Eurasian Economic Perspectives

Table of Contents

1. Frontmatter

2. Regional Studies

   1. Frontmatter

   2. Residential Real Estate in the Municipalities Located in the Naturally Valuable Areas in Poland

      Alina Kulczyk-Dynowska, Katarzyna Przybyła

      Abstract

      This chapter presents the selected aspects of residential real estate resources in 117 municipalities linked with Polish national parks. The necessity of meeting the living needs makes this type of real estate particularly important. As a result of interactions occurring between the residential real estate and its socio-economic environment, the selected features characterizing demography and the tourist function of the explored municipalities were discussed. The selection of territorial units was based on the criterion of establishing a national park in the area of a municipality. The research period covers the years 2005–2015. The purpose of this chapter is to attract attention to the situation of local communities residing in the areas covered by the highest rank of area forms of nature protection.

   3. Contemporary Trade Regionalism on the Example of Free Trade Area of the Asia-Pacific (FTAAP)

      Sebastian Bobowski

      Abstract

      The Free Trade Area of the Asia-Pacific (FTAAP) is a trade framework proposed during the meeting of Asia-Pacific Economic Cooperation (APEC) in Beijing in 2014, however, proposal was given initially in Hanoi in 2006. It may be considered as manifestation of mega-regionalism in trade, an attempt to set the rules of trade in the twenty-first century at the expense of multilateralism under the auspices of WTO, but also to overcome noodle bowl effect in the Asia-Pacific region. The main objective of the chapter is to study the project of FTAAP, using the concepts of trade regionalism and mega-regionalism, its genesis, economic, and political implications. As indicated by author, next to geographic scope of FTAAP, there is a concern resulting of the fact, that the concept of creating a free trade zone, a de facto mega-regional grouping, does not fully coincide with the concept of regional liberalization based on regulations promoted over the years by APEC and WTO rules. The same applies to the concept of open regionalism underlying the APEC. Author concluded that a hybrid approach and multitiered system might be a solution to enable individual states to proceed with convergence toward higher standards and gains, considering diversity of APEC member states. Alternatively, FTAAP could be made as an evolutionary agreement, while not excluding the possibility of the US membership inside a single framework with China.

   4. Financial Vulnerability of NGOs in Southeast Anatolia and Mediterranean Regions

      Murat Önder, Emrah Ayhan

      Abstract

      The availability of financial resources for NGOs is vulnerable to external and internal challenges. Therefore, it is debatable whether current financial resources of NGOs are sufficient or not. NGOs face great challenges to balance and diversify their financial resources to decrease their financial vulnerability to pursue their social missions and organizational goals. This study provides an empirical analysis of financial vulnerability of NGOs in Turkey with the case of Youth NGOs in Southeast Anatolia Region (n = 103) and Mediterranean Region (n = 100) of Turkey. The data was gathered from a semi-structured and detailed survey with 280 items among 203 representatives of Youth NGOs, and discussions and observations during 5 one-day workshops in both regions organized by the Turkish Ministry of Youth and Sports. The revenue concentration of Youth NGOs as an indicator of financial vulnerability was operationalized by revenue concentration index, which is similar to Hirschman–Herfindahl Index (HHI). NGOs with revenue concentration index of one (1.00) are considered to have lower level of revenue diversification, while NGOs with revenue concentration index of zero (0.00) are considered to have higher revenue diversification. The results of calculations were coded to test possible interactions and relations between dependent variable and independent variables by using Ordinary Least Squares (OLS) regression method. The findings show that number of revenue streams, tenure, size, and managerial competence have positive influence on reducing financial vulnerability of Youth NGOs.

   5. Structural Changes on Polish Housing Market: Has the Market Returned to the Level Before the Crisis?

      Barbara Batóg, Iwona Foryś

      Abstract

      Housing market in Poland has undergone several development phases and the fundamentals for new investment arouse. The Polish housing market has become a new research area. The aim of the chapter is to answer the question whether individual local markets with the same dynamics have been influenced by individual development factors and whether the structure of investors has changed over time. In the analysis, the multidimensional spatial and temporal data on four kinds of apartments completed in period 1995–2017 in 16 Polish regions (voivodships) were used. The stochastic shift-share analysis SSANOVA was applied in order to find the common pattern and differences between regions and sectors. The study results confirm the hypothesis about spatial diversification of the market. The introduction of housing environment variables to the analysis strengthens the position of those Polish voivodships that have been traditionally thought to be economically the weakest but have strong location potential.

3. Macro Economics

   1. Frontmatter

   2. Effect of GDP, Energy Consumption, and Material Consumption on Waste Generation: The Case of EU-28 Countries

      Richard Gardiner, Petr Hajek

      Abstract

      Controversy encompassing economic growth and waste generation into the economic system–environmental implication nexus usually jolts many experts, academic elites, policy makers, and others out of belief. This is because hazardous waste has detrimental effect on health and environment. The leading school of thought argues that economic growth creates much waste and thus exacerbates problems with environment. The contribution of waste into the economic system can also be ascribed to increasing material consumption. Hence, this chapter focusses on the causal relationship among economic growth, energy consumption, and material consumption on waste generation. Here we used panel cointegration tests to demonstrate that cointegration is present among total waste, GDP, energy consumption, and material consumption. The results of panel vector error correction models indicate that there is a unidirectional short-run effect running from material consumption to waste generation. In addition, there is a unidirectional long-run Granger causality running from GDP, energy, and material consumption to waste generation into the economic system. However, no short-run causality running from GDP and energy consumption to waste generation was observed. This implies that waste generation will not change even if GDP and energy consumption increase suggesting that the EU-28 countries represent a successful case of waste management.

   3. A Comparative Global Overview for Flat-Plate Solar Collectors (FPSCS) in G-7 and G-20 Countries

      Hakan Acaroğlu, M. Celalettin Baykul

      Abstract

      This study conducts a comparative global quantitative analysis about solar thermal technological systems for developed and developing countries. Flat-plate solar collectors (FPSCs) supply hot water to a storage tank for use. It also supplies hot fluid at much higher temperatures for industrial processes. So, they are introduced and used in our analysis for getting realistic practical life results. The market structure and the government policies are taken as a reference for the comparison. The G-7 and the G-20 countries; along with the European Union (EU) are chosen for observing the differences in markets and policy trends of the solar energy systems in the period between 2005 and 2015. A significant convergence is obtained for the developing countries about catching up to the developed ones on a chosen reference. However, there are critical precautions and strategies that the G-20 countries should consider for sustainable improvements on these technological, environmentally friendly, and energy saving systems. Our study aims to figure out and displays these critical and crucial marketing and policy decisions as a guideline for the demand, the supply, and government sector sides of the developing countries. In the application, we measure the effectiveness of those economic policies for each country by creating a policy development index level, which attains the index values numerically referring the induced renewable energy policy.

   4. Cluster Analysis of Sustainable Development Goal Indicators in the European Union

      Magdaléna Drastichová

      Abstract

      Sustainable development (SD) is a fundamental objective of the European Union (EU) enshrined in its primary law. The EU Sustainable Development Strategy (SDS) was adopted in 2001 and subsequently, its external dimension in 2002. The EU Sustainable Development Goal (SDG) indicator set replaced the EU SDS in 2017. Selected indicators of this set were used in a cluster analysis to classify the sample of the 28 EU countries and Norway according to their performance in sustainability. In the selection of indicators, priority was given to the indicators reflecting decoupling and the indicators related to the climate and energy targets, along with the important representatives of the economic, social and institutional dimensions of SD generally. The Hierarchical Cluster Analysis (HCA) was applied to create four clusters using the indicator values in the initial year (primarily 2007) and the most recent year (predominantly 2016). The changes in the allocation to clusters also reflect the path of SD in the countries investigated.

   5. An Investigation of Turkey’s Competitiveness on Different Products Groups in Automotive Sector via Revealed Comparative Advantage Index

      Semanur Soyyiğit, Kiymet Yavuzaslan

      Abstract

      Competitive power in international trade is one of the most desirable targets of countries in today’s globalized world. Thus, the importance of international competitiveness that has been a fundamental issue since the rise of the international economic theory is increasing for various products. Within this scope, it is so prominent to analyze product groups in which countries have comparative advantages from past to present in order to detect the problems and to determine the existing situation. In this context, with reference to the importance of countries in the existing global structure, investigation of comparative advantage of Turkey in the production of motor vehicles constitutes the subject of this study. Revealed Comparative Advantage (RCA) index, which has been suggested by Liesner first and then developed by Balassa, is used to determine the comparative advantage of Turkey in the production of motor vehicles from 1989 to 2016. Findings indicate that new competitors exist in automotive sector and that the competitiveness of Iran and the Eastern European countries will be determinant in the medium- and long-term position of the Turkish automotive industry in global markets.

   6. Intra-industry Trade Development and Adjustment Cost: Testing Smooth Adjustment Hypothesis for the Estonian Labor Market

      Grigori Fainstein

      Abstract

      In this chapter we analyze the trade expansion impact on labor market adjustment cost. The main aim of the investigation was to test the smooth adjustment hypothesis (Intra-industry trade expansion leads to significantly smaller labor adjustment costs). The empirical equation analyses the impact of intra-industry trade development on the Estonian sectoral employment change as an empirical proxy of labor market adjustment cost. For this purpose we used panel data for trade, employment, and set of control variables for 25 production sectors and years 2005–2015. In the analysis we apply a dynamic GMM-SYS model. The results obtained did not support the given hypothesis for Estonia in years under consideration. We also found a negative relation between sectorial change in labor productivity and employment. According to our results increasing competition due to trade expansion was not an essential factor of labor adjustment for Estonia.

   7. Underemployment Among Educated Poles

      Anna Bebel, Maria Piotrowska, Marek Kośny

      Abstract

      This chapter presents the issue of underemployment affecting highly educated Poles. It analyzes the extent of underemployment in the Polish labor market and its effect on such factors as income stability, job satisfaction, or life satisfaction. The gender aspect of underemployment (whether women are more likely to be underemployed than men, or vice versa) is also analyzed.

      In the paper, data from both primary and secondary sources were used, and statistical methods were applied, i.e., descriptive statistics and OLS regression models. In contrast to unemployment among persons with higher education, which is currently negligible in Poland (with the exception of a specific group of graduates entering the labor market), underemployment constitutes a significant issue. More than 15% of educated Poles would like to work more hours per week and more than 40% work below their level of qualification. Underemployment brings negative consequences for employees, such as lower income, lower financial stability of the family, or lower satisfaction from work and life.

4. Investment and Risk Management

   1. Frontmatter

   2. A Factor Model for Country-Level Equity Returns

      Adam Zaremba

      Abstract

      We offer a new three-factor asset-pricing model for country equity returns. The model accommodates a broad set of country-level cross-sectional anomalies better than the popular CAPM, three-factor model, and four-factor model. Furthermore, it fully explains the performance of other models’ factors, while the standard models are not able to explain the alphas of their factors. The new model relies on the country-level portfolios formed based on the EBITDA-to-EV ratio and on skewness-enhanced momentum. These factor portfolios provide reliable and robust sources of return, and their performance is consistent with the behavioral finance mispricing interpretation. This study is based on the accounting and price data from 78 country equity markets in 1995–2015.

   3. Earnings Quality and Market Efficiency: Evidence from Romanian Capital Market

      Mihai Carp, Constantin Toma

      Abstract

      This chapter analyzes the role of the financial information quality in the streamlining of the Romanian capital market. The study is carried out at the level of the entities that are listed on the regulated section of the Bucharest Stock Exchange, the sample being created by excluding the entities with financial activities. The use of the accounting criteria for the evaluation of the accounting data quality, respectively, earnings quality, earnings smoothing, and earnings predictability has allowed the identification of a significant qualitative level of reports issued by the entities that are part of the chosen sample. By introducing, as control variables, of the specific of accounting standards based on which the financial statements were issued we once again confirmed the robustness of the reached results. The Romanian capital market is characterized by a low level of performance, a featured that is estimated through the Jensen index, as a result of the difference between the investors’ expectations and accomplishments, regarding the yield of the owned titles. The tested determinist relationship between the indicators of the two informational dimensions (accounting and capital market) identifies a significant influence of the quality of the accounting on the efficiency level of the capital market.

   4. A Tale of Two States: An Application of a Markov Switching Model to Anomaly Returns

      Adam Zaremba, Anna Czapkiewicz, George D. Kambouris

      Abstract

      The time-varying profitability of equity anomalies calls for a useful tool to select the winning investment strategies from the loser investment strategies. We offer a new framework for dynamic asset allocation across the anomalies based on a Markov regime switching model. Using a sample of eleven equity anomalies from the US equity market from the years 1963 to 2016 we demonstrate the predictability of their performance. The anomalies forecasted to be profitable significantly outperform the remaining anomalies by 0.15–0.43% per month. The results are robust to many considerations.

   5. Influence of the Correlation Coefficient on the Risk of the Exchange Option

      Ewa Dziawgo

      Abstract

      The chapter illustrates the properties of the exchange option: the definition, construction, and functioning of instrument, instrument’s construction, types options, payoff functions, the pricing model, the effect of the correlation coefficient on the option price and value parameters: delta, vega, and theta. These parameters are the very important risk measures. The analysis of the variation in the value of risk measures provides information on the impact of changes of specific factors on the option price. The objective of this chapter is analysis of the influence of a change in the value of correlation coefficient between the return rates of underlying instruments on the variation in the option’s price and values of the risk measures. Many Polish firms running the businesses on Turkish and Romanian markets. So, the empirical research existed in this chapter are illustrated based on a simulation of valuations of currency exchange options of Turkish Lira (TRY) into Romanian Leu (RON).

5. Economics of Innovation

   1. Frontmatter

   2. Evaluation of Creative Industries’ Economic Impact in the EU Countries

      Ugne Daubaraite, Grazina Startiene

      Abstract

      For the last 20 years, creative industries (CI) have been experiencing increasing attention from both academia and policymakers alike. Capable of creating jobs, invigorating cities and regions, cultural and social life, contributing to the increase in value added, exports and quality of life, numerous researches proved CI to have impact on national economy. However, CI impact should not be limited to superficial analysis of static data. CI impact on national economy is best disclosed in comparison to other countries and the aim of this research is to analyse economic CI impact by running an empirical research in EU countries in 2008–2014 and taking into consideration CI impact on employment, added value and exports. We conclude there are three CI impact directions, namely economic, sociocultural, and environmental impact areas and verify that CI is an influential sector that holds impact on various areas of national economy.

   3. Disruptive Innovation and Dynamic Capabilities Approach: Sensing, Seizing, and Transforming

      Oscar Mauricio Cruz-Sanchez, Michael Hernando Sarmiento-Muñoz, Oscar Fernando Castellanos Dominguez

      Abstract

      Disruptive innovation (DI) has been widely discussed in academic and business environments. It has been defined as a product or process that changes the basis of competition, offering valuable attributes for emerging segments ignored by the mainstream market. On the one hand, DI requires the firm ability to identify and take advantage of the opportunities offered by new markets and new technologies in highly changing and volatile environments. On the other hand, dynamic capabilities portray the firm ability to achieve new and innovative ways of competitive advantage in highly volatile environments through integration, building, and reconfiguration of a set of internal and external competences. The process of disruptive innovation is related to the dynamic capabilities approach in its application and relevance to the context of disruption. They are addressed through an analytical–descriptive perspective. The literature review regarding both dimensions—dynamic capabilities and disruption theory—was analyzed by capturing foundations and characteristics in order to integrate them as a powerful way for disruption. The methodological tools used were disruptive innovation attributes, dynamic capabilities approaches and characteristics, and two dimensions: articulation and integration. All of them are qualitative. Based on the findings, it has been established that a powerful way to catalyze disruption is an iterative and no lineal process of: sensing—disruptive opportunities identification; seizing—deploying disruptive strategy; and transforming—organizational asset reconfiguration.

6. Law and Regulation

   1. Frontmatter

   2. Formation of Contracts via the Internet

      Doruk Utku

      Abstract

      The ability of sellers and suppliers to communicate with customers has prospered with the increase in communication methods, especially the wide usage of the Internet. Sellers and suppliers are intensely benefiting from the opportunities created by information technologies for marketing their goods and services to targeted customers. Buyers can easily attain goods or services produced anywhere and save time by quickly purchasing them through the Internet, while staying at home or office. However, contracting by electronic communication causes new challenges to the traditional legal principles of contract formation that are essentially based on oral or old fashioned paper contracts. This chapter presents the legal framework of electronic contracting from a comparative law perspective and focuses on some specific issues, which are subject to discussion among legal scholars, like the legal aspects of electronic contracting methods, communication of assent in digital environment, and the legal effects of displays in online shops. In conclusion, a critical review is presented of the discussions about instantaneousness of e-mail communication, viewpoints that are in favor of nonbinding legal effects of the displays in online shops and necessity of the concept of “electronic agent.”

   3. Restraint of Trade Clauses in Commercial Agency Contracts: A Comparative Perspective

      Argun Karamanlıoğlu

      Abstract

      Commercial agency is an important concept in domestic and international trade. Commercial agency is a viable solution for merchants who would like to extend their network of sales and service while cost of a commercial agent is usually less than hiring sales personnel or doorstep salesmen or opening up a branch in a different location. On the other hand, it is always easier and less costly to promote their goods and service in a foreign country for exporters. Several problems may arise after termination of commercial agency contracts. One of these problems is commercial positions of principal (merchant) and commercial agency after termination of contract. Principal has a certain interest in protection of his goodwill and clients while (former) commercial agent may still engage with clients of his (former) principal either on his own account or as a commercial agent of another opponent of (former) principal. Restraint of trade clause in commercial agency contracts can be defined as noncompetition agreements after termination which obliges (former) commercial agent not to compete with (former) principal. Legal provisions regulating restraint of trade clause in several different legal systems are going to be analyzed in our study.

   4. Equalization Demand of the Agent and Its Importance in Business Law

      Esra Hamamcioğlu

      Abstract

      One of the most important consequences of the agency contract (commercial agency contract) in terms of its termination is the equalization demand of the agent. After termination of agency contract, the agent may request a reasonable equalization demand if he/she has brought the principal new customers or has significantly increased the volume of business with existing customers. Thus, the principal continues to derive substantial benefits from the business with these customers. Equalization demand of the agent (commercial agent) is regulated on an equitable basis. As of this nature, equalization demand of the agent carries a counter-execution nature for the customer portfolio (goodwill) which the agent acquired and the principal may benefit on its own, depending on the termination of the agency contract that establishes continuing obligation. In this respect, the equalization demand does not have the characteristics of compensation theoretically. However, compared to similar provisions, Turkish Commercial Code Article 122 has some differences and it may also need to be amended to clarify some issues. Objectives of this study are to determine the legal nature, conditions, and calculation of the equalization demand. Furthermore, scope of application of this claim includes other contractual relations giving similar monopoly rights unless it is contrary with fairness.

   5. Commercial Agency Contract and Comparison with Similar Contracts (Exclusive Distribution, Franchising, Brokerage, and Commission Contracts)

      Özge Uzun Kazmaci

      Abstract

      The contract between the merchant and the commercial agent is a commercial agency contract. This contract creates a continuing obligation for each party. Commercial agency contract is not defined in any Act but commercial agent is defined in Turkish Commercial Code. However, the provisions regarding commercial agency in Turkish Commercial Code are not sufficient. Therefore, it is important to compare commercial agency contract with similar agreements in order to determine the legal nature of the contract and provisions to be applied to the contract in case of a legal conflict. Agency contracts have some differences and similarities with similar contracts such as exclusive distribution, franchising, brokerage, and commission contracts. Agency contract, unlike brokerage and commission, is a permanent contract. Recognition of monopoly in an agency contract is not a necessary element. However, it is necessary to recognize the monopoly on exclusive distribution contract.

   6. Women as Perpetrators of Economic Offences in France

      Joanna Brzezińska

      Abstract

      Women committed 19,696 economic offences in France in 2003. Among them, 16,755 cases constituted fraud, and 2941 financial offences. In 2008, a considerable increase in the level of crime rate among French female perpetrators was recorded. According to the statistics, women committed 25,364 economic offences (an increase by 28.8% over the period of 6 years), from which 20,733 constituted fraud and 4631 financial offences. The aim of this chapter is to study two issues. The first objective is to identify what factors determine the increase in economic offences committed by women in France and indicate potential methods of reducing the phenomenon studied. The second objective is to determine whether the upward trend is constant or whether it is currently subject to continuation. For this purpose, the research paper shall present compilations of statistics showing the analysis of dynamics of offences committed by women and indicating particular categories of economic offences (particularly fraud and financial offences). It can be deduced that such prompt modification in female perpetrators’ behaviour results from social and economic changes that intensified in France in the several past decades.

   7. Criteria for the Proper Management of Public Property and the Control of Public Procurement

      Jan Gola

      Abstract

      The aim of the chapter is to indicate how the criteria of proper management of public property affect the control over granting public contracts and the consequences of their non-application. This chapter deals with the control of public procurement in the European Union, which is directly related to the issue of proper management of public property. The entity granting the public contract should take into account criteria such as legality, cost efficiency, purposefulness, and reliability. The entire area of exercising the property rights of the state and other public and legal entities by public authorities is subject to control in these areas. It should be pointed out that these should be directives for the authority that grants the contract to act in the management of public property in the public interest. Moreover, it should be stressed that proper management of public property is carried out by a number of provisions of public economic law, which set out best practices for public authorities in this area and constitute a reference point for control and supervision activities undertaken with respect to appropriate bodies possessing public property. The criteria indicated have an impact on savings in the spending of financial resources, which are the responsibility of the public sector in a broad sense, and on the creation of foundations for the use of economic shares by entrepreneurs on the public market. In the chapter, a research formal-dogmatic method and a functional method of analysis were applied.

   8. The Jurisdiction of the European Commission and National Competition Authorities in the Control of Legal and Economic Aspects of Concentration Between Undertakings

      Wojciech Szydło

      Abstract

      The objective of considerations raised within the chapter is to carry out an analysis of premises, principles and effects of the process of concentration of entrepreneurs who conduct their economic activity in member states of the European Union. Concentration of entrepreneurs is a complicated economic process which consists of the takeover of assets and liabilities of entrepreneurs who participate in it or else, the performance of: merger of enterprises, acquisition of an enterprise, joint venture, as well as pursuant to a purchase by a given entrepreneur of partial property of another entrepreneur. It thus causes substantial effects, both in legal and economic terms, for individual enterprises and for the common market. The chapter contains deliberations which are targeted at presenting the uniquely critical role played by proper preparation of entrepreneurs in the conduct of planned in the future concentration process both from the legal–organisational perspective and the economic one. The chapter furthermore contains an analysis, carried out on the basis of the provisions of Council Regulation (EC) on the control of concentrations between undertakings; jurisdiction procedure over the process of entrepreneurs’ concentration, carried out by the European Commission (EC) and national organs of competition of individual member states. The general interpretation principle in accordance with which the EC competence jurisdiction is related to the exclusive jurisdiction of concentration control bearing a community dimension will be subjected to an analysis, while national competition organs may investigate concentrations without the said community dimension. At the same time, the chapter will discuss and analyse the exceptions from this general rule regarding the division of competence jurisdiction amongst the EC and national competition organs, including in particular situations where concentration of entrepreneurs of non-community dimension is taken over by the EC for assessment and cases where concentration of community dimension is subjected to assessment in its entirety or part by national competition bodies. Deliberations are completed by an analysis of substantive and economic criteria of control of concentrations, carried out by the EC and national competition organs. While conducting deliberations in the above-stated areas of interest a research method consisting of an analysis of provisions of the European Union Law, achievements of the doctrine and EU court judicature having a substantial impact on the practice of the carried out concentration process was applied.

   9. Public Tender as a Form of Selection of the Electricity Supplier for the Residents of the Commune

      Przybylska Monika

      Abstract

      The chapter focuses on the performance of public tasks by communes in the scope of ensuring energy supply to its inhabitants. This issue is based primarily on the EU concept of the internal market. EU legislation has obliged EU member states to open up the electricity market to competition. In this respect, the provisions of EU directives have enabled electricity consumers to choose their electricity supplier. Communes are consumers of electricity. They purchase it in order to perform the tasks assigned to them in the scope of satisfying the inhabitants’ needs in the field of electricity. Since the commune is a public entity, it is obliged to purchase energy on the basis of transparent criteria, i.e. within the framework of a public procurement procedure. The aim of the chapter is to indicate which criteria should be taken into account by the commune when choosing the energy supplier, with the assumption that it should take into account not only price but also non-price factors, especially environmental protection during the generation of energy by energy companies. In the course of work on this chapter, the dogmatic method was used through the analysis of EU and Polish legislation.

   10. The Most Economically Advantageous Tender in the Public Procurement System in the European Union

       Bobowski Sebastian, Gola Jan, Przybylska Monika, Szydło Wojciech

       Abstract

       The aim of the chapter is to list the features of the most economically advantageous tender and to stress its significance in the public procurement procedure. The chapter concerns selection of most economically advantageous offer in the area of public procurement law of the European Union. The awarding entity may find the tender the most economically advantageous if they point out the best quality/price ratio, taking into account quality, ecological or social aspects of a given object of the contract. The price or the cost of the contract should also be taken into consideration in the evaluation. Thus the price-related criterion is essential whereas the quality of offered goods and services is of the greatest significance so that the most economic tender was the most economically advantageous from the point of view of the awarding entity. Defining the most economic tender, the authors of the chapter point out at general methods of selecting it on the basis of objective reasons economic calculation and other methods of calculating it. Moreover, they present legal regulations in selected Member States as regards criteria of selecting the most economically advantageous tenders in the public procurement procedure implementing EU directives. Formal and dogmatic method and the ratio analysis have been used. The case study has also been presented.