Boris Majcen

The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries

Abstract This paper examines different channels of global technology transfer to transition countries. We study the impact of direct technology transfer through FDI, intra-industry knowledge spillovers from FDI, firm’s own R&D accumulation and R&D spillovers through trade for total factor productivity (TFP) growth of local firms. Using firm-level data for eight transition countries for the period 1994–1998, we found that technology is being primarily transferred to local firms through direct foreign linkages. Our results also suggest that FDI do not generate positive intra-industry spillovers for domestic firms.

Technology Transfer Through FDI in Top-10 Transition Countries: How Important are Direct Effects, Horizontal and Vertical Spillovers?

The paper exploits a large set of more than 8,000 firms for ten advanced transition countries in order to uncover the importance of different channels of technology transfer through FDI and its impact on productivity growth of local firms. In addition to direct effects, we also distinguish between intra-industry (horizontal) and inter-industry (vertical) spillovers from foreign owned firms to local firms. After correcting for foreign investment selection bias and controlling for endogeneity of input demand (using a dynamic system GMM approach), direct FDI effects were found to provide by far the most important productivity effect for local firms in transition countries. Direct effects of FDI are found to provide on average an impact on firm???s productivity that is larger by factor 50 than the impact of backward linkages and by factor 500 larger than the impact of horizontal spillovers.

Impact of firm heterogeneity on direct and spillover effects of FDI: Micro-evidence from ten transition countries

This paper presents a comparative study of the importance of direct technology transfer and spillovers through FDI on a set of ten transition countries, using a common methodology and appropriate methods to account for selection and simultaneity correction. This paper considers by far the largest firm level dataset (more than 90,000 firms) used by any study on the spillover effects of FDI. The main novelty of the paper is the explicit control for various sources of firm heterogeneity when accounting for different effects of FDI on firm performance. Controlling for these variables leads to some interesting results which contrast with the previous empirical work in the field. We find that horizontal spillovers have become increasingly important over the last decade, and they may even become more important than vertical spillovers. Furthermore, this work shows that the heterogeneity of firms in terms of absorptive capacity, size, productivity and technology levels affect the results. These findings suggest that both direct effects from foreign ownership as well as the spillovers from foreign firms substantially depend on the absorptive capacity and productivity level of individual firms. Only more productive firms and firms with higher absorptive capacities are able to both compete with foreign affiliates in the same sector and benefit from the increased upstream demand for intermediates generated by foreign affiliates. In addition, these results show that foreign presence may also affect smaller firms to a larger extent than larger firms, but this impact may be in either direction.

Sustainability of the Slovenian Pension System: An Analysis with an Overlapping-Generations General Equilibrium Model

This paper uses a dynamic overlapping-generations (OLG) general equilibrium model to analyze welfare effects in Slovenia, the macroeconomic effects of the Slovenian pension reform, and the effects of the pension fund deficit on the sustainability of Slovenian public finances. Although young and new generations will lose from the pension reform, even complete implementation of reforms might not sufficiently compensate for unfavorable demographic developments. The level of expected deficit for the pay-as-you-go state pension fund seems to be most worrying. Financing the pension system with value-added tax revenues, as an extreme case, could result in more sustainable public finances, because gross domestic product and welfare levels ought to increase; however, this might be infea-sible to implement politically, given that generations of voters would have their welfare decreased. In addition, the present pension system is opaque and tremendously complicated and primarily, should be made more comprehensible to the public.

Distribution of personal income tax changes in Slovenia

Slovenia belongs to a group of EU member states that have reduced their personal income tax burden during the late-2000s financial and economic crisis. The latest changes, introduced in the personal income tax system during the last two years, have primarily reduced the tax burden on low-income taxpayers. However, this was only the last step in a series of personal income tax reforms since 2004 that have reduced the average tax burden on all taxpayers. Using an exclusive database of taxpayers and utilising a general-equilibrium modelling platform, an approach that is unfortunately still rare in Central and Eastern European countries, we assess the consequences of these reforms at both the micro and the macro level. From a macroeconomic point of view, the initial positive consequences of higher private consumption and welfare are declining over time owing to the increased budget deficit and reduced investment.

The Income Tax Reform in Slovenia: Should the Flat Tax Have Prevailed?

In 2007, Slovenia launched a comprehensive tax reform. This paper analyzes several proposed tax reform scenarios, including the flat tax proposal, with a dynamic general equilibrium model of the Slovenian economy, linked to a microsimulation model. We focus on the macroeconomic and welfare aspects of the proposed scenarios, capturing the effects on individual taxpayers and the government budget. The main characteristics of the model are presented along with the results of different reform scenarios, including that which finally passed the parliament and is now part of Slovenias tax system. Our results suggest that choices other than the flat tax system are better suited to the countrys longterm economic development.

The Effects of Foreign Trade Liberalisation and Financial Flows between Slovenia and the EU after Accession

The new version of the CGE model of the Slovenian economy based on the 1998 SAM was used for simulations of the consequences of further foreign trade liberalisation after 1998 as the outcome of implementation of Free Trade Agreements and the European Agreement, adaptation of the Customs Tariff to the EU Common External Tariff for manufacturing products, adoption of the EU Common External Tariff after the accession of Slovenia to the EU, and estimated transfers between the two budgets. Results obtained show a positive net outcome of Slovenian accession to the EU in the long run. On the other hand, rational behaviour by the government will certainly moderate possible short-run negative effects and improve favourable long-run effects.

Determinants of Unmet Needs among Slovenian Old Population

Abstract Background Population ageing has significant effects on societies. The organization of care for dependent old people is one of the key issues for ageing societies. The majority of care for homebound dependent old people in Slovenia is still performed by informal carers, even though the use of formal services has been increasing over the last 20 years. The proportion and characteristics of people with unmet needs are important for the development of long term care social policy. Method The SHARE (Survey of Health, Ageing and Retirement in Europe) survey was used to assess the determinants of care arrangements and of unmet needs of the aging population in Slovenia. Multinomial regression analysis was used to evaluate individual and contextual determinants of care arrangements and unmet needs. Results The proportion of older people with unmet needs is 4%. As expected, “needs” (Functional impairment OR=4.89, P=0.000, Depression OR=2.59, P=0.001) were the most important determinant, followed by the predisposing factor “age” (age OR 1.15, P=0.000) and two enabling factors, namely:“community setting and “availability of informal care within household” (Urban areas OR=.47, P=0.021; Household size 3+ OR=2.11, P=0.030). Conclusion This study showed that there are a proportion of older people in Slovenia with severe needs for care, which are being unmet. As shown by the importance of enabling factors, social policy should encourage the development of formal services in rural areas and elaborate policy measures for informal carers.

Slovenia: Ownership and Performance of Mass-Privatised Firms

After prolonged debates on the most adequate method for privatising companies in Slovenia, a combined model was adopted, which in principle allowed for paid and non-equivalent (i.e. mass) privatisation. The proponents of mass privatisation argued that its main advantages were the speed at which large parts of the economy would be transferred to the private sector and its contribution to starting of capital markets in countries in transition (Lipton and Sachs, 1990; Frydman et al., 1997). Mass privatisation indeed involved a large part of the corporate (nonfinancial) sector in Slovenia but was spread over five years. ’ Unlike in similar programmes implemented elsewhere, privatisation was decentralised on both the supply and demand sides, and in principle a wide spectrum of options was made available in the privatisation law. Nevertheless, in practice that model limited the selection of privatisation methods on both sides. The basic model of privatisation 1. Transfer of 20 per cent of shares to para-state funds: 10 per cent to the pension fund and 10 per cent to the restitution fund; 2. Transfer of 20 per cent of shares to privately managed privatisation funds in exchange for ownership certificates collected by them from citizens; 3. Exchange of 20 per cent of shares at favourable terms for ownership certificates ofinsider owners (managers, current and former employees);