Issue 3, 2024

The article presents the results of recent implemented and current research on up-to-day trends, challenges, risks and social and economic consequences of the green transition for economic development on a national and European level discussed at the annual scientific conference, organised by the Economic Research Institute at the Bulgarian Academy of Sciences.
Keywords: green economy; sustainable development; growth; labor market; European Union; financing; sectoral and regional policy; green transformation of companies
JEL: E00; F00; G00; J00; M00; O1; Q00; R1

This article investigates the impact of institutional quality on accelerating the energy transition in the Western Balkans. The region's heavy dependence on energy means the transition to cleaner energy sources will affect GDP growth. However, improving institutional quality can speed up the process by increasing energy efficiency, reducing pollution, and decreasing reliance on energy imports. The Western Balkan countries must adopt the EU's goal of energy transition and reducing CO2 emissions as part of their path to joining the European Union. However, institutional factors such as corruption, weak governance, political instability, and the rule of law have hindered individual countries' progress. This study used data from the World Development Indicator and the International Energy Agency from 2005 to 2020 to investigate the relationship between institutions, energy transition, and economic growth in the Western Balkans. The study employed four econometric models using random and fixed effects regression methods. The results revealed a positive and statistically significant impact from CO2 emissions, governance effectiveness, final consumption expenditures, and trade openness in total energy consumption. Conversely, GDP per capita, the deterioration of controlling corruption and political stability have a negative impact on total energy consumption. In contrast, control of corruption significantly impacts renewable energy growth. The findings also revealed that, even though the increase in total energy consumption raises GDP, it negatively impacts GDP per capita due to energy inefficiency and a large portion of the energy expenses from individual incomes. In contrast, renewable energy consumption positively impacts GDP and GDP per capita.
Keywords: Economic Growth; Institutions; Energy Transition; Renewable energy; CO2
JEL: O43; Q40; Q48; Q01

The creation of Next Generation EU in response to the COVID-19 pandemic was a significant milestone in the European integration project. NGEU is an innovative financial instrument with the ambitious tasks to boost economic recovery and to finance long-term investments, thus raising the question if it can be viewed as a common fiscal capacity. The aim of the present article is to analyse in detail the structure of NGEU expenditure from the perspective of the public sector's three main functions (allocation, redistribution and stabilisation) and to draw conclusions about whether this instrument increases the EU’s capacity to perform them. After a concise literature review of the main arguments in favour of a supranational fiscal capacity, the article examines in detail the expenditure side of NGEU’s main component, the Recovery and Resilience Facility. It is concluded in the article that NGEU increases the EU’s capacity to perform the redistribution function and to some extent the allocation function. However, it cannot be viewed as a macroeconomic stabilisation mechanism. The article discusses several challenges arising from the establishment of the fund.
Keywords: European Union; Next Generation EU; fiscal integration; public sector functions; fiscal federalism
JEL: F15; H7; H87

This paper empirically analyses the impact of fiscal policy on the economic growth of the countries of Southeast Europe. The work was carried out with secondary data from the 12-year period and respectively from 2010 to 2021 and includes 11 countries, so the data belongs to the panel type. The purpose of this paper is to analyze social variables such as government spending, income from taxes, public debt, government effectiveness, fiscal freedom, rule of law index, and corruption in economic growth. For this purpose, we employ different econometric models and techniques such as OLS, OLS Robust fixed and random effects models, and GMM (Generalized Method of Moments). The findings from the research show that fiscal policy instruments have a positive impact on the economic growth of the countries of Southeast Europe, while the effectiveness of the government, the rule of law, and corruption show a statistically significant impact on the economic growth of these countries. The recommendations for the countries are for policymakers in the region to prioritize the development and implementation of sound fiscal policies to stimulate economic growth. By strategically managing government spending and taxation, these countries can enhance aggregate demand, encourage investment, and create a favourable business climate. Furthermore, adopting expansionary measures during economic downturns and adopting prudent debt management practices can contribute to stability, confidence, and sustainable growth.
Keywords: Fiscal Policy; Economic Growth; Southeast Europe; Institutions; Government
JEL: O4; O40; H3

The paper focuses on examining the impact of the public sector, specifically the tax system and expenditure structure, on income inequality in CEE countries from 1998 to 2021. A panel data estimation technique is used to analyse this relationship. The findings of the research indicate that the tax systems in the CEE countries, characterised by limited progressivity and low shares of income taxes in total tax revenues, do not contribute effectively to reducing income inequality (shares of personal income tax, direct taxes and VAT are positively connected with GINI). In contrast, social and education spending are negatively associated with income inequality. These results suggest that expenditure policies have a stronger impact than tax measures in addressing income inequality in CEE countries.
Keywords: income inequality; public sector; CEE countries; panel regression
JEL: D31; E01; H23; H53; D63

Migration bears a significant relationship with the dynamics of economic growth in developing countries. This study aims to investigate whether the allocation of internal migrant workers to specific regional units, as conducted in this research within East Java Province, Indonesia, yields the anticipated effects. The Heckman two-step estimation method was used in analyzing the impact of migrant workers on economic growth in developing countries. The results of this study indicate that the determinants of migrant workers in East Java are significantly influenced by age, gender, level of education, marital status, presence of family members under the age of 5, description of the category of origin, Gross Regional Domestic Product Based on Current Prices (PDRB ADHK), region of origin, and the number of poor people. The results of the analysis of the significant impact of migrant workers on the economic sector (PDRB ADHK in destination areas) on migrant workers in East Java are migrant workers of productive age, male migrant workers, migrant workers with bachelor/diploma’s degree, migrant workers who come from areas with the widest type of floor is in the form of non-timber/soil housing, and migrant workers originating from small-town areas contribute the most to the PDRB of the destination region.
Keywords: Heckman two-step estimation; migrant workers; PDRB
JEL: J60; J61; J62

Managerial orientation has become a key concept regarding SMEs internationalization even if not all companies have enough experience in this complex process. During the last decades, traditional internationalization practices (exporting), broadened and developed into a multi-faceted and more differentiated activity that enhances the competitiveness of a business. This paper’s objective is to present how and if the international activity of a business and its environment are influenced by management strategic decisions. By analyzing the successful internationalization of Romanian cases, this paper aims to establish a connection between certain managerial approaches and the success of the business (risks taken, capabilities, and process in general). The study was conducted over three months, where we collected data using a combination of instruments and methods (such as. surveys, interviews, analysis of data, and online research about the companies). Effective management practices are crucial for the success of SMEs seeking to internationalize. The role of high-quality management and a manager’s education can contribute to the company's overall success and its benefits.
Keywords: internationalization; SMEs; managerial practices; business environment; competitiveness
JEL: F23; G32; L23

This study aims to determine the effect of the minimum wage on employment in the formal and informal sectors in Indonesia. This study has a panel data set with a total of 170 observations consisting of 34 provinces in Indonesia during the 2017-2021 period. The use of the Ordinary Least Square (OLS) method, fixed effect, and random effect are used to compare the results of the three methods used. The results explain that the minimum wage has a negative and significant effect on the absorption of formal sector workers, while the minimum wage has a positive and significant effect on the absorption of informal sector workers.
Keywords: minimum wage; formal sector; informal sector
JEL: J23; O17; O46

Despite the acknowledged significance of organization communication in achieving positive organizational outcomes, there is a dearth of empirical knowledge regarding internal organization communication (IOC) influence on employee engagement (EE), particularly in Balkan countries. The aim of this study is to fill this research gap by measuring the effect of IOC in EE, thereby providing a significant contribution to the growing domain of organizational communication. Specifically, this paper investigates the relationship between eight dimensions of IOC (such as communication climate, supervisory communication, organizational integration, media quality, co-worker communication, company information, personal feedback, and subordinate communication) and three dimensions of EE (employee vigour, employee dedication, and employee absorption). The present study involved the administration of a survey to a sample of 152 employees working in public secondary education institutions within the Republic of North Macedonia. The data was subjected to analysis using SPSS software. The results of the study indicate that several IOC dimensions play a crucial role in predicting various dimensions of EE, such as employee energy, dedication, and absorption within the organization. The findings of this study make a substantial contribution to the existing knowledge on the relationship between IOC and EE in non-profit organizations.
Keywords: Internal Organizational Communication; Employee Engagement; Media Quality; Company Information; Employee Dedication
JEL: O15; J50; L82

The research relevance is predefined by the importance of communication as a necessary competence of process management in the enterprise. The main aim is to analyse the key principles of building communications in the management of business processes of modern enterprises. The results were obtained to illustrate the importance of building communication both within the enterprise, regardless of its affiliation to a particular area of business. The interrelation of social, technical, and managerial components of the communication system within a single enterprise, determines communication in general. The practical significance lies in the possibility of their use in the construction of business, based on a high-quality task setting for all participants of the communication process, tracking the overall level of its perception and execution.
Keywords: business environment; management sector; competitive advantage; professional contacts; corporate culture; counterparties
JEL: D83; J53; M14

This article presents a quadratic model to evaluate the impact of COVID-19 on HR soft skills. The pandemic has disrupted the global workforce, necessitating an examination of the effects on communication, collaboration, and adaptability. The model calculates the outcomes and underscores the importance of dedicating resources to the updating of soft skills taking into account remote work, the process of digital transformation nowadays, and shifting job requirements during COVID times. The findings inform policymakers, HR professionals, and organizations in addressing COVID-19 challenges. By understanding the economic implications, organizations can adapt recruitment, training, and talent management strategies for long-term sustainability and growth. This model contributes to existing literature and aids decision-making for a skilled and resilient workforce in a post-pandemic era.
Keywords: Quadratic model; COVID-19; Human resources; Soft skills; Impact assessment; Workforce resilience
JEL: J24; J63; J82; M12; O15; I18