Post-Soviet Agricultural Restructuring: A Success Story After All?

Challenging the initial expectation that all post-Soviet economies will evolve from collective toward fully individualized farming, I argue that they separated into two different reform paths. In the European successor countries and Kazakhstan, corporate and family farms coexist, labor exited agriculture, and capital inflow boosted labor productivity (a “Westernization”). In the Transcaucasian and the other Central Asian countries, complete farm individualization did not increase labor productivity much, in turn keeping rural incomes depressed (a “Southernization” akin to the Global South). Future policies should promote income alternatives to agriculture and improve the flexibility and transparency of farm consolidation processes.

Short-Term Capital Flows, Exchange Rate Expectation and Currency Internationalization: Evidence from China

This paper intended to employ a portfolio approach to assess the effect of exchange rate expectation on Chinese RMB internationalization and empirically test the interactive effects among short-term capital flows, RMB appreciation expectation and the internationalization process using a VAR model with monthly data ranging from February 2004 to December 2020. The results suggest that RMB exchange rate appreciation could lead to an increase in the foreign demand for RMB and RMB denominated assets, while RMB internationalization would attract more short-term capital inflow due to the reduced transaction costs. The empirical evidence from the VAR model estimation confirms the finding that expected RMB appreciation induces short-term capital inflow and promotes RMB internationalization. The robustness checks confirm the evidence. The results have important policy implication for RMB internationalization and for maintaining a sound and stable financial system.

The Capital Flow Volatility Spillover in Some Selected African Economies

Purpose: The study conducted an empirical examination of the link between capital flows and exchange rate by examining the relative influence of FDI and FPI on the exchange rates. Method: The study proceeded with the EGARCH model and the data sample covering the period from 1990-2016. The data were subjected to cross-country screening. The screening criteria are such that all the data that constitute capital in all sampled countries must have equal sample sizes. The measurement of capital flow in each of the sampled countries was restricted to two categories capital, namely, foreign portfolio investment (FPI) and foreign direct investment (FDI). Results: The research establishes that the behavior of capital flow volatility spillover of the sample countries' currencies exchange rate differs, with only South Africa's and Morocco's currencies revealing some slight similarity and existence of asymmetric volatility spillover from capital flows to exchange rate. Additionally, the study discloses that capital flows spillover has a considerable effect on exchange rate volatility than harmful spillover. The study also observed that positive shocks associated with capital flow volatility affect exchange rate value in Botswana more than capital outflow. Further positive capital flow spillover impending from capital inflow has a considerable effect on exchange rate volatility than the harmful spillover impending from the capital outflow. Further, the positive capital flow spill over impending from capital inflow significantly affects exchange rate volatility more than the negative spillovers that emanate from the capital outflow. Implications: This suggests that the monetary policy should consider options that can accelerate capital flow into the Moroccan economy. However, in South Africa for any given quantum of capital flow into the economy, the South African Reserve Bank must use instruments to affect stability; otherwise, the currency exchange rate could remain unstable. Thus, capital withdrawals out of the Egyptian economy will create domestic currency instability. Keywords: Spill-over, Foreign Direct Investments (FDI), Portfolio Investments (PI), asymmetric, capital flow volatility, Exchange rate volatility.

Coexisting Hidden and Self-Excited Attractors in an Economic Model of Integer or Fractional Order

In this paper, the dynamics of an economic system with foreign financing, of integer or fractional order, are analyzed. The symmetry of the system determines the existence of two pairs of coexisting attractors. The integer-order version of the system proves to have several combinations of coexisting hidden attractors with self-excited attractors. Because one of the system variables represents the foreign capital inflow, the presence of hidden attractors could be of real interest in economic models. The fractional-order variant presents another interesting coexistence of attractors in the fractional-order space.

Wage Inequality and Unemployment in the Presence of Imported Intermediate Goods: A Theoretical Analysis

This article develops a static three-sector and five-factor competitive general equilibrium model of a small open economy: sector 1 is the rural agricultural sector, which produces products using informal or unorganised unskilled labour and land as inputs; sector 2 is the urban manufacturing, final-goods-producing sector that produces products with the help of unskilled labour, who get unionised wages, and capital; and sector 3 is the service sector, which uses skilled labour with formal wages, capital and sophisticated hi-technology-intensive imported intermediate goods produced abroad as inputs. We show that an exogenous increase in capital inflow or an increase in tariff on imported intermediate input reduces the skilled–unskilled wage inequality and lowers unemployment as long as the return to capital is unaltered and output adjustments absorb the entire shock of the two policies. Such capital inflow increases rural wage and reduces unemployment via the Harris Todaro mechanism but interestingly does not allow the skilled wage to increase. Thus, two critical policy targets can be accommodated at the same time. JEL Codes: F13, J31, J46

Foreign capital inflows and housing market in Pakistan

Purpose Housing prices have been increasing tremendously in Pakistan, there should be many reasons but the haphazard urbanization and rapidly growing population. To find out the causes of this price rise, this study aims to assess the impact of the foreign capital inflow and some domestic factors on housing prices. Design/methodology/approach To get the benefits of high-frequency data, it has been converted into a monthly, quarterly and yearly basis. The unit root is performed to see the stationarity, Johansen test is used for cointegration and coefficients are obtained through the ordinary least squares technique. The robustness of the results is checked with dynamic ordinary least squares and the Chow breakpoint test is used to detect structural breaks. Findings The housing prices have increased over time; this has been reflected in all the data sets under observation. The country has observed a rapid growth in population and urbanization that has badly affected almost every activity of city life. The impact of foreign capital inflow is positive on the house price appreciation. There is a dire need to divert such foreign funds in the housing sector so that it cannot create an artificial price hike. The government should regularly publish a housing policy for the guidance of investors and the public at large. Also, public authorities should provide housing finance facility. Originality/value This is a novel work to the best of the authors’ knowledge because no one has studied the impact of foreign capital inflow on the housing market for the economy of Pakistan. Furthermore, this study is different in the sense that it has disaggregated annual data into a monthly and quarterly basis to get the benefits of high-frequency data.