While research and development expenditures are considered a key to productivity growth and development, the question remains whether their contribution could depend on the particular countries' and ...industries' actual development levels and positions in global value chains. In this paper we analyse the relative contribution of RandD to the efficiency (productivity) on the industry and sector level in OECD countries using industry-level panel data and the stochastic frontier production function approach. The results indicate that RandD capital productivity enhancing effect increases with the level of technology; physical capital shows the opposite effect. The distribution of efficiency across industries shows remarkably different variances, reflecting different degrees of competition and the structure of value chains. Among different external factors, the share of labour with tertiary education at the national level showed a strong positive correlation with efficiency, while for other external factors the effect varied across the industries. The findings imply that in the design of RandD policy measures the structure of the industries needs to be considered.
After regaining independence, social dialogue has not been of key importance in the functioning of Baltic labour markets. Despite trade unions’ being the dominant form of workers’ representation in ...the Baltic States, their role is limited owing to low union density and collective agreement coverage. Unions have, to a certain extent, been unable to overcome the Soviet legacy, although it has been argued that the unions have some unused potential. The effect of unions on labour market flexibility and inequalities is currently limited, thus explaining the balance between flexibility and security being more towards the former, and the favourable inequality dynamics in Estonia during the past 15 years is due to reasons other than the successful activities of unions and social dialogue. The chapter still discusses some moderate recent positive tendencies and effects, such as the dynamics of minimum wages in Estonia in recent years, the unions’ support of wage-bidding power of workers in the lowest wage categories, and positive effects in reducing the gender pay gap in Estonia, which has the largest labour market inequality in the Baltics.
We study the productivity implications of R&D, capital accumulation, and innovation output for entrants and incumbents in Estonia. First, in contrast to developed economies, a small percentage of ...firm engage in formal R&D, but a much larger percentage innovate. Second, while we find no difference in the R&D elasticity of productivity for the entrants and incumbents, the impact of innovation output - many of which are a result of 'doing, using and interacting' (DUI) mode of innovation - is found to be higher for the entrants. Entrants who innovate are 21% to 30% more productive than entrants who do not; the corresponding figures for the incumbents are 10% to 13%. Third, despite the adverse sectoral composition typical of catching-up economies, Estonian incumbents, who are the primary carriers of 'scientific and technologically-based innovative' (STI) activities, are comparable to their counterparts in developed economies in translating STI activities into productivity gains. Fourth, while embodied technological change through capital accumulation is found to be more effective in generating productivity growth than R&D, the effectiveness is higher for firms engaging in R&D. Finally, our results suggest that certain policy recommendations for spurring productivity growth in technologically advanced economies may not be applicable for catching-up economies.
This article assesses the strictness of employment protection legislation and
its actual enforcement in the Baltic States. We use information from the
applicable legislation as well as employer ...surveys, data on the coverage of
labour legislation and the practice of law enforcement. Overall strictness is
close to the average of EU countries and relatively well aligned with EU
regulations; individual and collective dismissals are relatively heavily and
temporary forms of employment relatively weakly regulated. However, effective
flexibility is increased by problems of enforcement: there is much evidence of
violations of statutory regulations at enterprise level. In addition, the
proportion of the workforce actually covered by the regulations is relatively
low. In the Baltic States temporary employment is more widespread, implying a
higher level of flexibility than the EU average.
In this article, we present a comparative analysis of the organization of public funding of research in three central and eastern European countries. We first compare the organization of funding ...agencies, the portfolio of funding instruments and, finally, the repartition of funding by beneficiaries. Further, we identify the main structural characteristics of the funding systems, by looking at features like sectoral divisions, level of delegation and the role of different institutional levels in the management of funding. Against a widespread conception of research policies in central and eastern European countries converging towards a western-style model, our study displays profound differences between the considered countries, related to history but also to contextual factors in the reform phase.
After regaining independence, social dialogue has not been of key importance in the functioning of Baltic labour markets. Despite trade unions’ being the dominant form of workers’ representation in ...the Baltic States, their role is limited owing to low union density and collective agreement coverage. Unions have, to a certain extent, been unable to overcome the Soviet legacy, although it has been argued that the unions have some unused potential. The effect of unions on labour market flexibility and inequalities is currently limited, thus explaining the balance between flexibility and security being more towards the former, and the favourable inequality dynamics in Estonia during the past 15 years is due to reasons other than the successful activities of unions and social dialogue. The chapter still discusses some moderate recent positive tendencies and effects, such as the dynamics of minimum wages in Estonia in recent years, the unions’ support of wage-bidding power of workers in the lowest wage categories, and positive effects in reducing the gender pay gap in Estonia, which has the largest labour market inequality in the Baltics.
The paper seeks to explain the inflationary dynamics in the Baltic countries since the mid-1990s. Single-equation estimations generally yield poor results, while panel data estimations provide ...statistically and economically satisfactory findings. The main result is that the observed gradual disinflation can to a large extent be explained by adjustment to international prices. Stringent fixed exchange rate systems have exerted downward pressure on inflation both directly and via expectations to future inflation. Measures of excess capacity in the labour market have no effect on inflation, while industrial output gaps have some explanatory power. Real oil price shocks have an immediate but short-lived impact on inflation.
The transition from a command to a market economy and the ensuing convergence processes have brought fundamental changes to post-communist countries’ labour markets in a relatively short period. ...These have been analysed from different angles, but at least in the economics literature not much has been said (at least not explicitly) about the evolution of the middle class during and after the transition. In the case of the former communist countries, aggregate developments have been well documented, but these do not reveal the impact on the middle class (Atkinson and Brandolini 20 ). It has been argued that the middle class was a loser in the transformation process. This claim merits careful consideration because of its importance for the growth and economic development of these countries. Since the Industrial Revolution the middle class has been thought of as the source of various elements needed for growth: new ideas, physical capital accumulation, human capital accumulation, entrepreneurship and innovation, and small businesses (Acemoglu and Zilibotti 997; Kharas 20 0). The middle class also contributes to economic growth through its substantial contribution to the development of democracy and active political participation (Banerjee and Duflo 2007). In this chapter we present the development of the middle class in the Baltic states in line with long-term labour market developments. The case of the Baltic states as post-communist economies is particularly interesting for that purpose owing to the major changes in the world of work that have occurred in a relatively short time.
The economic recession in 2008–09 had a strong negative effect on the public sector in the Baltic states. Unlike the rest of the EU, where public sector reforms to cope with the challenges arising as ...a result of the crisis started in 2010–11 and were related to the debt crisis, in the Baltic states the public sector was heavily consolidated as early as 2009 and in Estonia significant budget cuts were introduced in February 2009. Thus, for the Baltics there should be comparatively more evidence on the effects of public sector cuts on the economy, the labour market and the quality of public services. The Baltic states’ experience of the crises might also provide some lessons for the rest of Europe: hopefully some positive, but also some concerning the possible negative consequences of public sector adjustments. Adjustment in the course of crises without exchange rate devaluation through so-called ‘internal devaluation’ (wage cuts restoring international competitiveness) has sometimes been described as fairly successful (for example, due to the relatively rapid recovery since 2010), and was introduced on the basis of quite a strong consensus among both politicians and the general public (for example, according to Eurobarometer, the approval ratings for the government increased from 38 per cent in summer 2009 to 53 per cent in spring 2010 (OECD 2011a) and without major protests.
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