Eurasian Economies in Transition Eurasian Economies in Transition Edited by Aysen Hic Gencer, İlyas Sözen and Selahattin Sari Eurasian Economies in Transition Edited by Aysen Hic Gencer, İlyas Sözen and Selahattin Sari This book first published 2017 Cambridge Scholars Publishing Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2017 by Aysen Hic Gencer, İlyas Sözen, Selahattin Sari and contributors All rights for this book reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the author, except for the inclusion of brief quotations in a review. Although the author and publisher have made every effort to ensure that the information contained in this book was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause. The editors have made every effort to include an exhaustive set of opinions on all the issues discussed in every part of this book. The views of the contributors of the chapters do not necessarily reflect the editors’ own. ISBN (10): 1-4438-1266-8 ISBN (13): 978-1-4438-1266-5 To further enjoying life together with my husband, Alp … —Ayşen For my lovely parents … —İlyas For my wife, Naciye … —Selahattin The knowledge of anything, since all things have causes, is not acquired or complete unless it is known by its causes. —Avicenna CONTENTS Preface ........................................................................................................ xi Foreword .................................................................................................. xiii Eurasian Customs Union and Turkey’s Membership Part One: Globalization and Regional Studies Chapter One ................................................................................................. 2 Changes in the World Power: The United States within the New Balance of Power Chapter Two .............................................................................................. 24 The Effect of Globalisation on Foreign Trade and Investment in Eurasian Countries Chapter Three ............................................................................................ 38 The Resource Potential of the Participating Countries of the Eurasian Economic Union Chapter Four .............................................................................................. 52 The Influence of Corporate Governance Mechanism to Earnings Management on Indonesia and China Industrial Banking Chapter Five .............................................................................................. 66 The Internal Innovation Processes in Kazakhstan Chapter Six ................................................................................................ 86 Could Remittances Shield Vulnerable Households in Transition Economies? Part Two: Growth and Development Chapter Seven .......................................................................................... 108 The Impact of Institutions on Economic Growth in the Central and Eastern European Countries before and during the Global Economic Crisis viii Contents Chapter Eight ........................................................................................... 123 Beta Convergence Analysis on Transition Economies: 1991–2011 Chapter Nine ............................................................................................ 136 Does Purchasing Power Parity Hold for Commonwealth and Independent States? Chapter Ten ............................................................................................. 143 Investigating the Existence of the Tourism-led Growth Hypothesis in the Central Asian Republics: A Bootstrap Panel Causality Analysis Chapter Eleven ........................................................................................ 151 Evaluation of Turkic Republics in Terms of Business Feasibility Potential Part Three: International Finance Chapter Twelve ........................................................................................ 166 The Impact of the US Dollar and the Euro on Currencies in Europe and Asia Chapter Thirteen ...................................................................................... 183 The Effects of Exchange Rate Volatility, Reserve Volatility, and Real Interest Rates on Foreign Trade: Applications on Transition Economies Chapter Fourteen ..................................................................................... 201 Governance Aspect of Foreign-Exchange Policy in Indonesia Chapter Fifteen ........................................................................................ 222 How Can Market Capitalisation in Eurasian Markets be Increased? Chapter Sixteen ....................................................................................... 235 Fiscal Rules, Creative Accounting, and Fiscal Transparency: An Evaluation on the Transition Economies Chapter Seventeen ................................................................................... 248 The Sustainability of External Debts for Turkic Countries Eurasian Economies in Transition ix Part Four: Integration and Transition Chapter Eighteen ..................................................................................... 264 Hope versus Reality: Twenty Years of Economic Transition and the Turkic States of Central Asia Chapter Nineteen ..................................................................................... 279 Strengthening the Integration Process in the Eurasian Economic Union Chapter Twenty ........................................................................................ 293 Social Integration in Turkey and Transition Economics Chapter Twenty-One ................................................................................ 307 Convergence of Maastricht Criteria as Economic Performance Criteria: Analysis of EU and Transition Economies Joining the EU Chapter Twenty-Two ............................................................................... 325 Problems of Privatisation and Regulation in Transition Economies Chapter Twenty-Three ............................................................................. 339 Comparative Analysis of Central Asian Tourism Product from the Point of View of Turkish Travelers: The Cases of Kyrgyzstan, Kazakhstan, Tajikistan, Uzbekistan and Turkmenistan Part Five: Energy and Natural Resources Chapter Twenty-Four ............................................................................... 360 The Central Asian Countries and the Energy Sector: Economics, Politics and Legal Aspects Chapter Twenty-Five ............................................................................... 376 Nonlinear Real Exchange Rate Dynamics and Oil Prices in the Commonwealth of Independent States Chapter Twenty-Six ................................................................................. 394 Features of Value Added Distribution of the Gazprom Corporation in 2004–12 Chapter Twenty-Seven ............................................................................. 404 Causality Relationships between Renewable Energy, Economic Growth, and CO2 Emission in Middle Eastern and North African Countries x Contents Chapter Twenty-Eight .............................................................................. 424 Contribution of the Agriculture Sector to Sustainable Development in Eurasian Countries: Evaluating Risks and Opportunities Chapter Twenty-Nine............................................................................... 440 Water Flowing Beyond Borders and Water Problems PREFACE We are delighted to announce that, so far, seven conferences of the International Conference on Eurasian Economies (http://www.avekon.org), organised by the Eurasian Economists Association, have been held in various Eurasian countries: November 4–5, 2010: Istanbul, Turkey, in association with TC Beykent University October 12–14, 2011: Bishkek, Kyrgyzstan, in association with Kyrgyzstan-Turkey Manas University October 11–13, 2012: Almaty, Kazakhstan, in association with Turan University September 17–18, 2013: St. Petersburg, Russia July 1–3, 2014: Skopje, Macedonia, in association with Ss. Cyril and Methodius University September 9–11, 2015: Kazan, Russia, in association with the Kazan Federal University August 29–31, 2016: Kaposvar, Hungary, in association with Kaposvar University We are proud to have published our first book with Cambridge Scholars Publishing, Central Asian Economies in Transition, edited by E. Ayşen Hiç Gencer and Cevat Gerni, in 2012. The book consisted of selected papers from the first two conferences that specifically addressed six Central Asian countries (Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan, and Azerbaijan) and their economic ties with Turkey. In addition, we featured specially invited articles by prominent academics working on Central Asian economies. All these articles were blended to form a complete and coherent description of Central Asian economies, their challenges, and their integration into the world economy. For this second book in your hands, we broadened the region to