Economic Reforms and Pro-Poor Growth: Lessons for Africa and other Developing Regions and Economies in Transition

The paper discusses the meaning and measurement of pro-poor growth and also reviews evidence of pro-poor growth (or the lack of it) in a large cross-section of countries and time periods. The emerging story is that many episodes of growth are not pro-poor and also that although economic reforms have had positive effects in those countries that have been steadfast in implementing market reforms, the overall impact on growth has been small for many countries and in most cases not pro-poor. I present a general theory of pro-poor growth that includes ten principles that should be incorporated in all economic reforms that seek to generate pro-poor growth. These principles highlight the importance of understanding the poor, their economic activities, capabilities, constraints that impede their participation in markets and also an appreciation of linkages within sectors and regions. It is argued that pro-poor reforms cannot have the intended impact unless there are significant changes in the institutions of governance. Finally, the principles presented underscore the fact that pro-poor growth policies cannot be sustained without workable partnerships between markets and states in the ever changing and complex processes of social and economic development.

Stages of organizational transformation in transition economies: A dynamic capabilities approach

How do organizations previously dominated by the state develop dynamic capabilities that would support their growth in a competitive market economy? We develop a theoretical framework of organizational transformation that explains the processes by which organizations learn and develop dynamic capabilities in transition economies. Specifically, the framework theorizes about the importance of, and inter-relationships between, leadership, organizational learning, dynamic capabilities, and performance over three stages of transformation. Propositions derived from this framework explain the pre-conditions enabling organizational learning, the linkages between types of learning and functions of dynamic capabilities, and the feedback from dynamic capabilities to organizational learning that allows firms in transition economies to regain their footing and build long-term competitive advantage. We focus on transition contexts, where these processes have been magnified and thus offer new insights into strategizing in radically altered environments.

Comparative Analysis of Educational Attainment in Transition Economies

The project compared several indicators of educational attainment across various groups of transition economies, and between transition economies and others. The indicators of education reflected both the quantity of schooling (e.g. average years of schooling, percentage not attending school at all, and adult literacy rates) and schooling quality (e.g. public expenditure on education, pupil-teacher ratios, repetition rates, dropout rates, and international test scores). The basic test used in the project was a t-test on differences in sample means. Among the transition economies, the indicators examined were most favourable for central European, high-income and advanced transition countries, although the differences between these countries and the remaining transition countries were not usually statistically significant. When compared with other world economies, the transition countries typically showed significantly better indicators than developing countries, but differences between transition and developed countries were not statistically significant. The project also examined the behaviour of the correlation coefficient between indicators of education and income, which, as expected, were usually positive.

The end of transition?:The role of informal economies in the post-Soviet space

This book challenges the accepted notion that the transition from the command economy to market based systems is complete across the post-Soviet space. While it is noted that different political economies have developed in such states, such as Russia’s ‘managed democracy’, events such as Ukraine gaining ‘market economy status’ by the European Union and acceding to the World Trade Organisation in 2008 are taken as evidence that the reform period is over. Such thinking is based on numerous assumptions; specifically that economic transition has defined start and end points, that the formal economy now has primacy over other forms of economic practices and that national economic growth leads to the ‘trickle down’ of wealth to those marginalised by the transition process. Based on extensive ethnographic and quantitative research, conducted in Ukraine and Russia between 2004 - 2007, this book questions these assumptions by stating that the economies that operate across post-Soviet spaces are far from the textbook idea of a market economy. Through this the whole notion of ‘transition’ is problematised and the importance of informal economies to everyday life is demonstrated. Using case studies of various sectors, such as entrepreneurial behaviour and the higher education system, it is also shown how corruption has invaded almost all sectors of the post-Soviet every day.

Entrepreneurship in transition economies:the role of institutions and generational change

The transition economies have lower rates of entrepreneurship than are observed in most developed and developing market economies. The difference is even more marked in the countries of the former Soviet Union than those of Central and Eastern Europe. We link these differences partly with the legacy of communist planning, which needs to be replaced with formal market-supporting institutions. But many of these developments have now taken place, yet entrepreneurial activity still remains low in many places. To analyse this longer term issue, we highlight the necessarily slow pace of development of new informal institutions and the corresponding social attitudes, notably rebuilding the generalised trust. We argue that changes are even slower in the former Soviet Union than Central and Eastern Europe because communist rule was much longer, leading to a lack of institutional memory. We posit that changes in informal institutions may be therefore delayed until after full generational change.

Corporate governance, managers' independence, exporting, and performance of firms in transition economies

Using data on 157 large companies in Poland and Hungary, this paper employs Bayesian structural equation modeling to examine the relations among corporate governance, managers' independence from owners in terms of strategic decision making, exporting, and performance. Managers' independence is positively associated with firms' financial performance and exporting. In turn, the extent of managers' independence is negatively associated with ownership concentration, but positively associated with the percentage of foreign directors on the firm's board. We interpret these results as indicating that concentrated owners tend to constrain managerial autonomy at the cost of the firm's internationalization and performance, but board participation of foreign stakeholders enhances the firm's export orientation and performance by encouraging executives' decision-making autonomy.

Ownership structure and investment finance in transition economies:a survey of evidence from large firms in Hungary and Poland

Using survey data on 157 large private Hungarian and Polish companies this paper investigates links between ownership structures and CEOs’ expectations with regard to sources of finance for investment. The Bayesian estimation is used to deal with the small sample restrictions, while classical methods provide robustness checks. We found a hump-shaped relationship between ownership concentration and expectations of relying on public equity. The latter is most likely for firms where the largest investor owns between 25 percent and 49 percent of shares, just below the legal control threshold. More profitable firms rely on retained earnings for their investment finance, consistent with the ‘pecking order’ theory of financing. Finally, firms for which the largest shareholder is a domestic institutional investor are more likely to borrow from domestic banks.

Corporate governance, managers' independence, exporting and performance of firms in transition economies

Using data on 157 large companies in Poland and Hungary this paper employs Bayesian structural equation modeling to examine interrelationships between corporate governance, managers' independence from owners in terms of strategic decision-making, exporting and performance. It is found that managers' independence is positively associated with firms' financial performance and exporting. In turn, the extent of managers' independence is contingent on the firm's corporate governance parameters: it is negatively associated with ownership concentration, but positively associated with the percentage of foreign directors on the firm's board. We interpret these results as an indication that (i) risk averse, concentrated owners tend to constrain managerial autonomy at the cost of the firm's internationalization and performance, (ii) board participation of foreign stakeholders, on the other hand, enhances the firm's export orientation and performance by encouraging executives' decision-making autonomy.