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Abstract

This study analyses the effectiveness of government incentives on household savings in Hungary prior to the Covid pandemic and the ensuing economic turmoil. Time series pertaining to life insurance, voluntary pension savings, and long-term and short-term government bonds are tested in relation to government incentives. The novelty of this study is the test on complex mix of policy incentives and saving funds. The analysis applies the multiple breakpoint test and OLS regression, based on the behavioural life cycle hypothesis. The conclusion is that in the analysed time period the government incentives had a significant effect and promoted savings behaviour, with the exception of short-term government bonds.

Open access

Abstract

This study compares the European country groups using economic, financial and health indicators in 2000 and 2015. The “Core” European Union (EU) countries, which are the main progenitors of the deterioration processes within the EU, have changed their cluster memberships from higher-order clusters to lower-order ones. Deposits in banks (assets) to GDP (%) and inflation at consumer prices (annual %) have played a leading role in the formation of EU country groups for 2000 and 2015. The study emphasized the importance of political cohesion and financial stance to mitigate European countries’ financial risks and welfare states.

Restricted access

Abstract

This paper investigates the impacts of potential determinants of demand for tourism in Turkey through Markov Regime Switching-Vector Auto Regression (MS-VAR) estimations from 1999 to 2017 on monthly data. The determinants are income level, exchange rates and the threat of terror incidences. The terror variable, following the Global Terrorism Index (GTI) 2017 report, is calculated for Turkey by the author. This research has conducted two separate MS-VAR models to observe the relevant parameters’ signs of the demand for tourism function. Both MS-VAR models revealed that income level and exchange rates have positive influences on tourism while the terror threat has a negative impact on tourism in Turkey. Terror adversely affects the demand for tourism in the short-term in which terror has occurred in the nearest past (i.e., a month ago). The MS-VAR models also yield that a similar negative impact of terror on tourism activities does not appear over the longer periods.

Restricted access

Abstract

Researchers and practitioners alike have long debated the role of high GDP growth strategies and social expenditures (SE) in ensuring a better distribution of income and reduction of poverty. This study is aimed at investigating the effectiveness of social expenditures by offering the use of a robust methodology. Our sample consists of 27 EU countries (further divided into pre- and post-2000 members) between 2005 and 2017. We used panel data to determine whether social expenditures have a positive effect on the World Bank generated Human Development Index (HDI).

Restricted access

Abstract

In order for monetary policy’s interest rate channel to operate smoothly and effectively, the relevant retail interest rates of the real economy should react quickly and follow the movements of the prime rate. It has been observed that this connection has weakened since the financial crisis and it was suggested that the so called Weighted Average Cost of Liabilities (WACL) might be a better proxy for the banks’ marginal costs than the prime rate or interbank rate. In this study the WACL for Czech Republic, Hungary and Romania is calculated by applying cointegration tests and ARDL models. I examined whether their long-run relationships with the retail loan rates are more stable. Results: 1. Using the WACL instead of the interbank rate yields slightly more stable long-term relationships with the retail loan rates, and the WACL has been proved to be somewhat more stable than the interbank rate. 2. The interest rate pass-through has been efficient for the household loan rates in all three countries, but only in Romania for the corporate loan rates. 3. The results suggest that the central banks can effectively influence the commercial banks’ financing costs even in a low interest rate environment, although this cost represents only one component of the loan rates, and the movements of other components can offset the changes of the prime rate.

Open access

Abstract

János Kornai, the most distinguished Hungarian economist passed away on 18 October 2021. This short essay, written by a long-time disciple of Kornai tries to prioritize his scientific achievements spreading over six decades. The conclusion is that Kornai's most important contribution to the principles of economics was already presented in his 1971 book, entitled Anti-equilibrium, and without this book his most respected later works and his other original concepts, like the soft budget constraint or the shortage economy, cannot be understood.

Open access

Abstract

The enlargement of the euro area (EA), an unfinished process, was low on the European agenda in the period between the 2008 and the 2020 crises. The socio-economic consequences of the coronavirus pandemic and frictions in geopolitics would call for a coherent Europe, yet new and old fault-lines appeared in the EU involving the eastern periphery where sovereignty issues gained particular importance. The authors revisit the euro adoption process of the new member states, with a focus on the Visegrad Group (V4) countries, applying a two-track approach: a monetary policy analyses of EA entry as a rational cost/benefit issue and, second, a political economic survey of key stakeholders, set in the context of the dilemmas of retaining or sacrificing nominal monetary sovereignty. Even a piecemeal enlargement of the EA, involving Bulgaria, Croatia and Romania, would cause business consequences and political repercussions in the countries left out of EA. The paper concludes that further moves towards a developmental state model would preclude euro adoption and put such member state in collision course with the core Europe.

Open access

Abstract

The financing of young start-up companies is hindered by market failures that prompt governments around the world to intervene at the venture capital market. The aim of this paper is to give a comprehensive overview on this research field based on sound systematic literature review methodology, which was never done before. We found three major themes: pure governmental venture capital involvement, governmental-private venture capital cooperation, and governmental involvement in the financing of pre-seed startups. The evaluation of the governmental efforts varies according to these themes and also the investigated geographic location. Generally, pure governmental venture capital is the most controversial theme, the government-private cooperation is mostly viewed in a positive light, while the authors almost unanimously praise the government’s efforts when financing pre-seed startups. We found that the success of governmental venture capital should not be judged based on the realized return of its investments, since profit maximalization is not its goal. The governments try to alleviate market failures at the venture capital market and transition financed startup companies to private financing. Thus, we advise researchers to use the number of this type of successful transitions as the success criteria of governmental investments.

Open access

Abstract

Hungarian small- and medium-sized enterprises are facing the challenges of digitalisation and innovation to survive fierce competition in the era of Industry 4.0, and particularly of COVID-19. Survival in the heavily hit sectors depends on the degree of digitalisation and involvement in e-commerce. This paper aims to examine Hungarian SMEs’ current scale of digitalisation and adoption of Industry 4.0 technologies. It also analyses the role of the Hungarian government’s support for SMEs’ digital transformation. To this end, secondary data were collected from Eurostat, the European Commission and the Hungarian Central Statistical Office, including the Digital Economy and Society Index (DESI), indices of skills and innovation from SME performance reviews and sectoral business statistics. In processing the data, the study strictly followed the European Commission’ classification protocol, complemented by a qualitative analysis of reports and programmes related to digitalisation and Industry 4.0 in Hungary. The findings reveal that there is a further need for strengthening the digitalisation and innovation capacities of Hungarian SMEs. The effects of introduced measures could not be seen yet. Hence, the Hungarian government should continue to support SMEs’ digital transformation in order to increase their role in high-tech manufacturing and knowledge-intensive services.

Open access

Abstract

In the following paper, I examine the considerable impact of the recent world-economic shift that has determined the circumstances of Hungarian suppliers' value-chain integration. I argue that as a result of the specialized positions they occupied in the value-chain after the collapse of the Comecon market, Hungarian enterprises in export-oriented industries faced a dilemma—a trade-off between obtaining the most advanced technologies (and thus access to world-market niches) and retaining ownership in the hands of domestic capital. When company managers opted to protect ownership with the help of the state, they exposed themselves to greater risk of downgrading their position in the value chain. If they managed to get access to advanced technologies (and the requisite funding), they were more likely to lose control over their company's assets, either as a result of a hostile takeover or becoming part of the larger partner's merger-and-acquisition plans. This paper is a discussion of some of the particular characteristics of this dilemma, as well as a comparison with the experience of Hungarian service providers who implemented a different strategy. This paper is also a critical assessment of some of the chief characteristics of the world-economic evolution that has been underway since 2009, such as German automotive value chains' expansion in the CEE region and the growing role of Chinese capital in regional infrastructural projects.

Open access

Abstract

Industrial parks may be high pollutants of the local environment, but also engines of regional development, employment, and economic value added. To make them more sustainable, regional planning often purports to promote a transition to a greener approach, but in reality, many green measures oppose business logic and profitability, while those companies that do invest in sustainable solutions do so without having a clear strategy. This complicated setup is to be explored and modelled in this article which is focused on a remarkable area, the urban region of Székesfehérvár, an industrial city in Hungary having an impressive economic development and hosting significant domestic and international companies. The disharmony between greening policies, intentions and actions is observable in Székesfehérvár, despite the considerable local and regional potentials of renewable energy resources. Findings indicate that systemic thinking and future-oriented decision making will be necessary to achieve true sustainability, which also requires a mutually proactive attitude and the cooperation of different sectors. A legitimate strategy aiming at greening the local and regional economy (with renewable energy concerns), implemented by both public and business actors can be the key element of a successful transition. This strategy needs to be stimulated by local governance.

Open access

Abstract

This article tries to explain the differences in COVID-19 case fatality rate (CFR) in 22 European countries by their type of organization and performance level of their healthcare systems. The CFR is taken here as the most important indicator since it measures the ratio between COVID deaths and COVID cases. In our view, this indicator reflects the true performance of the healthcare system, as this indicator is freed form public health interventions, like testing, lockdowns or social distancing.

Our research is also unique, because it sees the healthcare system in a holistic way and tries to explain the CFR not by individual risk factors, socioeconomic indicators, or partial system parameters, but by using a complex healthcare system classification method adopted from Isabelle Joumard and an overall healthcare system performance index adopted from European Health Consumer Index (EHCI).

The main results are twofold. First, higher EHCI score is related to lower CFR. So, the countries are cumulated basically in two quadrants: High EHCI performers (score 790 and higher) with low CFR (below 1.93%) and low EHCI performers with high COVID CFR. Second, apart from Czech Republic, the V4 countries are not doing very well in fighting COVID. Hungary is the worst, not only from the V4 group, but the worst from the whole list of 22 European countries included in this research. Poland is doing better, but still is high above the median CFR. Slovakia was the second worst from the V4 group. Czech Republic is the best V4 performer and the only country with EHCI score lower than median and CFR also lower than the median.

Free access

Abstract

The main objective of this paper is to identify the impacts of the COVID-crisis on growth, in particular on growth potential in the European Union (EU), in the context of a broader growth analysis. The quantitative analysis underlying this paper focuses on the financial and economic (“Great”) recession of 2008–2009, the subsequent recovery and the period of the COVID-crisis. We provide a detailed overview of some of the mechanisms of the COVID-crisis on growth.

The COVID-crisis is likely to have a direct impact on the level of potential output. A decrease in investments and labour market hysteresis may have long-lasting effects on potential growth. The former would have a negative impact on productivity. This can lead to increased inequalities and have a negative effect on social cohesion. The future development of divergences among the EU Member States is particularly important. Their possible intensification could disrupt the functioning of the euro area and the internal market.

A lasting source of potential growth in the EU Member States could be productivity growth. Its decisive structural factor is the growth dynamism of total factor productivity (TFP). There are large differences in this area with regard to the level and growth dynamism of performance of the Member States. Narrowing the output gaps vis-à-vis the front-runners through deep structural reforms could be a key factor in raising growth potential. The cleansing effects of crises, which force structural change and resource reallocation, can also create new opportunities for TFP growth.

Open access

Abstract

COVID-19 has been the “hottest” topic in many fields of research during 2020–2021. Our analysis focuses on the publications related to the pandemic in the business and economics area. Using the Web of Science database, the main international research patterns in this field have been analysed. Our research covers less than two years (2020 and part of 2021), but the number of publications is large (more than 1,000) in this limited time span. The publication patterns of the CEE countries have also been examined. Bibliometric and social network analysis was used to assess which countries and institutions published the most during this period. For analysing the main trends in the given field, keyword analysis was performed.

Open access

Abstract

Despite a long period of post-crisis recovery, the COVID crisis caught the EU in a precarious state. The policy and institutional innovations during the financial crisis tempered the macroeconomic imbalances that had caused the crisis. Nevertheless, the EU was left with a strong trend of divergence in economic and social performance because of the lack of sufficiently strong reforms at EU and national levels. But the lessons of the previous crisis were learned. This time around, the EU-level policy and institutional innovations were decisive. The fiscal capacities of the hard-hit countries were strengthened quickly. Green and digital transformation will require a major new wave of innovation in the corporate sector in the EU. This, in turn, critically hinges on improving the quality of public and private institutions and advancing with the implementation of major reforms at the EU level, such as the digital single market or Capital Market Union. Implementing these reforms fully, and preventing later reversals is a key to stemming the trend of economic and social divergence, thus strengthening the coherence of the EU.

Open access

Abstract

The immediate effects of COVID-19 on the global flows of foreign direct investment (FDI) were devastating, resulting in a large drop. Flows to the Visegrad countries were also affected but less than the world average. The fall in FDI was the result of underlying trends that started before the pandemic but accentuated by the latter, creating a “perfect storm”. These secular trends include the digitalisation of production and the birth of Industry 4.0, resulting in more asset-light international production and reorganisations of company networks, the sustainability imperative, making the impact of FDI more relevant than its quantity, and a slowdown in the liberalisation of the policy framework for FDI both in individual countries and at the multilateral level. The recovery of FDI from the shock of 2020 is expected to be long and it will be impossible to return to the pre-pandemic structural and geographical patterns. Building resilience and diversification of production at the expense of the search for the lowest-cost locations will be the top priorities of investors, forcing the host countries to revise their investment promotion strategies focused on cost reduction. In the Visegrad countries, the model based on low labour costs will sooner or later reach its limits.

Open access

Abstract

Relying on the Labour Force Survey and the monthly revenue statistics of the Hungarian Central Statistical Office, we assess the immediate economic impact of the first wave of the COVID-19 pandemic in the first two quarters of 2020. We first analyse the role of job loss, working time reduction, downtime, and telework in adjustment to the crisis. The findings reveal an even more serious setback and increase in inequality than in 2008–2009. School leavers, young workers and unskilled laborers were particularly severely affected. Graduates were less likely to lose their jobs, more likely to switch to telework, and their employers faced a smaller decrease in sales revenue. The revenues of foreign-owned exporters fell more than the average in March but recovered by June. The decline experienced by businesses in the Hungarian ownership was slower but more prolonged.

Free access

Abstract

This paper examines the factors which determine the impact of network communication and network connections on the likelihood of contracting the new coronavirus in the European and Latin American countries. The author presents several data sets to prove the following suggestions: 1) The generalized indicators of economic development and society’s globalization are not indicators of how vulnerable a country’s population may be in a pandemic; 2) Not the economy as such, but the conventional way of life of people, their daily behaviour and habits have a decisive influence on the disease spread; 3) Factors of prevention of illness and health promotion such as the habit of exercise, distance, and network communications use modern online services to become protective factors against the risk of infection only at a certain level of development of the country; 4) In the developed countries, a much broader set of factors than in the developing countries determine protection against disease risk; 5) The evolution of a networked society opens up significant opportunities for the developing countries to improve the quality of life, and the emergence of new, progressive traditions.

Free access

Abstract

The recent pandemic has raised fundamental questions about the traditional role of government. That role has stressed the pursuit of national interests and identified the tools that governments should use in the pursuit of those interests. While over the past century the desirable role of the state was amended to include new objectives (such as equity and stabilization) the focus had remained national interests. This paper argues that this national focus has become increasingly anachronistic and damaging.

Free access

Abstract

The paper analyses the differences of COVID-19 mortality rates (MR) in 24 European countries. We explain MRs on the available, reliable ex-ante economic, health and social indicators pertaining to the year 2019 – i.e., before the outbreak of the pandemic. Using simple regression equations, we received statistically significant results for 11 such variables out of 28 attempts. Our best model with two ex-ante independent variables explains 0.76 of the variability of our ex-post dependent variable, the logarithm of Cumulative COVID Deaths. The estimated coefficient for the variable Density of Nurses shows that having one more nurse per 1,000 of population decreases cumulative COVID deaths by almost 15%. Similarly, one more unit Consumption of Non-Prescribed Medicine decreases cumulative deaths by 5%. It seems that until now those European countries were successful in minimising the fatalities where the population had a high level of health literacy, people pursue healthier lifestyle and the healthcare systems worked with a relatively large nursing force already prior to the COVID pandemic.

Open access

Abstract

The crisis caused by the coronavirus pandemic has prompted governments and central banks to take unorthodox measures aimed at protecting the standard of living of people and sustaining the production and service activities of companies. The policy of aggressively increasing the supply of money has entailed a significant rise in the budget deficit and public debt. It is important to consider the extent of its impact on the escalation of inflation processes and to formulate suggestions regarding the economic policy. Inflation is already higher than the official indicators show it, because it is partly suppressed. The increase in the general price level does not fully reflect the actual inflation rate. We are dealing with shortageflation – the simultaneous occurrence of price inflation and repressed inflation accompanied by shortages. It is methodologically interesting to compare this current phenomenon, 3.0, with the suppression of inflation in the war economy, 1.0, and in the economies of state socialism, 2.0. Such comparisons highlight not only the similarities of these processes but also the differences resulting from the specificity of responses of households and businesses. This paper discusses five channels of unloading excessive savings, indicating the most beneficial ones from the point of view of sustainable economic development in the post-pandemic future. It is particularly important to prompt the conversion of compulsory savings into voluntary savings, and at the same time, to stimulate the transformation of the inflationary monetary reserves into the effective demand expanding the use of existing production capacities and investments creating new capacities.

Free access

Abstract

In order to mitigate the economic effects from the COVID-19 epidemic, a moratorium on loan repayments was introduced in several countries, including Hungary. Essentially, a loan moratorium provides additional finance for participants, allowing theories of both credit demand and consumption to be tested on debtors’ decisions as to whether or not they participate in the programme. In this paper, we use a linear probability model on the Hungarian survey data to examine the driving factors behind the households’ decision to participate in the scheme. Our results show that the younger debtors and those with more children are more likely to utilise the programme. Stretched financial situations, i.e., lower incomes, lower savings and higher payment-to-income ratios, increase the probability of continued participation as well. The chance of participating in the scheme also increases significantly when a household has faced borrowing constraints over the past two years, i.e., it has not been or only partially been able to satisfy its credit demand.

Free access

Abstract

Although the issue of the coronavirus pandemic has temporarily overridden discussions on the impacts of climate change on tourism, they have not lost their relevance at all. The exposure of the tourism industry to these effects is indisputable. This study, conducted in 2019–2020, examined the perceptible impacts of climate change that generate further changes, and the issue of climate adaptation involving certain supply-side players in the tourism sector at the local and regional levels. In the questionnaire used to explore the topic, questions were asked about a number of perceptible phenomena and their effects on everyday life, recreational habits, and adaptation. The quantitative surveys involved 1,615 respondents from the Transdanubian region of Hungary (NUTS1/HU2). The results of the research clearly confirm that the problem of climate change is no longer a concern only for scientists, and although the different generations perceive and evaluate the phenomenon differently in many cases, it increasingly affects people’s everyday lives and recreational habits. The perceived effects experienced by the respondents clearly influence the enjoyment of certain tourism product groups (beach holidays, hiking, attending open-air events) and the comfort and satisfaction experienced by individuals.

Open access

Abstract

Fake news, deceptive information, and conspiracy theories are part of our everyday life. It is really hard to distinguish between false and valid information. As contemporary people receive the majority of information from electronic publications, in many cases fake information can seriously harm people’s health or economic status. This article will analyze the question of how up-to-date information technology can help detect false information. Our proposition is that today we do not have a perfect solution to identify fake news. There are quite a few methods employed for the discrimination of fake and valid information, but none of them is perfect. In our opinion, the reason is not in the weaknesses of the algorithms, but in the underlying human and social aspects.

Open access

Promoting the future of innovative higher education through thousands of master's programmes

STEM, interdisciplinary and business programmes in a changing labour market

Society and Economy
Authors: Katalin Feher, Zsuzsanna Géring, and Gábor Király

Abstract

This paper discusses how leading innovative universities and their master's programmes reflect rapidly changing social-economic technological trends. The increasing focus on the STEM subjects, the changing profile of business and MBA programmes, and the ratio of interdisciplinarity provide insights into the development of future-oriented higher education. In the scope of this study, 2,708 master's programmes were surveyed globally based on their online representation, and 1,750 training programmes from this list were analysed in terms of employability rankings. According to our findings, Western Europe offers the largest number of master's programmes. STEM studies are overrepresented at the top innovative universities, and interdisciplinary studies account for fifteen percent of the programmes. Additionally, business studies with interdisciplinary programmes were identified in a higher proportion as compared to business-only studies. The findings signal the labour market's preferences toward future-oriented, personalised and responsive knowledge. The present study contributes to future education through a global analysis, and supports the strategy creation of higher education institutions (HEIs). Therefore, this article is especially informative to representatives, policy makers or researchers at future-oriented HEIs.

Open access
Society and Economy
Authors: Edina Berlinger, Judit Lilla Keresztúri, Ágnes Lublóy, and Zsuzsanna Tamásné Vőneki

Abstract

The severity and frequency of operational loss events show high variability across the globe. In this paper, we first examine the extent to which the quality of country-level governance measured by the Worldwide Governance Indicators explains cross-country variation of operational losses. We use the comprehensive database of SAS OpRisk Global for the period of 2008–2019 covering 132 countries and 8,144 loss events with a total loss amount of almost 490 billion USD. Our findings indicate that the governance indicators lost their explanatory power over the past decades, which contradicts the academic consensus and calls for new explanatory variables. To find these variables, we hypothesize that the changes are driven by some important megatrends such as economic development and technological advancement, globalization, and sustainability. Accordingly, we propose an extended model where the number of mobile subscribers, the export to GDP ratio, and the poverty headcount ratio were significant for the frequency. For severity, only GDP is a significant and robust explanatory variable. Investors, regulators, and analysts should, therefore, concentrate on these factors if they wish to model, manage, or mitigate operational risks.

Open access
Society and Economy
Authors: Edina Berlinger, Judit Lilla Keresztúri, Ágnes Lublóy, and Zsuzsanna Tamásné Vőneki

Abstract

The severity and frequency of operational loss events show high variability across the globe. In this paper, we first examine the extent to which the quality of country-level governance measured by the Worldwide Governance Indicators explains cross-country variation of operational losses. We use the comprehensive database of SAS OpRisk Global for the period of 2008–2019 covering 132 countries and 8,144 loss events with a total loss amount of almost 490 billion USD. Our findings indicate that the governance indicators lost their explanatory power over the past decades, which contradicts the academic consensus and calls for new explanatory variables. To find these variables, we hypothesize that the changes are driven by some important megatrends such as economic development and technological advancement, globalization, and sustainability. Accordingly, we propose an extended model where the number of mobile subscribers, the export to GDP ratio, and the poverty headcount ratio were significant for the frequency. For severity, only GDP is a significant and robust explanatory variable. Investors, regulators, and analysts should, therefore, concentrate on these factors if they wish to model, manage, or mitigate operational risks.

Open access

Abstract

Our aim is to identify periods of restrictive versus expansionary economic policy in the euro area in the last two decades. We firstly conducted the study for identifying the dominant trend in fiscal policies and then in monetary policies. We studied several fiscal outputs, focusing on the cyclical adjusted primary balance. We also analysed the European long-term and short-term interest rates. The study was conducted for several windows, namely for 3-, 4- and 5-year periods. Additional procedures were conducted for robustness checks, namely the study of structural breaks in the analysed time series as well as a study of them recurring to Markov-Switching Regimes models. For most of the analysed periods and subperiods of the series, we concluded for the presence of expansionary policies either in the fiscal or in monetary European domains. Finally, the results and the analysis of dependencies in the euro area economy favour the evidence that economic authorities in the euro area have sought to coordinate monetary and fiscal policy to stabilise the economy.

Restricted access

Abstract

A set of policy prescriptions based on Modern Monetary Theory (MMT) have been developed that are independent of the monetary model, which are often presented together, in a context that does not require taxation: guaranteed income, job guarantee and full employment. These are enabled by the ability of a government to deficit spend as needed, as long as government controls its sovereign currency.

Here I raise the concern that implementing MMT accounting could cause increases in political power inequality relative to citizens not seen since the medieval era or before. The assumption that spending and tax policy in an MMT system would occur as proponents expect is contradicted by the history of political choices regarding spending and taxation over the past half-century. The record of behaviour by politicians in the nations where foreign aid money “fell from the sky,” thus divorcing national income from the tax base, also contradicts this idea.

With removal of the formal requirement for taxation, politicians operating in an MMT system will have little inherent reason in the short term to treat citizens well except moral suasion. This should provide a foundation for tyranny unparalleled in modern history. Incorporating progressive taxation into MMT’s corpus, for the express purpose of economic and political stability, is suggested in order to achieve the overall aims of the MMT policy advocates. However, this may not be sufficient. In addition, considering increasing the role of governors/leaders of states within the monetary unions may be useful, because those governments do need to follow the old rules of taxation to support spending, and this may provide a counterweight.

Open access

Abstract

Government involvement in the venture capital (VC) market has become an important catalyst of the entrepreneurial ecosystem of young and innovative firms. There is an extensive literature describing the VC model, but the models of its government backed variants are not comprehensively discussed. The article focuses on the model of purely government backed venture capital (GVC) and hybrid venture capital (HGVC). The conclusion of this article is that, by the logic of their models, GVCs are destined to underperform than private VCs. Many articles see HGVCs as a step forward compared to GVCs, as they involve private participants. The novelty of the current article lies in bringing out the drawbacks deriving from the system of hybrid venture capital funding by creating a complex theoretical framework of the HGVC model. We show that due to the crowding in of private participants, this scheme creates a two-goal system where the private profit maximising interests conflict with the economic policy goals. The complex system of HGVC is exposed to increased moral hazard issues that might lead to higher distortions than GVC. The conclusions are especially relevant in the case of developing industries.

Open access

Abstract

The aim of this paper is to diagnose the cause-and-effect relationships between reinvestment of earnings (RoE) and other components of FDI inflows and GDP in Poland in the years of 2004–2019, using the VECM model**. Changes in the structure of FDI inflows in Poland are in line with the stages of the FDI life cycle. The increase in the share of RoE in the structure of these investments is also accompanied by an increase in the impact and the degree of explanation of changes in GDP. Studies confirmed that changes in the structure of FDI in Poland was adequate to the theoretical cycle of FDI life. The increase in the share of RoE in the structure of FDI inflows is accompanied by a decrease in equities. The VECM model, impulse response function and decomposition analysis confirmed that among FDI components mainly equities, and next, RoE have large participation in the degree of explanation of GDP. In the short-term, mainly equity has the most important impact on GDP, and additionally, RoE. In the long-time, the importance of equity decreases, while increases the impact of RoE, and also, debt instruments. The increase in the share of RoE in the structure of FDI inflows accompanied by the increase in the impact of these investments on GDP changes.

Restricted access

Abstract

The 2008 crisis highlighted the importance of using stress tests in banking practice. The role of these stress tests is to identify and precisely estimate the effect of possible future changes in market conditions on capital adequacy and profitability. This paper seeks to show a possible methodology to calculate the stressed point-in-time probability of default (PD) parameter. The presented approach contains a linear autoregressive distributed lag model to determine the connection between the logit of default rates and the relevant macroeconomic factors, and uses migration matrices to calculate PDs from the forecasted default rates. The authors illustrate the applications of this methodology using the Hungarian real credit portfolio data.

Open access

Abstract

Healthier people contribute more to the development of the economy. Besides, in a better economy, people have a better quality and healthier life. At this stage, one has to ask which one precedes the other: health or wealth? To find the answer, this study aims to investigate the causality relationship between health and inclusive wealth in the European countries for the period of 1990–2015. The causality between health and inclusive wealth scores, which are estimated by cluster and discriminant analyses, is investigated by the panel causality test. The research results indicate bidirectional causality between health and inclusive wealth. A one-way causality is detected in 11 cases as being from inclusive wealth to health and in 8 the other way. Furthermore, a two-way causality is found in 2 countries. Among the results, it is noteworthy that 91% of the countries with causality from inclusive wealth to health are among the healthy countries.

Restricted access
Acta Oeconomica
Authors: Gergely Csurilla, András Gyimesi, Erika Kendelényi-Gulyás, and Tamás Sterbenz

Abstract

We describe a statistical approach for the measurement of the newly defined luck-based noise factor in sports. It is defined as the difference between the actual outcome and the expected outcome based on the model predictions. We raise the question whether some sports exhibit a higher level of noise-factor than others, making investments in that sport riskier. Data from 14 individual sports in six Summer Olympic Games between 1996 and 2016 were included in the analysis. Market shares are predicted by the autoregressive linear and zero-inflated beta regression models with exogenous variables, where the higher Normalized Mean Squared Error indicates a higher noise-factor. Modern pentathlon, tennis and cycling showed the highest noise-factors, whereas swimming, table tennis and athletics were the least noisy. Possible reasons are discussed in the paper. Our analysis indicates that countries with suitable resources producing leading elite Olympic athletes are predicted to achieve higher success in sports with a lower noise-factor such as swimming. In contrast, investments in noisy sports, such as e.g., modern pentathlon, are associated with a higher risk.

Open access

Abstract

Although a number of studies have been conducted over the past decade to understand the factors influencing the willingness of producers to operate in a short supply chain (SSC), the intention to adapt can still be identified as an unexplored area. The main aim of the present study is to determine the extent to which Hungarian fresh sour cherry producers show a willingness to operate in a short supply chain and what investments they would make to do so. The sour cherry producers involved in the study clearly show a willingness to operate in a short supply chain. Some producers approach this in a “complex” manner, so they would even meet individual consumer needs and deliver orders to the consumer. Farmers opting for a “simpler” solution would prefer to sell their products to the consumer at their premises or at farmer’s markets. Further results support the fact that the more producers believe in the viability and future of SSCs and the higher their level of education is, the more willing they are to adapt in terms of resources or production processes in order to achieve complete transition. The results reflect the importance of examining the factors that determine farmers’ intentions to operate in the short supply chain, but it is also worthwhile and justified to explore how willing they are to “sacrifice” and invest in order to completely adapt.

Open access

Abstract

Although a number of studies have been conducted over the past decade to understand the factors influencing the willingness of producers to operate in a short supply chain (SSC), the intention to adapt can still be identified as an unexplored area. The main aim of the present study is to determine the extent to which Hungarian fresh sour cherry producers show a willingness to operate in a short supply chain and what investments they would make to do so. The sour cherry producers involved in the study clearly show a willingness to operate in a short supply chain. Some producers approach this in a “complex” manner, so they would even meet individual consumer needs and deliver orders to the consumer. Farmers opting for a “simpler” solution would prefer to sell their products to the consumer at their premises or at farmer’s markets. Further results support the fact that the more producers believe in the viability and future of SSCs and the higher their level of education is, the more willing they are to adapt in terms of resources or production processes in order to achieve complete transition. The results reflect the importance of examining the factors that determine farmers’ intentions to operate in the short supply chain, but it is also worthwhile and justified to explore how willing they are to “sacrifice” and invest in order to completely adapt.

Open access

Abstract

Studying in Hungary has become a new trend among Chinese students under the Belt and Road Initiative. The spectacular tripling of the growth of incoming Chinese students has influenced the number of international students in Hungary. In this paper, 26 in-depth narrative interviews with Chinese students in Hungary were conducted and analysed, employing the grounded theory method. This research reveals that beyond considerable uncertainty regarding future plans and career trajectories, three paths are open for Chinese students in Hungary. The largest group intends to return to China after graduation, although they have doubts concerning whether their acquired skills and knowledge can be utilised. The second group aims to find niche jobs, in which they can utilise their in-betweenness. Finally, a small proportion consciously builds their network and aims to remain in Hungary or Europe, engage in further studies or seek employment. The findings contribute to policymakers who support Chinese international educational mobility and to individual Chinese students that wish to widen their horizons and find alternative career paths.

Open access

Abstract

Studying in Hungary has become a new trend among Chinese students under the Belt and Road Initiative. The spectacular tripling of the growth of incoming Chinese students has influenced the number of international students in Hungary. In this paper, 26 in-depth narrative interviews with Chinese students in Hungary were conducted and analysed, employing the grounded theory method. This research reveals that beyond considerable uncertainty regarding future plans and career trajectories, three paths are open for Chinese students in Hungary. The largest group intends to return to China after graduation, although they have doubts concerning whether their acquired skills and knowledge can be utilised. The second group aims to find niche jobs, in which they can utilise their in-betweenness. Finally, a small proportion consciously builds their network and aims to remain in Hungary or Europe, engage in further studies or seek employment. The findings contribute to policymakers who support Chinese international educational mobility and to individual Chinese students that wish to widen their horizons and find alternative career paths.

Open access

Abstract

Islamic Finance receives more attention due to the growing need for financial services in countries with a Muslim population. However, the rules of Islam and its applications in daily life cause conflicts in today's conventional financial system. Since interest gains are prohibited in Islam according to the Quran, Islamic banks develop and use interest-free methods, unlike the conventional banking system. Islamic Finance introduced profit-sharing ratios to replace interest rates and to increase the participation of religious investors in the financial system. In this research, we compare interest rates with profit-sharing ratios in the Turkish banking market. We use wavelet and historical correlation analysis as a new methodology in evaluating the association between these two factors. Although it is presumed that Islamic banks operate as interest-free banks, our analysis confirms former studies and finds that profit-sharing ratios are highly correlated and coherent with interest rates in Turkey. We also find small differences among Islamic banks on how quickly profit-sharing ratios follow the market interest rate changes.

Open access
Society and Economy
Authors: Harun Ercan, Ilhami Karahanoglu, and György Walter

Abstract

Islamic Finance receives more attention due to the growing need for financial services in countries with a Muslim population. However, the rules of Islam and its applications in daily life cause conflicts in today's conventional financial system. Since interest gains are prohibited in Islam according to the Quran, Islamic banks develop and use interest-free methods, unlike the conventional banking system. Islamic Finance introduced profit-sharing ratios to replace interest rates and to increase the participation of religious investors in the financial system. In this research, we compare interest rates with profit-sharing ratios in the Turkish banking market. We use wavelet and historical correlation analysis as a new methodology in evaluating the association between these two factors. Although it is presumed that Islamic banks operate as interest-free banks, our analysis confirms former studies and finds that profit-sharing ratios are highly correlated and coherent with interest rates in Turkey. We also find small differences among Islamic banks on how quickly profit-sharing ratios follow the market interest rate changes.

Open access

Abstract

The main purpose of this paper is to study the functional distribution of income in Portugal in the long run, considering the period between 1953 and 2017. The labour share in income or value added depends on two fundamental variables, labour productivity and the average labour compensation. The trends of these variables are quantified for the aggregate economy and for its main productive sectors. An interesting result emerges, namely the different dynamics across sectors, both for the (unadjusted) wage share (considering only the wages of employees) and for the adjusted labour share (considering also as labour compensation one fraction of mixed income). Moreover, a shift-share analysis is used, in order to distinguish the importance of each sector's wage share evolution (“within” effect) and the changes in each sector's weight (structural changes, or “between” effect). Finally, a first attempt to incorporate the effect of wage inequality on the functional distribution of income is made, subtracting the labour compensation of the highest paid workers (top 10%, 5% and 1%) in order to calculate the wage share of the (so-called) "typical" workers.

Open access

Abstract

The main purpose of this paper is to study the functional distribution of income in Portugal in the long run, considering the period between 1953 and 2017. The labour share in income or value added depends on two fundamental variables, labour productivity and the average labour compensation. The trends of these variables are quantified for the aggregate economy and for its main productive sectors. An interesting result emerges, namely the different dynamics across sectors, both for the (unadjusted) wage share (considering only the wages of employees) and for the adjusted labour share (considering also as labour compensation one fraction of mixed income). Moreover, a shift-share analysis is used, in order to distinguish the importance of each sector's wage share evolution (“within” effect) and the changes in each sector's weight (structural changes, or “between” effect). Finally, a first attempt to incorporate the effect of wage inequality on the functional distribution of income is made, subtracting the labour compensation of the highest paid workers (top 10%, 5% and 1%) in order to calculate the wage share of the (so-called) "typical" workers.

Open access

Abstract

It is now becoming widely accepted that our economy has reached the limits both in terms of the carrying capacity of our planet and in terms of bringing real social justice to the table. Degrowth is a research area that aims to transcend mainstream approaches. While moving beyond the growth paradigm would entail serious changes in all areas of social life and Degrowth research extends into most of them, the transformation of sports is not among them. Neither is Degrowth a recognised concept among those who deal with sports. The participatory backcasting research introduced in this paper attempts to fill this void. In the backcasting project, master students of sports economics envisioned the sustainable future of sports and identified potential intervention steps that lead towards such normative states. This paper describes the results and assesses those elements that aim for strong sustainability. The results show that relocalisation and the sharing economy are the most accepted Degrowth concepts in a normative scenario on sustainable sports in this group. At the same time, the paper offers frameworks of thoughts for those who want to move beyond the slogans of sustainability either as responsible citizens or in positions related to the world of sports.

Open access

Abstract

It is now becoming widely accepted that our economy has reached the limits both in terms of the carrying capacity of our planet and in terms of bringing real social justice to the table. Degrowth is a research area that aims to transcend mainstream approaches. While moving beyond the growth paradigm would entail serious changes in all areas of social life and Degrowth research extends into most of them, the transformation of sports is not among them. Neither is Degrowth a recognised concept among those who deal with sports. The participatory backcasting research introduced in this paper attempts to fill this void. In the backcasting project, master students of sports economics envisioned the sustainable future of sports and identified potential intervention steps that lead towards such normative states. This paper describes the results and assesses those elements that aim for strong sustainability. The results show that relocalisation and the sharing economy are the most accepted Degrowth concepts in a normative scenario on sustainable sports in this group. At the same time, the paper offers frameworks of thoughts for those who want to move beyond the slogans of sustainability either as responsible citizens or in positions related to the world of sports.

Open access

Abstract

The article discusses how and why Green Recovery could be beneficial for the Visegrad countries based on a modelling exercise using the E3ME macroeconometric model. Green Recovery is defined as including policies in recovery plans that not only target economic recovery, but also contribute to environmental targets. The paper proposes that a Green Recovery could be valuable and suitable for the region contributing to both restoring employment and boosting economic activity as well as reaching climate goals. This is tested through a macroeconomic simulation, using the E3ME model. E3ME is built on Post-Keynesian economic theory and on econometric estimations of macroeconomic relationships. The results of the analysis focus on three dimensions: (1) social – employment, (2) environmental – level of CO2 emissions and (3) economic activity – gross domestic product (GDP). Outcomes indicate that a green recovery can shorten the time needed for employment and economic recovery as well as contributes to CO2 emission reductions. In Hungary, Czechia and Poland, the impact persists into the long-term; however, the paper also concludes that countries with high reliance on coal (e.g. Poland) could return to coal in the long term if no further policies are introduced.

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Abstract

In recent years, the city of Veszprém was able to obtain several significant achievements concerning its green branding: it was awarded the “Hungary in Bloom” and the “Climate Star” titles together with the “Gold” prize of the Entente Florale Europe award and the special “President’s Award for the Restoration of a Public Open Space”. This case study examines the impact and results of the preparation work and participation in national and an international green branding contests on destination marketing and city image through the analysis of the literature and structured interviews with the theme specialists of the contests. The implications of the research, based on the result of displaying the future vision of Veszprém, offer best practice advice for communities that are considering using green branding tools such as entering a horticultural contest. The results of the research confirm that a potential winning entry, apart from having an attractive cityscape, needs to meet the more novel assessment criteria of these contests as well, i.e. the development of family friendly and accessible infrastructure, multilingual tourist information and digital accessibility.

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Abstract

In a higher education institution, perceptions and values are split due to the emergence of subcultures, and market orientation is split into competitive, customer (student) and interfunctional orientation. This study seeks to shed light on the concept of market orientation in this context through a comparison of perceptions and values of market orientation in subcultures in a higher education institution in Hungary and consider avenues for potential best practice. Through a mixed method approach, subcultures are identified and are found to exhibit a combination of overlapping and disparate market-oriented values and perceptions. Market orientation is found to be a continuum and affected by an array of latent variables, such as level of support (institutional and collegial), attitudes to performance appraisal and extent of external focus. Management must tailor the initial message of a market orientation strategy to the shared values at the organizational level, and then adjust the message and incentives to each subculture. In this way, management can create an atmosphere of cohesion, whilst addressing diversity in subcultures.

Open access

Abstract

We explore to what extent official interest rate changes can potentially in a procyclical manner impact different financial cycle indicators (credit/GDP, debt service ratio, house prices and stock market indices). We test this on data covering 1995−2016 in 21 countries and the euro area using the Concordance index and Monetary policy procyclicality ratio. Results show that this was not a widespread phenomenon, but there was significant heterogenenity across countries. The procyclicality of interest rate changes was usually higher when financial cycle gaps were increasing and lower when they were decreasing. On average, central banks in several larger economies were running potentially less procyclical monetary policy than those in the smaller ones. The resulting propensity of conflicts between achieving price and financial stability by central banks was low, as only in 10% of the cases the objectives were conflicting (usually when inflation was below the target and the credit cycle was in an expansion phase).

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