Eastern Journal of European Studies

Author: Peter Gladoic HAKANSSON, Predrag BEJAKOVIC 

Abstract: After the Great Recession, unemployment rose quickly. During 2013-2014, Croatia registered unemployment rates above 17%, which were way over the EU 28 average. Today, Croatia experiences bottlenecks on the labour market: job vacancies are increasingly lacking suitably skilled candidates. Thus, the Croatian labour market adapts poorly to both recession and the booming economy; in other words, the Croatian labour market has a low resilience. An economy with a high labour market resilience can benefit from a booming economy, while an economy in the opposite situation faces wage inflation and loss of competitiveness. This article aims to analyse and discuss the role of labour mobility in reducing labour market bottlenecks and thereby increasing labour market resilience in Croatia.

Keywords: labour market, labour force mismatch, Croatia, bottleneck occupations, spatial mobility, labour market resilience,

Pages: 5-25 | Full text (PDF)

Authors: Cezar TECLEAN, Gabriela DRĂGAN

Abstract: In this paper we propose a quantitative model of territorial accessibility provided by the endowment of transport infrastructure for the European Union reference space. For this purpose, we designed a composite index calculated at regional NUTS 2 level, which includes the following proxy variables representative for the assessment of territorial equipment with transport networks: the densities of the motorways network, the high-speed rails network and the inland waterways, the number of interregional links on the motorway, high-speed railway and inland waterway, the number of airports and ports of the trans-European core network. Based on said index values, we have developed a spatial model of the deficit accessibility in the Community space and a synoptic of the possible solutions for the development of transport networks, as a prerequisite for the homogenization of the territorial accessibility and the improve of the territorial cohesion. 

Keywords: territorial accessibility, transport infrastructure, territorial cohesion, European Union, 

Pages: 26-47 | Full text (PDF)

Authors: Ioana Alexandra HORODNIC, Colin C WILLIAMS, Rodica IANOLE-CĂLIN

Abstract: The aim of this paper is to analyse financial gains as a motive for engaging in under-declared employment (choosing envelope wages) amongst youth population. A youth profile of those more likely to choose envelope wages for financial gains is proposed, based on socio-demographic characteristics. Reporting on a survey amongst 1,059 students and employing logistic regression analysis, the finding is that unmarried undergraduate students with a difficult financial situation are more likely to choose envelope wages for a higher cash-in-hand income. Various theoretical explanations and motivations for engaging in such noncompliant behaviour are then explored to test their validity for the youth population.

Keywords: under-declared employment, under-declared wages, envelope wages, undeclared work, financial motivation,   

Pages: 48-69 | Full text (PDF)

Authors: Yilmaz Onur ARI, Ibrahim BELLO

Abstract: The paper examines the impacts of remittances on terrorism for Turkish economy by using annual time series data covering the period of 1990-2019. Autoregressive Distributed Lag (ARDL) was used in the application of econometric method. To ensure robustness of results, the study accounts for structural breaks in the unit root test and the co-integration analysis. The results obtained indicated that remittances flows to Turkey have a positive and significant effect on terrorism. This is in line with the empirical evidence that finances through remittances can promote terrorism in a country. The study also concludes that unemployment has strong a correlation in promoting terrorism in Turkish economy and that persistent unemployment can cause economic inequality, poverty, social dislocation, unrest, and conflict such as terrorism, which has a negative impact on subsequent long-run economic growth. Besides, trade openness shows a negative but significant effect, which indicates that trade openness has a little influence in promoting terrorism. 

Keywords: remittances, terrorism, Turkish economy, economic growth, unemployment,

Pages: 70-93 | Full text (PDF)

Authors: Josip FRANIC

Abstract: Although quasi-formal employment has become a constituent part of labour markets around Europe, there is still limited understanding of the exact mechanisms underlying this illicit scheme. The lack of knowledge is particularly pronounced when it comes to the rationales for workers to accept such jobs regardless of all pitfalls attached. To fill the gap, this paper elaborates on the most important findings from qualitative interviews with 30 quasi-formal workers in Croatia. Besides low employment prospects, this study conducted in 2015 also highlights distrust in institutions, low intrinsic willingness to pay taxes, lack of deterrence and misperception regarding financial gain as the key factors shaping the decisions of labour suppliers in this respect. Apart from sizeable theoretical contribution, the findings presented in this paper are also expected to assist policymakers in Croatia and beyond in their endeavours to reduce the attractiveness of wage underreporting for workers. 

Keywords: quasi-formal employment, under-declared employment, envelope wages, Croatia, qualitative research,

Pages: 94-112 | Full text (PDF)

Author: Magda WISNIEWSKA-KUZMA

Abstract: The aim of the article is to measure and analyse changes in the steepness of PIT tax progressivity in OECD countries in 2004-2017, using an alternative method of measuring the type of tax progression. The Steepness Progression Index was developed based on the OECD's indicators of average and marginal taxation in two selected income groups (67% and 167% of average remuneration). The index was used to determine the type of tax progressivity: progressive, regressive and proportional. The result of the empirical study showed that seven OECD groups could be identified among OECD countries with similar levels of progression steepness. Post-socialist countries (except Slovenia) formed one group of countries characterized by the occurrence of regressive progression in the PIT tax and a minimal difference between the average and marginal taxation at both levels of income.

Keywords: personal income tax progressivity, measurement of tax progression,

Pages: 113-131 | Full text (PDF)

Authors: Katerina GAWTHORPE

Abstract: This study analyses the VAT tax rate heterogeneity for the case of the Czech Republic. While the European Union recommends tax harmonization, the Czech legislature differentiates among three VAT tax rate groups. Those tax groups' composition has recently changed as the government intends to ease the tax burden during the coronavirus pandemic. Yet, the Czech authority misses an impact evaluation tool of such policy measures for local industries. The EU ambition and the ongoing tax-policy reforms necessitate the model developed in this study which analyses the tax effect at a detailed industrial level. The simulation outcome discloses the sectors which are the most susceptible to VAT taxation changes and suggests the most beneficial tax differentiation scheme to boost economic production. The results support the current tax legislation changes in favour of the more heterogeneous indirect tax rates. A lower tax rate for the industrial sector seems especially advantageous in mitigating the gross domestic product's negative tax impact.

Keywords: computable general equilibrium model, Czech Republic, VAT tax, input-output,

Pages: 132-159 | Full text (PDF)

Authors: Ilhami KARAHANOGLU

Abstract: In the finance sector, in general, a single VaR method is used for one single portfolio or for all similar portfolios and it hampers the opportunity for comparison. Such shortcoming deriving from trusting one single VaR method results in very incoherent results for the analysis as well as in untrustable transactions based upon those risk estimations. In order to overcome that, similar investments tools/portfolios should be analysed simultaneously by different VaR methods for comparison. Considering such overcome, this study is aimed to compare the VaR (value at risk) estimation methodologies for all 5 separated portfolios (which are similar considering their liquidity and investment process) holding USD, EUR, GOLD, BIST100 Index (Istanbul Stock Exchange Index) and BITCOIN considering their daily return on TRL (Turkish Lira). For performance measurement of different methodologies listed namely as extreme value VaR (GRPD-gnadenko theorem), ewma based volatility filtered historical simulation, historical simulation, delta normal, and bootstrapping; the 3 backtesting procedures and the related statistics are used.   

Keywords: Historical VaR, Delta Normal VaR, EVT, VaR Backtesting, BITCOIN,

Pages: 160-181 | Full text (PDF)

Authors: Almir ALIHODZIC

Abstract: Banking profit plays a very crucial role in terms of providing a base for internal growth as well as a signal for additional borrowing. Profit is also a source for dividend payments to shareholders and expectations for future dividend payments. This research includes all banks in Bosnia and Herzegovina and testing endogenous and exogenous variables on bank profitability indicators. In addition to credit risk, the profitability of banks in B&H is also influenced by the financial result of operations, which is determined by price and interest rate risk. The primary goal of this paper is to attempt to identifying and recognizing the factors affecting the profitability of banks operating in Bosnia and Herzegovina. Therefore, this research focuses on the determinants of banking sector profitability that can be divided into two groups, namely: internal and external factors. The research period covered the years from 2007q1-2019q4 on a quarterly database. The total number of observations was 52. The paper included the OLS regression model (FE model) and the random-effects GLS model. Both models were appropriate for the obtained results through the Hausman test. The results showed that the significant influence on the dependent variables were the return on asset (ROA) and return on equity (ROE), which has been achieved by the following independent variables, such as the growth rate of net profit/loss, cost to income ratio and the growth rate of gross domestic product.

Keywords: profitability, non-performing loans, cost-to-income ratio, bank sector,

Pages: 182-202 | Full text (PDF)

Authors: Manuel BENAZIC, Daniel TOMIC

Abstract: The surprising resilience of current communist states towards democratic opening and a mainstream neoliberal economic 'way-of-life' in the past did not hamper their economic performances and development perspectives as much as we would expect. In the countries that are one-party states, in which the institutions of the ruling party and the state have become intertwined, ostensibly arguing for political and economic equality, still maintaining a firm control over the economic resources, we could expect economic relationships that are au contraire modern economic trends. However, China for example, a supposedly communist economy, with its breath-taking socio-economic progress, elusively ignores mainstream economic vocation, progressively advancing towards establishing itself as a sacrosanct economic force. In that manner, the goal of this paper is to (1) evaluate the dynamics of relevant macroeconomic variables in three current communist states (China, Laos and Vietnam) in order to (2) expose possible deviations to modern capitalist trends as well as to (3) provide relevant information that can serve as a guideline for macro policies. For that purpose, we analyzed the relationship between the GDP, price, money and the exchange rate by using VAR modeling. Results revealed coherent macroeconomic dynamics with a causality that is in accordance to a common capitalist economic framework.   

Keywords: macroeconomic shocks, macroeconomic dynamics, current communist states, central planned economic systems, VAR analysis,

Pages: 203-228 | Full text (PDF)

Authors: Dilek ERDOGAN, Nuray TOKGOZ

Abstract: Information technology outsourcing provides several advantages for organizations, such as reducing the cost of ownership of IT products/services, providing rapid access to modern technologies. However, when the outsourcing relationship is not managed effectively, the desired results are not always achieved. This article aims to reveal the role of contract and relationship norms in the success of the IT outsourcing relationship, by focusing on the Turkish domestic market. Firstly, the measurement scales of the research were developed by making use of the previous studies and field interviews. Then the measurement model and hypotheses were tested using the partial least square method. It was concluded that both contract and relationship norms affect IT outsourcing success, but the contract is more effective than relationship norms for IT outsourcing success. Furthermore, it is concluded that relationship norms have a mediating effect between the contract and IT outsourcing success.   

Keywords: IT outsourcing, contractural governance, relational norms, Partial Least Square (PLS), Turkey,

Pages: 229-250 | Full text (PDF)

Authors: Ferhat CITAK, Patricia A. DUFFY

Abstract: This paper uses cross sectional survey data to explore the two-way causality between the household head's education level and poverty in Turkey. In contrast with the existing studies, this is the first study to examine the issue of a possible endogeneity problem. For that purpose and to overcome the simultaneity bias, we adopt the most commonly used Instrumental Variable (IV) estimation technique, two-stage least squares (2SLS) regression.  Our IV estimates indicate that the policy reform, which was implemented in 1961, only increases the household head's years of education for rural residents. Furthermore, the higher the level of education of the household head, the higher the household per capita income. Policy recommendations for policymakers are addressed in the conclusion.   

Keywords: poverty, education, income, instrumental variable, Turkey,

Pages: 251-265 | Full text (PDF)

Authors: Dorin FESTEU, Natalia TURLAKOVA, Rodica CRUDU

Abstract: The purpose of this research was to develop a framework for an Entrepreneurial Education (EE) programme tailored to Eastern European neighbourhood universities. A transversal design employing Delphi method involving sixteen experts in EE from the EU and Eastern European neighbouring countries has been used. The research has concluded that an Entrepreneurial Education programme in the Eastern Europe should ideally include the following five modules: Entrepreneurship; Innovation management; Business planning; Intellectual Property law; Leadership and start-up project management. The modules should ideally be delivered in start-up centres where opportunities are provided for the application of the theoretical concepts. The findings provide empirical evidence and arguments for the development of a structure and content that is the most useful to the students enrolled on EE programmes in the Eastern European universities.   

Keywords: entrepreneurship in Eastern Europe, higher education, entrepreneurship education,

Pages: 266-287 | Full text (PDF)

Authors: Samuel AMPONSAH ODEI, Michael AMPONSAH ODEI, Henry Junior ANDERSON

Abstract: This paper examines firms use of external consultants and commercial labs as an essential source of knowledge for innovation performance and activities in the IT and other information service firms. Consultants are essential conduits to transfer knowledge, technologies and innovations to firms and other economic agents. Using data from the Eurostat Community Innovations Survey conducted between 2012 and 2014 and the doubly robust estimation methodology, this study, as expected, found a positive and statistically significant relationship between product and process innovations, intramural R&D, engagement in R&D, market introduction of innovations, engagement in other preparation influenced firms to rely on the services of external consultants. The results of the propensity-score matching also show that on average, firms that relied on the services of consultants were 61% more likely to improve their product innovations and 62% organizational innovations than those firms that didn't use them. The results are important for firm managers who are aiming to be innovative and can serve as a practical guide on how to improve firm-level innovation potentials and activities.   

Keywords: consultants, innovations, knowledge transfers, R&D, Czech Republic,

Pages: 288-311 | Full text (PDF)

Authors: Branislav RADELJIC

Abstract: The normalization of relations between Belgrade and Moscow in the mid-1950s and the Yugoslav authorities' decision to develop closer relations with the West coincided with Yugoslavia's intention to seek its own way forward, characterized by self-management at home and a lead role in the international Non-Aligned Movement. Later, following the establishment of official relations between the European Community and Yugoslavia in 1968, the Community accepted that Yugoslavia remained where it stood ideologically and continued to provide it with new trade agreements. However, a careful examination of official debates and archival collections reveals that it did not take long before the appreciation for the policy of non-alignment was overshadowed by uncertainty (due to the death of President Tito, but also the end of the Cold War and collapse of communism), with the movement eventually losing its significance with the outbreak of the Yugoslav state crisis and consequent policy-making preferences.   

Keywords: Yugoslavia, European Community, Non-Aligned Movement, international collaboration,

Pages: 312-333 | Full text (PDF)

Authors: Sandro KNEZOVIC, Marco ESTEVES LOPES

Abstract: The article contextualises the concept of the European army within wider European security and defence discourse. The European Union (EU) is facing complex challenges, which requires a strategic approach to IR. This research examines the EU's strategic posture and capacities in the international arena by employing two leading concepts of IR theory - constructivism and realism. Since the EU operates in an interlinked world, the article takes into account a wider geostrategic environment and heterogeneity of concepts and interests of actors in various pockets of the globe, offering viable future perspectives for the phenomena in its focus. It suggests a functional development of a EU's strategic culture and a fine-tuned reconsideration of its exclusively constructivist approach to contemporary security challenges.   

Keywords: European army, defence and security, strategy, Euro-Atlantic community, international relations,

Pages: 334-352 | Full text (PDF)

Authors: Uliana SYTAILO, Oksana OKHRIMENKO

Abstract: The research encompasses analysing the conformity of profiles of energy strategies approved by the EU member countries, with criteria of security in the energy market determined by the requirements of the current European energy legislation. To assess the level of economic security of energy markets, it is proposed to rank national energy markets according to economic security indicators, taking into account the structure of energy markets in terms of participants and functions. This enables to objectively streamline the markets of electricity of the EU member countries in the form of ranking for ascertaining their positions under conditions of creating a single competitive energy market.  

Keywords: economic security, energy market, strategy, evaluation, ranking,

Pages: 353-377 | Full text (PDF)

Authors: Radu SIMANDAN

Abstract: This article traces the complex path that Martin Feldstein followed, for more than twenty years, in his principled critique of the European common currency project. Involved in the debate on the euro from its early stages to the tumultuous times of the sovereign debt crisis and the resulting recession, author of numerous articles in the academic and popular press, drawing his arguments from economics and political economy, he contributed to the development of an American vision on monetary unification in the EU. Studying this extended body of literature proves to be an interesting way to explore the sinuous discussion on the euro from the theoretical, applied and public-debate perspectives.    

Keywords: euro, EMU, Martin Feldstein, US economists, monetary unification,

Pages: 378-395 | Full text (PDF)

Authors: Hristina RUNCHEVA TASEV, Milena APOSTOLOVSKA-STEPANOSKA, Leposava OGNJANOSKA

Abstract: The judicial contribution to the dynamic process of European Integration was especially important, as the Court of Justice of the EU, through its creative and extensive interpretation of the Treaties, became an important catalyst for the integration process. The next phase of the European integration seems to be the 'integration through the rule of law', as the further development of this process must be based on a secure and solid ground, reaffirming the Union as a community of values. Given its importance for the confidence of citizens in the Union and the effective delivery of policies, the rule of law is of central relevance to the future of Europe. The main aim of this paper is to examine the progressive and influential role of the CJEU regarding the integration process, as a starting premise for determining its potential as an actor in the process of overcoming the following challenges.     

Keywords: European Integration, CJEU, Rule of Law, Integration through Law,

Pages: 396-426 | Full text (PDF)

Authors: Mihaela MATEI, Monica ROMAN, Alexandru FLOREA, Adina IORGANDA

Abstract: In the nineties, Romania and Poland were perceived as the largest countries of emigration and sources of irregular migration to Western Europe states. Later, the dynamics and effects of migration influenced migration policies in the two countries, notably after the start of the accession negotiations with the European Union. This study provides a comparative analysis of labour migration policies in Romania and Poland, investigating the effect of the Europeanization process. Based on a qualitative approach, we discovered a variety of policy responses to the international labour migration dynamics. The results showed that although the constraints of standard European migration policies similarly influenced the labour migration policies of the two states, they were differently affected by the adopted national approaches. In the context of the new, emergent migration patterns, the study provides an analytical framework useful for policy makers and practitioners in the field of labour migration policies.     

Keywords: emigration and immigration policies, labour migration policies, Europeanization, Romania, Poland,

Pages: 427-448 | Full text (PDF)

Author: Tamas SZIGETVARI

Pages: 449-452 | Full text (PDF)