Department of State Title VIII Grant
The Davidson Institute, through the continued funding support of the Department of State's Title VIII Research and Training on Eastern Europe and the Independent States of the Former Soviet Union, has administered the research competition "Public Policy and Business Practices Affecting the Development of Markets in CEE and Eurasia" for the past five consecutive years.
2001 Grant Cycle
In the second year of participating in the Department of State Title VIII program, the Davidson Institute received $60,000 in funding. We received nine applications for research on the Balkans and Central and Eastern Europe. From these applications, the selection committee awarded two grants totaling $60,000 for research on Romania and Slovenia.
2001 Title VIII Grantees
John Earle, Upjohn Institute for Employment Research
J. David Brown, Heriot-Watt University, Central European University
Project: "Factors Affecting Micro Enterprise Development in Romania"
This project sought to measure factors affecting the growth and productivity of new start-up firms, including finance, human capital, technical assistance and the business environment. Data on a survey sample of about 300 micro and small enterprises was used to estimate augmented employment and productivity functions in a panel data framework. This project resulted in one working paper.
WP 702: What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, and the Business Environment in Romania
By: J. David Brown, John S. Earle and Dana Lup.
Development of a new private sector is considered crucial to economic transition and development, however there has been little research on the determinants of start-up growth. Analyzing survey data from 297 new small businesses in Romania there is strong evidence that access to external credit increases the growth of both employment and sales, while taxes appear to constrain growth. Entrepreneurial skills have minimal effect and there is weak evidence for the effectiveness of technical assistance on growth.
Peter F. Orazem, Iowa State University
Project: "Do Market Pressures Induce Economic Efficiency: A Case Study of a Slovenian Retail Firm, 1989-2000"
Data on employment, costs and sales from 1989 through 2000 for a formerly state-owned department store chain was used to examine how efficiency changes during transition. The proximate causes of efficiency gains were assessed by examining the timing of government policy changes, privatization, and market entry of competitors. This project resulted in one working paper.
WP 621: Do Market Pressures Induce Economic Efficiency?: The Case of Slovenian Manufacturing, 1994-2001
By: Peter F. Orazem and Milan Vodopivec.
By analyzing a unique longitudinal data set on all manufacturing firms in Slovenia from 1994-2001, firm efficiency changed in response to the changing competitive pressures. Results show that the period was one of rapid growth in total factor productivity relative to levels in OECD countries and the rise in firm efficiency occurs in almost all industries and firm types. Competitive pressures that sort out inefficient firms and retain the most efficient, along with the entry of new firms, are the major source total factor productivity gains. Market competition from new entrants, foreign owned firms, and international trade also raise total factor productivity. Results strongly confirm that market competition cultivates efficiency.