products is expected to rise due to income growth and segmentation of consumers that would reflect different preferences for low-fat or zero-fat products, products with natural additives, and so on. On the market level, a significant share of the consumed milk and dairy products is imported. This study aims to better understand attitudes and preferences of Kosovar consumer segments toward milk and dairy products. A quantitative survey with 300 consumers was conducted in major Kosovo cities. Applying a reduced version of the Food Related Lifestyle instrument identified three distinct consumer segments: the conservative consumer segment, the socially oriented foodie, and the information-seeking eco-consumer. The latter two segments are especially open to trying new food products and actively search information about food. All three consumer segments show strong consumer patriotism by believing that domestic milk and cheese are safer than imported products and are of higher quality. This indicates the strong market potential for dairy farmers and companies in the Kosovo, which should develop new food products having these segments in mind. The authors explore the strategies that farmers and companies should use to better target these consumer groups and gain greater access to desirable segments.     

Election cycles in mining licensing: theory and evidence from Albania

Most of the literature on political business and budgetary cycles (PBBC) has focused on fiscal and monetary policy variables in advanced-country contexts. We extend this literature by investigating political cycle effects in a non-monetary, non-fiscal policy regime (the allocation of mining licences) in a transition country context. We propose a model of mining licensing that allows for corruption and for both supply and demand effects to determine the outcome. We then estimate this model using time-series data from post-communist Albania. Relying on a dynamic Poisson model, we find evidence of both opportunistic and partisan effects. Based on our theory, we suggest a corruption interpretation of political cycles in non-fiscal/non-monetary variables. This interpretation, we suggest, may be more applicable to the context of developing and transition countries. Our study raises important questions about the unintended (and often pernicious) effects of transition politics on economic regulation and economic performance in post-socialist economies.     

Election cycles and mining-sector governance in post-conflict Kosovo

Political business cycles are typically linked to the manipulation of fiscal or monetary policy instruments. In a recent article, Imami, Lami and Uberti (ILU) argue that opportunistic politicians may also choose to manipulate non-fiscal/non-monetary policy instruments. Here, we extend ILU’s study using time-series data on mining-sector licensing from post-conflict Kosovo (2001–2018). We find robust evidence that is consistent with electoral opportunism in the allocation of mining permits, despite the checks-and-balance mechanisms introduced by Kosovo’s international administrators in an attempt to reduce the politicisation of licensing. That said, the cycle effect is only observed prior to scheduled, as opposed to early, elections. Disaggregating the data by licence type, in addition, we find that the observed election cycle is driven primarily by the manipulation of licences for the mining of construction materials. We argue that, in the context of post-conflict Kosovo, this is the category of licences whose strategic manipulation offers the greatest pay-off to the incumbent. The results raise some questions about the feasibility of fighting political opportunism (and, relatedly, corruption) by establishing formal check-and-balance mechanisms.     

Political business cycles and construction licensing

We analyze the effects of opportunistic and partisan politics on the licensing of construction activities, which in turn determines the level of housing supply. In line with Political Business Cycle theory, we hypothesize that the municipal incumbent may manipulate the supply of construction permits before (general and local) elections in order to boost economic activity and voter satisfaction, or to accommodate special‐interest groups. Our findings, based on time‐series data from post‐socialist Tirana (Albania), are consistent with opportunistic and partisan incentives’ creating cycle effects in the licensing of construction permits. However, we find that the direction of opportunistic election cycles depends critically on the interaction between the municipal incumbent and the central‐level government. Our paper raises important questions about the effects of transition politics on spatial development in post‐socialist cities.     

Latent Class Analysis of Consumer Preferences for Wine in Tirana,Albania

This research aimed to determine wine attributes preferred by consumers in Tirana, Albania, and consumer segments based on preferences and sociodemographic factors. To accomplish these objectives, a conjoint choice experiment was designed. Data were analyzed with the latent class approach. Initial results showed a 5-class model fit best. Results indicated that younger people tend to prefer Italian wines over domestic wines, whereas some older consumers strongly prefer domestic, lower priced wines. Other domestic wine consumers sought higher prices, possibly indicating a niche demand for high-quality Albanian wines. The wine industry and its marketers might use this information to strategically market their wine to different groups. Overall, the majority of the respondents preferred Italian wines, but many might be persuaded toward domestic wine. Government assistance in standardizing the quality of wine and introducing new grape cultivars and efficient farming practices should aid long-term competitiveness of domestic wine in Albania.     

Analysis of Consumer Preferences for Table Olives—The Case of Albanian Urban Consumers

The table olive production sector is undergoing rapid changes, as the government is undertaking an ambitious program supporting the expansion of olive grove plantations. Despite the increase in domestic production, imports of table olives are still high, due to constraints in quantity and quality of domestically supplied olives. In the context of import substitution strategy, embraced by producers and policy-makers, it is important to analyze the consumer preferences for table olives. The objective of this paper is to segment the table olive market according to preferences for table olives attributes, and assess willingness to pay for the main product attributes, applying Conjoint Choice Experiment (CCE) and Latent Class Analysis to collect and analyze the data. The research results show a strong consumer preference for domestic table olives whereas preferences for other attributes and willingness to pay vary between consumer groups.