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HARMONIZATION OF THE MARKETING AND ACCOUNTING ACTIVITIES IN THE IMPLEMENTATION OF THE GROWTH STRATEGY

Author(s): Predrag Gajić,Perica Macura / Language(s): English / Issue: 35/2021

Keywords: growth strategy; market share; marketing cost; activity based management; cost allocation; activity based costing; relevant accounting information;

This research is an attempt to emphasize the interdependence of the accounting and marketing functions in the segment of the growth strategy implementation with an attempt to increase the market share. In this process, activity-based management and activity-based costing were used as recommended instruments, with analytical activities and implementation (operational) activities in the application of the mentioned strategy considered separately. In both cases, the analysis was performed from the standpoint of the need to identify activities and costs of non-production departments, such as marketing and accounting, by individual cost objects, which are, in this case, target markets where the growth strategy will be applied. In this way, it will be possible to concretize the target character of such costs and an objective approach when linking them to cost objects, because the cost of such activities is pooled out from the costs of marketing department whose costs are mostly budgeted as a unique whole. In operational terms, this will enable a number of decisions, such as: whether to outsource the analysis of the effects of entering new markets or to do it within the company, whether and how to standardize time and costs of non-production activities; whether there is an economic justification for entering new markets based on planned results that include the consumption of resources of identified non-production activities that are commonly “hidden” in the aggregate cost values of these and other functions.

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POVERTY REDUCTION, INSTITUTIONS AND THE NIGERIAN ECONOMY

Author(s): Olayide Olayinka Olaoye / Language(s): English / Issue: 35/2021

Keywords: poverty reduction; institutional quality; economic growth; law and order;

The prime goal of the United Nations is to reduce poverty to the barest minimum in all economies of the world. Africa seem to be worst hit by poverty. Nigeria, has also experienced the consequences of poverty in the forms of kidnapping for money, extortion and so on. Although Nigeria has recorded growth in the economy over time, such growth has not succeeded in transforming the economy. This study therefore sets out to examine the relationship between poverty reduction and economic growth through the channel of institutional quality. Trickle-down theory formed the basis for the study which covered the period 1990-2019. Correlation analysis, Granger-causality as well as the Autoregressive Distributed Lag model were used. The study found that an inverse but weak relationship exists between poverty reduction and economic growth. Also, a unidirectional flow exists from voice and accountability (an indicator of institutional quality) to poverty reduction. Moreover, the study found a strong but negative influence of the rule of law on poverty reduction. Therefore, enforcement of law and order is crucial to poverty reduction in Nigeria. In addition, government expenditure on health has had positive impact on poverty reduction, while government expenditure on education has had negative impact on poverty reduction. Hence, government investment in providing more health facilities will help to reduce poverty in Nigeria. However, government should reconsider public spending on education in Nigeria. Government intervention in education should be limited to regulation and the provision of those educational facilities that face the free-rider problem.

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BORROWING OF THE REAL SECTOR IN THE FUNCTION OF ECONOMIC DEVELOPMENT OF THE REPUBLIC OF SRPSKA

Author(s): Predrag Ćurić,Srđa Popović,Dragana Bašić / Language(s): English / Issue: 35/2021

Keywords: banking sector; indebtedness; credit policy; financial indicators; balance sheet analysis; credit risk;

The availability of funds for lending in the economy under favourable conditions is the fundamental and most important function provided by the banking sector, even though its role is crucial in executing payment transactions as well as in providing security in savings products. As per expectations, quantitative analysis shows a very high level of correlation between the changes in the volume of bank loans and the changes in the gross domestic product in the Republic of Srpska. The research of the indebtedness of the real sector in the function of economic development of the Republic of Srpska was conducted on the basis of a representative sample comprising of 188 large companies out of 343 in total. By using the data obtained from the financial statements of the companies, we investigated the extent to which the channeling of bank credit funds affects the financial stability and operations of companies in the Republic of Srpska. The results obtained indicate a high level of use of bank loans for the purpose of ensuring current liquidity and maintaining fixed assets necessary for regular operations. Companies that are more indebted to banks fail to operate more successfully even to the slightest extent. The conducted research indicates a significant volume of loans placed with the aim of providing current liquidity and maintenance of fixed assets and equipment. However, it is particularly significant to alter the credit policy of banks, which would direct a larger volume of bank credit funds to investments.

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ENERGY GENERATION AND AGGREGATE OUTPUT IN NIGERIA: EVIDENCE FROM NARDL

Author(s): Musibau Ojo Adejumo,Rasak Adetunji Adefabi / Language(s): English / Issue: 35/2021

Keywords: energy access; aggregate output; NARDL; energy supply; economic growth; energy generation;

Energy generation has received a little or no attention over a period of time. Most scholars are focused on energy consumption and economic growth. This study empirically examined the asymmetric impact of energy generation on aggregate output in Nigeria between 1980 and 2019 using Nonlinear Autoregressive Distributed Lag (NARDL) Model. The stationarity test was conducted on the variables employed to avoid spurious regression. The result revealed that the variables were mixed at level and the first difference. The bound test result revealed that the variables are not cointegrated in the long run. Also, Wald test indicates that energy generation has short run impact on aggregate output in Nigeria. As revealed from the empirical results, from all sources of significant energy generation in Nigeria, gas generation brings the desired result to aggregate output in Nigeria. The study therefore suggests that action should refocus on the gas production subsector. This subsector needs to be developed carefully to avoid wasting this energy source by incineration. Also, the government should redirect those subsidies for petroleum products to the gas generation subsector.

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EXTERNAL ADJUSTMENT AND FLEXIBILITY OF THE EXCHANGE RATE REGIME: THE CASE OF TRANSITION COUNTRIES

Author(s): Dragan Gligoric,Borce Trenovski,Kristijan KOZHESKI / Language(s): English / Issue: 34/2021

Keywords: exchange rate regime; external adjustment; transition countries; first order autoregression;

Milton Friedman’s traditional claim is that flexible exchange rates facilitate external adjustment by means of their corrective movements before the balance of payments crisis occurs. In order to test this hypothesis, we employ the first order autoregression based on the panel data on exchange rate regime and external balance expressed as the share of balance of goods and services in GDP. The sample covers 16 Central and Eastern European (CEE) and 12 Commonwealth of Independent States (CIS) transition countries over the period 2000-2019. The results, which are based on the sample of all transition countries, failed to prove that more flexible exchange rate regimes facilitate external adjustment. When the analysis was performed on two groups of countries separately, the results showed that the deficit of balance of goods and services in CIS countries has a higher persistence compared to CEE countries. However, a more flexible exchange rate regime does not facilitate external adjustment. On the other hand, in CEE countries, the relationship between exchange rate regime flexibility and the rate of balance of goods and services reversion exists, proving that Friedman’s hypothesis does hold.

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AN INSIGHT INTO POTENTIAL FISCAL IMPLICATIONS OF THE GREAT LOCKDOWN FROM THE PERSPECTIVE OF SMALL STATES

Author(s): Primož Pevcin / Language(s): English / Issue: 33/2020

Keywords: small states; government expenditures; globalization; Great Lockdown; economic vulnerability;

The Great Lockdown has caused severe economic distractions to the majority of world countries, and de-globalization trends have started to increase. Globalization was to an extent beneficial for smaller economies, and it was one of the factors contributing to the rise in the number of countries around the world during the last few decades. According to the perceived larger openness and vulnerability of smaller states, it is thus expected that those countries are hit much harder by the economic contraction, as their outputs are much more volatile in relation to the economic cycles. In this context, the paper intends to investigate the exposure of European states to the current lockdown, where the focus is particularly on assessing the fiscal impacts of the lockdown. The main research question is whether there are any differences regarding the fiscal functions of government between smaller and larger states. This is addressed through the cross-national comparative investigation based on data for 44 European countries; and we specifically assess how fiscal activities of government differentiate among smaller and larger states. The results of the study suggest that the effect of the size of the state does not affect the consumption spending of government, but the size variable matters for the transfer expenditures. This piece of research would like to add to the development of the discipline of small state studies, in particular to the issue of their vulnerability and changing global economic environment.

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INVESTMENT AND ECONOMIC GROWTH: THE EXAMPLE OF BOSNIA AND HERZEGOVINA

Author(s): Jelena Bjelić / Language(s): English / Issue: 33/2020

Keywords: investment; economic growth; FDI; Bosnia and Herzegovina; added value;

An investment is a factor of the economic growth and a mandatory constituent in the majority of development models. This study analyzes the impact of the gross investment on the economic growth in Bosnia and Herzegovina (BiH) for the period 2005-2017, and provides the assessment of the interdependence of investment and a newly added value in industry. The relationship between the foreign investment and the economic growth is also included. The dependent variables are the GDP growth rate and the added value in industry (as % of GDP). The independent variables are the total investment rate (as % of GDP) and the foreign investment rate (as % of GDP). The hypothesis is that the gross investment and the foreign investment are positively correlated with the GDP growth rate. The investments contribute to a higher newly added value in industry. The results show that the gross investment is a significant factor of the economic growth because there is a high significance and positive correlation between the observed variables (the total investment and the GDP growth). This shows that the investment growth stimulates the economic growth in Bosnia and Herzegovina. But the dynamic analysis as an investment-GDP ratio shows oscillations. The impact of investments on the share of the newly added value in industry is insignificant and negative. The results of the dynamic analysis are similar. The relationship between the variables of the foreign investment rates and the GDP growth is significant and positive. Although the foreign investments are not sufficient, they still contribute, to a certain extent, to the economic growth of BiH.

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ANALYSIS OF SUSTAINABLE GROWTH RATES OF COMPANIES INCLUDED IN THE MIXED HOLDING POWER UTILITY OF REPUBLIC OF SRPSKA

Author(s): Goran Radivojac,Aleksandra Krčmar / Language(s): English / Issue: 33/2020

Keywords: sustainable growth; revenues; Banja Luka Stock Exchange; Elektroprivreda;

This paper analyzes selected data on the performance of companies that are part of the power utility Elektroprivreda Republike Srpske with the aim of determining their sustainable growth rates. The energy sector was chosen because of its importance both for the Republic of Srpska capital market (measured by the participation in the total market capitalization of the Banja Luka Stock Exchange and the basic Stock Exchange index) and the entire Republic of Srpska economy (measured by the participation in gross domestic product). The analysis considered data from published financial statements for 2019, with an emphasis on the following: operating assets, liabilities, capital, operating income and net profit. The dividend policy was also considered, but it was concluded in the paper that none of the observed companies paid dividends from profit for 2019 by the end of this analysis. The research results show that the rate of sustainable growth exceeds 1% in only one case, while in several other cases there are negative rates of sustainable growth caused by the loss in the observed period. Such facts could raise concerns, but also indicate possible directions for future actions in order to improve the performance of the considered companies.

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PUBLIC HEALTH EXPENDITURE AND INFANT MORTALITY RATE IN NIGERIA

Author(s): Adeagbo Mathew Oluwaseun / Language(s): English / Issue: 33/2020

Keywords: public health spending; infant mortality rate; female literacy; Diphtheria; Pertussis and Tetanus;

One of the numerous responsibilities of the government of any country is to invest in the various sectors of the economy. This should, however, be channeled to the appropriate sectors, such as the health sector, that will lead to a continual growth of the country. It is in the light of this, that this study looks at government spending on the health sector and its effect on infant mortality rate (INFM) in Nigeria. Health is central to the well-being of the citizens. This study made an attempt to provide empirical evidence of the impact of public health expenditure on infant mortality rate in Nigeria between 1991 and 2018 using time series data. The Fully Modified Ordinary Least Square (FMOLS) analytical method was used to examine the relationships. Various robustness checks were carried out to ensure the reliability of the result for policy makers. Findings revealed that all variables employed positively impacted INFM except for Diphtheria, Pertussis, and Tetanus (DPT) immunization and female literacy rate. It was therefore recommended that more public enlightenments on the importance of taking DPT immunization for infants should be embarked upon for the target audience to be able to produce a positive effect, nursing mothers should be educated more on the need to take good care of their children especially at the early stage and not leave chance to the faith of the day care, all in the name of being literate and answering the call of their job at the expense of their parental role among others.

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THE INFORMAL ECONOMY AND ECONOMIC GROWTH OF NIGERIA: A TIME-VARYING PARAMETER APPROACH

Author(s): Abiola Lydia Aina / Language(s): English / Issue: 33/2020

Keywords: economic growth; informal economy; time-varying parameter model; Nigeria;

Studies on the relationship between the informal economy and economic growth have been inconclusive as to whether the positive or negative relationship dominates. These results are partly due to the type of estimation technique such as fixed-parameter techniques. Fixed parameter techniques have been used to observe the relationship between economic growth and the informal economy. A caveat to the fixed-parameter estimation techniques used to observe the relationship between the informal economy and economic growth is the inability to account for annual disruptions. This paper seeks to examine the relationship between the informal economy and economic growth in Nigeria in the period from 1991 to 2015 using the Time-Varying Parameter (TVP) model. The TVP model is estimated in two stages. First, an Ordinary Least Squares (OLS) multiple regression is estimated and the outcome is subjected to the flexible least-squares approach. The results show the dominance of the negative effects of the informal economy on economic growth. The outcomes also reveal that overtime movements of time-varying parameters in the informal economy and economic growth are connected with economic and political events. This paper recommends the absorption of the informal economy into the official economy through government policy.

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CONSIDERING NONLINEAR CONNECTIONS IN THE INDIVIDUAL PERFORMANCE MANAGEMENT MODEL

Author(s): Živa Veingerl Čič,Vesna Čančer,Simona Šarotar Žižek / Language(s): English / Issue: 32/2020

Keywords: individual employee performance management; nonlinear connections; service sector; structural equation modeling; Warp PLS 5.0.;

To discuss nonlinear connections between constructs of the conceptual model of individual employee performance management in Slovenian service sector. Constructs were analyzed with the validated measurement instrument, adapted to the Slovenian context due to preliminary research. Existence of significant nonlinear connections between them was checked by structural equation modeling. The software tool Warp PLS 5.0. based on the Warp2 algorithm was used. Holistic employee development methods significantly improve employees’ work satisfaction, individual performance, and well-being. The quality of the conceptual model obtained with Warp PLS 5.0 supports the consideration of nonlinear connections between constructs. They exist between the constructs of the conceptual model of the individual employee performance management system in e.g. the Slovenian service sector. Results make employees and managers aware that existing performance management systems are inadequate. Hence, one must place this knowledge of the situation and trends of individual work performance as the basis for sensible management action, including new performance management systems based on a requisitely holistic approach, focusing on the individuals and their performance, not on the performance management system. The designed employee performance model is individually oriented and applies mentoring, coaching, sponsorship and intergenerational cooperation. It clarifies how one can use holistic employee development to improve individual employee performance, job satisfaction, and well-being.

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SITUATIONAL LEADERSHIP IN SERVICE ORGANIZATIONS

Author(s): Zdravko Todorović,Boris Todorović / Language(s): English / Issue: 33/2020

Keywords: leader; employee; leadership style; development; success;

The purpose of this paper is to present a situational leadership model. The model is universal and can be applied in small, medium and large enterprises of various industries. Numerous surveys on U.S. Fortune 500 companies and surveys on other companies around the world have shown its universality, but also the need to improve the model. The aim of this paper is to adapt the model to the needs of the service activity that deals with vehicle servicing. The paper presents the hypothesis that by adapting the situational leadership model in service activities, it will lead to better personnel leadership, increased profits and satisfaction of the demands and requirements of stakeholders. We used quantitative and qualitative methodology in our paper. We collected numerical data based on a situational questionnaire, and we collected qualitative data based on interviews with employees and leaders. The results of the conducted research confirm that by adjusting the situational leadership model, the profit of the organization can be improved. The extension of the model refers to the clear definition of business objectives, and the requirements of the CEO that leaders must have the highest knowledge and skills to effectively manage staff in given situations. The limitation of the research refers to a small sample, because we applied and adjusted the model only to one service organization. The originality of the work refers to the adaptation of the model of situational leadership in a service organization that deals with vehicle servicing. For the first time, the development of leaders is assessed in situational leadership models at the request of the CEO. Based on the results, the CEO analyses the development of leaders and the development of employees. To achieve the defined goals, the CEO requires from leaders to be at the highest level of development. Therefore, the introduction of continuous training of leaders is necessary. There are several ways to assess employee development. For the first time, employees are developed based on their ability to perform jobs. Leaders must be able to adapt their leadership style to all employees, to train employees as quickly as possible to perform tasks independently.

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ECONOMIC BURDEN OF A NEGLECTED TROPICAL DIS-EASE IN AFRICA: THE CASE OF HUMAN AFRICAN TRYP-ANOSOMIASIS

Author(s): Joseph Afolabi Ibikunle / Language(s): English / Issue: 32/2020

Keywords: Human African Trypanosomiasis; economic growth; Mean Group estimator; Augmented Mean Group estimator; Common Correlated Estimated Mean Group;

Neglected Tropical Diseases (NTDs) are a category of diseases that cause severe infection to over one billion people worldwide. They impact the world’s poorest people, decrease the quality of life and productivity of employees, hinder physical and cognitive growth, contribute to maternal and child disease and even death. Despite the risks, they are overshadowed by the efforts to fight HIV/AIDS, malaria and tuberculosis, and considered to be “other diseases” that are not really catered for. Hence, this paper analyzed the economic burden of neglected tropical diseases in Africa from 2000 to 2018. Data used were Gross Domestic Product (GDP), human African trypanosomiasis reported cases, current health spending, net official development assistance, consumer price index and exchange rate. The second-generation econometric methods were employed: cross sectional dependence, slope homogeneity, Westerlund cointegration, Pesaran and Smith MG, Pesaran CCEMG and Eberhardt and Teal AMG estimation. Findings confirm the following: first, cross-sectional dependence and slope heterogeneity exist among African countries; second, there is a long run relationship between GDP and NTDs; third, NTDs impacted negatively and significantly GDP, therefore, they stand as a serious detriment to economic growth in Africa. The study suggested that governments in Africa should raise funds to eradicate NTDs and provide an improvement of the environmental conditions that lead to their spread, such as clean water, enhanced sanitation initiatives and vector control.

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EFFECTS OF TOURISM DEVELOPMENT ON THE ECONOMY OF BOSNIA AND HERZEGOVINA

Author(s): Andrijana Mrkaić Ateljević,Srđa Popović / Language(s): English / Issue: 33/2020

Keywords: Bosnia and Herzegovina; tourism; economic development;

Bosnia and Herzegovina (BiH) used to be an attractive tourist destination, which existed within the former Yugoslavia, and experienced a real collapse of tourism development after the war in the 1990s. The recovery process required, above all, the establishment of general stability and harmonization of interests of three constituent nations. That is the reason why the focus on general economic and social progress has been present for years, and tourism as an economic branch has been placed on the margins of development plans. The subject of this research is tourism as a facilitator of the development of Bosnia and Herzegovina. The main aim is to present the direct and indirect contributions of tourism to the development of the national economy of Bosnia and Herzegovina. It required the collection of data using classical scientific research methods, and then processing using statistical techniques. The purpose is to provide the insight into the strength and direction of correlation between individual categories in the balance of payments through correlation regression analysis. In addition, the analysis of the impact of tourism on investment, employment and gross domestic product was performed. This paper answers the question whether tourism in Bosnia and Herzegovina stimulates economic development and whether economic development enables the development of tourism.

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IMPACT OF EXPORTS ON ECONOMIC GROWTH IN BOSNIA AND HERCEGOVINA

Author(s): Milenko Krajišnik,Biljana Gojković,Sonja Josipović,Sanja Popović / Language(s): English / Issue: 32/2020

Keywords: foreign trade; exports; economic growth; GDP; Bosnia and Herzegovina;

The importance of foreign trade and its impact on the economic growth have been the subject of numerous studies. There is no doubt that exports have a multiplier effect on the growth of gross domestic product, but economists are constantly interested in what the foreign trade multiplier is and why it is not higher. This paper deals with the analysis of foreign trade of Bosnia and Herzegovina, its geographical and production structure and concentration, as well as the causes of high and continuous deficits. The analysis indicates potential opportunities to improve the poor production structure of foreign trade and ways in which foreign trade, and especially exports, could increase in order to improve the foreign trade balance. The analysis is especially focused on determining the foreign trade multiplier, and the results show the great importance of exports for economic growth. It also aims to emphasise how to improve export potential of Bosnia and Herzegovina in the future.

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SPECIAL ECONOMIC ZONES: THE IMPACT AND IMPLICATIONS ON ECONOMIC GROWTH WITH REFERENCE TO THE CHINESE MODEL

Author(s): Dražen Marjanac,Ana-Marija Alfirević / Language(s): English / Issue: 32/2020

Keywords: special economic zones; macroeconomic parameters; sustainable economic growth; national economy;

The subject of the research is related to the analysis of the impact of special economic zones on the economic growth of countries that have applied the aforementioned concept of economic development, with reference to the Chinese model. The research goals are to provide the scientific and expert public with an overview of the mechanism of special economic zones and the implications on targeted macroeconomic parameters. The research was conducted by analyzing the relevant literature, the method of deduction and quantification of the impact of special economic zones on economic growth. The research will provide an answer to the research problem that is sublimated in the question: Do special economic zones stimulate economic growth of the national economy and how? The results of the research will show that there is a strong relationship and a degree of determination between special economic zones and targeted macroeconomic parameters. This will confirm the basic hypothesis that special economic zones have a significant impact on sustainable and inclusive economic growth of the national economy ceteris paribus as well as the access to high technology, innovations and know-how.

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ICT-BASED STUDENT ENTREPRENEURIAL PROJECTS ANALYSIS OF SYSTEMATIC SUPPORT AND EVALUATION OF STUDENT INTEREST

Author(s): Ljubiša Mićić,Dragana Preradović / Language(s): English / Issue: 32/2020

Keywords: student; ICT industry; university; system support analysis; entrepreneurship;

In today’s modern world, more than ever before, students are faced with entrepreneurship based on the use of information and communication technology (ICT) as a reasonable and justified career choice. Whether their career choice would be successful or not depends a lot on the level of sys-tem support through entrepreneurial ecosystem during their education. The main objective of this paper is to present the current assessment, indicate the problems and possible solutions regarding the entrepreneurial infrastructure, culture and potential of higher education institutions in Banja Luka, Bosnia and Herzegovina. To achieve this, we have researched the level of the system support to students for development and launch of their ICT based start-ups during and after their university education respecting different educational profiles and demographic characteristics. The research covers the sample of 436 students from seven higher education institutions in Banja Luka at their bachelor studies and includes focus groups, survey, descriptive and inferential statistical methods. We have found significant discrepancy between university ICT programs and infrastructure and student needs. For instance, a quite large number of students interested in ICT industry attended some kind of informal education from this domain and at the same time they were unaware that those and similar programs were freely available at their universities. In this paper we have identified those and similar gaps and compared our research results with similar results in other countries.

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INVESTIGATING THE EFFECTIVENESS OF STERILIZATION POLICY IN CONTROLLING MONEY SUPPLY AND CAPITAL INFLOWS IN NIGERIA

Author(s): Innocent Chile Nzeh,U. C. C. Nwogwugwu,Joseph Afolabi Ibikunle,Benedict I. Uzoechina,Chiedo O. Anthony,Uzoma M. Anyachebelu / Language(s): English / Issue: 32/2020

Keywords: Sterilization policy; capital inflow; money supply; monetary policy;

Over the last decade, Nigeria has witnessed rising capital inflows that have kept the monetary authorities on their toes. This study, therefore, investigated the effectiveness of sterilization policy in controlling money supply and capital inflows in Nigeria. The need for this investigation arose from observed dearth of study in this area in Nigeria as well as the surge in capital inflows within the study period with its likely macroeconomic implications. The study would answer the question: (1) to what extent does sterilization effort of the Central Bank of Nigeria effective in controlling capital inflows in Nigeria, (2) to what extent is sterilization policy able to regulate money supply in Nigeria. By utilizing monthly data spanning a period of 2010-2018 under the framework of Two Stage Least Squares (2SLS), findings show that the sterilization policy of the CBN is effective in regulating money supply and depressing capital inflows both in period of normal capital inflows and in period of intensive capital inflows. We therefore recommend that in periods of sudden and volatile capital inflows, sterilization measure should be given a priority in order to stave off the negative consequences of such unexpected inflows. We also recommend fiscal prudency on the part of the fiscal authorities, especially within the period of high and volatile capital inflows just as the observance of a synergy between fiscal and monetary policies is not ruled out.

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CERTAIN MANIFESTATION FORMS AND PROVING MONEY LAUNDERING IN THE EMERGING MARKET

Author(s): Miloš Grujić,Mile Šikman / Language(s): English / Issue: 32/2020

Keywords: Money laundering; emerging markets; illegal behaviour; law enforcement;

Money laundering, in its almost 90-year-long history, has attracted the attention of the scientific, professional, but also the general public. Throughout the entire period, the manifestations of this criminal phenomenon, its typology, etiological factors, etc., have changed, but the essence has remained the same: the transformation of illegally acquired money into legal financial flows. Emerging markets are particularly burdened, which is the subject of this paper: identifying, monitoring and proving the process of money laundering with the aim to reduce it in developing countries. In addition, what can be observed in these markets is that money laundering operations are mainly related to those activities where most of the payments are made in cash. Their specificity, that is, the basic motive for execution, is not just a profit, but the aspiration to introduce “dirty” money into legal flows. The aim of this paper is to use the method of description to explain and describe scientifically the money laundering process and to combat this phenomenon with a focus on the characteristics of the money laundering process. In addition, the paper describes the models and weaknesses of this process, while at the same time it respects the standards and specifics of business operations in emerging markets. The result of the paper is that it provides an overview of money laundering in the 21st century in small and open economies, including proposals to prevent and combat this negative phenomenon.

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LIMITATIONS OF THE PANEL REGRESSION MODEL APPLICATION: THE EXAMPLE OF THE WESTERN BALKAN COUNTRIES

Author(s): Bojan Baškot,Stanko Stanić / Language(s): English / Issue: 32/2020

Keywords: panel regression model; heterogeneity; foreign direct investments; GDP growth;

Panel regression model may seem like an appealing solution in conditions of limited time series. This is often used as a shortcut to achieve deeper data set by setting several individual cases on the same time dimension, where cross units visually but not really multiply a time frame. Macroeconometrics of the Western Balkan region assumes short time series issue. Additionally, the structural brakes are numerous. Panel regression may seem like a solution, but there are some limitations that should be considered.

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