Squaring the circle? Government as venture capital investor
JUDIT KARSAI
Governments play several roles in the venture capital market. Based on empirical examples, the current paper focuses on the role of the government as a venture capital investor. Compared to the direct involvement of governments in investments entailing risks of market distortion, the paper demonstrates that governments increasingly contribute to the funds of the venture capital market in an indirect way: by encouraging private investors to participate. The involvement of private investors in government schemes could serve as a guarantee to select commercially viable projects without any political pressure, to schedule the financing of programs independently from election cycles, and to encourage experienced fund managers to participate in government programs. The main conclusion of the paper is that only those government-funded venture capital funds could ensure the proper utilization of public resources that are managed by the private sphere and are funded mostly by private investors. This would also contribute to economic policy objectives, such as improving the supply of capital for promising young companies.
In the squeeze of demand and supply Performance of the private equity market in Central and Eastern Europe since the beginning of the crisis
ÁLMOS MIKESY
The level of development of the Central and Eastern European private equity market lagged behind the European average due to various supply and demand side reasons. Since the beginning of the crisis the region has lost from its importance for the investors, and the government agency could have filled this gap only partially. On the corporate side, the low level of investment readiness and openness to external investors are the two main obstacles of the development of the private equity market in the region. The determinants of the demand to employ external equity was analysed by binary logistic regression among Central and Eastern European micro, small and medium size enterprises. Data was derived from the European Commission Access to Finance survey conducted in 2013. According to our results the firms’ expectation about the equity supply proved to be the most important factor. The empirical analysis confirmed the existence of contraselection as well. Besides that, companies with improving credit history are more likely to plan to raise external equity.
Demographic transition, pension reforms and labor supply in the Auerbach– Kotlikoff models
GERGELY VARGA
As in many countries in the developed world, demographic transition will impose a major impact onto the social security pension system and the macroeconomcy in Hungary. In the article I introduce the overlapping cohorts Auerbach–Kotlikoff- type models which are less frequently used in the domestic pension modelling. The models take into account the behaviorial and general equilibrium consequences of the demographic processes and the pension reforms along the simulation of the dmographic transition. Because of the primary importance of the relationship between the employment and the pension system, I highlight how the labor supply decision can be incorporated into the models.
Legal supplement
The history of the UN Security Council sanctions regarding North Korea
JUDIT PALLOS
The nuclear research and weapons program of the Democratic People’s Republic of Korea (North Korea) began with the paramount support of its biggest ally and sponsor, the Soviet Union, during the Cold War in the 1960’s. Within just a few years the socialist state of the Korean Peninsula had several nuclear reactors at its disposal, and also because of feeling threatened by the successful experimental nuclear deto- nation by China, advanced on to uranium enrichment, plutonium production and the designing of the nuclear payload delivery systems. In 1985, North Korea signed the Nuclear Non-Proliferation Treaty, however never complied with the obligations writ- ten in the contract and, in 2003, North Korea left the group of Signatories. The sud- den collapse of the Soviet Union had a devastating effect on Pyongyang, and as since felt the need to ensure its protection and survival from all global threats. Of course, there are other more complex reasons behind the war rhetoric of this refractory state as related to UN sanctions, which the present study will explain in a more detail.