Transition Countries

In 2006, Mexico became the first transition country to transfer part of its public-sector natural catastrophe risk to the international reinsurance and capital markets. The Mexican case is of considerable interest to highly exposed transition and developing countries, many of which are considering similar transactions. Risk financing instruments can assure governments of sufficient post-disaster capital to provide emergency response, disaster relief to the affected population and repair public infrastructure. The costs of financial instruments, however, can greatly exceed expected losses, and for this reason it is important to closely examine their benefits and alternatives. This paper analyzes the Mexican case from the perspective of the risk cedent (the Ministry of Finance and Public Credit), which was informed by analyses provided by the International Institute for Applied Systems Analysis (IIASA). The rationale for a government to insure its contingent liabilities is presented along with the fiscal, legal and institutional context of the Mexican transaction. Using publicly available data, the paper scrutinizes the choice the authorities faced between two different risk-transfer instruments: reinsurance and a catastrophe bond. Making use of IIASA's catastrophe simulation model (CATSIM), this financial risk management decision is analyzed within the context of a public investment decision. r

Farms in Tajikistan currently face a severe debt crisis. This is part of a more general problem, as many transition countries in the Commonwealth of Independent States (CIS) have been struggling with farm debt overhangs. Debt resolution discussions have been ...

The paper examines the effect of inflation on growth in transition countries. It presents panel data evidence for 13 transition countries over the 1990-2003 period; it uses a fixed effects panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeneity. The results find a strong, robust, negative effect on growth of inflation or its standard deviation, and one that appears to decline in magnitude as the inflation rate increases, as seen for OECD countries. And the results include a role for a normalized money demand in affecting growth, as well as for a convergence variable, a trade variable and a government share variable. Robustness of the baseline single-equation model is examined by expanding this into a three-equation simultaneous system of output growth, inflation and money demand that allows for possible simultaneity bias in the baseline model. JEL classifications: C23, E44, O16, O42.

Building on institutional theory and on existing literature regarding barriers to private businesses in transition countries, this paper examines the inter-related effect of nineteen factors grouped into four types of barriers (formal, informal, environmental and skills) on existing small- and medium-sized enterprise operations in Lithuania. Regression analyses on a sample of 332 business owners indicate that perceived formal barriers are associated with perceived informal barriers such as corruption and perceived environmental barriers are associated with perceived skill barriers such as management problems. The transition effect based on business start-up date was not found to play a significant role.

This review reports on why is there still rabies in the world?-an emerging microbial and global health threat. Rabies remains an important public health issue in the world. While rabies has been controlled throughout most of the developed world, it remains a significant burden in developing countries, particularly in Africa and Asia. Although industrialized countries have been able to contain recent outbreaks, many resource-limited and transitioning countries have not been able to react adequately. Although, a vaccinepreventable disease, the annual number of human deaths caused by rabies is estimated to be 35,000 per year, mostly in Africa, Asia and Latin America. Though, dogs have been identified as being primarily responsible for the transmission of rabies in human and other domestic animals, known pathogenesis and available data suggest that all or nearly all cases of human rabies attributable to bats were transmitted by bat bites that were minimized or unrecognized by the patients. One of the key for controlling rabies is to focus on the animal reservoir. The high incidence of rabies in some country led to numerous concerns attributed to a potential carrier-dog phenomenon, undocumented transmission of rabies virus from wildlife to dogs, counterfeit vaccines, vaccine mismatching and seroconversion testing in patients after their completion of postexposure prophylaxis. However, the number of reported human rabies cases, particularly in Africa, greatly underestimates the true effects of the disease. Contributing factors include failure to seek treatment at healthcare facilities, failure to make a laboratory diagnosis and failure to report the disease. The disconnection between human and dog rabies in developing world reflects a lack of awareness of the concept of one medicine, or health without regard to species, in approaches to rabies control in the public health system. Another factor contributing to the endemicity of rabies in the world could be attributed to low vaccine coverage. Although there are many factors that contribute to the epidemic or endemic nature of rabies in the world, the single most important factor is the failure to immunize domestic dogs, which transmit rabies to humans. Regional and local disease resurgence occurs, due in part to a combination of political and economic instability, environmental perturbations and shifting government priorities. Indeed rabies is a widely distributed zoonotic disease of major public-health importance and an emerging as well as re-emerging microbial and global health threat but a preventable problem. Surveillance strategies for rabies and other rabies-ralated viruses in the world, particularly Africa must be improved to better understand the epidemiology of this virus and to make informed decisions on future vaccine strategies.

This paper investigates whether an Okun-type relationship between output and unemployment is taking hold in formerly planned economies as they move towards the market. Using a first-differences variant of Okun's Law, we test for its presence in 25 transition countries divided into groups of "reform leaders" and "reform laggards." For leaders, represented by the 10 European Union (EU) accession countries, Okun's Law is detected in both 1991-94 and 1995-2000 periods. For laggards, represented by the remaining group, it is present only for the later period and only when countries affected by wars are removed from the sample. A comparison of unemploymentoutput elasticities and unemployment levels in EU candidates and EU members themselves indicates that their labor markets might be converging.

The policy prescription for solving environmental problems of developing countries and countries-in-transition (CIT) is slowly getting polarized into two viewpoints. One group of researchers and policy advocates including multilateral organizations upholds extensive use of market based instruments (MBIs) in these countries. The other group argues that institutions need to be built first or the policy makers should select the incremental or tiered approach taking into account the existing capabilities. The group also insists that the financial, institutional and political constraints make environmental regulation in these countries more problematic than in industrialized countries. In the short-run, the immediate needs of the developing countries can be addressed effectively by learning lessons from the difficulties encountered by a few successful cases and accordingly evolving an appropriate policy instrument. In this paper an attempt has been made to highlight three such cases from three different parts of the world—Malaysia (Asia-pacific), Poland (Eastern Europe) and Colombia (Latin America). The paper looks into what policy instruments led to a fall in water pollution levels in these countries and what role did MBIs play in this pollution mitigation? The case studies suggest that it is a combination of instruments—license fee, standards, charge and subsidies—reinforced by active enforcement that led to an overall improvement in environment compliance.

The recent growth in research on "good governance" and the quality of government institutions has been propelled by empirical findings that show that such institutions may hold the key to understanding economic growth and social welfare in developing and transition countries. We argue, however, that a key issue has not been addressed, namely, what quality of government (QoG) actually means at the conceptual level. Based on analyses of political theory, we propose a more coherent and specific definition of QoG: the impartiality of institutions that exercise government authority. We relate the idea of impartiality to a series of criticisms stemming from the fields of public administration, public choice, multiculturalism, and feminism. To place the theory of impartiality in a larger context, we then contrast its scope and meaning with that of a threefold set of competing concepts of quality of government: democracy, the rule of law, and efficiency/effectiveness.

The farming structure in transition countries has shifted from dominance of large corporate farms to family smallholdings. Smallholders everywhere experience difficulties with access to market services, including sale of products, purchase of inputs, and acquisition of machinery; they suffer from credit shortages and have limited access to information and advisory services. The barriers to market access prevent smallholders from fully exploiting their inherent productivity advantages. Best-practice world experience highlights farmers’ service cooperatives, created by grassroots users, as the most effective way of improving the market access of small farmers. Service cooperatives also help smallholders overcome market failures, when private business entrepreneurs are unwilling to provide services in areas that they judge unprofitable or unfairly exploit users through monopolistic practices. These difficulties and market failures are prominent in transition countries and scholars accordingly expected rapid development of agricultural service cooperatives in response to smallholder needs. The present volume explores the gaps between expectations and reality.

The authors are grateful to the sponsors for their support and also, most especially, to the many colleagues both in the international financial agencies and in many national governments who have, over the years, contributed so much to our knowledge of value-added taxation (VAT) in both theory and especially practice. In particular, very useful comments and supplementary materials (often unpublished) bearing on this study were received from participants at workshops held in 2004 and 2005 at USAID and the World Bank, as well as at the first Global Conference on VAT held in Rome in March 2005.

The objective of this paper is to look at employment services and labor market policies in the transition countries of Eastern Europe and Central Asia, and identify key benefits and constraints of active labor market programs, as well as the main characteristics and features of successful policy interventions. Various policy options are discussed on how to enhance public employment services but also private employment agencies which might be relevant to and suitable for the countries in the region given their macroeconomic and labor market situation. Overall, this report recommends that greater resources will be needed for active labor market programs (ALMPs) in the future. However, the emphasis should be put on improving the design and effectiveness of ALMPs, rather than on increasing spending levels only.

6 Abstract: This review reports on why is there still rabies in the world?-an emerging microbial and global health threat. Rabies remains an important public health issue in the world. While rabies has been controlled throughout most of the developed world, it remains a significant burden in developing countries, particularly in Africa and Asia. Although industrialized countries have been able

Corporate governance is the organizational arrangement by which a company represents and serves the interests of its investors. It encompasses anything from a company's boards to executive compensation schemes to bankruptcy laws. Generally, the definitions of corporate governance which was found in the literature tend to share certain characteristics. One of this characteristic is the notion of accountability. Corporate governance is the process of supervision and control which intends to ensure that the company's management acts in accordance with the interests of shareholders (Parkinson, 1994). Corporate governance, the internal policies and leadership that guide the actions of corporations, played a major part in the recent global financial crisis. While much blame has been targeted at compensation arrangements that rewarded extreme risk-taking but did not punish failure, the performance of large, supposedly, sophisticated institutional investors in this crisis have not been examined. Corporate governance has come to the forefront of academic research due to the vital role it plays in the overall health of economic systems. Corporate governance was long ignored as a matter of potential importance for the development of a nation's economy. This paper, however, expresses some cases in the field of corporate governance, regarding the failure of corporate governance. Institutional investors failed to effectively monitor such volatile investments, ignoring relatively well-established corporate governance principles and best practices. Corporate Governance Failures offers nuanced and realistic proposals to mitigate future financial pitfalls.

The last decade has been witness to one of the largest tax experiments in economic history, the transformation from centrally-planned to market-based tax systems. The cultural and institutional legacy of central planning has had a lasting impact on tax reform in countries in transition. The fundamental choices for reform were a 'big-bang' approach or an evolutionary approach. With the benefit of hindsight, we can now evaluate the choices made and whether or not basic advice was heeded. The tax systems that have emerged are, at least in some ways, satisfactory in terms of tax policy but deficient in terms of tax administration and enforcement. Experiences with tax reform have been diverse, and in some countries there has been very little reform at all. We conclude by examining what lessons have been learned during the first decade of transition. JEL Classification Numbers: H0, H2, P2 3 For the purpose of this paper, CIT refers to all previous centrally planned or socialist countries in Central and Eastern Europe (CEE) and the former Soviet Union (FSU). Other countries experimenting with transition to a market economy include China, Vietnam, Cambodia, Laos, North Korea, and Myanmar. Cuba is a special case in itself and like in North Korea little reform has been pursued there. The main differences between CITs in CEE and the FSU, and the rest is that the latter group of countries has not simultaneously engaged in political liberalization, maintaining instead a single-party political system. The focus of this paper is on tax reform in CEE and the FSU. 4 See for an earlier review of tax systems in transitional economies and Ebril and Havrylyshyn (1999)for a more recent review of tax reform in the Former Soviet Union. Background information on the economic conditions and the tax structure of CITs is available from the European Bank for Reconstruction and Development's Transition Report (1999) and the International Bureau of Fiscal Documentation's

This paper was developed with financial support from the SBF Bourse de Paris and the New York Stock Exchange, and the assistance of George Sofianos, Bill Tschirhart, and Didier Davidoff is gratefully acknowledged. We appreciate comments received on this paper from Anthony Boardman, Bernardo Bortolotti, Narjess Boubakri, JeanClaude Cosset, Kathy Dewenter, Alexander Dyck, Ivan Ivanov, Ranko Jelic, Claude Laurin, Marc Lipson, Luis Lopez-Calva, John McMillan (the editor), Harold Mulherin, Rob Nash, John Nellis, David Newberry, David Parker, Enrico Perotti, Annette Poulsen, Ravi Ramamurti, Susan Rose-Ackerman, Nemat Shafik, Mary Shirley, Aidan Vining and three anonymous referees. Additionally, we appreciate comments received from participants at the NYSE/Paris Bourse Global Equity Markets conference (Paris, December 1998), the Harvard Institute for International Development Privatization Workshop (June 2000), the International Federation of Stock Exchanges' Third Global Emerging Mark...

Enterprise resource planning (ERP) systems are highly complex information systems. The implementation of these systems is a difficult and high cost proposition that places tremendous demands on corporate time and resources. Many ERP implementations have been classified as failures because they did not achieve predetermined corporate goals. This article identifies success factors, software selection steps, and implementation procedures critical to a successful implementation. A case study of a largely successful ERP implementation is presented and discussed in terms of these key factors.

The aim of this paper is to provide an overview of the key issues surrounding entrepreneurship development in transition countries focusing on six main themes. Though it can be argued that the transition countries started from more or less the same point when they embarked on their transitional path, in this paper, we indicate a number of the differences in initial conditions which further influenced SME development. By surveying the existing literature on SME development, this paper illustrates that as the transition process progresses, entrepreneurship development in transition countries is a story of increasing divergence. The transitional context provides unique opportunities for entrepreneurship activities to develop. However, at the same time this environment presents unique challenges for entrepreneurial development especially knowledge-based entrepreneurship as the free-market system matures within a context with low levels of SMEs and inherited negative views towards entrepreneurship Ruta Aidis, Lecturer in Entrepreneurship and Governance, SSEES / UCL,

So far, little research has focused on female entrepreneurship in a transition context. Using an institutional perspective, this paper compares two countries at different stages in the process of transformation. Lithuania followed a rapid transitional path leading to EU membership, whilst Ukraine is on a much slower development path. While women entrepreneurs in Lithuania and Ukraine share many common features and problems, there are important differences between the two countries. This indicates a need to recognize the diversity that exists between transition countries, reflecting different inheritances from the Soviet past, as well as differences in the pace of change during the transition period.

This paper is studying the degree of financial independence and decision of local authorities, in a number of transition countries in South-Eastern Europe. Our research identified the strengths and weaknesses of public finance reform, for each country, followed by a classification of decentralization in the analyzed area.

The paper exploits a large set of more than 8,000 firms for ten advanced transition countries in order to uncover the importance of different channels of technology transfer through FDI and its impact on productivity growth of local firms. In addition to direct effects, we also distinguish between intra-industry (horizontal) and inter-industry (vertical) spillovers from foreign owned firms to local firms. After correcting for foreign investment selection bias and controlling for endogeneity of input demand (using a dynamic system GMM approach), direct FDI effects were found to provide by far the most important productivity effect for local firms in transition countries. Direct effects of FDI are found to provide on average an impact on firm's productivity that is larger by factor 50 than the impact of backward linkages and by factor 500 larger than the impact of horizontal spillovers.

This article quantifies the impact of incentives related to potential membership on institutional change as measured by the World Bank Governance Indicators. Based on a panel of 25 transition countries for the period from 1996 to 2008, we show that pre-accession incentives provided by EU and NATO clearly matter for institutional development. In addition, path-dependency determined by cultural norms may be overcome by economic liberalization, while foreign aid hampers institutional development.

Purpose -The aim of this paper is to examine how corporations in India interpret corporate social responsibility (CSR). Focusing on four commonly known approaches: the ethical, the statist, the liberal, and the stakeholder approach, the paper seeks to investigate the reported drivers and barriers to implementing CSR practices.

Theoretically, the explanatory approaches of foreign direct investment (FDI), as for example, the internalization theory and the eclectic paradigm, and general equilibrium trade models that incorporate horizontal multinational firms (MNEs), sustain the existence of a substitution relationship between FDI and international trade. Models of vertical FDI and considerations concerning demand, for their part, support a complementarity relationship. Empirically, however, it is difficult to find substitution between the two variables. This work presents a review of the existing theoretical and empirical literature, highlighting the reasons that underlie the apparent incongruity between theory and empirical works, and drawing attention to gaps that should be corrected in future works. JEL Classification: F12; F14; F23. Keywords: Foreign direct investment, multinational firms, international trade.

Credibility of an exchange rate policy is one of the most important factors contributing to success or failure of any stabilization program. Authorities usually hope that the public will trust official exchange rate commitments and take decisions regarding domestic currency holdings accordingly. However, as the experience of several countries analyzed in this study shows, this is not always the case. Economic agents behave in line with their own expectations which need not directly reflect central bank's commitments but are most often a combination of official policy and public's own notions regarding its actual future course. There are clear advantages of high credibility of exchange rate policy to the country's disinflation efforts. It can help bring inflation down quicker and reduce inevitable output losses. Naturally, this prompts the question of whether one can quantify credibility and find factors that are affecting it. Various studies found in the literature have ...

Urban agriculture may have a role to play in addressing urban food insecurity problems, which are bound to become increasingly important with the secular trend towards the urbanization of poverty and of population in developing regions. Our understanding of the importance, nature and food security implications of urban agriculture is however plagued by a lack of good quality, reliable data. While studies based on survey data do exist for several major cities, much of the evidence is still qualitative if not anecdotal. Using a recently created dataset bringing together comparable, nationally representative household survey data for 15 developing or transition countries, this paper analyzes in a comparative international perspective the importance of urban agriculture for the urban poor and food insecure. Some clear hints do come from our analysis. On the one hand, the potential for urban agriculture to play a substantial role in urban poverty and food insecurity reduction should not be overemphasised, as its share in income and overall agricultural production is often quite limited. On the other hand, though, its role should also not be too easily dismissed, particularly in much of Africa and in all those countries in which agriculture provides a substantial share of income for the urban poor, and for those groups of households to which it constitutes an important source of livelihoods. We also find fairly consistent evidence of a positive statistical association between engagement in urban agriculture and dietary adequacy indicators.

This paper examines the causal relationship between financial development and economic growth in Turkey. Five alternative proxies for financial development are developed and Granger causality tests applied using the cointegration and vector error correction methodology (VECM). The empirical results show that the direction of causality between financial development and economic growth in Turkey is sensitive to the choice of proxy used for financial development. For example, when financial development is measured by the money to income ratio the direction of causality runs from financial development to economic growth, but when the bank deposits, private credit and domestic credit ratios are alternatively used to proxy financial development, growth is found to lead financial development. On balance, however, for Turkey, growth seems to lead financial sector development.

Congenital heart defects (CHD) occur in 8 per 1000 live births. If they remain untreated, 70-80% of these patients die in early childhood. With modern diagnostic and treatment procedures, 90% of these patients reach adulthood. Within 8 years following reunification of Germany, it was possible to improve treatment for CHD in former East Germany to West German standards. Based on the experience gained in this process, a plan for improvement of care of Estonian patients with CHD was developed and implemented in the German-Estonian project, "Partnership for the Heart". The main elements of the project were (1) the training of Estonian physicians in Germany, (2) training courses conducted by German and Estonian specialists in Estonia and (3) use of telemedicine for consultation on a continuous basis. During the project 15 Estonian patients underwent cardiac surgery and/or catheter interventions performed by a joint team of German and Estonian specialists. The infant mortality due to CHD in Estonia fell by 28% during the project period. Key techniques of cardiac surgery are now being employed in Estonia without outside support, indicating the success of the training program and the long-term improvements to cardiac health care in Estonia. The total project costs were 314,252 Euro (D), which is 50% lower than the estimated cost of treating the 15 patients abroad in Western Europe. The structure of "Partnership for the Heart" and the modified self-sufficiency model of medical care have not only produced results for Estonia but can be taken as a template for future bilateral health projects with other transition countries and for other fields of medical specialisation, and thus might aid a European health policy.

The paper analyses the link between the autonomy according to business function and the performance of foreign subsidiaries in Slovenia, Poland, Hungary, Slovakia and Estonia. The obtained results supported the argument that the relationship between autonomy and performance depends on the type of autonomy. Marketing and finance are the most powerful dimensions of autonomy. Higher autonomy in marketing is negatively linked with technology upgrading, measured by the productivity level, the improvement of technological level of production equipment, and the quality of products. The higher the financial autonomy of the subsidiaries the bigger the positive changes in all fields of performance.

Using data from 1996 to 2000, we investigate the effect of extensive foreign ownership on the banking sectors in general and bank efficiency in particular for eleven transition countries. Our unbalanced panel consists of 220 banks and 830 observations.

This paper is part of a wider research on South and East Asian countries' taxation, carried out in this Department, under the direction of L. Bernardi, A. Fraschini and P. Shome, and under the supervision of. V. Tanzi. South and East Asia are a particularly fast developing world economic areas, and are becoming increasingly more economically integrated. These countries, however, are not homogenous, and are lacking in any supra -national Authority. The total fiscal pressure of South and East Asian countries looks somewhat low when compared to that of countries with a similar per-capita income, pertaining to other economic world areas. However, a smooth Wagner law is confirmed by the data so that fiscal pressure is destined somewhat to increase as growth continues. With regards to similar experiences of developing and transition countries, indirect taxes prevail over direct ones. Low tax wedges on labor improve efficiency, by inducing both the supply and demand of labor. The heavy burden on consumption lessens equity and increases welfare losses. Any further uniform analysis of South and East Asian countries' tax policy issues would be however quite fruitless. It is far better to consider tax policies issues which rise inside the whole area separately to those more specific to each cluster made up by similar countries. Intra-regional economic integration poses severe challenges to the tax structure in the Asian area. Three tax policy issues seem most problematic: the building of intra-countries' agreements on reducing trade tariffs; the sequential revenue consequences of reduction in foreign trade taxes; the increasing tax competition for FDI. Intra-countries clusters' tax policy issues differ from each other. In Japan and in S. Korea different choices have been made regarding the comprehensiveness of the PIT's basis, whose burden as a consequence ends up being more fairly distributed in S. Korea. The two countries are facing the common problem of an ageing population and consequentially, social contributions, and eventually VAT are being raised. Malaysia's direct taxes look higher than Thailand's, but this is only because of the taxation of oil companies. Thailand has adopted VAT, while Malaysia has not changed its traditional sales tax. Both the countries are engaged in the recovery of revenue by improving tax administration. Both in China and in India income tax is small and poorly redistributing. Also, India has just moved from a schedular to a comprehensive tax basis. VAT is well established in China, while it is just arriving in India, as a consequence of a long waited but challenging reform, especially regarding the tax relationships among levels of government. Taxing power is now more centralized in China, but this needs to be corrected in order to avoid a lack of accountability on the part of the provinces. JEL Classification numbers: H20, H24, H25, H29

This paper is part of a wider research on South and East Asian countries' taxation, carried out in this Department, under the direction of L. Bernardi, A. Fraschini and P. Shome, and under the supervision of. V. Tanzi. South and East Asia are a particularly fast developing world economic areas, and are becoming increasingly more economically integrated. These countries, however, are not homogenous, and are lacking in any supra -national Authority. The total fiscal pressure of South and East Asian countries looks somewhat low when compared to that of countries with a similar per-capita income, pertaining to other economic world areas. However, a smooth Wagner law is confirmed by the data so that fiscal pressure is destined somewhat to increase as growth continues. With regards to similar experiences of developing and transition countries, indirect taxes prevail over direct ones. Low tax wedges on labor improve efficiency, by inducing both the supply and demand of labor. The heavy burden on consumption lessens equity and increases welfare losses. Any further uniform analysis of South and East Asian countries' tax policy issues would be however quite fruitless. It is far better to consider tax policies issues which rise inside the whole area separately to those more specific to each cluster made up by similar countries. Intra-regional economic integration poses severe challenges to the tax structure in the Asian area. Three tax policy issues seem most problematic: the building of intra-countries' agreements on reducing trade tariffs; the sequential revenue consequences of reduction in foreign trade taxes; the increasing tax competition for FDI. Intra-countries clusters' tax policy issues differ from each other. In Japan and in S. Korea different choices have been made regarding the comprehensiveness of the PIT's basis, whose burden as a consequence ends up being more fairly distributed in S. Korea. The two countries are facing the common problem of an ageing population and consequentially, social contributions, and eventually VAT are being raised. Malaysia's direct taxes look higher than Thailand's, but this is only because of the taxation of oil companies. Thailand has adopted VAT, while Malaysia has not changed its traditional sales tax. Both the countries are engaged in the recovery of revenue by improving tax administration. Both in China and in India income tax is small and poorly redistributing. Also, India has just moved from a schedular to a comprehensive tax basis. VAT is well established in China, while it is just arriving in India, as a consequence of a long waited but challenging reform, especially regarding the tax relationships among levels of government. Taxing power is now more centralized in China, but this needs to be corrected in order to avoid a lack of accountability on the part of the provinces. JEL Classification numbers: H20, H24, H25, H29

Various research studies addressing the specific problems and difficulties in the underdeveloped regions in the transition countries from Central and Eastern Europe have identified possible reactions regarding appropriate economic and social policy measures. Some of them take into consideration the role of cluster initiatives as a response to poor competitiveness, low level of innovation, high levels of unemployment and out-migration of the highly-skilled labour force. Though, the simple presence of clusters in a less developed region does not automatically mean more competitiveness and prosperity. A series of policy measures meant to improve the frame conditions for business firms and overall regional development should accompany clusters formation, as a coherent package including economic, legal, institutional, infrastructure, cultural and socio-political elements. Staring from these overall considerations our paper brings into discussion the capacity of cluster policies to offer viable solutions to the Romania's Eastern regions, lagging behind the Western ones. First, an overall image of the clusters existing in the Eastern part of Romania is provided based on statistical methods, mainly location quotients, Gini and Herfindahl indexes of regional specialisation and industrial concentration and cluster analysis. Second, GIS techniques are employed in order to provide a spotlight on cluster identity, location and borders by means of spatial, thematic data at locality level. Performance indicators are also included, so as to get an image on clusters' contribution to the development of the corresponding local economies as well as the county and region economy. Third, based on these results, the interviews with business environment representatives and policy makers in the envisaged regions point out the clusters with the highest chances of success. Also, the best practices are discussed and connected with successful solutions from other Central and East European countries. They will be differentiated in accordance with the characteristics of the orth-East and South-East regions, bearing in mind that, however, South-East region has a higher development level and different profile compared with orth-East.

We analyse how the choice of reform speed and economic growth affect one another. We estimate a system of three equations where economic growth, economic reform and FDI are jointly determined. New reforms affect economic growth negatively, whereas the level of past reform leads to higher growth and attracts FDI. This means that the immediate adjustment cost of new reforms

Përkthyes për gjuhën shqipe për librin 'Decentralizimi Fiskal dhe Transferimi i Granteve Në Vendet në Tranzicion: Një Perspektivë Kritike' 2005 i shkruar nga Ņeljko Ńević, Universiteti i Greenwich, Mbretëria e Bashkuar e Britanisë së Madhe. Ky libër është financuar nga një grant i Iniciativës për Reforma të Qeverisjes Vendore dhe të Shërbimit Publik, Instituti i Shoqërisë së Hapur, Budapest, Hungari.
Titulli i origjinalit: 'Fiscal Decentralisation and Grant Transfers In Transition Countries: A Critcal Perspective'

Enforcement more than regulations, laws-on-the-books or voluntary codes is key to effective corporate governance, at least in transition and developing countries. Corporate governance and enforcement mechanisms are intimately linked as they affect firms' ability to commit towards their stakeholders, in particular towards external investors. We provide a framework for understanding these linkages and how they are shaped by countries' institutional contexts. When the general enforcement environment is weak and specific enforcement mechanisms function poorly, as in many developing and transition countries, few of the traditional corporate governance mechanisms are effective. The principal consequence in these countries is a large blockholder, but there are important potential costs to this mechanism. A range of private and public enforcement "tools" can help reduce these costs and reinforce other supplementary corporate governance mechanisms. The limited empirical evidence suggests that private tools are more effective than public forms of enforcement in the typical environment of most developing and transition countries. However, public enforcement is necessary regardless, and private enforcement mechanisms often require public laws to function. Furthermore, in some countries at least, bottom-up, private-led tools preceded and even shaped public laws. Political economy constraints, resulting from the intermingling of business and politics, however, often prevent improvements in the general enforcement environment, and adoption and implementation of public laws in these countries.

This paper explores interactions between growth, economic liberalization and democratization during transition. The results can be summarized as follows: (1) Liberalization has a strong positive effect on growth during transition (also when controlling for endogeneity of liberalization in growth).

The arnona, the system of property taxation in Israel, is a unique form of taxation being based on a property's size (m2) and not on its discrete open market value. The actual use of the property (residential versus non-residential), its location in the municipality, type of property and its age are the determining factors for tax liability. In order to test for equity within the current system, the methodology adopted was to investigate the effect of population size, remoteness and population makeup with respect to some 80 municipalities on the levels of arnona. Although the thresholds of arnona for individual municipalities are approved by a committee of the Knesset, the present analysis indicates that the current differences in per capita amount of arnona collected by local authorities do reflect factors that would normally be expected to influence an ad valorem property tax in a market economy. It is argued that whilst the arnona is an accepted form of local authority property taxation, there are a number of fundamental weaknesses. Its application could be improved by incorporating elements of an ad valorem property tax, which would more fully reflect the socio-economic level of taxpayers and the physical condition of the built environment. However, the arnona, not being based directly on a property's market value should be of interest to countries (e.g. transitional countries of Central and Eastern Europe) who are presently introducing property taxes within an environment where property markets are not as yet fully developed.