Johannes Stephan

Competition and Antitrust Policy in the Enlarged European Union: A Level Playing Field?

With the central and eastern European countries (CEECs) increasingly included into the international division of labour in the European economic space, we are prompted to ask whether this integration operates on a level playing field with respect to competition policy. In fact, our analysis reveals that effectiveness of implementation of competition law and policy and intensity of competition are lower in the CEECs. We find no reason to believe that the new eastern EU members struggle with the recent reforms of competition policy in the EU, nor do we see the necessity for policy action to spur effective implementation.

The Role of the Human Capital and Managerial Skills in Explaining the Productivity Gaps between East and West

This paper assesses the determinants of productivity gaps between firms in the European transition countries and regions and firms in West Germany. The analysis is conducted at the firm level using a unique database constructed by fieldwork. The determinants tested in a simple econometric regression model focus on the issue of human capital and modern market-oriented management. The results are novel inasmuch as a solution was established for the puzzling results in related research with respect to a comparison of formal qualification between East and West. Furthermore, the analysis establishes that the kind of human capital and expertise mostly needed in postsocialist firms are related to the particular requirements of a competitive market-based economic environment. Finally, the analysis also finds empirical support for the role of capital deepening in productivity catchup, as well as the case that the gaps in labor productivity are most importantly rooted in a more labor-intensive production, which does not give rise to a competitive disadvantage.

Factors Accounting for the Enactment of a Competition Law - An Empirical Analysis

This work is concerned with the factors accounting for decisions to enact a national competition law. We first update and enlarge existing data bases of countries that have enacted a competition law. We then identify and discuss the factors that may influence the decision to enact a competition law. Panel-data logit analysis is then used to test a set of hypotheses relating to the factors involved across time and across countries. The results are interpreted in terms of significance and the sign of their influence on the probability that a country enacts. The results shed light on the probability of individual countries, particularly developing countries, taking the step of enactment.

Does Local Technology Matter for Foreign Investors in Central and Eastern Europe? Evidence from the IWH FDI Micro Database

This article analyzes investment motives, scope, and intensity of R&D and innovation, in foreign affiliates and the extent and determinants of linkages to the host countrys scientific institutions. The analysis uses the IWH FDI micro database that offers evidence for 809 foreign affiliates in Central and East Europe. Foreign direct investment into the region seems to be still dominated by market- and efficiency-seeking motives. Tapping into localized knowledge, skills, and technology seems to be of secondary importance. Yet, the majority of foreign affiliates actively engage in R&D and innovation, although fewer foreign firms build technological linkages with local scientific institutions.

Foreign direct investment in weak intellectual property rights regimes – the example of post-socialist economies

This analysis attempts to integrate international business theory on foreign direct investment (FDI) with institutional theory on intellectual property rights (IPR) to analyse FDI in Central and Eastern Europe, a region with an IPR regime gap vis-à-vis Western Europe. Starting from the premise that FDI plays a crucial role for technological catching up in Central and Eastern Europe (CEE) via technology and knowledge transfer, this article assesses the role played by IPR regimes as a factor for corporate governance and control of foreign-invested subsidiaries, for their own technological activity, their trade relationships, and networking for technological activity. As a specific novelty to the literature, the influence of the strength of IPR regimes on corporate control of subsidiaries is analysed. The results suggest that IPR-sensitive foreign investment tends to have lower functional autonomy, tends to cooperate more intensively within its transnational network and is still technologically more active than less IPR-sensitive subsidiaries.

The ‘German Model’ in Decline

The phrase, a ‘German model’, is adopted in the title although the existence of such a model is highly doubtful. The German economic post-war success story can be understood as a result of economic policy in a peculiar internal and external market constellation, whatever model is stylised (see Holscher 1994). This paper argues that the market constellations faded away, but economic policy remained as if nothing happened at all. The process of changing market constellations began in the early 1970s with the breakdown of the Bretton-Woods system of fixed exchange rates, continued with ‘eurosclerosis’ and stagnation in the 1980s, and found its preliminary last stage in the new constellation of a unified German economy. The obvious signal of the new constellation is the coincidence of a record export performance and mass unemployment, reaching figures comparable to the world economic crises of 1933.

Results of a Fieldwork Project

The second empirical analysis is based on a fieldwork project conducted between 2002 and 2003, which generated a large and unique database on 438 foreign subsidiaries in a selection of CEECs, namely the Czech Republic, Estonia, Hungary, Poland, Slovakia and Slovenia. The field work was done between 2002 and 2003 by the use of a concise, two-page questionnaire, sent out to the largest foreign investment subsidiaries in the countries named. The questionnaire is presented in the Appendix to this book (pp. 160–4).

Exchange Rate Policy, Fiscal Austerity and Integration Prospects: The Hungarian Case

Hungary prides itself on being one of the ‘hottest’ candidates for EU membership in the next round of EU enlargement. It bases this on the fact that, amongst all post-socialist economies, the Visegrad-four have proceeded comparatively further in systemic transformation and economic development than other post-socialist economies. Moreover, in 1992/93, Hungary, together with Poland and the then CSFR, had signed ‘Europa Agreements’, which can be interpreted as a preliminary step to accession agreements. In fact, Hungary is the country which started as the earliest with systemic reforms in some form of a ‘third way’. This can be highlighted not least by the introduction of a two-tier banking system already in 1987, which envisaged, but failed to achieve at this early stage, the hardening of Hungary’s ‘soft budget constraint’ (Kornai, 1986).

State Aid in the New EU Member States

In the early phase of transition, which began in the 1990s, Central and Eastern European countries (CEECs) pursued economic restructuring that involved massive injections of state support. With reference to the history of state aid in centrally planned economies, we investigate state aid practices of CEECs since attaining full EU membership. We analyse whether their state aid policies during and after transition challenged European state aid legislation, and whether these fit into the EU strategy of ‘less but better targeted aid’. The data-based analysis is complemented with some indicative insights from state aid in the steel industry as well as the financial service sector to suggest that there is today no significant difference in state aid law application between East and West any more – the new EU members have further caught up by better aligning to the objectives of the State Aid Action Plan.

Conditions of Internal Technology Transfer and Spillovers between Foreign Investors and Foreign Affiliates in Central East Europe

Whereas the previous chapter was concerned with motives and matches between expectations and reality by foreign investments in CEECs as a condition of technology transfer and spillovers, Chapters 4 to 6 separately analyse the conditions for internal (Chapter 4) and external (Chapters 5 and 6) technology transfer and spillovers. Amongst the most widely discussed determinants of the technological role of FDI for host economies is internal, direct technology transfer within the network of the foreign investor (including the intentional contracted, and the unintentional, not accounted for in contracts, that is spillovers).