Financial System Development and Economic Growth in Transition Economies: New Empirical Evidence from the CEE and CIS Countries

We examine the role of financial development in economic growth in the former Communist countries of Central and Eastern Europe and the Commonwealth of Independent States during the first two decades since the beginning of transition. These countries, which had undeveloped financial systems under Communism, provide an interesting test of the relationship between financial development and growth. Our study is the broadest in terms of coverage and time period. We find that measures of financial market efficiency and competitiveness are more important than the size of the market in terms of promoting economic growth.     

Too smart for their own good? A study of perceived cognitive overqualification in the workforce

This study examined the concept of cognitive overqualification, the possession of a higher level of cognitive ability than is required for a given job. Among 156 US based customer service representatives, cognitive overqualification was found to be associated with job dissatisfaction, but was only weakly related to measures of job and training performance. The results of this study provide support for the common practice among personnel managers to reject overqualified job applicants, as these individuals may be more likely to develop negative job attitudes, although not necessarily in anticipation of their poorer job performance.     

A survey on institutions and new firm entry: How and why do entry rates differ in emerging markets?

This paper considers the impact of institutions on new firm entry in emerging markets. In particular, it surveys the findings of a 2-year research project on the sources of success in terms of entry rates and conditions (including gross entry rates, exit rates and therefore net entry rates) across the BRIC countries (Brazil, Russia, India, China). These emerging market economies display widely varying entry and exit rates and a framework is developed to capture the interaction between key aspects of formal institutions, how those institutions play out in practice, and their impact on entry and exit rates. The country case studies reveal that, whilst different contingencies affect the relationships between institutions and entry in each country, there are some empirical regularities in the determinants of successful entry and conversely in its constraints. One such regularity is the critical interaction between formal rules and informal mechanisms. There is also variation in whether these works so as to compensate for deficiencies in formal institutions, as in China and India, or whether deficiencies in formal mechanisms are compounded by poor informal mechanisms, as is sometimes true in Brazil. Indeed, relatively good formal rules and structures can be undermined by informal mechanisms deterring or blocking entry, as is largely the case in Russia.     

Evaluating Systemic Geopolitics – A Twenty-First Century View

This article explores the effects of borders on the making of trade union policies and on their capacity to act. It takes as an entry-point the reform of Luxembourg's system of family allowances and financial support for students in 2010, which redefined the group of beneficiaries and partly excluded cross-border workers from neighbouring countries. This led to heated debates in Luxembourg and in the Greater Region (comprising Luxembourg, Saarland, Rhineland-Palatinate, Lorraine and Wallonia) during which trade unions played an important part. The author explores the contradictory logics of both competition and cooperation within the Greater Region. These lead to a gap between integration as a discourse and what it means for local populations, in particular regarding labour market competition. The debates within trade unions on the issue of social entitlements for cross-border workers offer insights into the dynamics of this dichotomy and into the everyday fabric of cross-border social relations.     

R&D, Investment, and Industry Dynamics

We present a model of industry evolution where the dynamics are driven by a process of endogenous innovations followed by subsequent embodiments in physical capital. Traditionally, the only distinction between R&D and physical investment was one of labeling: the first process accumulates an intangible stock, knowledge, while the second accumulates physical capital. Both stocks affect output in a symmetric fashion. We argue that the story is not that simple, and that there is more to it than differences in the object of accumulation. Our model stresses the causal relationship between past R&D expenditures and current investments in machinery and equipment. This causality pattern, which is supported by the data, also explains the observed higher volatility of physical investment relative to that of R&D expenditures.     

Recent developments in French economic planning

Conclusions French planning seems to have had a very real effect on the economy in its early years. Industrialists' expectations were raised and new ideas were disseminated in a subtle way, and not merely because people believed the numerical values of published forecasts. In the early 1960s the idea of a consensus was extended beyond the need for greater private investment and the plan became the focus for a national debate on priorities. This exercise was valid and effective in a period of fast and accelerating growth but later the authorities chose instead to impose their own priorities, which included turning away from planning at the industrial level. This was partly because the underlying techniques of traditional French planning were seriously flawed in an open economy, but it probably also represented ideological preferences. However the consultative mechanisms continued to exist through the 1970s, though largely restricted to the macro-economic sphere. The 7th Plan generated a serious and powerful debate about responses to the recession but this was ignored by the authorities. Somewhat surprisingly, the reduced circumstances of planning did not affect the respect for its institutions in the eyes of other social actors: unions and business.¹⁰ In calling for a restoration of planning, the Socialists were therefore responding to a real need in a society with very limited channels for dialogue between social partners who nevertheless were forced to confront one another in the macro-economic sphere. But at the time of writing it looks as if an opportunity has been lost to carry out a detailed multi-scenario reflection on medium term economic policy.     

Methods of privatization and economic growth in transition economies1

We examine how different methods of privatization might have affected growth in transition economies. Using several econometric specifications, including fixed effects and GMM, we estimate a cross‐country panel growth model for 1990–2003. We find only voucher privatization to have been significantly associated with faster growth. Moreover, neither private sector development per se nor capital market development exercised a significant influence. We speculate that voucher privatization may have been effective because of the speed with which links between firms and the state were severed.