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Über dieses Buch

This book is written in honor of Horst Brezinski and explores a wide and diverse range of topics related to comparative economic studies. Containing contributions from a number of former Presidents of the European Association for Comparative Economic Studies, the chapters discuss the hard budget constraint, economic transformation in Central Eastern Europe, illiberal democracy, sovereign wealth fund, higher education, the euro, the shadow economy, multinational companies, and economic power. Additional attention is given to new areas of study such as the digital economy and sports economics.
This book aims to examine comparative economies across a wide range of geographical areas including China, Hungary, the United Kingdom, Poland, and the United States and will be relevant to those interested in emerging and transition economies, the political economy, economic policy, and international relations.

Inhaltsverzeichnis

Frontmatter

Introduction

Abstract
2020 was the year of the 30th anniversary of the European Association for Comparative Economic Studies (EACES). Chapters have been collected in this book to celebrate the EACES’ long-lasting life and its achievements over a thirty-year span of time. Since comparative economic studies were always fuelled through some channels by political economy and non-mainstream economics, Part I (Chapters 2 to 6) is devoted to what remains of such political economy approach thirty years after. Part II (Chapters 7 to 16) exemplifies that, though more diversified across countries and economic issues, the typical comparative economics analysis is still alive and in a good shape. Part III (Chapters 17 to 19) provides three examples of how comparative economic studies can be extended to actually new topics and areas such as electronic commerce and sports economics.
Wladimir Andreff

Political Economy in Comparative Studies

Frontmatter

The Political Economy of Socialism Revisited

Abstract
For about fifty years Marxist–Leninist political economy of socialism has been the supreme discipline of social science within the Soviet empire. Its development was by no means uncontroversial. So, it took till the early 1950s that together with the Stalinist economic system the doctrinal body of the discipline emerged. As a historical science, however, it has little to say about how to run this system. At the core, there are the economic laws of socialism. As laws they are norms to be fulfilled by the socialist planner. The first, the basic economic law of socialism is an objective function: welfare maximization. The second, the law of the balanced proportionate development of the economy, is postulating the efficient use of resources by conscious planning. The third, the law of value, implying commodity production under socialism and defining equilibrium conditions, was hotly debated within the discipline. The allocational and distributional consequences of these laws fell outside the domain of political economy and were treated by the economics of optimal planning.
Hans-Jürgen Wagener

The Development of Thinking on the Czechoslovak Economic Transformation

Abstract
Thinking among professional economists on the post-1989 Czechoslovak transformation reflected ideas they had developed over the preceding decades. The repressive ‘normalisation’ period, after reform attempts of the late 1960s, led to a division into generational groups. An older group of economists, officially silenced from 1970, developed a conception of a gradual transformation with continuing substantial state ownership. Among a younger generation, careful to protect their careers, Václav Klaus established his position as a leading figure in the debates that were for a time permitted, but these did not lead to a coherent economic strategy. Comparisons with Hungary and Poland show similar attractions for the ideas of Mises and Hayek, but also a developing recognition in those countries that their critique of socialism was not enough for a reform strategy. The slower pace of pre-1989 economic change and political liberalisation in Czechoslovakia and restricted scope for debate and discussion helped those economists who believed that the fastest possible privatisation would be possible to triumph politically.
Martin Myant

The Hard Budget Constraint as the Pillar of the Economy

Abstract
The socialism-to-market transition is over but has left its marks on the transitioning economies. An important lesson of transition is the major effect of the hardness of the budget constraint on the process, the resulting economy, and the state. One should not overlook its ethical import: a hard BC means that you receive the fruits of your labor, pocket your earnings, and swallow your losses. Yet to be hard, the BC needs protection. Here the state’s vital role manifests in extreme differences in the success of transition in countries of very similar socialist economic structure: Eastern Europe vs. the FSU.
Michael Keren

Illiberal and “Inward-Looking” Drives: What Fuels Them?

Abstract
There is evidence of mounting illiberal inclinations in the industrialized world, in democratic societies; an “inward-looking” syndrome (rising nationalism) is also taking place. Are they to be linked with temporary drivers in the “extraordinary times” we are living through, or do they have deeper roots? An answer to this question begs an examination of trends in society and economy, of the emergence of new (unconventional) threats, of disruptions and, not least, of failed public policies. The argument that “liberal democracy” is on the wane is misleading to the extent that policies can be corrected, that citizens and elites alike do not lose trust in democratic values. It may also be true that, although democracy has a “liberal core,” it can also be driven by “illiberal” components, and that the magnitude of the latter can vary. But for democracy to survive, its liberal core must be preserved.
Daniel Daianu

The Political Economy of Sovereign Wealth Funds

Abstract
Sovereign Wealth Funds (SWF) play a significant role in many countries. In this paper, I develop a model that shows the potential of SWF to stabilise autocratic regimes. A ruling elite might have an incentive to put part of their income into such an investment vehicle. The reason is that a SWF gives credibility to a ruling elite with respect to their future decision on redistribution to the poor. This credibility is crucial for the elite since this helps to prevent the poor from staging a revolution. The implications of the model fit quite well the observation that the use of SWF is much more common in countries with autocratic political regimes.
Jürgen Jerger

Comparative Economics Still on the Tracks

Frontmatter

European Higher Education: Challenges and Achievement

Abstract
Universities in the European Union are called to support integration and pursue economic value, as evidenced in both European and national strategies. In line with this perspective, European higher education institutions strengthen the value of their education and knowledge output while reinforcing their economic basis. The former goal is in line with the greater competition among economies, the latter became important following the international crisis and the fiscal crisis of many European states. A particular feature of higher education institutions in the European Union is their role in supporting European integration, with particular concern for a unified labor market. Much of the EU action has thus been concentrated on moving governments and universities in the direction of pursuing the integration of national education systems. To do so, and given the limited EU competences in education, the European Commission has proposed strategies and goals and has provided (part of) the necessary resource basis. National governments in turn are called to implement the necessary reforms. The fundamental component of this approach is the so-called Bologna Process that created the European Higher Education Area. The core of the Process is to ensure comparability in the standards and quality of higher-education qualifications among European countries. The outcome of these processes has been important, but much remains to be done. The paper critically analyzes the evolution of the European higher education and research system within the frame of European integration and with a view to the goals pursued, the results achieved, and the challenges ahead.
Bruno Dallago

Eurozone: Crisis, Policies and Reforms

Abstract
This chapter reviews the recent economic situation, trends and perspectives of the Eurozone. First, we summarize the main features of the double crisis that hurt the euro area since 2008–2009, including the more recent slow recovery. Second, we discuss the policies adopted in the Eurozone during and after the crises, including the monetary policy by the European Central Bank, that became—some years later with respect to the Fed and other central banks—progressively more accommodative over time; but we also emphasize the limits of fiscal policies, in particular their “austerity” approach. Third, we stress the need to change the current macroeconomic policies, to make more robust the economic recovery (in countries like Greece and Italy real output is still below the pre-crisis levels) and improve the social condition, severely deteriorated because of the long crisis. Macroeconomic policies should be targeted at the support of aggregate demand and especially investment, that in most euro area’s countries has collapsed. The consequent improvement of the economic and social situation will also make more feasible the adoption of institutional reforms, necessary to guarantee the continued existence of the euro in the long-run.
Enrico Marelli, Marcello Signorelli

Brexit: The Lure of the Neoliberal Thought Collective

Abstract
The neoliberal agenda has polarised societies and in consequence, the choices facing the UK electorate range from neoliberalism to left wing socialism. Empirical evidence already exists on the measurable effect of the increasing dominance of the neoliberal wing of the Conservative party, indicating the continuation of laissez faire, migration control, increasing inequality, a low tax low wage economy, stagnating income and deteriorating public services. The competing ideology will result in the nationalisation of the utilities and the railway system, the regulation of capital, necessitating some element of control to prevent flight, the deregulation of labour, increased taxation, particularly on corporations to repair the damage to infrastructure and public services and provisions enacted to improve wealth distribution. Both these alternatives should be unappealing to the majority of the electorate. However, allied to the “first past the post” electoral system, in a post Brexit world, what has become the tribal nature of UK society will oscillate between two competing ideologies to the detriment of national welfare. The rationale for this phenomenon is little understood or accepted by the political elite. A plausible explanation is the cultural shift in progressive values towards a post-industrial, technological, socially inclusive, multicultural society, built on increasing opportunities for tertiary education, which has threatened the perceived superiority of privilege enjoyed by the older post war generation of primarily white men.
Jens Hölscher, Peter Howard-Jones

The Limits of Europe: Lessons from Post-Communist Experience for the Post-Brexit Union

Abstract
Fifteen years ago it counted as received wisdom that accession to the European Union implies arrival to a safe haven concluding the ups and downs of post-communist transformation. Quantitative assessment (Papi et al. in JAMA 60(2): 271–290, 2018) indicates a considerable degree of convergence, especially in Central European countries and much less in Southeast Europe and the NIS. Despite improved performance, in Hungary, Poland, and the Czech Republic Euro-skepticism has been elevated to the level of governmental policies for a decade by now. We ask why and scrutinize a single case: that of the former frontrunner of transition, Hungary. We offer four plus one theses for reflection on the relevance of economics versus politics in shaping outcomes, in a broader comparative perspective.
László Csaba

Eurozone Membership and Foreign Direct Investment

Abstract
Our aim in this chapter is to estimate the effects of European Monetary Union (EMU) membership on foreign direct investment (FDI). Previous literature on the cross-border impact of a common currency have concentrated on international trade effects. Our analysis is based on the gravity model, which has been successfully applied to explain most forms of bilateral cross-border flows. We estimate a structural gravity model using data for 34 OECD countries between 1985 and 2013 for bilateral FDI. We use a variety of econometric techniques to ensure the robustness of our findings including stock as well as flow measures of FDI and addressing selection issues. Our estimates of the impact of EMU underlines the role of FDI as a channel for benefits from deep economic integration between countries. The effect of EMU membership on FDI is estimated to be significant and positive, at around 130%.
Randolph Luca Bruno, Saul Estrin

Multinationals from Post-socialist Countries: How Large Their Foreign Investments Can Be?

Abstract
Increased outward foreign direct investment from post-socialist countries indicated the emergence of indigenous multinational companies. Nevertheless, we do not have a clear picture about the real extent of outward FDI realised by indigenous firms, as balance of payments contain data on outward FDI realised by resident firms, including transactions both by locally controlled and foreign-controlled firms. The chapter tries to have a closer look at the possible respective shares of these two groups of companies, relying on the comparison of outward FDI data published by the respective national bank and inward FDI data of the partner country according to the ultimate controlling owner of the investment. We found that the stock of outward FDI controlled by Czech firms ultimately may be substantially larger than what is presented as outward FDI data. Many Czech foreign investor firms realise FDI transactions from foreign headquarters. Similar can be the case for Slovakia. On the other hand, Estonia, Hungary, Poland and Slovenia act as intermediary countries for FDI, which means that outward FDI realised by local subsidiaries of foreign multinationals may represent a substantial share of total outward FDI. Thus FDI by indigenous multinationals represents a smaller share of total outward FDI.
Magdolna Sass

Non-Observed Economy vs. Shadow Economy and Informal Employment in Poland: A Range of Mismatching Estimates

Abstract
The Non-Observed Economy (NOE) vs. the Shadow Economy (SE) display large discrepancies throughout the European Union transition countries, in particular in Poland. A tractable taxonomy of unobserved activities is designed according to both definition and scope. Direct measurements from tax audits, household informal expenditure, labour force surveys and Eurobarometers provide piecemeal estimates. Indirect measurements from cross-section analyses are drawn from discrepancies on the market for goods and services, the money market and the labour market; the relevance of major determinants of the NOE/SE—tax evasion and informal employment, is tackled. Other macro measurements provide time-series estimates designing the trends of the SE from electricity consumption methods and structural modelling of multiple indicators multiple causes (MIMIC). Last, the gap in NOE/SE estimates from national accounts adjustments vs. MIMIC is addressed.
Philippe Adair

The Yugoslav Successor States: From Self-Management Socialism to Political Capitalism

Abstract
This chapter argues that in some of the successor states of former Yugoslavia an economic system of political capitalism has replaced the former economic system of socialist self-management. The chapter focuses on the examples of Croatia and Serbia using a case-study approach. In the former country, the commanding heights of the economy were captured during the wars of the 1990s by new elites of returning emigres and managers without strong connections to the former communist party. In the latter the old elites were reproduced under the period of sanctions, sanctions-busting and the development of organised crime networks. Both are examples of variants of a system of political capitalism in which a ruling political elite dominates the economy, extracting quasi-rents and undermining productivity and economic growth. In contrast, in Slovenia, a form of coordinated market economy emerged from the old self-management system. It was not significantly affected by the Yugoslav conflicts and became an EU member state in 2004. These examples suggest that political capitalism is not a natural consequence of the transition from self-management, but rather a consequence mediated by the effect of war, conflict and sanctions.
Will Bartlett

Is (Post-Communist) China Becoming a Dominant Economic Power in South East Asia?

Abstract
This chapter picks up the century-old communist idea that this system will one day evolve to dominate the capitalist system. Now that China is successfully catching up, it not only has gained considerable weight globally but it is also an emerging power in its own region of South East Asia. Immediately, the question arises as to whether this emerging power is going to use its growing power to emerge as a dominant economic hegemon, which, not being purely market-oriented, may change the rules of the game in international business and economics away from free competition on a levelled playing field to something else that the today rich countries may not turn out to be superior in. This question, of course is reminiscent of the equally century-old fear of a China with diverging norms and values.
Desmond Okwor, Johannes Stephan

The Power of Technology in the US and China: A Comparison

Abstract
Technology is a key factor for economic development and economic power. This chapter tries to evaluate the sources and the impact of technological power and its changes in the US and China in the 2000–2018 years in a comparative way. The analysis of capital accumulation, education, R.&D. activities, learning by doing processes, industrialization and de-industrialization, structural change, and the different stages of the Fordist model of development, contributes to explain why at present the US is the top world technological power and why China has been rapidly catching up since the radical economic reforms started in 1978. The two giant economies have unevenly grown in capital formation, knowledge and exports and in key-sectors, such as ICT, motor vehicles, energy, renewables, etc. At present, in some niches or sub-sectors China has already exceeded, or will soon exceed, the US, given the larger demographic and industrial size and the still higher dynamism of the economy.
Vittorio Valli

New Extensions of Comparative Economic Studies

Frontmatter

Electronic Commerce—Markets, Competition, and Social Welfare: A Clash with History of Economic Thought

Abstract
Household references are endogenous and markets themselves influence their formation. The introduction of electronic markets for goods and services and labor effect tastes, preferences, values, and interpersonal relationships in new and sometimes unpredictable ways. Further digital markets provide massive amounts of information for consumers and producers, but that information may be asymmetric and create market power on either side of the transaction. In the past central planning was thought to be an alternative to markets in determining production and consumption opportunities, but as a practical matter failed due to the information requirements. Today that information is available and may be utilized by private entities, government entities, or even machines to influence or control the production and allocation of labor, goods, and services, and thereby social norms as well. Whether the Internet will be enslaving, or liberating is an open question.
David M. Kemme

The Economic Determinants of the Olympic Performance in Communist and Post-Communist Countries

Abstract
The chapter first reminds the statist model of sport, its overshooting Olympic performance, and reforms before its final collapse. Moving towards a market-compatible sport system during the transformational economic crisis was not without hindrances ending up into a hybrid sports industry. All these changes affected Olympic performance downwards. Econometric modelling explains all nations’ medal totals at Summer Olympic Games by GDP per capita, population, a host country effect, regional sport specialisation, and a political regime variable taking on board communist and post-communist specificity. A similar model is adapted to Winter Games by adding two variables, snow coverage and endowment in winter sports resorts. Both models provide a statistically significant explanation of how medal totals have evolved in post-communist nations. Used for forecasting, the Winter Olympics model enables checking the impact of doping on Olympic performance with a natural experiment at the 2014 Sochi Games.
Wladimir Andreff

Introducing Hard Budget Constraints Without Restricting Entrepreneurs: The Role of Voluntary Agreements in UEFA’s Club Licensing and Financial Fair Play Regulations

Abstract
In the past European club football provided a textbook example of the “soft budget constraints phenomenon” initially described by Janos Kornai. As a remedy UEFA introduced the Club Licensing and Financial Fair Play Regulations (FFP). The Break-Even Requirement and the Fair Market Value Principle were the main elements of these regulations since their introduction in 2009 and first application in 2012. In 2015 the new concept of Voluntary Agreements was added. Which is the presumed rationale behind this major amendment of the rules? After analyzing the effects of The Break-Even Requirement and the Fair Market Value Principle, we propose that the new concept of Voluntary Agreements makes FFP less vulnerable to the allegation that it discriminates against true entrepreneurs wishing to develop mismanaged football clubs into sustainable businesses. Voluntary Agreements give such entrepreneurs more flexibility to invest, which would be of particular importance in environments where quality is only slowly remunerated by the football markets. The fact that not a single Voluntary Agreement has been signed until January 2020 is hard to reconcile with the allegation of discrimination.
Egon Franck

Backmatter

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