ABSTRACT Effective tax policies must adapt to the ever-evolving strategies employed in global tax planning. This paper emphasises the importance of ongoing improvements to ensure sustainable taxation in a dynamic economic landscape. We broaden our understanding of the banking sector’s profit-shifting scale and identify its determinants. We apply panel data modelling to bank-level and administrative tax data of withholding taxed payments to non-residents in Poland. We note that international tax differences cause a geographical distribution of profits in banks, with low-tax jurisdictions attracting disproportionately high profits. Banks with varying sizes of assets and credit risks take different tax responses. Furthermore, we identify significant tax, regulatory, and macroeconomic drivers in banks’ reported profit shifting. We provide insights into how enhanced tax regulation measures can influence risk management, particularly in regions with developing financial markets. Furthermore, this research highlights the critical role of international cooperation in creating a more equitable tax landscape.

ABSTRACT Global economic instability necessitates examining how financial crises affect inflation, particularly in resource-dependent economies such as Kazakhstan. Strongly tied to raw material exports and global markets, Kazakhstan is highly vulnerable to external shocks. This study quantifies the impact of global shocks on inflation using time series data from 2015–2025 and econometric modelling with non-linear and lagged variables. This article contributes to the existing literature by identifying the nonlinear and lagged transmission channels of global shocks and by evaluating their implications for Kazakhstan’s monetary policy. The analysis focuses on oil prices, exchange rates, and the volatility index (VIX). Results show that commodity shocks and currency fluctuations are the main drivers of inflation. A $1 per-barrel increase in oil prices raises inflation by 0.27% within six months, while currency depreciation intensifies inflationary pressures. Both exchange rate volatility and the VIX reveal threshold effects, shifting from stabilising to inflationary at higher levels. Findings highlight the need for macroeconomic policies that consider time lags and non-linearities to enhance resilience against global shocks.

ABSTRACT This study seeks to analyse monetary policy transmission (MPT) using a structural vector autoregression model (SVAR) in a transitional economy. First, a baseline recursive model based on the Cholesky decomposition was formulated to examine extensive time series, revealing abnormal reactions of prices and exchange rate (FX) to monetary policy (MP) shock. Second, we employed an alternative model to address anomalies, integrating both short- and long-run restrictions to refine the identification strategy. Both price and exchange rate puzzle were resolved with the alternative model and FX, consumer price index (CPI) had statistically significant reactions to the MP shock in the medium and long term. Third, it also indicated that the contractionary MP shock contributed to FX appreciation with a substantial magnitude while the FX shock produced a statistically significant CPI response, suggesting a strong FX pass-through. Robustness tests confirmed stability of the alternative model with different specifications. A clear communication strategy strengthens the credibility of the Central Bank of Uzbekistan (CBU) which reduces the strong FX pass-through and facilitates a smoother transition to the inflation targeting regime.

ABSTRACT This study investigates entrepreneurship’s role as a catalyst for digital economic complexity, using Chinese data. Addressing a gap in digital economics literature, particularly in post-communist contexts, we introduce novel measures of digital economic complexity, moving beyond traditional economic indicators. Our findings reveal that entrepreneurship significantly and positively influences digital economic complexity. This impact, however, is indirect, mediated through the promotion of ICT talent aggregation and active technology transactions, suggesting a crucial pathway for entrepreneurship’s influence. Furthermore, the effect exhibits heterogeneity. It is notably stronger within the Yangtze River Economic Belt and in provinces characterised by high levels of financial inclusion and industrial concentration, highlighting the importance of regional and structural factors. This research contributes a new framework for assessing digital economic complexity and provides empirical evidence resolving the debate on entrepreneurship’s digital economic impact, demonstrating entrepreneurship’s vital role in shaping it, specifically in a rapidly evolving, post-communist setting like China.

ABSTRACT Firms’ reliance on energy is a critical issue that affects all economies, regardless of ideology, yet their preferences for public spending in the energy sector remain underexplored. This study examines the factors influencing firms’ prioritisation of public spending on energy over other sectors, using data from the World Bank’s Enterprise Surveys covering 30 Eastern European and Central Asian countries. Probit regression analysis reveals that businesses experiencing frequent power outages and perceiving electricity as a significant operational obstacle are more likely to prioritise energy-related spending. This preference is stronger in emerging market economies and low-income developing countries than in advanced nations. Additionally, while firm characteristics such as size, age, ownership, political connections, and government contracts show limited influence on firms’ prioritisation of public spending in the energy sector, industry type plays an important role. These findings highlight the critical role of energy infrastructure in shaping firms’ policy preferences, particularly in economically vulnerable contexts.

ABSTRACT The article is devoted to an analysis of the development of the Russian machine tool industry before and after Russia’ invasion of Ukraine in February 2022. It reviews the history of the industry in the USSR, its collapse in the 1990s and stabilisation in the early 2000s. Prior to Russian’s annexation of Crimea in 2014 and the imposition of sanctions by Western countries the government had already adopted policies to secure a revival of the industry on a more independent basis and some success was achieved. After 2014 the government’s efforts to restore the industry intensified and the scale of output of metal cutting machine tools steadily increased. However, there was still a significant dependence on imports, especially of the most advanced types of equipment. After the start of the war in 2022 sanctions were rapidly intensified and more countries participated. Quite rapidly, imports from Western countries were replaced by imports from China and other non-sanctioning countries. The development of the domestic industry received new priority and output increased. By the end of 2023 the situation had to some extent stabilised. Notwithstanding sanctions, the Russian defence industry has been able to acquire the machine tools it needs, although not always of the highest quality.

ABSTRACT Previous research proposes that extra-regional linkages and non-firm actors might generate unrelated diversification. This article contributes to the field by testing the role of government subsidies in moderating the relationship between foreign-owned enterprises and unrelated diversification of manufacturing in Chinese cities. Using high-dimensional fixed-effect models for panel data in 1999–2012, this article finds that foreign-owned enterprises promote the development of unrelated new industries, and government subsidies strengthen the promotive effect. Heterogeneity analysis shows that the moderating role of government subsidies is significant for enterprises of the western countries, but is insignificant for enterprises from China’s Hong Kong, Macau, and Taiwan regions, and that the promotive effect of foreign-owned enterprises is significant in East China, but insignificant in Central and West China. These findings highlight the role of foreign-owned enterprises and local governments in shaping unrelated diversification in developing countries.

ABSTRACT Russian policymakers have ambitions to become a major exporter of organic foods, capturing as much as 10% of the world’s organic market. Russia’s war with Ukraine and subsequent Western sanctions render this goal unrealistic for the foreseeable future. Aside from the war, this article examines factors that affect the growth of Russia’s organic food sector. We argue that although Russia’s organic food sector has come far in a short period of time, it is unlikely to dislodge the primacy of industrial agriculture, which remains the cornerstone of agricultural production in Russia and in other developed states. The organic food market in Russia is likely to remain a niche market, which means that Russia will remain wedded to industrial agriculture and the food it produces.

ABSTRACT This research investigates the effects of FDI spillovers on the productivity of domestic firms by relying on unconditional quantile regression. Using panel data of Vietnamese enterprises over the period 2000–2012, we find evidence of positive spillovers for firms at the lower tails and negative spillovers for those at the upper tails of the productivity distribution. Time and the firm’s legal status are other factors determining the effect of FDI spillovers. Notably, only low productivity state-own enterprises benefit from positive horizontal spillovers, but in the long run rather than in the short run.

ABSTRACT This paper adapts and estimates the DSGE model of Medina and Soto (2007) in the context of Kazakhstani economy. The main goal of the paper is to contribute to the scarce macroeconomic modelling literature on Kazakhstan and analyse the structure of the Kazakhstani economy using the DSGE framework. Overall, we find that the oil price shock is key in explaining the variance of virtually all the variables of interest – in particular, it accounts for more than 40% of variance in real exchange rate over the long-term horizon. Furthermore, while the oil price and commodity (oil) production shocks contributed positively to the country’s GDP growth in real terms before the Great Recession, their effects have been primarily negative during the two major economic crises of 2007 and 2015, and the fiscal policy has had mixed success in counteracting them. Lastly, the counterfactual exercises show that the choice to adopt the floating exchange rate policy in 2015 has prevented a larger output slump in the short-term at the cost of stronger currency depreciation, and that countercyclical fiscal rules would have greatly mitigated the immediate negative impact of the 2007–08 and 2015 crises, in addition to making real output more stable overall.