Eastern Journal of European Studies

Dimensions of globalization and income inequality in transition economies: taking into account cross-sectional dependence

Author: Mehmet Akif DESTEK

Abstract: This study aims to investigate the impact of different globalization dimensions on income inequality for the period from 1991 to 2013 in a panel of 11 transition economies. For this purpose, the relationship between economic, social and political globalization indices and Gini coefficient is examined with second generation panel data methods such as CCE (common correlated effect) estimator and Konya causality procedure to consider the cross-sectional dependence across transition economies. The result reveals that economic globalization negatively correlated with income inequality in China and Russia; social globalization negatively correlated with income inequality in Belarus and Poland; and the political globalization negatively correlated with income inequality in Kazakhstan. In addition, the causality test results show that economic globalization causes income inequality in China, Hungary, Moldova and Russia; social globalization causes income inequality in Hungary, Belarus, Kazakhstan and Poland; and political globalization causes income inequality in Kazakhstan, Poland and Russia. 

Keywords: income inequality, globalization, transition economies, cross-sectional dependence 

Pages: 5-25 | Full text (PDF)

Analysis of the relationships between Bitcoin and exchange rate, commodities and global indexes by asymmetric causality test

Authors: Mehmet Levent ERDAS, Abdullah Emre CAGLAR

Abstract: This study investigates the asymmetric causal relations between Bitcoin and gold, Brent oil, US dollar, S&P 500 and BIST 100 Indexes for the weekly data of the period between November 2013 and July 2018 via by Hatemi-J (2012) test. The results indicate only a causal link going from the Bitcoin price to S&P 500 Index. Consequently, a change in Bitcoin prices appears to influence the investors' decisions on the S&P 500 Index. Therefore, it can be said that the investors in S&P 500 Index have closely followed the new macro-financial developments in the market and have been active on the S&P 500 market. However, the presence of a causality relation between Bitcoin price and other variables cannot be determined. Thus, it is supposed that Bitcoin may exist in association with the commodity market and other global indicators in the future, along with the recognition of the Bitcoin currency by countries, its being accepted as a means of exchange and its increased reliability

Keywords: bitcoin, commodities, exchange rates, global indexes, asymmetric causality test

Pages: 27-45 | Full text (PDF)

Explaining informal entrepreneurship in South-East Europe: a tax morale approach

Authors: Colin C WILLIAMS, Slavko BEZEREDI

Abstract: Conventionally, entrepreneurs participating wholly or partially in the informal economy were explained as rational economic actors doing so when the benefits outweigh the costs. However, the finding that many entrepreneurs do not operate in the informal economy even when the pay-off is greater than the costs has led to the emergence of a new tax morale approach. Grounded in institutional theory, this asserts that formal institutional problems lead to an asymmetry between the laws and regulations, and entrepreneurs' views on the acceptability of informality. The greater this asymmetry (measured by the level of tax morale), the greater is the prevalence of informal entrepreneurship. To evaluate this, interviews with a nationally representative sample of 1,430 entrepreneurs in Bulgaria, Croatia and FYR Macedonia are reported. Using an ordered logit model, the contribution of this paper is to reveal that entrepreneurs operating in the informal economy have significantly lower tax morale, and that the formal institutional problems associated with lower tax morale include a lack of tax fairness, corruption and political instability. The theoretical and policy implications are then discussed.

Keywords: informal economy, shadow economy, entrepreneurship, tax morale, institutional theory 

Pages: 47-68 | Full text (PDF)

Does democracy improve human development? Evidence from former socialist countries

Authors: Giorgio LIOTTI, Marco MUSELLA, Federica D'ISANTO

Abstract: Between the end of the 80s and the beginning of the 90s, the changes in the political regimes in the Eastern European countries have enabled millions of people to have access to new political, economic and civil liberties. According to several economists, political and social sciences, the transition from a dictatorship to a democratic political regime has positive effects on Human Development (HD). However, recent studies do not provide strong empirical evidence in favour of this hypothesis. Therefore, the debate about the relationship between democracy and HD is still open. Considering the case of former Socialist countries, the aim of this paper is to empirically analyze whether and to what extent democracy affected the level of HD in these countries during the transition period.  Using data on Polity IV and Human development index for 18 former Socialist countries from 1990 to 2014, we find evidence of a positive relationship between democracy and HD. Also, the results were robust when we checked for a set of control variables as growth rate, the degree of trade openness and log population.

Keywords: democracy, human development, Eastern European Countries, panel data 

Pages: 69-88 | Full text (PDF)

Cultural values and financial reporting practices: contemporary tendencies in Eastern European countries

Authors: R.M. Ammar ZAHID, Alina ȚARAN, F.N. Can SIMGA-MUGAN

Abstract: Financial reporting practices may never be uniform because of contextual factors that differentiate countries and businesses all over the world. By following Gray's (1988) approach, this study investigates how cultural factors influenced financial reporting practices from three representative Eastern-European countries, Lithuania, Poland, and Romania, during the 2000-2015 period. Confirmatory factor analysis and structural equation modelling indicate that societies' orientation towards uncertainty avoidance and individualism influence accounting values of professionalism, uniformity, conservatism, and secrecy. Masculinity dominance enhances accounting for prudential practices and limited disclosure. These findings suggest that international accounting harmonization cannot overcome cultural boundaries. Standard-setters, practitioners, and stakeholders need to be aware of this. 

Keywords: accounting values, cultural dimensions, Gray's theory, Eastern Europe, structural equations modelling 

Pages: 89-109 | Full text (PDF)

Education and health: welfare state composition and growth across country groups

Authors: Joao A. S. ANDRADE, Adelaide P. S. DUARTE, Marta C. N. SIMOES

Abstract: When analysing the Welfare State-economic growth nexus, the importance of health and education expenditures and their impact on human capital accumulation is often neglected. In this study, we claim that the Welfare State composition matters for growth, making it necessary to assess the impact of education and health (public) expenditures on educational attainment and health status, as well as their effect on the real output across countries. To better account for the influence of differences across countries we consider three groups over the period 1960-2012: high income (non-EU) OECD countries, the EU member states before the 2004 enlargement and the EU enlargement (2004 and 2007) new member states. The contribution of the study is twofold. First, we identify long-run relationships for the main variables using the DOLS estimator corrected for cross-sectional dependence. Secondly, we estimate short-run relationships that include an ECM term from the associated long-run equation by applying fixed effects and pooled mean group estimators and identify the direction of causality. The results of the estimation of the long-run equilibrium relationships point to a positive, direct or indirect, influence of (public) education expenditures and (public, private or total) health expenditures on the output in all the groups. 

Keywords: education, health, public expenditures, economic growth, OECD

Pages: 111-144 | Full text (PDF)

Corporate Social Responsibility of Ukrainian tourist enterprises: identity, strategy and performance

Author: Iryna KUBAREVA, Olha MALIARCHUK, Nataliia POHUDA

Abstract: This paper investigates the level of Corporate social responsibility (CSR) development of two groups of Ukrainian tourist enterprises (tour operators-franchisers and travel agencies-franchisees). The system of metrics has been proposed in order to justify CSR assessment and performance on the base of the Balanced Scorecard (BSC) approach in terms of identification of four stakeholder groups (consumer, business community, employees and society). Based on a sample of 179 Ukrainian tourist enterprises, regression results show that there is a strong positive relationship between the independent variables (the number of CSR development programs with staff participation; transparency in corporate reporting index and the number of social projects aimed at the development of local community and society) and the resulting indicator of CSR performance - a franchise business network. We have discovered that the CSR activity significantly increases the number of franchises, which is the key factor of CSR performance from a strategic perspective.  

Keywords: Corporate social responsibility (CSR), tourist enterprises, stakeholder theory, CSR strategy, CSR performance 

Pages: 145-167 | Full text (PDF)

Economic convergence of the Eastern Partnership countries towards the EU-13

Authors: Dzenita SILJAK, Sandor Gyula NAGY

Abstract: The aim of the paper is to analyse if the Eastern Partnership countries converge towards the new Member States of the European Union, the EU-13. Beta convergence, which is based on the neoclassical growth theory, tests the hypothesis that poor countries tend to grow faster than rich countries, in per capita terms. The analysed period is 2004-2016, with two sub-periods: 2004-2008 and 2009-2013. The subdivision is made in order to test the research hypotheses. The first hypothesis is that the recent financial crisis negatively affected the absolute convergence process among the analysed countries. The second hypothesis is that the recent financial crisis negatively affected the conditional convergence process among the countries. The empirical findings support the economic convergence hypothesis, and the convergence rates range 1.6%-3.8%. The results show that the recent financial crisis negatively affected only absolute convergence. Negative effects of the crisis on conditional convergence are not confirmed.

Keywords: Beta convergence; Eastern Partnership; European Union; New Member States; financial crisis  

Pages: 169-185 | Full text (PDF)

The impact of the 2008 economic and financial crisis on the public spending devoted to social protection in the EU

Authors: Agnes OROSZ

Abstract: This paper analyses the trends of general government expenditures in the European Union. Government expenditure has increased considerably in all industrialized countries since 1870. Although this increase has not been equal in all countries, it is nevertheless remarkable that despite institutional differences, growing public spending has been a general phenomenon. The long-term trends of general public spending in the European Union shows us that, after a short period of decreasing general government expenditure, any external economic shock might significantly increase public spending. During the analysed time periods the highest share of public spending is devoted to social protection. Well-functioning systems of social protection increase spending in times of recession, and scale it back as the economy recovers, therefore the welfare state can operate as an effective "automatic stabilizer". The paper also tests which EU member states' welfare systems have been able to function as an automatic stabilizer.

Keywords: general government expenditures, social protection, automatic stabilizer function   

Pages: 187-203 | Full text (PDF)

Structural changes and wage inequality in the Bulgarian economy

Authors: Svilena MIHAYLOVA, Silviya Bratoeva-MANOLEVA

Abstract: In light of the growing concern about the economic and social costs of high income inequality, the paper analyses wage inequality in Bulgaria in the context of the structural changes taking place in the economy. For this purpose, we first estimate wage inequality in the country over the period 2000-2016 by using the inequality decomposition method proposed by Pyatt, Chen and Fei (1980). Then, we analyse the differences in wages depending on economic activity, region and educational attainment. The results show that wages are the most significant source of income inequality in Bulgaria and that their contribution to overall inequality increases significantly during the analysed period. Furthermore, the growing role of the service sector at the expense of agriculture and industry is associated with increasing wage differences across economic sectors, regions and levels of education, which together shape the magnitude and the dynamics of wage inequality.

Keywords: wage inequality, structural change, deindustrialization

Pages: 205-227 | Full text (PDF)

Credit growth and non-performing loans: evidence from Turkey and some Balkan countries

Authors: Almir ALIHODZIC, Ibrahim Halil EKSİ

Abstract: In this paper, endogenous and exogenous factors that affect the credit growth rate of some Western Balkan countries (Bosnia and Herzegovina, Croatia and Serbia) and the credit policy in Turkey will be investigated through a multiple regression analysis. The credit growth rate will be used as the dependent variable while the rate of the non-performing loans along with the growth rate of the deposit, the return of equity and the real growth rate of the gross domestic product will be used as independent variables. In this paper the STATA 13.0 software package will be used. This data analysis will include a quarterly basis data for the period: 2007q1 - 2017q2 due to its higher significance. The result of the regression analysis showed that there is a reverse relationship between the rate of the non-performing loans and the credit growth rate for all the observed countries. The high share of problematic loans in total loans relatively reflects in a negative way the overall tendency of the banks towards taking risks and credit growth. It reduces the profitability of the banking sector and increases the systemic risk as well. The basic results of the regression analysis also showed a positive relationship between economic growth and the credit growth of banks.

Keywords: economic growth, credit growth, non-performing loans   

Pages: 229-249 | Full text (PDF)

BOOK REVIEW:

Alina Mihaela Dima (ed.), Doing Business in Europe. Economic Integration Processes, Policies, and the Business Environment, Springer, 2018

Author: Mihaela Cristina DRĂGOI

Pages: 251-255 | Full text (PDF)