An inexhaustible source of income? The significance of Belarusian refineries and the outlook for the future. OSW Commentary No. 81, 2012-06-20

Belarus generated a surplus at US$1.9 billion in foreign trade in goods and services in the first four months of 2012 as compared to a deficit of US$2.8 billion for the same timeframe a year earlier. Minsk owes this, its highest positive trade balance since 1991, mainly to a significant increase in exports of petroleum products manufactured by the refineries in Navapolatsk and Mazyr. This is a consequence of the favourable contract for supplies of Russian oil until 2015 which Belarus signed in December last year. This contract has resulted in a de facto resumption of Russia subsidising Belarus. The favourable conditions of Russian oil supplies will allow the Belarusian refineries to remain the driving force of the country’s economy, and the Belarusian government will not allow them to be privatised, which Russia has been seeking for years. The two refineries initiated an ambitious modernisation programme, which is aimed at increasing their output and improving the quality of their production. Owing to this, their share in the market of petroleum products in the region, including on the Polish market, may grow within the next few years.

Will income inequality cause a middle-income trap in Asia? Bruegel Working Paper 2013/06, 10 October 2013

The Asian economy is expected to realise favourable growth during the first half of this century, but there is no guarantee. There is a discussion about a ‘middle-income trap’, which refers to a country that has realised rapid growth to become a middle-income country but is unable to grow further. A middle-income trap could occur not only if there is a delay in shifting the economy toward a productivity-driven structure, but also if there is a worsening of income distribution.We consider this in line with the theories of development economics and through a quantitative analysis. The relationship between income inequality and the trap can be explained by the Kuznets hypothesis and the basic-needs approach. Our quantitative analysis supports the Kuznets hypothesis, and indicates that,although a low-income country can accelerate its economic growth with the worsening of income distribution as an engine, a middle income country would experience a decreasing growth rate if it fails to narrow the income gap between the top and bottom income groups. The results also show that the basic-needs approach is also applicable in practice, and imply that the improvement of access to secondary education is important. A sensitivity analysis for three Asian upper-middle-income countries(China, Malaysia and Thailand) also shows that the situation related to a middle-income trap is worse than average in China and Malaysia. These two countries, according to the result of the sensitivity analysis, should urgently improve access to secondary education and should implement income redistribution measures to develop high-tech industries, before their demographic dividends expire. Income redistribution includes the narrowing of rural urban income disparities, benefits to low-income individuals, direct income transfers, vouchers or free provision of education and health-care, and so on, but none of these are simple to implement.

A bottomless pit: the costs of Crimea’s annexation by Russia. OSW Commentary No. 143, 29.07.2014

The annexation of Crimea has brought the Russian authorities significant dividends, in particular on the domestic stage: it has resulted in an unprecedented social and political consolidation, and strengthened Vladimir Putin’s position after several years of decline in social support for him. It has provided Russia with strategic benefits, giving it broad access to the Black Sea and the military infrastructure on the peninsula, as well as access to natural gas and crude oil reserves. Russia has also taken over numerous assets (including the tourist infrastructure) previously owned by the Ukrainian state. However, the decision itself concerning Moscow’s annexation of Crimea was taken off the cuff, with no calculation of the costs of integrating it with the Russian legal, political and socio-economic space. Russia took over a region that required subsidies from the Ukrainian budget; moreover, the annexation struck at the most important industry of the Crimean economy – tourism. Crimea’s integration with Russia will be a complex process that entails high costs, financial, organisational and social, including multi-billion dollar investments in the modernisation and development of infrastructure, covering the region’s budget deficit, and paying out social benefits. For reasons of prestige and political significance, Moscow is treating Crimea as a showcase region. Russia is determined to prove that the Crimean incorporation will be beneficial for the region’s economy and will raise people’s living standards. However, the expenses triggered by Crimea’s integration will coincide with a deteriorating economic situation in Russia, aggravated by US and EU sanctions, and this may force Russia to postpone or even give up some of its ambitious investments in the peninsula. Some of the integration costs will have to be borne by other Russian regions, even though they already face serious financial problems that have forced them to reduce their own investment programs. Another issue that has come into question is the fulfilment of the Crimean people’s’ expectations concerning the improvement of their living standards, due to the tourist sector’s problems (small-scale tourist services used to be one of the local people’s main sources of income), the rising costs of maintenance, and finally, restrictions of civil rights after the introduction of the more restrictive Russian legislation.

No other choice but co-operation. The background of Lithuania's and Latvia's relations with Belarus. OSW Commentary No. 99, 2013-01-04

For years now Belarus has been a key economic partner for Lithuania and Latvia. These two Baltic states have well-developed port infrastructure and thus provide what are the geographically closest and also the cheapest exit to international outlets for Belarusia’s petrochemical and chemical industries, both of which are export-oriented. As a result, the transit of Belarusian goods is one of the major sources of income for the state budgets of the two countries. This economic interdependence has affected the stance Riga and Vilnius take on Minsk at the EU forum. When in February and March 2012 the Council of the European Union was resolving the issue of imposing economic sanction on selected Belarusian companies which backed Alyaksandr Lukashenka’s regime, this triggered a discussion on what the point of such measures is and on possible economic losses in Lithuania and Latvia. As a result of firm resistance from Latvia (which was backed by Slovenia), the Council removed those companies which were most strongly engaged in co-operation with Latvian partners from the list of those to be covered with economic sanctions. Lithuania, which is more critical of the political situation in Belarus, did not express its official opposition to the sanctions. Despite some differences in the policies adopted by Riga and Vilnius, it turned out that Minsk could count on strong support from local business groups in both of these countries, as these groups fear impediments in this highly profitable co-operation and also retaliation from the Belarusian government. The existing economic bonds mean that neither Vilnius nor Riga have any other choice but to co-operate with Belarus. They must therefore adopt a carefully balanced policy towards Minsk. At the same time, being EU member states, they do not officially deny that a problem exists with the violation of human rights by Alyaksandr Lukashenka’s regime. It is for this reason that the governments of Latvia and Lithuania will be interested in maintaining the status quo in relations with Minsk. On the other hand, Belarus in a way also has no other choice but to use the ports in Lithuania and Latvia, and this will prevent it from excessively escalating tension in relations with these two countries.

The Role of Pluriactivity in Farm Exit and Labour Supply Decisions. Factor Markets Working Document No. 67, August 2013

EDITED VERSION TO BE PUBLISHED SOON Pluriactivity has been a topic of research in agriculture for the best part of a century. It is a term which has both broad and narrow definitions and hence is subject to multiple interpretations. This paper considers two forms of pluriactivity: within the farm gate pluriactivity, also commonly referred to as farm diversification, and beyond the farm-gate pluriactivity, also known as multiple job holding. Previous studies of pluriactivity have shown that it can inhibit the natural process of structural change in the farm sector, by allowing small and unprofitable farms to survive with the support of income from outside the sector. In this paper, two empirical models of pluriactivity are estimated using farm level data for Ireland. The first examines the impact of on-farm diversification on off-farm labour supply, while the second investigates the relationship between off-farm labour supply and farm exit which is specified in the context of retirement and non-succession. The result of the first model suggests that farms that engage in within the farm gate pluriactivity are less likely to engage in beyond the farm gate pluriactivity, in other words more diversified farmers are less likely to work off farm. The second model confirms previous findings in the literature that part-time farmers have a reduced probability of having a farm successor. While the model results are specific to the Irish case, they do provide some value insights into the impacts of pluriactivity on structural change in farming.

Turcja - korytarz transzytowy dla surocow energetycznych do UE? Prace OSW 17/2005. = Turkey - an energy transit corridor to the EU? OSW Study 17/2005

1. The priority of Ankara's energy policy is to make Turkey an important transit corridor for energy resources transported to the EU. Turkey wishes to play an active role in the distribution and sale of gas and oil flowing across its territory. 2. Transit and sale of energy resources, and gas in particular, are expected to provide a major source of income for Turkey and a tool by which Ankara will be able to build its position in the region and in Europe. 3. Since Turkey is an EU candidate country, Brussels will probably welcome Turkey's role as a transit corridor as much as Ankara will. 4. The success of Ankara's energy strategy hinges on developments in Turkey's internal energy market. 5. It also depends on a number of external factors including: - Export policies and internal situation in producer countries. Most importantly, it depends on: a. Russia and its energy policy priorities b. Stability in the Middle East. - Policies of consumer countries, including the EU in particular. - Policies of world powers present in the region (USA).

Practical Modified Gini Index. ACES Working Papers, 2012

The Gini index is the most common method for estimating the level of income inequality in countries. In this paper we suggest a simple modification that takes into account the moderating effect of in-kind government benefits. Unlike other studies that use micro level data that is rarely available for many countries or over a period of time, the proposed modified Gini index could be calculated using just the regularly available data for each country. Such data includes the original Gini coefficient, government consumption expenditures, GDP and total tax revenue as a percentage of GDP. This modified version of the Gini index allows us to calculate the level of inequality more precisely, and make better comparisons between countries and over time.