SciPap, Volume 28 (2020)

Open Access Article SciPap-1209
Innovation Processes and Economic Growth in the Context of European Integration
by Oksana Zhylinska, Olena Bazhenova, Tetiana Zatonatska, Oleksandr V. Dluhopolskyi, Givi Bedianashvili, Ihor Chornodid

Abstract: The paper explores the influence of innovations on economic growth in countries, which are candidates to membership in the European Union. For empirical research, we have chosen nine countries such as Albania, Bosnia and Herzegovina, Georgia, Montenegro, North Macedonia, Serbia, Moldova, Turkey, and Ukraine. To investigate the impact of innovation factors on economic performance we have constructed three panel data models with fixed effects. The results of models estimation show ICT service exports (% of total service exports) and number of researchers in R&D (per million people) affect GDP per capita of the countries – candidates for membership in the EU with a lag of one year. Besides this, all control variables are significant except government expenditure on education. Given the ceteris paribus clause, an increase in the ICT service exports by 1% will lead to the rise of GDP per capita by minimum 0.09 and maximum 0.16 percent points. At the same time, an increase in the number of researches in R&D with a lag 1 by 1% – to the rise of GDP per capita by minimum 0.22 and maximum 0.25 percent points. Insignificance of high-technology exports and patent applications of residents and significance of ICT service exports and number of researchers in R&D in countries – candidates for membership in the EU might indicate that these countries are ones with preferably low-processed exports but potential for driving the innovations production activities
Keywords: Economic Growth, European Union, Innovations, High-Technology Exports, Panel Data Models
JEL classification: E01, E62, O11, O30, O41, O52

Open Access Article SciPap-1192
Social Inclusion as an Instrument for Reducing Socio-Economic Inequality
by Olena Krasota, Tetiana Melnyk

Abstract: Socio-economic inequality is growing on both local and global levels. It harms economic growth and welfare. As governments do not have enough resources to invest in education, healthcare, etc., reducing inequality is challenging. Income redistribution is a widespread means of limiting social differentiation. In this case, people are passive members of the process and lack motivation for productive activity. Therefore, reducing inequality has to be conducted in a way other than through social protection system. We consider social inclusion to become an effective instrument of inequality reduction. It includes giving all the society members equal rights regarding access to all resources and goods and involving people in economic, social, and political changes.
Keywords: Economic Growth, Social Inclusion, Socio-Economic Inequality, Gini Index, Social Exclusion
JEL classification: I30, O15, D63, H53

Open Access Article SciPap-1170
Poverty Risk and Quality of Housing in the EU Regions with a Different Urbanisation Rate
by Ivana Kraftová, Romana Provazníková, Tetiana Korovchenko

Abstract: The aim of this article is to compare selected parameters of /quality of life in the European Union countries by the degree of urbanization of living space and to verify the validity of three hypotheses aimed at quality of life evaluation in rural EU areas. The main data source is the Eurostat statistical data. Comparative analysis, variability, and concentration analysis using the method of adjusted index of geographical concentration have been applied during the processing. The analysis results show that the degree of risk of poverty "is split" in the EU between rural areas and cities. In this respect, European countries are divided into two roughly equal groups. The degree of concentration of people at risk of poverty in rural areas exceeds half the attainable interval. The extent of the actual geographic concentration of the population, and at the same time the disparities existing between European countries are both involved in it. Cost and quality of housing show the highest variability within European rural areas. The findings are in accordance with those experts who plead for a more effective tool targeting of EU cohesion policy in pursuit of its objectives in the field of poverty decreasement.
Keywords: Rural Region, Housing, Degree Of Urbanization, Risk Of Poverty, Overcrowding, Cost Overburden
JEL classification: I31, R58, R21

Open Access Article SciPap-1167
Regional Dimensions of Human Capital and Economic Growth: A Review of Empirical Research
by Stefan Rehak

Abstract: Intuition thus tells us that the relationship between human capital and economic growth at the regional level is more complex compared to the national level. The aim of this article is to survey the theoretical and empirical approaches of the relationship between human capital and economic growth at the regional level. We selected all articles in top scientific journals whose authors used the term human capital in their keywords. The total sample consists of 21 articles from the Journal of Economic Geography, 46 articles in Regional Studies, 35 articles in Papers in Regional Science and 4 articles in Economic Geography. The theoretical and empirical research at the regional level highlights the role of interregional migration, and the role of human capital in externalities in dense urban agglomerations. The greater complexity of the economic processes associated with the accumulation of human capital in the regions requires policies tailored to the needs of the regions.
Keywords: Human Capital, Regional Policy, Regional Economic Growth, Externalities, Migration
JEL classification: R23, R11, J24

Open Access Article SciPap-1158
Regional Resilience Redefinition: Postpandemic Challenge
by Vladimír Žítek, Viktorie Klímová

Abstract: Regional resilience is understood as the ability of the socio-economic system to respond to rapid changes caused by various external factors. Such an external factor is the crisis caused by the Covid-19 pandemic in the spring of 2020, to which economies in many regions have not been able to respond adequately. Firstly, they did not anticipate such a situation and have paid insufficient attention to some matters. The paper aims to identify new challenges that should be reflected in the development strategies of regions striving for a higher level of resilience to unexpected pandemic crises. The analysis is performed on the example of the prepared Strategy of Regional Development of the South Moravian Region for 2021-27. We have created a proposal specific measures which should be involved in his type of strategic documents. In some generalizations, three topics proved to be critical. These are 1) the internet and cybersecurity, 2) health and social care, and 3) the availability and standardization of public and private services. The ability to move activities to the internet has met significant limits that need to be removed or overcome. The health and social care system will have to be re-evaluated in terms of the overall regional concept. The actual unavailability of basic services meant for many inhabitants a further deterioration of the already uncomfortable situation.
Keywords: Economic Development, Regional Resilience, Strategic Document, Pandemic Crisis, Covid-19, Security, Czech Region
JEL classification: R11, R58

Open Access Article SciPap-1164
Climate Assessment and Experience with Mobbing among Public Administration Staff (Example from Czech Tax Office)
by Tomáš Čech, Pavlína Králová, Petra Dvořáková

Abstract: The paper focuses on the issue of relationships and climate in the workplace in public administration including the factors that have a negative effect on workplace climate and interpersonal relationships. From a theoretical perspective, the paper summarizes the knowledge of interpersonal relationships in the workplace, environmental effects on workplace climate including pathological and negative phenomena that influence workplace relationships, including especially conflicts, bullying, and sexual harassment. The objective of the research was to identify the assessment of workplace climate and relationships by the employees of the Tax Office for the Olomouc Region as a prerequisite for high-quality performance of public administration, including their experience with workplace aggression and bullying by their colleagues. The research was performed by means of a quantitative research strategy. The data were received from 305 employees by means of a questionnaire. The results suggest that about three quarters of employees assess their workplace climate in a positive way, which has a favourable effect on their work performance. The negative assessment by Tax Office employees may be related to their experience with mobbing and bossing reported by 10% of employees.
Keywords: Public Administration, Climate, Working Environment, Satisfaction, Conflicts, Aggression, Workplace Bullying, Tax Office
JEL classification: H83, J28

Open Access Article SciPap-1163
The Effect of Human Capital on the Output of Slovak Urban Regions
by Oliver Rafaj

Abstract: Cities play a key role in the creation of the national product. Most of the population is located in cities, which leads to intensive economic activity. At present, two main topics are being discussed in the academic environment. One focuses on the importance of different size categories of cities in the economic system of countries. The second focuses on the importance of individual production factors in the creation of economic output of cities. This article deals with measuring the effects of production factors on the economic output of urban regions (also referred in this article as cities) in Slovakia. The analysis of 78 urban regions of Slovakia showed that the human capital factor has the largest effect on the production of their total output. Results from the subsequent analysis on the comparison of the impact of production factors between different size categories of urban regions largely confirmed the main result. However, the measured effects of individual production factors for different size categories of urban regions brought interesting differences.
Keywords: Slovakia, Human Capital, Urban Regions, Urban Size, Economic Output
JEL classification: R12, R10

Open Access Article SciPap-1149
Making Sense of a Change Management in Public Sector Organizations: Change Imitation as Employee Response to Radical Decisions
by Žilvinas Židonis, Agota Giedrė Raišienė

Abstract: Macro-level reforms of public administration in Central and Eastern Europe (CEE) countries is discussed broad range in scientific studies. However, the adoption of innovative management tools that have proved their worth in the private sector has received only limited attention. This paper presents probably the first study on the role of emotions and sensemaking in managing radical changes in the public administration institutions in CEE. We found that instead of leading to active resistance and change rejection, as confirmed in earlier research proceeded in Western Europe countries, negative emotions led to passive resistance based on behaviour of change imitation. By drawing on the theory of sensemaking, we also divulge how the archetype of the “Soviet times” is employed to explain novel and contradictory events caused by change implementation.
Keywords: Public Administration, Emotions, Sensemaking, Central And Eastern Europe, Change Management, Psychological And Behavioural Response, Lithuania
JEL classification: D73, H83

Open Access Article SciPap-1154
Applying Advanced Scenario-Based Dynamic SPACE Analysis: A Case Study of Ukrainian Energy Company
by Valeriy Balan, Inna Tymchenko

Abstract: We offer methodology for forming a strategy for energy company based on the use of dynamic SPACE analysis which provides an opportunity to formulate strategic recommendations for possible scenarios (optimistic, most probable and pessimistic) and calculated on the basis of β-distribution of the expected future. We have identified nine stages of the formation process of strategic recommendations for strategic business units of our case company. The methodical toolkit is developed by considering the dynamic approach taking into account possible scenarios (optimistic, most probable and pessimistic) of the future development, obtaining predicted integral estimates based on -distribution. The matrix of strategic recommendations is formed depending on the basic trajectories and values of the model parameters, which enables to identify "basic" strategic decisions and recommendations for each strategic business unit of the enterprise taking into account predicted trajectories as superposition of single basic vectors.The methodology of forming a strategy for a power company is a flexible and effective tool for strategic diagnostics for making managerial decisions about choosing a development strategy not only for a power company, but also for other enterprises by adapting evaluation criteria in accordance with their relational space. The presentation of the predictable trajectories of business units in the form of S-vectors by means of the superposition of the basic unit vectors for each of the possible development scenarios, as well as for the expected b-distribution of expected future, enables managers to increase the validity of the proposed strategic recommendations and increase the effectiveness of their implementation.
Keywords: Strategic Diagnostics, Portfolio Analysis, Dynamic Space-Analysis, Scenario Analysis, Basic Trajectories, S-Vector, Matrix Of Strategic Decisions, -Distribution.
JEL classification: L21

Open Access Article SciPap-1136
Evaluation of Indicators of Public Administration in EU Countries by Use of Multidimensional Analysis
by Martina Halásková, Renata Halásková

Abstract: The paper evaluates public administration from the viewpoint of selected indicators focused on the quality of government, corruption rate, e-public services and finance (government expenditures on public administration). The research covers the period 2012-2018 for the selected set of 28 EU countries and applies factor analysis and hierarchical cluster analysis. Results of the factor analysis showed that three economically developed countries, Denmark, Finland, and Sweden, attained the best results of public administration. By contrast, countries with the worst total results of public administration and a low economic level are Bulgaria, Romania, and Poland. Based on the evaluation of common indicators of public administration (performance of public administration and expenditures on public administration) using hierarchical cluster analysis, the EU countries were divided into four clusters by their internal similarity. The largest similarity in the performance of public administration is seen in two groups of countries, i.e. 16 countries. The largest similarity by government expenditures on public administration is seen in the countries in the second and fourth cluster, i.e. 17 countries. Following the analysed public administration indicators, the results also showed a link to traditional models of public administration in the majority of similar countries. This fact supports the specific features of administrative systems and the role related to management and evaluation of public administration.
Keywords: Public Administration, Factor Analysis, Hierarchical Cluster Analysis, Good Governance, Quality Of Government, Indicators Of Public Administration
JEL classification: C38, H11, H83

Open Access Review SciPap-1129
An Economic Analysis of Public Choice: Theoretical Methodological Interconnections
by Jolana Volejníková, Ondřej Kuba

Abstract: Public choice theory is an established part of general economic theory. It emerged as an offshoot of the mainstream in the 1940s and deals with applying economic methods to political analysis and decision making within political institutions. Today, the public choice approach is being used successfully in a wide spectrum of social sciences, as well as in politics at the macro- and international levels. At the theoretical level, we feel that public choice theory is of wide importance relating to the change in definition of its traditional place in economic theory. Approximately, this change began to occur during the 1980s, and it documents an interpretative shift from public choice theory being a relatively independent economic discipline to a discipline that is presented as an immanent part of the new political economy, a newly created school of opinion. This paper’s goal is to analyze and discuss the paradigmatic, historically conditioned theoretical-methodological concept of public choice by using research into the literature. Concurrently, our ambition is also to define key points of overlap that link public choice theory to the economic mainstream (neoclassical economics) on one hand and the new political economy on the other. We have developed the conclusions of this analysis and intellectual comparison into a wider discussion of public choice theory’s significance and its role in the formative process of economic theory’s development and future trajectory.
Keywords: Economic Theory, Public Choice Theory, Economic Mainstream, Methodology, New Political Economy
JEL classification: A1

Open Access Article SciPap-1117
Contracting and Outsourcing in Public Sector in the Czech Republic
by Beáta Mikušová Meričková, Markéta Šumpíková, Nikoleta Jakuš Muthová, Juraj Nemec

Abstract: The aim of this study is to contribute to the recent discussion about contracting/outsourcing in public sector and its results. The study builds on the original research of contracting and outsourcing in the Czech public sector and assesses them from a comprehensive perspective. The following research questions are set: “Does contracting/outsourcing in public sector in the Czech Republic bring efficiency gains?” and “If not, why contracting/outsourcing services in the public sector in the Czech Republic do not bring efficiency gains?”. To answer the research questions two alternatives of services provision, namely internalisation and contracting, were evaluated. The three criteria, 1) expenditure on the provision of the service per citizen/employee, 2) the expenditure per performance indicator and 3) the quality of services evaluated on the basis of citizen/employee satisfaction as consumers of services were used in evaluation. To evaluate the efficiency of contracting services in the public sector was used the method of multi-criteria evaluation for selected samples - the method of the best values of criteria. It is not possible to come to the final conclusion about higher efficiency of internal versus external production. However, what can be clearly and un-doubtfully documented is the fact that depending on the concrete case the more efficient solutions differ. The core factor of the limited success of contracting and outsourcing - the quality of contract management represent critical problem in the Czech Republic.
Keywords: Czech Republic, Outsourcing, Contracting, Public Service, Contract Management
JEL classification: H41, H57

Open Access Article SciPap-1114
Socio-Economic Indicators and Income Inequality: Lesson from West Java in Indonesia
by Farida Rahmawati, Fikita Putri Ananda, Bagus Shandy Narmaditya

Abstract: This study is aimed at investigating the impact population, human development index, and economic growth in determining the income inequality in West Java of Indonesia. This paper used a panel regression to gain insight into comprehensively understanding the relationship between variables. This study engaged eight years of time series data from 2011 to 2018 and cross-section data of 27 districts/cities in West Java Province from Statistics Indonesia (BPS). The findings indicate that population, human development index and economic growth affect income inequality altogether. In partial, total population and human development index can explain the income inequality. Meanwhile, economic growth failed in influencing income disparity of West Java Province. This finding suggests that the Kuznets hypothesis of the “U-Reverse” curve in West Java Province was not proven for the period 2011 to 2018. This study emphasizes the significant impact of having strategies in suppressing the population in West Java Province both through programs and binding regulations relating to births and immigration. Also, the synergy between stakeholders in providing jobs opportunities that potentially reduce inequality in the West Java province of Indonesia.
Keywords: Economic Growth, Human Development Index, Regional Development, Population, Income Inequality
JEL classification: O15, D63, R23

Open Access Article SciPap-1112
Corporate Governance and Performance of Non-Financial Firms in Nigeria
by Emmanuel Mitaire Tarurhor, Enoh Hilda Olele

Abstract: The study examined corporate governance and the performance of non-financial firms in Nigeria within the canonical correlation analytical framework. The study validated the relationship between set of corporate governance variables and set of firm’s performance variables using relevant data extracted from the firm’s published annual financial statements and various issues of the Nigerian stock exchange fact books spanning 2011-2018. The results from this study provided evidence to prove the existence of a statistically significant association between sets of corporate governance and sets of firm’s performance variables using the Wilks’ Lambda, Pillai’s trace and Lawley-Hotelling trace at the 5 percent significance level and Roy’s Largest root at the 1 percent significance level. The implication of this study is that corporate governance is highly instrumental in improving the performance of non-financial firms in Nigeria. In other words, an improvement in corporate governance indices will inevitably boost the profitability of non-financial firms in Nigeria.
Keywords: Corporate Governance, Firm’s Performance, Canonical Correlation Analysis, Non-Financial Firms, Agency Problem.
JEL classification: C18, G3, L25, M21, M41

Open Access Article SciPap-1107
Government Accrual-Based Accounting Standards Implementation in Indonesia: The Role of Local Government Internal Audit
by Muhtar Muhtar, Payamta Payamta, Sutaryo Sutaryo, Prihatnolo Gandhi Amidjaya

Abstract: This study aims at investigating the effect of local government internal audit characteristics on government accrual-based accounting standards (SAP) implementation in local government in Indonesia, as represented by the level of non-compliance with SAP of local government audited financial statement. Indonesian local governments with accrual accounting standards non-compliance findings during 2015-2018 are analyzed with OLS regression, equipped with sensitivity analysis to test the robustness of the research model. This research presents empirical evidence that the capability, maturity, and size of local government internal audit plays a role in lowering non-compliance with accrual-based SAP. Sensitivity analysis reveals that the effects remain consistent for all variables. The limitation of this study is that local governments with adverse and disclaimer audit opinions are not employed as samples due to data availability, in which there is a possibility for more issues in implementing accrual-based SAP. This study brings implications for local governments in Indonesia and the State Development Audit Agency (BPKP) to be able to improve local government internal audit function capability and maturity and human resource availability through various supporting policies.
Keywords: Complexity, Local Government, Non-Compliance With Accrual-Based Sap, Internal Auditor Capability, Internal Auditor Maturity, Internal Auditor Size, Financial Factors
JEL classification: H83

Open Access Article SciPap-1105
Sentiment on the Stock Markets: Evidence from the Wavelet Coherence Analysis
by Zuzana Janková

Abstract: In this paper we propose to use wavelet analysis to determine the relationship between investor sentiment and stock index. Based on stock indices in various markets and alternative indicators, sentiment using wave analysis uses the intensity and correlation between sentiment and stock index returns in the short and long term. Initially a strong relationship identified by wavelet coherence and phase difference gradually becomes less intense with increasing time horizon. This suggests that overestimation or underestimation in the short term is gradually corrected in the long run. In addition, a stronger relationship can be observed between investor sentiment and stock indices in times of crisis, including COVID-19 pandemics.
Keywords: Sentiment Index, Stock Index, Stock, Market, Wavelet Analysis, Wavelet Coherence
JEL classification: G12, G15, G17

Open Access Article SciPap-1099
Performance Measurement in Education Public Services Based on the Value for Money Concept
by Beáta Mikušová Meričková, Jana Štrangfeldová, Nikoleta Jakuš Muthová, Nikola Štefanišinová

Abstract: The growing interest in the performance of public services by citizens and public authorities force public service organizations to seek justification in the use of public resources. The public also require reassurance that public services provide value for money. This reflects the need for a comprehensive measurement and assessment of performance in the utilities sector. The selection of appropriate performance indicators is a key process in managing and monitoring the performance. However, this requires the participation of those organizations which this measurement concerns. The aim of the study is to present a proposal of possible performance indicators in education public services based on the Value For Money concept. The outcome of the study, in the form of a proposal for possible performance indicators, is enriched by feedback from education professionals and school heads through conducted structured interviews. The proposal of possible performance indicators can be an initial outline of appropriate performance indicators for the model for measuring and assessing the performance of public grammar schools in the future. It can also be an inspiration for other public service organizations in how to set appropriate performance indicators in relation to their objectives.
Keywords: Slovak Republic, Education, Performance Management, Value For Money, Public Service Organizations
JEL classification: H75, I21, I22

Open Access Article SciPap-1094
Analysis of Industry 4.0 Readiness in Hungary: Estimation of i4.0 Readiness Index Compared to EU Countries
by Kornélia Svačinová

Abstract: The issue of Industry 4.0 revolution is a highly discussed topic in response the industrial production is one of the most important economic sectors in the European Union. Industrial transformation and digitalization seem to be necessary evolution steps due to the lack of skilled laborers in the EU. Current demographic trends and projections of the future workforce composition are projecting warning signals. Aims: This paper reviews documented efficiency of the Industry 4.0 and adds empirical evidence on the Industry 4.0 readiness from Hungary. The main goal of this article is to calculate the innovative I4.0 Readiness Index in Hungary by using industry level indicators, and to compare results within EU-27 countries. Outcomes will be used to identify clusters of macroeconomic similarity. Data and methods: Literature review was conducted. I4.0 Readiness Index was enumerated based on data from Eurostat. Cluster analysis was used to determine the different country classes (groups) in transition towards Industry 4.0. Results: Denmark has the highest score value of I4.0 Readiness Index among the EU-27 member states, Bulgaria has the lowest performance. Hungary is on the 23rd place in the ranking. Conclusion: EU-27 region may be divided into five clusters. This paper confirmed macroeconomic disparities among countries. Cluster analysis is in accordance with results of the I4.0 Readiness Index. Findings in this paper may be considered in a future research by analysing further I4.0 indicators.
Keywords: Industry 4.0; I4.0 Readiness Index, Hungary; EU-27 Countries, Cluster Analysis.
JEL classification: O10, O14

Open Access Article SciPap-1092
The Choice of Collaborating with Fintech Entities for Competitive Advantage through Leadership Styles
by Steph Subanidja, Mercurius B. Legowo, Fangky Antoneus Sorongan, Eko Wahyudi

Abstract: Nowadays, the existence of a fintech entity is a necessity. The choice is disruption or collaboration. This study investigates the antecedents of fintech collaboration based on leadership styles and its consequence on competitive advantage. The study is a quantitative causality approach using a questionnaire to collect the data and use structural equation modelling to analyse it. There are 166 respondents, as samples, from 479 supervisors to directors of automotive, electronics, and food and beverage of medium and large companies. Results show that leadership styles have a positive effect on competitive advantage and fintech collaboration. This study's original value is that fintech collaboration is a necessity for managerial decisions as a mediator for competitive advantage based on leadership styles. It concludes that the primary antecedent choice in encouraging fintech collaboration is transactional leadership, and collaboration with the fintech entity to create a competitive advantage is necessary. Meanwhile, for further research, it is assumed that suitable leadership to encourage competitive advantage through fintech is transformational leadership, and collaborate with the fintech entity is a must.
Keywords: Competitive Advantage, : Fintech Collaboration, Leadership Styles.
JEL classification: G2, L21, M2, O32

Open Access Article SciPap-1087
Terms of Trade and Industrialization: Case of Economies with Manufacturing Exports
by Oksana Zhylinska, Olena Bazhenova, Ihor Chornodid, Marianna Oliskevych

Abstract: The paper explores the macroeconomic effect of industrialization on terms of trade and economic growth for economies with prevailing manufacturing exports. We tested such hypothesis as influence of terms of trade adjustment annual growth on manufacturing added value annual growth in economies with manufacturing exports and vice versa; influence of terms of trade adjustment annual growth and manufacturing added value annual growth on GDP per capita growth in economies with manufacturing exports. In the research we used annual data of GDP per capita (annual %), manufacturing, value added (annual %) and terms of trade adjustment (annual %) in 2008-2018 for 51 countries with manufacturing export. For this purpose we estimated vector autoregression model for panel data. Analysis of impulse response functions shows that the positive shock in manufacturing value added growth leads to slight increase in terms of trade adjustment growth in the second year and further stabilization in the seventh period. In turn, shock in terms of trade adjustment growth provokes smaller upsurge in manufacturing value added growth than in previous case. At the same time, shock in manufacturing value added growth results in gross national product per capita growth increase and its further stabilization in three years term. In addition, gross national product per capita growth reacts to shock in terms of trade adjustment growth by slight rising.
Keywords: Economic Growth, Terms Of Trade, Industrialization, Panel Var Model, Manufacturing Value Added Growth
JEL classification: F14, F43, O14