A Comparative Analysis of the Public Spending Efficiency of the New EU Member States: A DEA Approach

This paper provides an analysis of the performance and efficiency of the public sector in the European Union (EU). Using composite indicators and data envelopment analysis, we focus on the new EU member countries, which were involved over the past decade in the accession and integration process. Results of the analysis indicate that, unlike "old" EU members, which invested more in sectors such as education or health, countries in Central and Eastern Europe, the "new" EU member states, have directed public resources mainly toward the performance of the government sectors. However, greater efficiency has been achieved precisely in those areas where they have invested less.     

The European flying geese: New FDI patterns for the old continent?

This article attempts to apply the flying geese metaphor to emerging foreign direct investment (FDI) patterns in Europe and the Mediterranean. Such a division of labour is at best at a nascent stage, given the overwhelming share of Western Europe in both inward and outward foreign direct investment flows. Because of these imbalances, special attention is to be paid to Central and Eastern Europe’s (CEE) potential, both in the group joining the European Union (EU) in 2004 and the rest of the subregion. For the former, middle-income countries, risks in investment promotion are related to uncertainty brought about by the transition to European Union’s acquis and an eventually too fast increase in production costs. Policy response to that requires a modernisation of both general and specific investment promotion policies, adjusted to the rules of the Union. For the rest of Central and Eastern Europe, the challenge is to adjust to the enlarged European Union and to improve the business and investment environment, in order to capture the foreign direct investment outflows of other European countries searching for optimum labour costs.     

Equilibrium exchange rates in Central and Eastern Europe: A meta-regression analysis

This paper analyses the ever-growing literature on equilibrium exchange rates in the new EU member states of Central and Eastern Europe in a quantitative manner using meta-regression analysis. The results indicate that the real misalignments reported in the literature are systematically influenced, inter alia, by the underlying theoretical concepts (Balassa–Samuelson effect, behavioral equilibrium exchange rate, fundamental equilibrium exchange rate) and by the econometric estimation methods. The important implication of these findings is that a systematic analysis is needed in terms of both alternative economic and econometric specifications to assess equilibrium exchange rates.     

欧元向何处去稳定还是动荡

当前欧元区经济和欧债危机形势既存在稳定因素,也存在着不稳定因素。稳定因素包括欧元区经济初步复苏,欧央行实行“准量化宽松政策”,欧盟扩大危机防火墙,欧盟和重债国降低财政赤字;而不稳定因素则包括欧盟财政统一存在困难,欧元区面临决策机制困境。文章综合分析后指出,欧元区仍面临严峻挑战,我国应加强对欧美债务危机潜在影响的预判与应对。     

The role of the european union in environmental taxation

The paper considers the extent to which environmental taxation should be coordinated by, or assigned to, the European Union (EU) rather than its member states. An economic interpretation of the principle of subsidiarity forms the main organizing principle for the discussion. Since the signing of the Maastricht Treaty in 1992, this principle has governed the boundary between the roles of member states and the Union. The paper considers the application of subsidiarity to the assignment of policy responsibility for environmental taxation between the EU and national governments, highlighting the role of both environmental and economic spillovers from uncoordinated national policy and problems of integration of environmental taxes with other areas of policy.     

Dynamic linkages between emerging European and developed stock markets: Has the EMU any impact?

This paper investigates the short- and long-run behavior of major emerging Central European (Poland, Czech Republic, Hungary, Slovakia), and developed (Germany, US) stock markets and assesses the impact of the EMU on stock market linkages. Evidence of one cointegration vector in both a pre- and a post-EMU sub-period indicates market comovements towards a stationary long-run equilibrium path. Central European markets tend to display stronger linkages with their mature counterparts, whereas the US market holds a world leading influential role. No dramatic post-EMU shock is detected in stock market dynamics. The empirical findings have important implications for the effectiveness of domestic policy decisions, as the emerging Central European states have recently joined the EU and local stock markets may become less immunized to external shocks.     

Not Every Kind of Outward FDI Increases Parent Firm Performance: The Case of New EU Member States

Using a large firm-level dataset we investigate what kind of firms from new EU member states from Central and Eastern Europe (CEECs) tend to invest abroad (testing of self-selection hypothesis), and what is the impact of outward FDI on their productivity (testing of learning-by-investing hypothesis). We find that the best firms tend to self-select into outward FDI. There is also a positive effect of outward FDI on productivity growth of investing firms from CEECs, the strongest being in the case of Estonia, Romania, Czech Republic, and Slovakia. The positive impact of becoming a first-time foreign investor is relatively long lasting, but comes into effect only in investments in Western European or other CEECs and in the case of manufacturing subsidiaries.     

国有商业银行在欧盟市场准入问题上的思考

2004年5月欧盟再次东扩后,欧盟成为世界最大的经济体和中国的最大贸易伙伴,因此进入欧盟市场成为中国国有商业银行实施跨国经营战略中不可或缺的一环。目前,我国国有商业银行主要通过建立分行或子银行的方式进入欧盟市场。本文通过对欧盟及其成员国相关银行法律的介绍,提出针对我国国有商业银行在欧盟市场准入问题中的对策建议,即短期内整合现有机构,通过建立子银行的方式来利用欧盟单一银行执照和全能银行业务两个市场机会;中期目标是拓展北欧、南欧和东欧市场,并将丹麦和波兰作为重点选择国家;另外,还建议将兼并收购作为国有商业银行进入欧盟市场的一项长期战略。     

Determinants of the Export Structure of Countries in Central and Eastern Europe

The growth in exports from Central and Eastern Europe to Westernmarkets suggests that entrepreneurs have responded to changedincentives by restructuring their production to capture newmarkets. The absence of change in the structure of exports,however, suggests that these restructuring efforts have notbeen significant. This article analyzes the magnitude of thechange in export structure across the Central and Eastern Europeancountries in 1990–95, focusing in particular on tradewith the European Union. It finds that imports of intermediateinputs and machinery are an important determinant of the changesin export structure. Sourcing of inputs from abroad is a majorfactor underlying the expansion of exports to the European Union.Outward processing (subcontracting) arrangements and foreigndirect investment have a smaller impact. Except for Poland,inflows of foreign direct investment are statistically insignificantor negatively associated with measures of revealed comparativeadvantage. This suggests that foreign investors have chosensectors in which the Central and Eastern European countrieswere not relatively specialized under central planning.     

How attractive is central Eastern Europe for risk capital investors?

This paper addresses the attractiveness of Central Eastern European countries for risk capital investors by the construction of a tailored composite measure. Based on a survey among institutional investors, we define six key drivers that determine an emerging country's attractiveness for this type of investment. Using 42 socio-economic data series as proxies for these six key drivers, we benchmark the Central Eastern European countries with EU-15, Norway, and Switzerland and identify six tier groups of country attractiveness. We highlight socio-economic strengths and weaknesses of Central Eastern Europe and provide guidelines for policy improvements to attract more risk capital funding to spur innovation, entrepreneurship, employment, competitiveness and growth in the emerging region.     

Financial Convergence in Transition Economies: EU Enlargement

This paper analyzes the financial effect of the enlargement of the European Union (EU) to include ten new Central and East European countries (CEECs) on firms' business and financial structures. We employ quantitative analytic techniques and financial ratios to discover whether firms in the new EU member states tend to converge with businesses in the EU-15 in terms of the structure of their financial statements. We examine the extent to which the increasing integration of the former may foster the convergence of productive structures. We analyze the evolution of twelve financial ratios in a sample of firms obtained from the AMADEUS database, performing a dynamic factor analysis that identifies the determining factors of the joint evolution of deviations in financial ratios from the average values of EU-15 firms. This allows us to analyze the convergence in each of the CEECs toward the EU-15.     

Competition and Concentration in the New European Banking Landscape

This paper measures the degree of concentration and competition in the enlarged European Union (EU) banking environment over the period 1998–2002. In the empirical part we opt for a methodology as proposed by Panzar and Rosse based on a non‐structural estimation of market competition. Our results suggest that European banks were operating under conditions of monopolistic competition and that bank interest revenues in the 10 new EU member states was earned under conditions of higher competition than those that existed in the old EU banking countries. The opposite result was observed for total operating revenues. Smaller banks earn interest income in a less competitive environment than larger banks, while the opposite is observed for total revenues.     

Scenarios on the spatial and economic development of Europe

Countless autonomous, self-reinforcing and countervailing forces impact the future competitiveness of Europe and its spatial structure. Poignant examples include globalization, ageing and climate change, but also policy decisions taken by nation-states or the European Union. Scenarios are an appropriate method by which to explore possible future developmental pathways in a dynamic context. This contribution describes and discusses four economic policy scenarios produced by the ESPON 3.2 project and link these to the Lisbon Strategy and the European Social Model. In each scenario, a policy package is assembled from existing EU policy areas according to a particular ideological context. Afterwards, its territorial consequences are discussed in terms of socioeconomic disparities, migration and the environment. In so doing, some observations will be made regarding possible spin-offs, trade-offs and side effects of European policy when placed in a spatial context. These scenarios should hold interest for policy discussions on territorial cohesion, a concept which seeks to integrate economic development and spatial planning, as well as on European competitiveness and cohesion.     

‘Brexit’ and International Insolvency Beyond the Realm of Mutual Trust

The outcome of the referendum held in the UK in June 2016 is of far‐reaching and unpredictable consequences. This article focuses on the particular field of international insolvency with a view to identifying some of them, all arising out of the fact that the UK will be leaving the EU area of justice and the strong cooperation based on mutual trust between member states. This will make UK–EU insolvency cases clearly less efficient and effective. The consequences of Brexit could be mitigated by the already existing coordination among the international instruments dealing with these matters, in particular the European Insolvency Regulation and the UNCITRAL Model Law on Cross‐Border Insolvency. However, not all EU member states have in place rules dealing with these issues as regards to third states. In order to lessen the impact of Brexit in this sensitive area of law, the implementation of the Model Law in order to deal with extra‐EU cross‐border insolvency could be of avail. Copyright © 2017 INSOL International and John Wiley & Sons, Ltd     

A local realisation of auditor independence construct in Poland: counteracting ‘iron curtain’ syndrome in academic writing

This paper discusses the local construction and realisation of auditor independence in Poland. In the last decade, in the context of European Union (EU) harmonisation and accession processes, the institution of external auditing (and its Anglo-Saxon perspective) has been imported to economies in transition together with what forms professional best practice and the requirements for auditors to be independent.As a result, patterns of conduct (based on Western ideas in terms of best practice) have travelled to the Central and Eastern European (CEE) region but without the recognition that there are ‘differences’ in local culture and accounting traditions and that professional ethics is historically constructed by somewhat different sets of predispositions (i.e. ideas of freedom in Poland). New levels of perceived normality are established for an emerging professionalism without any reference to cultural constructions within the CEE.It therefore seems relevant to research how auditor independence has been de jure constructed and de facto implemented in economies in transition. The paper addresses the globalisation of constructs, such as auditor independence, through the process of EU harmonisation and local responses. The authors’ objective was to enable local, ‘other’ voices to contribute to the auditor independence debate through interviews with practitioners and regulators and insights from local media. Those silent voices from the CEE economies, in this example, Poland, may contribute to shifting the ‘Iron Curtain’ syndrome which prevails in Western academic writing about this part of the world.     

Corporate Reporting Practices in Poland and Romania – An Ex-ante Study to the New Non-financial Reporting European Directive

The European Directive 2014/95/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups is applicable by European Union-based entities starting with the financial year commencing on 1 January 2017. Central and Eastern European (CEE) countries are reported to face difficulties when implementing new European or global accounting regulations and models. We investigate the quality of non-financial disclosures in Poland and Romania, the biggest CEE countries, prior to the European Directive’s adoption and explain the diffusion of this type of reporting through the lens of the institutional pressures. We find that prior regulation, local institutional characteristics, ownership, industry and auditors have an impact on the quality of disclosures. Poland experienced a higher extent of voluntary reporting, but Romania faced prior regulatory demands for non-financial reporting (NFR). We find that the overall disclosure score is higher for Romania, which provides support for the importance of regulations to strengthen the spread and quality of NFR. The research findings are relevant to practice and policy. This ex-ante evaluation of reporting practices and of their determinants is useful to understand how change occurs in practice and how companies react to regulatory and other institutional demands.     

Comparative analysis of environmental,social, and governance disclosures

We examine the level of environmental, social, and governance (ESG) sustainability disclosure by firms between two regimes where disclosure is mandatory versus voluntary. We use the regulatory environment between the United States (US) and European Union (EU) to compare ESG disclosures. Firms in the US are currently under a voluntary disclosure regime. In contrast, EU members are under a mandatory disclosure regulatory regime that began in 2017. We find that EU firms outperform US firms under voluntary disclosure requirements (2007–2016), and the ESG disclosure of EU firms further improves relative to US firms after the implementation of the mandatory disclosure in Europe in 2017. Our results suggest that the 2017 adoption of disclosure guidelines in the EU is associated with improvements in EU firms' ESG disclosure. Our results regarding the value-relevance of ESG disclosure support a move toward mandatory ESG disclosures. Results support current initiatives that have been taken by global regulators and stock exchanges in recommending and requiring globally listed companies to disclose their ESG sustainability information to portray accurate and comprehensive corporate reporting. The results further our understanding of how firms from different institutional environment settings may have disclosed their ESG practices, thus providing opportunities for future research.     

Real exchange rate adjustment in European transition countries

In single-equation tests, real exchange rates show mean reversion for nine of 10 Central and Eastern European transition countries for the period January 1993 to December 2005. Because of the shift from controlled to market economies and accompanying crises, failed policy regimes and changes in exchange rate regimes, unit root tests for transition countries often require allowance for structural changes. Accounting for structural breaks gives substantially faster mean-reversion speeds than those found for major industrialized countries. These fast adjustment speeds are plausible: Transition countries had perhaps 10 years to make unprecedented adjustments required for accession to the European Union. A number of papers have applied non-linear models to the Central and Eastern European countries. This paper investigates four non-linear models and compares them with piece-wise linear break models. The break models appear superior in detecting mean reversion for the Central and Eastern European transition countries.     

The reaction of asset prices to macroeconomic announcements in new EU markets: Evidence from intraday data

We estimate the impact of macroeconomic news on composite stock returns in three emerging European Union financial markets (the Budapest BUX, Prague PX-50, and Warsaw WIG-20), using intraday data and macroeconomic announcements. Our contribution is twofold. We employ a larger set of macroeconomic data releases than used in previous studies and also use intraday data, an excess impact approach, and foreign news to provide more reliable inferences. Composite stock returns are computed based on 5-min intervals (ticks) and macroeconomic news are measured based on the deviations of the actual announcement values from their expectations. Overall, we find that all three new EU stock markets are subject to significant spillovers directly via the composite index returns from the EU, the U.S. and neighboring markets; Budapest exhibits the strongest spillover effect, followed by Warsaw and Prague. The Czech and Hungarian markets are also subject to spillovers indirectly through the transmission of macroeconomic news. The impact of EU-wide announcements is evidenced more in the case of Hungary, while the Czech market is more impacted by U.S. news. The Polish market is marginally affected by EU news. In addition, after decomposing pooled announcements, we show that the impact of multiple announcements is stronger than that of single news. Our results suggest that the impact of foreign macroeconomic announcements goes beyond the impact of the foreign stock markets on Central and Eastern European indices. We also discuss the implications of the findings for financial stability in the three emerging European markets.     

Production Efficiency in the Austrian Insurance Industry: A Bayesian Examination

This paper examines the developments in the production efficiency of the Austrian insurance market for the period 1994‐1999 using firm‐specific data on life/health and non‐life insurers obtained from the Austrian insurance regulatory authority. The article uses a Bayesian stochastic frontier to obtain aggregate and firm‐specific estimates of production efficiency across insurer types and time. The study provides strong evidence that the process of deregulation had positive effects on the production efficiency of Austrian insurers. The life/health and non‐life firms showed similar patterns of development in that they were less efficient during the years 1994‐1996 and significantly more efficient in 1997‐1999. If the Austrian experience is representative, similar benefits from deregulation may be expected for the Central and Eastern European countries that prepare for the accession to the European Union.