SciPap, Volume 28, Issue 2 (2020)

Open Access Article SciPap-1094

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-1065

by Maria-Ionela Damian, Carmen-Giorgiana Bonaci, Jiri Strouhal

Abstract: There are few areas in accounting which generate debates as intense as measurement, and in particular fair values, because they directly impact the figures reported, as well as their credibility and relevance. The main argument in favour of fair values is that these are providing relevant information to the market participants. The main objective of our paper is to analyze if fair values reported by Romanian companies in their financial statements (more precisely in the case of financial assets) are value relevant. We therefore contribute to the little developed body of literature on the value relevance of fair value in emerging markets. We employ a model which is similar to that proposed by Barth (1994), based on the relation between the bank’s market value and its net assets, separated into financial assets and net asset before (excluding) financial assets. Furthermore, we also analyze whether value relevance of fair value accounting for financial assets varies with the three levels of the fair value hierarchy. Consistent with Barth (1994), we find that financial reporting at fair value of the financial assets has a greater explanatory power of the share prices compared to the historical cost reporting. Partially consistent with Song et al. (2010), we also document that financial assets reported at fair value within level 1 are value relevant, while financial assets of level 2 and level 3 are not value relevant.

Keywords: Fair Value, Value Relevance, Financial Assets, Emerging Economy, Fair Value Hierarchy

JEL classification: M40, M41

Open Access Article SciPap-1063

by Bozena Chovancova, Jana Kušnírová, Peter Árendáš, Denis Matušovič

Abstract: The last two decades in the world are associated with the phenomenon of the Internet economy and with the emergence of new technologies that bring significant productivity gains for the economy. At the same time, restructuring processes have started, affecting changes in the sectoral GDP structure as well as changes in the sectoral composition of stock indices. The purpose of this article is to specify in more detail the relationship between the real economy and the stock market in terms of the onset of the 4th industrial revolution within the EU. The focus of our research is primarily on larger EU economies with a functioning stock market. In addition, the article also provides a detailed analysis of the structure of selected stock indices in terms of representation of the individual sectors, while only the German market seems relevant for further research. And it is on the German market that there is a statistically significant relationship between the development of the stock index DAX and German GDP. However, specifics affecting the development of the European market in comparison with the development of the US economy are also formulated.

Keywords: 4Th Industrial Revolution, GDP Structure, Stock Indices

JEL classification: L70, L88, G19

Open Access Article SciPap-1067

by Lenka Smékalová, Filip Kučera

Abstract: The paper focuses on the smart city concept implementation in the Czech Republic during 2007-2013. The aim is to deliver a closer look at the implementation of the concept in the conditions of the selected Czech municipalities by means of decoding the investments from the EU Cohesion policy. The municipalities represent small sized cities that have so far been on the periphery of interest in smart city debate as they are neither metropolises nor do they fit the newer concept of smart village. The analysed projects are divided into six smart city dimensions, the authors then explore investment intensity in relation to city size and its future commitment to become a smart city by means of having a formalized strategy. The results show that Czech municipalities invested into all smart city dimensions and infrastructure related projects prevailed. The larger the city the more intensive investment activity confirming the relation between size and absorption capacity. The divisive dimension that sets apart future smart cities is the investment into smart economy measures which were implemented in cities that later officially undertake the commitment of smartness.

Keywords: Czech Republic, Public Sector, Smart City, Cohesion Policy, Municipalities

JEL classification: H72, O21, R58

Open Access Article SciPap-1064

by Lucia Bartková, Lenka Veselovská

Abstract: The issue of double quality of daily consumption goods is perceived negativelyat present, and in this spirit, the media usually also report on it. They bring the results of the tests carried out, the reactions of manufacturers and distributors, and also the statements of politicians. The media have a major impact on consumer information perception and their purchasing behavior, including in the subject of dual product quality. The aim of the paper is to find out whether Slovak consumers perceive the issue of dual quality of goods and from where they learned about it. The research was carried out on a representative sample of 919 consumersin the Slovak Republic. Various statistical tests were used to verify hypotheses. Research shows that the majority ofcustomers have heard about the problem of dual quality of goods in the EU, most of them have learned about it from the media, and the media is also the source the consumersgive the most priority. Manufacturing companiesinvolved in this issue should therefore be more awareofhow their products areperceived in terms of the dual quality problem to ensure their competitiveness on the market.

Keywords: European Union, Dual Quality, Media, Customers

JEL classification: M31, M38, Q18

Open Access Article SciPap-1056

by Veronika Linhartová

Abstract: In current thinking, human capital is referred to as a driver of national economies. It encompasses all of the knowledge, talents, skills, abilities, experience, intelligence, and training of a country's workforce. National governments are fully aware of this, and they are seeking to stimulate human capital and encourage its development. A number of studies have shown that public investment for developing human capital is claimed to be the highest performing investment for achieving better economic performance. The aim of this paper is to verify whether government investment in areas that develop human capital can indeed aid its development in the Czech Republic. Using the least squares method, the paper studies whether the Human Development Index showed correlation to individual types of government expenditure between 1995 and 2017. The analysis revealed that in the Czech Republic, spending on recreation, culture, and religion had the largest influence on developing human capital for the period under review. Expenditure on education and health, which most studies cite as the main tools for cultivating human capital, placed only third or fourth regarding their contribution to developing human capital.

Keywords: Economic Growth, COFOG, Human Development Index, Public Expenditures, Creative Labor, Creative Economy.

JEL classification: H42, H50, A11, C32

Open Access Article SciPap-1066

by Dagmar Čámská, Jiří Klečka

Abstract: This paper is focused on corporate capital structure from the point of view of specific financial sources. These specific sources consist of liabilities provided by the entities closely connected to company itself such as subsidiaries, parent companies, or individual owners. The conducted research compares financing insolvent enterprises with financing companies without any existential difficulties. Specific sources can be distinguished according to their maturity and kind of providers how they are classified in balance sheets. The comparison is made on financial statements extracted from the prepaid corporate database Albertina. The obtained data sample consists of companies that belong to three industry branches specified according to CZ-NACE classification as CZ-NACE 25, CZ-NACE 28, and CZ-NACE F. Relative frequencies show which enterprises finance more by these specific sources and which kinds of sources are used more frequently. Ratio analysis presented by descriptive statistics expresses corporate capital structure and manifests the importance of these sources on financing. Gained results confirm if the insolvent entities tend to finance more through specific sources than their healthy counterparts. These findings could have serious consequences for insolvency proceedings and their results such as creditors' satisfaction level, assets monetization tempo. It is evident that it may influence business competitiveness, economic results and overall entrepreneurial stability.

Keywords: Czech Republic, Capital Structure, Payables To Related Entities, Insolvency, Specific Indebtedness

JEL classification: G32, G33

Open Access Article SciPap-1087

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

Open Access Article SciPap-115

by Peter Adamisin, Ivana Butoracova Sindleryova, Lucia Dancisinova

Abstract: The main purpose of this study is to analyse the development of wages and labour productivity in the period of 2000 to 2018 (data gained in 2019) in the Slovak Republic and to identify the spectrum of the correlation of these developmental features and predictors, but also to point out that the interconnection of the analysed issues cannot always represent direct dependence on the long-term sustainable growth of the economy. The authors focus on the question of the possible sustainability of wage development in the Slovak Republic based on the analysis of the relevant determinants. Comparing the development level and wages structure in the period before and after the national accession into the EMU, the authors try to warn about the resulting problem of the country's economy in connection with the current unsustainability of the growth of wages and labour productivity. The warning results are presented in the study.

Keywords: Wages, Analysis, Labour Productivity, Economic Comparison, Sustainability

JEL classification: E24, J3

Open Access Article SciPap-1069

by Kanis Fatama Ferdushi, Anton Abdulbasah Kamil

Abstract: The comparison of technical efficiency has been estimated by parametric and nonparametric production model for agricultural rice farms. This paper employs a translog stochastic frontier model to explain the source of inefficiencies of rice farm due to socioeconomic and farm-specific variables in seven selected regions of Bangladesh. The motivational point is of “start trade” to international rice market like other Asian countries. The average efficiencies estimates of Transplanted AMAN rice farms are vary 60%-90% in stochastic frontier analysis (SFA) whereas in data envelopment analysis (DEA) the technical efficiencies estimates are vary 64% to 79%. Average technical efficienies of Dhaka, Khulna, Barisal and Rangpur were found higher through SFA than DEA. Kernel density estimates appropriates to the empirical efficiency. The results of distribution of efficiencies indicate that Dhaka, Rajshahi, Khulna, Barisal, Sylhet and Rangpur efficiency were found negatively skewed. The graphical representation of the kernel density estimates indicated that inefficiencies were presented among the farms in the all selected regions.

Keywords: Technical Efficiency, Translog Stochastic Frontier Production Model, Inefficiency, Kernel Density

JEL classification: B23

Open Access Article SciPap-109

by Rita Toleikiene, Sigitas Balciunas, Vita Jukneviciene

Abstract: Corruption as the challenge needs many efforts. The fight against corruption is uniting organizations at international, national and local levels. This fight requires not only changes in legal basis or institutional procedures, but rather the change of society mindset turning it more and more to the intolerance to corruption. Therefore, youth is considered as a targeted group, which is able and capable to fight the dishonest behavior, corruption cases. It is important to ensure, that youth would be able to identify the corruption and inform appropriate institutions about this. This needs the values’ background of the youth, the relevant understanding of corruption and intolerance for it. This paper aims to reveal the understanding and attitude of the Lithuanian youth towards the corruption and to identify opportunities for strengthening the anti-corruption potential. The research was implemented in Šiauliai region, Lithuania, using quantitative approach. Few main findings were found out in the research. First, the motives to inform/withhold about the corruption cases depend on the status of occupation (students of high schools, employers or having no job young people are mostly ready to inform about corruption cases rather than students of universities and colleges), the gender (women have bigger potential of anticorruption), the social status of the family (having medium social status people have higher potential than people with lower or higher social status), the civil and political activity (more active young people have higher anti-corruption potential).

Keywords: Intolerance For Corruption, Youth Provisions, Anti-corruption Potential

JEL classification: M38, D73, D91

Open Access Article SciPap-900

by Monika Daňová, Ivana Kravčáková Vozárová

Abstract: The imbalance of the economic and social level between territorial units is a problem of many countries, including Slovakia. In addition to product losses, the absence of labor incomes of lagging territorial units and their reduced ability to develop independently appear to be a problem. The reason for such a situation may be low economic activity as well as a weak relationship between employment in some regions. The aim of this study is to identify differences in the relationship between the rate of economic growth and changes in the unemployment rate in the all regions at the NUTS3 level in Slovakia in the period 1999-2018. To examine the relationship between unemployment and the rate of economic growth, a gap version of Okun's Law was used. A simple linear regression model was constructed for each region at NUTS 3 level. By comparing the values of constructed econometric models, the regional differences and sources of these differences were identified. The results of the analyzes have indicated that there is a direct causal relationship between the change in unemployment and the rate of economic growth in the short term. The correlation coefficients confirmed the negative relationship between GDP growth rate and unemployment. The strength of the relationship across region at NUTS 3 level was differentiated, but in all NUTS 3 regions was statistically significant. The impact of the growth rate on changes in unemployment has been found to be differentiated mainly according to the size of unemployment, as well as the sources and stability of the rate of economic growth and the structure of economic activities.

Keywords: Regional Disparities, Okun's Law, Unemployment, Economic Growth, NUTS 3 Level, Slovak Republic

JEL classification: R12, E24

Open Access Article SciPap-1052

by Martina Halásková, Renata Halásková, Pavel Bednář

Abstract: Public services are crucial for working stable economies in the European Union and for the development of public policies, but also the ensuring of infrastructure and satisfaction of public needs. The article aims to evaluate selected public services by the volume of allocated public expenditures, focusing on similarities in the EU countries. The quantitative analysis concentrates on financial allocations by COFOG second level in selected areas of public services. The research is carried out for the period 2008-2017 by use of multidimensional scaling. The results have shown that the EU countries can be divided into seven clusters by the similarity of public expenditures on services, although partial differences are present even in these clusters. The results have proved a high similarity of services by the volume of allocated public expenditures (public health services, recreational and sporting services) and services related to housing development. On the other hand, differences in financial allocations are presented by public services which satisfy needs of society (police services) and areas of technical infrastructure (transport, waste management), compared to the other public services analysed. These findings reflect the role and size of the public sector with respect to priorities of the EU countries.

Keywords: Public Services, Public Sector, Public Expenditure, COFOG, EU Countries, Multidimensional Scaling

JEL classification: H40, H76, H83

Open Access Article SciPap-113

by Viktoriia Smiesova, Maryna Ivanova, Svitlana Faizova, Liliya Zolotukhina, Roman Karpenko

Abstract: Inefficient functioning of institution of property and the institution of government creates conditions for evolving and affirming a phenomenon of "power-property" in the economic system. Power-property is defined as a phenomenon based on monopolization of the conditions for production, distribution, exchange and, as a consequence, restriction of consumption; it arises under the conditions of evolving such socio-economic relations, where the government and its dominance are based on a special position of economic agents in the economic and political hierarchy of society. Power-property exerts a negative impact on the implementation of interests of economic agents and, at the same time, public interests. However, in the scientific literature there has not been empirical assessment of the influence of power-property on the realization of the economic interests of households, enterprises, and society. The purpose of the article is to determine the nature of the dependency of a level of implementation of the economic interests of households, enterprises and society on the increased power-property manifestations in the economic system, and to forecast changes that occur as a result of this effect. For research the following scientific methods were used: mathematical statistics, economic and mathematical modelling, and regression analysis. These methods make it possible to establish a quantitative dependency of the objective (subjective) factors of the studied objects, to reveal the nature of the functional dependency between them, to determine and analyze potential changes in the values of any of the parameters of the studied object. The study provides a forecast of changes in the level of implementation of the interests of households, enterprises and society under the reinforced favouritism in the decisions of authorities and increased government’s monopolization of the conditions needed for production, distribution, exchange and, as a consequence, for consumption. It has been empirically proven that an increase in the power-property tendencies result in lower revenues and higher transaction costs for economic agents that are not connected with the government, in reduced government spending on public goods, and limited opportunities for economic agents to actually influence the production and distribution conditions.

Keywords: Crony Capitalism, Institution, Interest, Government, Power-property, Property, Rent-seeking Behaviour

JEL classification: A1, C50, D72, E27

Open Access Article SciPap-1050

by Karolina Vozkova, Petr Teply

Abstract: This paper deals with the European banking sector fee and commission income, with a special emphasis on the Czech Republic, in the 2007-2018 period. During this time span, net interest income was declining due to low nominal growth and a long period of low interest rates. We contribute to the literature when comparing the magnitude of fee income across the EU banking sectors. We come to the following key findings. First, we conclude that there is no single optimal fee income strategy. Second, we argue that Czech banks are not abnormally dependent on fee income and their outstanding profitability is rather connected with sound risk management as well as with sufficient liquidity and capital buffers. Third, we find that in the EU, fee income share followed an increasing trend after the 2007-2009 global financial crisis which might be connected with an effort to maintain desired profitability in a low interest rate environment.

Keywords: Bank Performance, Czech Republic, European Union, Fee And Commission Income, Low Interest Rate Environment, Financial Stability

JEL classification: L25, G21