Marian Rizov

Credit Constraints and Profitability: Evidence from a Transition Economy

A conceptual framework for analyzing credit rationing and the link between credit access and profitability is developed. The empirical analysis using data from manufacturing firms in Bulgaria, an economy with dramatically changing credit constraints during transition, provides direct estimates of credit rationing and its impact on profitability and reform policy outcomes. The results from switching regressions show that the presence of credit market imperfections does impinge on profitability of firms and hinders industry restructuring. Policies fostering sound financial intermediation are suggested and discussed.

Rural development perspectives in enlarging Europe: The implications of CAP reforms and agricultural transition in accession countries

Abstract The purpose of this paper is to put into an appropriate theoretical frame the rural development issues in enlarging Europe and to analyse the rural development perspectives in the European Union (EU) accession countries. Based on comparisons of developments in the Common Agricultural Policy (CAP) and features of the rural areas in incumbent EU member states with the status of the rural sectors in accession countries, implications for the future of CAP are discussed. It is argued that despite coming from different development doctrines, the dominant rural sector—agriculture—in both eastern and western Europe is similarly characterized by dual structure. Thus, emphasis on rural development structural policies currently being promoted by the reforming CAP can be fruitful in both new and incumbent member states.

Productivity and Trade Orientation in UK Manufacturing

Within a structural model we explicitly allow for the trade orientation of companies to estimate productivity dynamics within 4-digit UK manufacturing industries. We use the FAME data on UK companies over the period 1994-2003. Following Ackerberg et al. (2005) we adjust the algorithm in Olley and Pakes (1996) by augmenting investment and exit decisions to allow for exogenous demand shocks by trade orientation, assuming that labour and capital are state variables, and productivity follows a first-order Markov process. We extend the framework further by allowing exporting to be an additional control variable that is driven by lagged productivity as in Melitz (2003), leading productivity to follow a second-order Markov process. We find that over the period of introduction of the Euro improvements in aggregate productivity were driven by exporters – mainly by market share reallocations away from inefficient and towards efficient export companies. Aggregate productivity also benefited from improvements in productivity of non-exporters but was driven by improvements within companies rather than by market share reallocations. In a period of sustained real exchange rate appreciation both export cleansing and competitive pressure on non-exporters seem to have contributed to improvements of productivity in the UK manufacturing.

Endogenous production organization during market liberalization: farm level evidence from Romania

This paper analyzes the production organization structure of farm sectors in a transition country (TC) where a number of organization modes emerged. Under imperfect markets rural households make optimal organization mode choices by adjusting their physical resources according to the non-tradable managerial input that they allocate in farming. Empirical results for Romania strongly support the hypothesis that the optimal organization mode choice is influenced by household’s human and physical capital endowments as well as by the market environment. Policies providing access to capital and secure property rights would facilitate shift to individual farming modes and efficient resource reallocation.

HUMAN CAPITAL AND THE AGRARIAN STRUCTURE IN TRANSITION: MICRO EVIDENCE FROM ROMANIA

This article examines determinants of the agrarian structure in transition economies with an emphasis on the role of rural households’ human capital. Land reform and enterprise restructuring have resulted in a broad range of farm types, such as cooperatives, partnerships, individual farms and combinations of these. In the theoretical model the fact that household resources are allocated to different organization modes is attributed to the utility maximization strategy of heterogeneous agents deriving income from uncertain sources in the face of incomplete factor markets. The empirical results from a multinomial logit model estimated with data from a two-year nationwide survey of Romanian rural households support the hypothesis that the current agrarian structure is importantly affected by the human capital characteristics of the households and the economic risks they face.

Linking Productivity to Trade in the Structural Estimation of Production within UK Manufacturing Industries

We estimate productivity dynamics within 4-digit manufacturing industries, using FAME data on UK Companies, from 1994 to 2003. We extend the algorithm in Olley and Pakes (1996) to allow for a selection bias driven by the Melitz (2003) effect (high productivity types selecting to exporting) to get more consistent and unbiased estimates of the parameters of the production function. We demonstrate a link between trade orientation and productivity within industries that is driven by selection, not by learning. Hence aggregate productivity is driven by market share reallocations amongst companies rather than from improvements in company level productivity.

CORPORATE CAPITAL STRUCTURE AND HOW SOFT BUDGET CONSTRAINTS MAY AFFECT IT

This survey paper examines existing theories of capital structure and related empirical tests with the aim to derive theoretical as well empirically testable predictions about the implications of the soft budget constraint for corporate capital structure. We show that the soft budget constraint syndrome is relevant for a variety of institutional environments, from central planning to capitalist economic systems, and consider features of company financing patterns in various institutional contexts. Special attention is paid to emerging and transition economies where, with the development of financial markets, companies reduce their financial dependence on the state and begin to borrow from a variety of sources. However, due to the persistence of soft budget constraints, corporate capital structure in transition and emerging economies may still deviate significantly from the capital structure of companies operating under hard budget constraints.

Economic analysis of the link between diet quality and health: Evidence from Kosovo

HighlightsA theoretically motivated two‐stage estimation strategy is employed to analyse diet diversity and its impact on BMI.Economic and demographic factors drive the choice of balanced diets in a sample of Kosovar adults.Diet diversity has a significant non‐linear impact on underweight and obesity leading to healthier status.Diverse, better quality diet should serve as a cornerstone for public health policy. ABSTRACT We analyse the link between diet diversity, (which is a proxy of diet quality) and health outcomes measured by body‐mass index (BMI) in a representative sample of Kosovar adults using household expenditure micro‐data. Building on a household model of health production we devise a two‐stage empirical strategy to estimate the determinants of diet diversity and its effect on BMI. Economic factors and demographic characteristics play an important role in the choice of balanced diets. Results from the BMI analysis support the hypothesis that diet diversity is associated with optimal BMI. One standard deviation increase in diet diversity leads to 2.3% increase in BMI of the underweight individuals and to 1.5% reduction in BMI of the obese individuals. The findings have important implications for food security policies aiming at enhancing the public health in Kosovo.

Institutions, history and wage bargaining outcomes: international evidence from the post-World War Two era

This article uses international evidence to assess the impact of tripartism and other forms of government involvement in bargaining on wage moderation and wage dispersion. We find that government involvement in wage bargaining leads to a modest increase in wage moderation and reduction in wage dispersion. Historic differences in bargaining institutions between countries have greater moderating effects.

Institutions, reform policies and productivity growth in agriculture: evidence from former communist countries

There are important differences among former communist countries in performance of their agricultural sectors that are commonly attributed to variation in inherent institutions and reform policy choices. In this paper the link between institutions, reforms and (labour) productivity growth in agriculture is analysed within an augmented neo-classical growth model framework derived from a production function. For the empirical analysis panel data over the transition period (1990-2001) were used that cover 15 former communist countries, applying a GMM-IV estimator. Estimation results strongly support the view that the shift to individual land use, measuring farm restructuring, as well as the overall economic reforms, supported by democratic institutions, have positively contributed to the (labour) productivity growth in former communist countries’ agriculture.