Cristina Batog, Ernesto Crivelli, Ms. Anna Ilyina, Zoltan Jakab, Mr. Jaewoo Lee, Anvar Musayev, Iva Petrova, Mr. Alasdair Scott, Ms. Anna Shabunina, Andreas Tudyka, Xin Cindy Xu, and Ruifeng Zhang
The populations of Central and Eastern European (CESEE) countries—with the exception of Turkey—are expected to decrease significantly over the next 30 years, driven by low or negative net birth rates and outward migration. These changes will have significant implications for growth, living standards and fiscal sustainability.
State-owned enterprises (SOEs) play an important role in Emerging Europe’s economies,
notably in the energy and transport sectors. Based on a new firm-level dataset, this paper
reviews the SOE landscape, assesses SOE performance across countries and vis-à-vis
private firms, and evaluates recent SOE governance reform experience in 11 Emerging
European countries, as well as Sweden as a benchmark. Profitability and efficiency of
resource allocation of SOEs lag those of private firms in most sectors, with substantial
cross-country variation. Poor SOE performance raises three main risks: large and risky
contingent liabilities could stretch public finances; sizeable state ownership of banks
coupled with poor governance could threaten financial stability; and negative productivity
spillovers could affect the economy at large. SOE governance frameworks are partly weak
and should be strengthened along three lines: fleshing out a consistent ownership policy;
giving teeth to financial oversight; and making SOE boards more professional.
This paper presents empirical evidence on the impact of competition on firm productivity. Using firm-level observations from the World Bank Enterprise Survey database, we find a positive and robust causal relationship between our proxies for competition and our measures of productivity. We also find that countries that implemented product-market reforms had a more pronounced increase in competition, and correspondingly, in productivity: the contribution to productivity growth due to competition spurred by product-market reforms is around 12-15 percent.
This paper examines the macroeconomic impact of migration on income convergence in the EU's New Member States (NMS). The paper focuses on cross-border mobility of labor and examines the implications for policymakers with the help of a general equilibrium model. It finds that cross-border labor mobility provides ample benefits in terms of faster and smoother convergence. Challenges, however, include containing wage pressures and better mobilizing and utilizing resident labor that does not cross borders.
Mr. Abdul d Abiad, Mr. Ashoka Mody, Ms. Susan M Schadler, and Mr. Daniel Leigh
The central challenges facing the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia as they work to catch up to advanced European Union (EU) income levels are discussed in this new book. Focusing on the region’s growth performance, and outlining two growth scenarios that illustrate the range of investment and productivity growth rates under the income catchup objective, the authors draw upon extensive resources to identify strengths and weaknesses.
This paper evaluates competitiveness in Slovakia and estimates the equilibrium real exchange rate for the koruna. Slovak wages and prices are found to have been relatively low even when adjusted for differences in relative income and productivity, suggesting an undervalued real exchange rate. However, recent rapid nominal appreciation has reduced most or all of this undervaluation and has brought the real exchange rate near or above equilibrium. The productivity-driven equilibrium real appreciation rate during 2005?09 is estimated at close to 3 percent per year but can be lower with the help of fiscal consolidation.
This book examines the opportunities and challenges involved for five central European applicants-the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia-in joining the European Union. The central focus is on the issues that policymakers in central Europe face as they craft macroeconomic and financial sector policies to help ensure growth that is both strong and sustainable, in a setting that may feature large and potentially volatile capital flows. It examines the competing pressures on these countries in the run-up to EU accession later, and monetary union.
Mr. Guorong Jiang, Mr. Peter Doyle, and Louis Kuijs
The paper discusses factors likely to shape the nature and pace of economic growth of five Central European transition countries now engaged in accession to the European Union. It is organized around the standard growth accounting framework. The paper reviews the growth of these countries since 1990 and draws lessons from the growth experiences of other regions since the 1950s, shedding light on long-term growth prospects for these countries. It discusses a set of growth calculations and highlights the key uncertainties in them.
This paper investigates the relationship between ownership concentration and enterprise performance in Ukraine. Using data on 376 medium and large enterprises, it finds that ownership concentration is positively associated with enterprise performance in Ukraine. The paper also finds that concentration of ownership by foreign companies and banks is associated with better performance than ownership concentrated by the domestic owners. Ownership by Ukrainian investment funds and holding companies does not have a positive effect on performance. In contrast to predictions by many observers of early transition, privatization methods had a lasting effect on ownership structure in Ukraine.
Poland stands out among transition economies as having experienced a relatively short and shallow contraction followed by sustained, vigorous growth. This paper examines various aspects of Poland’s growth performance from 1992 through 1998 at the macroeconomic level as well as across sectors and regions. It discusses the sources of Poland’s growth, showing that early in the decade, improved resource utilization was the paramount determinant, while factor accumulation, supported by rising foreign direct investment inflows, took on increasing importance in the later 1990s.