Volume 13 (2013): Edizione 2 (June 2013)

The aim of this study is to verify the assumption that price-cost competitiveness factors affect long-term economic growth in the sample countries. This analysis is based on the neoclassical growth model extended by human capital. Furthermore, variables reflecting the cost-competitiveness and cost-effective real exchange rate and unit labor costs were added to the model. The default is a panel regression methodology and related methods of data analysis. The sample consists of EU member states that meet the requirement of a small open economy and membership in the OECD. On the basis of this criterion, the following countries were selected: Belgium, Czech Republic, Denmark, Estonia, Ireland, Hungary, Netherlands, Austria, Slovenia and the Slovak Republic. Annual frequency in the time frame 1999-2010 is the reference period. This is shown by the analysis results in the case that the selected sample of countries with affordable cost factors appears to be significant. The selected indicators of competitiveness can be one of the prominent factors that influence economic growth in developed countries, yet they are not a fully sufficient and comprehensive source of growth factors in terms of competitiveness.

Introduction of the local coefficient in the property tax law since 2009 gave a significant tax authority to Czech municipalities; on average they can up to quadruple their property tax revenue which means increasing their total revenue by more than 10%. Czech municipalities appeared very cautious when exercising this new autonomy and only less than 8% of them applied the local coefficient in 2013.

The theory of yardstick competition offers one of the possible explanations of this reluctance: Voters do not vote for politicians who increase taxes unless the politicians in the neighbouring jurisdictions increase taxes as well. So municipal politicians are carefully observing what others do and approve the local coefficient with prudence.

The purpose of this paper is to evaluate the usage of the local coefficient with special regard to spatial distribution and impacts on re-election and to verify the existence of the yardstick competition among Czech municipalities in case of the property tax.

The results of the difference of means test using data for 206 municipalities with extended scope comply with this theory: (1) politicians who applied local coefficient in 2010 got re-elected in a significantly lesser number of municipalities than those who did not, and (2) in all years analyzed, municipalities applying local coefficient are surrounded by a higher share of municipalities with local coefficient than municipalities without it.

Scholars making economic policy recommendations to resolve corruption problem use several approaches, the most dominant of which are the principal-agent and rent-seeking theories. In this paper, we argue that the principal-agent theory has problems to account for the environment in which the agents offering and accepting corruption operate, and explain the importance of agents for survival of their environment. The rent-seeking theory, on the other hand, finds it difficult to establish socially effective legislation and ways to determine the barriers to entry that motivate agents to behave corruptly. Both problems, however, are vital for solving the problem of corruption. Lacking the knowledge of the agent’s environment (system) and their significance for survival of the system, the theory cannot define incentives that would discourage the agent from acting in a corrupted way. If the rent-seeking theory does not determine the barriers to entry that motivate agents to behave corruptly, it cannot determine the proper legislation that would deter corrupt behaviour and lead to economic development. For these reasons we investigate if both problems can be explained and solved within the alternative theory of redistribution systems and its part - the theory of parallel redistribution games.