Eurasian Economic Perspectives

Table of Contents

1. Frontmatter

2. Public Economics

   1. Frontmatter

   2. Cooperation Model of Public Employment Services and Private Stakeholders: Evidence from Poland

      Ewa Rollnik-Sadowska

      Abstract

      In the era of aging of European society, there is a need to rationalize public expenditures. As a result, it is crucial to increase the efficiency of public policy. It significantly refers to labor market policy, as on the one hand, it is responsible for activation of the unemployed, passive resources, increasing employability and optimal usage of labor supply. On the other hand, public entities conducting labor market policy (mainly public employment services—hereafter PES) are obliged to efficient management of public funds. The effectiveness of PES is strongly determined by the engagement of employers in realization of labor market instruments. Cooperation of PES with relevant stakeholders is needed to build up alliances for active policy. There are different models of such cooperation, with variant levels of partnership, communication channels, and mutual services. The main objective of the article is to determine the perspective cooperation model of PES and private companies in Poland. The quantitative study was realized among large companies in Podlaskie province. It is one of the Polish peripheral regions characterized by lower than average labor demand, lower purchasing power, and higher unemployment rate.

   3. Public Expenditure on Social Protection in the Light of the Europe 2020 Poverty Objective

      Katarzyna Maj-Waśniowska, Katarzyna Stabryła-Chudzio, Agnieszka Wałęga

      Abstract

      The problem of poverty and social inequality has become extremely important as a consequence of the 2008 financial and economic crisis. Taking into consideration, the Europe 2020 targets lifting at least 20 million people out of the risk of poverty and social exclusion compared with 2008 it seems necessary to check to what extent the member states of the European Union are capable of meeting their imposed requirements. The main aims of the paper include: the description of the EU strategy concerning fight with the poverty and social exclusion, its objectives and the methods used in their implementation in the Member States, analysis of European measures of poverty and social exclusion in Poland against the background of European Union countries and correlation between the level of public expenditure on social protection and indicators of poverty contained in the Europe 2020 strategy. Panel data models (longitudinal data) were used in the research. EU countries will also be subdivided into relatively homogeneous groups in terms of selected poverty rates. The study finds that the variation in the level of spending on social protection was reflected in the degree to which individual EU countries have achieved benchmarks. A higher level of GDP per capita results in a reduction in poverty while an increase in the unemployment rate raises the level of the analyzed poverty rates.

   4. Evaluation of Finances Impact to Business Competiveness in EU Countries

      Dalia Rudyte, Jurgita Karaleviciene

      Abstract

      Public expenditure in different countries may have different economic effects as business competitiveness capabilities are more likely to be expressed by more than one factor. The aim of this article is to investigate the link of public expenditure within different field businesses with reference to statistical data. This chapter analyzes the effectiveness of allocation of public expenditure regarding the value of such costs, as well, the impact on the businesses competitiveness incensement. It can be concluded that public expenditure for economy is assigned to productive public expenditure, and however it is not directly reflecting the need for the increasing expenditure for businesses competitiveness. The premise, as well as, a conclusion can be made that the increase of economic expenditure does not always have the impact on specific countries companies’ competitive advantage in the increase.

   5. Is it Still Possible to Receive an Adequate Income from Pensions in the Era of Ageing Societies?—The Great Pension Gap Challenge in Europe

      Tomasz Jedynak

      Abstract

      With societies aging and pension gaps deepening, supplementary pension schemes are treated as the most suitable way of ensuring adequate benefits for pensioners. However, a significant question underlying this research has arisen: how much should one save over the course of his or her professional career to ensure the future pension gap is covered? The following study has two main objectives: to identify the size of the pension gap in five countries (France, Germany, Italy, Spain, and Poland) and to estimate the level of additional savings required to cover it. The study shows that the size of the future pension gap for the average worker in these five countries is between 19% (Italy) and 40% (Poland). Due to different socioeconomic and demographic conditions, the amount of monthly savings needed to cover this gap will vary significantly. In relative terms, fully financing the pension gap for the average worker in a base scenario requires savings from 12% (Italy) to 20% (Poland) of their gross salary. Apart from offering a base scenario, the chapter also includes a sensitivity analysis which considers different values of the applied model’s parameters.

   6. Occupational Pension Scheme in Poland

      Joanna Niżnik, Katarzyna Owsiak

      Abstract

      This chapter describes and analyses the structure and performance of the occupational pension system in Poland, highlighting its strengths and weaknesses. The chapter examines the demographic implications for supplementary schemes and such factors as a sharp increase in the number of people over 65, permanent changes in dependency ratio and low savings rates. The study assesses the recent development of the occupational pension schemes and discusses the key elements of the proposals of the mandatory occupational capital plans in Poland. The voluntary occupational plans in Poland are still in an initial phase of development and have good developmental prospects (only 3% of insured people are covered). The political processes that shaped the country-specific pension arrangements in 1999 had important implications for subsequent reform possibilities, but the presented reform proposals need further detailed elaborations.

   7. Comprehensive Assessment of Financial Safety of the States Taking into Account Social, Economic, and Shadow Indicators

      Nadezhda Yashina, Sergey Petrov, Nataliya Pronchatova-Rubtsova, Oksana Kashina

      Abstract

      In the knowledge-based economy, the issue of assessing the financial policy effectiveness and its impact on the level of socioeconomic development of the country and the population’s welfare is acute. Maximizing the effectiveness of financial policy is possible while ensuring financial safety of the country. Market management conditions create the existence of a shadow economy, which adversely affects the development and functioning of the global financial system in general and of each state. The purpose of the chapter is to conduct a comprehensive assessment of the financial safety of states on the basis of determining the socioeconomic position of the country considering the shadow economy and revealing its impact on the level of the population’s welfare. To determine the financial safety of states, a methodology has been developed for calculating the total standardized indicator for assessing the socioeconomic position of countries considering the shadow economy by means of specially created system of indicators. Approbation of a technique is carried out on a selection of 45 countries in 2015. Based on the developed technique, a rating of countries was built. It was revealed that the higher the country’s financial safety, the higher the population’s welfare.

3. Regional Studies

   1. Frontmatter

   2. Evaluation of the Interregional Cooperation Influence on Innovative Development of Russia

      Julia Dubrovskaya, Elena Kozonogova

      Abstract

      The aim of this study is to assess the importance of interregional cooperation for innovative development of economy. We have carried out our study on the example of Russian regions. In this work, firstly, the system of indicators has been determined describing the level of research, infrastructural and industrial potentials’ development for separate territories. Then, we calculated the integral indices of research, infrastructural and industrial potentials for these regions. Secondly, research, sociopolitical, and economic forces behind territories’ interaction have been estimated. This made it possible to measure the level of interregional cooperation of economic subjects applying the gravity model. Thirdly, the econometric model has been constructed so that to determine the influence of interregional cooperation on the territorial differentiation level. Fourthly, the influence of changes in the level of interregional differentiation on the innovative development of territories has been assessed. Our findings reveal high level of functional dependence of innovative development from efficient interregional cooperation.

   3. Demography and Flexibility: The Two Vital Issues for the European Union

      Aleksandrs Fedotovs, Oksana Sakalosh

      Abstract

      In recent years EU has faced a number of problems: “sanctions war” with Russia, migration crisis, Brexit, terrorism, growing euroscepticism and populism. The aim of the paper is to draw attention to a potentially overlooked fundamental reason for these problems: Europe’s demography. Research methods used include application of economic theory, analysis of EU official documents, statistical data and publications on European demography, author’s own calculations. We find that territorial extension of EU has been driven by need for markets and resources, especially labor. The findings indicate that now EU has to concentrate upon internal problems, pointing out natural increase in population as one of the crucial ones. Unless Europe regains ability to rely upon its own human resources, the problem of maintaining European national and cultural identity has no solution. The study also finds that the EU regional policy should be more efficiently used to reduce territorial disparities within the Union in order to slow down depopulation of poorer member states.

   4. Problems in Eurasian Container Supply Chains

      Katarzyna Anna Kuzmicz

      Abstract

      Transportation of goods exchanged between China and Europe is performed mainly in containers. Due to economic reasons, most of the containers are transported by maritime corridors. Within the frame of the Chinese initiative One Belt One Road (OBOR), often referred to as the New Silk Road (NSR), substantial investments are made to develop rail connections between China and Europe. In this paper, major challenges in container transportation on the route China-Europe on strategic, tactical and operational level are analysed. Among others they include infrastructure design, location problems, container handling, allocation of resources, service network design, routing and scheduling as well as adjustments deriving from dynamic changes in environment. The main focus is on empty container repositioning problem.

   5. Recent Developments in the Sustainability Field: Energy and Economic Indicators in the European Union in 2015

      Maria Alexandra Maassen

      Abstract

      For the past decade renewable energy represented a main source of technological and environmental progress in the European Union, as well as on a global scale. During these years the renewable energy installments have steadily built significant sources of energy of national economics, but also contributed to the progress for achieving energy dependence decrease and the EU 2020 sustainability strategy. In the present chapter the Pearson coefficient was used to determine connections between ten main economic and energy indicators from the European Union in 2015, which revealed development trends of the member states depending on the evolution of each indicator for the year mentioned. The study revealed significant correlations, such as the negative correlation between the energy dependence and the share of renewable energy consumption in gross final energy consumption. Other correlations of the chapter present further connections between economic and energy indicators, having a direct impact on the sustainability strategy of the EU and on the energy consumers. The relevance of the study lies in the analysis of the most recent available data regarding the selected indicators from the European Union, that will contribute to the future development of the economic landscape significantly depending on current renewable energy trends.

   6. Systemic Irregularities in the EU Fund Law: Context of Public Supervision over Public Procurement Market

      Jarosław Odachowski

      Abstract

      The issue of the obligation to comply with the public procurement legal regime in the European Union (EU) fund law is related to the requirement to follow all applicable laws in a case. Problem of violating these regulations is connected with an occurrence of individual (existence of the beneficiaries) and systemic irregularities (functioning of the management and control system). This publication is an attempt to analyse components of the notion of systemic irregularities in the context of a public supervision over the public procurement market. It will allow to show a complexity of systemic irregularities, their relation to individual ones and negative effects in the area of public procurements. These legal problems have a very important meaning for the whole process of implementation of EU funds, because there is a necessity to use all of the public resources in appropriate way in line with all binding provisions—while each irregularity violates these provisions. In the case of systemic irregularities, there is a significant problem—the source of these ones is placed in the system of management and control. It is worth mentioning that discussed problems are important for all EU State Members. Moreover, there are not many scientific publications on this topic. Methodology is connected with an analysis of legal regulations (EU and national law) and legal literature.

   7. New Public Management at Local Self-Government Institutions

      Dalia Rudyte, Monika Kontrimaite

      Abstract

      An increasing number of governments are using e-governance as a new form of communication with residents, information exchange, and accessibility with the goal of offering improved electronic services, improving quality of services, increased transparency, and cost reduction as traditional public services in today’s society do not meet citizen’s demands. E-governance is the use of information and communication technologies in the public sector to increase the public’s and interested parties’ interaction. Governmental websites are one of the key determents for public organizations to increase this interaction. Although there are enough explored conceptual access, technological innovation, to evaluate e-provision of services and the introduction of e-government, e-management of determinants is not yet understood. This chapter addresses the problems that arise when applying new public management at local self-government institutions. The actual situation and the options are compared.

   8. What Does Housing Price in Russian Regions Depend On?

      Liudmila A. Guzikova, Ekaterina V. Plotnikova

      Abstract

      The housing sector is one of the priority areas of national economy. Its development characterizes the level of well-being of the country’s population. The availability of housing for the population is determined based on the level of housing market prices. The objective of the study is to identify the factors which have a significant impact on the housing price. The conducted literary review confirms the relevance of this objective. The study used qualitative and quantitative approaches. The data were obtained from sociological survey and state statistics. As the result of the study it was determined that the main factors of the housing price identified by the use of quantitative and qualitative approaches are different. This allowed concluding that the image of the good housing the people have in thoughts, differs from the housing they pay for, purchasing it in the market.

   9. Toward a European Energy Union: Financial Ratio Analysis of the EU Energy Sector

      Djula Borozan, Dubravka Pekanov Starcevic, Mirjana Radman Funaric

      Abstract

      In order to achieve the European Union energy objectives, namely cutting down greenhouse gas emissions, increasing energy consumption from renewables, and improving overall energy efficiency, the energy sector needs to be competitive, reliable, and keep track of changes in the world energy market. Particularly in the last decade, this sector has been facing significant changes, which have affected the development of the energy companies’ profiles and their financial performance. This chapter aims to evaluate the financial performance of the EU energy sector in order to deepen our understanding of its risk and return, as well as to provide information useful for making investment, credit, policy or regulatory related decisions. This is achieved through ratio analysis of the EU energy companies with the largest market share in each country observed for the period 2005–2015. Financial ratios indicate that the EU energy sector has been affected adversely by turbulent changes in economic, political, and regulatory conditions. The obtained results point out that new energy reforms are needed in order to ensure new investments required for building a low-carbon economy, competitive facilities for energy production and distribution, as well as for achieving sustainable financial efficiency and effectiveness in companies’ operation.

   10. Capacity of Industrial Structure: The Case of Eastern and Central Europe

       Leon Olszewski, Pawel Dobrzanski, Elie Chrysostome

       Abstract

       Changes after 1989 enabled Central and Eastern European (CEE) countries to start processes of political and economic transformation. The Washington Consensus was adopted by post-communist economies in early 1990s. However, reforms were introduced by CEE countries with different speed. The chapter outlines the philosophy and foundation of transition, in which structural changes play an essential role. In the second part, the analysis focuses on structural changes in industrial sectors. The chapter also examines the capacity of industrial structure, as industry is one of the key sectors for CEE countries. Many studies emphasized a significant effect of industry changes on long-term economic growth. The chapter focuses on the relation between structural changes in industry and economic growth/competitiveness. Due to the complexity of the topic, the research requires usage of diverse methodological approaches. Main method is a comparative analysis using data collected from Eurostat Database, OECD Database, and Global Competitiveness Report. The analysis shows that Visegrad countries are doing quite well in the region; however, they are still behind other European Union countries. They need to explore ways to transition to a knowledge-based economy. To achieve it they should focus on high-tech production and improve the business sector’s capacity for innovation, labor market efficiency, and strengthen business sophistication. This research can be used by the government agencies for industrial development policies.

4. Finance

   1. Frontmatter

   2. How Do Russian Construction Companies Use Debt Financing?

      Liudmila A. Guzikova, Ekaterina V. Plotnikova, Maria N. Zubareva

      Abstract

      Construction industry largely determines the development of society and its productive forces. Significant part of construction works in Russia is carried out by small construction companies. The success of companies’ economic activity is ensured by the effective use of capital formed by the use of own and debt sources with different costs. The capital structure is the ratio of the financing sources, which have different accessibility for different companies. The capital structure directly affects the company’s operation indicators and financial effectiveness. Proper use of debt financing should allow increasing the effectiveness of using own capital. The objective of the study is to investigate how small Russian construction companies use leveraged capital and the opportunities to increase their effectiveness by its use. As a result, the strong debt dependence of small construction companies was identified. This fact promotes high level of financial risk for both the companies and their counterparties. Companies which use short-term sources are more at risk, as this type of financing is more sensitive to economic situation in the country.

   3. Estimation of “Dark Matter” in the External Sector of the United States After the Outbreak of the World Economic Crisis in 2009

      Konrad Sobanski

      Abstract

      The aim of this chapter is to estimate the “dark matter” assets in the external sector of the United States after the outbreak of the world economic crisis in 2009. The author conducts a statistical analysis using a time series on the balance of payments (BoP) and international investment position (IIP) data for the United States and a group of 19 developed economies. The study reveals that the United States is a privileged economy with respect to foreign income on international investments. The rates of return on its foreign assets are relatively higher, and the costs incurred on its foreign liabilities relatively lower, as compared with the benchmark group of developed countries. Based on prevailing income differentials substantial “dark matter” net assets in the external sector of the US economy are estimated. Consequently, the actual net IIP deviates significantly from that officially reported. Recognizing such “dark matter” leads to the conclusion that the United States is a foreign creditor, not a debtor.