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401. Different Choices, Divergent Paths: Poland and Ukraine

Author:
Thorvaldur Gylfason, Eduard Hochreiter, and Tadeusz Kowalski
Publication Date:
12-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We compare the economic growth trajectories of Poland and Ukraine since 1990 to try to understand the extent to which the observed growth differentials can be traced to increased efficiency in the use of capital and other factors (intensive growth), rather than to simple accumulation of capital (extensive growth). We stress the role of qualitative factors such as education, governance and institutions. We ask whether the EU perspective and NATO membership played a role. We discuss the closely related histories of the two countries and note the stark differences between them, including their different approaches to the EU vs Russia, full vs incomplete transition to a market economy, and democracy vs anocracy, as well as different initial conditions. We compare key determinants of growth and growth trajectories, using economic as well as social indicators, and trying to disentangle efficiency and accumulation and combine path dependence and the role and scope of creative destruction. While Poland had the shortest and mildest transformation recession among CEE countries, Ukraine has been stagnant, or in decline, since 1990. The statistics we report and the stories we tell suggest that both countries have a complex relationship with democracy and that the nearly threefold difference in per capita GDP at PPP in 2021 in Poland’s favour, with the ratio of investment to GDP similar in both countries, can most plausibly be traced to: (a) Poland’s more extensive and diversified exports, and fewer restrictions on trade, in addition to more comprehensive and quicker restructuring of the national economy inspired by the EU perspective; (b) Poland’s more extensive and better-quality education; (c) Poland’s greater democracy and longer experience of democracy, lower levels of corruption, better governance, and freer press; (d) Poland’s smaller agricultural sector and greater emphasis on manufacturing; and (e) Poland’s lower inflation and higher level of financial development. Furthermore, Poland built market-friendly institutions to EU specifications and joined NATO. Against all this, Ukraine had more economic equality and lower unemployment as well as, from the early 1990s, a lower initial level of income per person, but was hampered by political divisions, path-dependent corruption and poor governance. During the global Covid-19 pandemic, Ukraine apparently suffered fewer deaths than Poland, despite fewer vaccinations.
Topic:
Economics, Education, Governance, Reform, European Union, Economic Growth, Inflation, Exports, Transition, and Labor Market
Political Geography:
Europe, Ukraine, and Poland

402. Economic and Social Impacts of FDI in Central, East and Southeast Europe

Author:
Doris Hanzl-Weiss and Branimir Jovanovic
Publication Date:
11-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study assesses the economic and social impacts of foreign direct investment (FDI) in 17 economies in Central, East and Southeast Europe (CESEE). More precisely, we investigate how different FDI inflows have affected various economic and social indicators, such as GDP growth, labour market outcomes, and poverty and inequality, for the period since the fall of communism until 2020. We pay particular attention to FDI that originates from the EU, as well as FDI from Germany and Austria, in order to evaluate whether their effects are different from the effects of FDI from other places of origin. We also examine whether there are differences in the impacts of different types of FDI – equity capital, reinvested earnings and intra-company debt, as well as of FDI that goes to different sectors of the economy – the primary, secondary and tertiary sectors. We find that FDI inflows have had, in general, a positive effect on economic growth in CESEE, and that this effect has been particularly strong for German and Austrian FDI. For total FDI, higher inflows of 1 percentage point (pp) of GDP are associated with 0.19 pp higher GDP growth. For FDI from Germany and Austria, this effect is five times higher – FDI inflows of 1 pp of GDP have led to 0.9 pp higher GDP growth. The positive GDP effects have come from the higher consumption and exports that the FDI has induced. FDI inflows have also reduced unemployment and increased wages, but have had no effects on labour productivity. Total FDI has had only limited effects on inequality and poverty, but FDI from Germany and Austria has been found to reduce both inequality and poverty, likely because they have benefitted mainly lower-income persons. There are differences in the effects of the different types of FDI, with reinvested earnings and equity capital having in general more beneficial effects than intra-company loans. Also, FDI in different sectors of the economy has had different effects, with inflows to the secondary and tertiary sectors having greater effects than inflows to the primary sector. The policy implications of these results are that CESEE economies should not give up on their efforts to attract more FDI, but also that their endeavours should be more targeted, focusing on investments that have greater economic and social impacts. Moreover, foreign investment should not be criticised for the perhaps unsatisfactory economic and social performances of the economies from this region. Instead, the reasons for this should be sought in domestic factors and in the modest growth of the European Union during the past two decades.
Topic:
Development, International Trade and Finance, Poverty, Foreign Direct Investment, Inequality, Economic Growth, and Unemployment
Political Geography:
Europe, Eastern Europe, Germany, and Austria

403. How do Economies in EU-CEE Cope with Labour Shortages?

Author:
Vasily Astrov, Richard Grieveson, Doris Hanzl-Weiss, Sebastian Leitner, Isilda Mara, Hermine Vidovic, and Zuzana Zavarská
Publication Date:
11-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The EU member states in Central and Eastern Europe (EU-CEE) have been experiencing increasing labour shortages, which only briefly subsided in the wake of the COVID-19 pandemic. Ongoing demographic decline suggests that labour shortages will only get stronger over time. As a result, the bargaining power of labour has increased, wages have been generally rising ahead of labour productivity, and industrial action (strikes) – the level of which has remained low in recent decades – has emerged in some instances. In the face of labour and skill shortages, people have been investing in education. The share of employees with tertiary education has increased, and vocational training has gained in importance, although active labour market policies have been used only selectively. Employers have increasingly been investing in fixed assets, especially in manufacturing, and the degree of robotisation has risen strongly. Despite domestic concerns that automation would generate massive job losses, our findings suggest that capital deepening has taken place faster where labour was in higher demand. Thus, labour was not substituted with capital, but rather the complementary effect prevailed. Employment actually increased in EU-CEE over the past two decades – despite the shrinking working-age population. Employers could hire not only the formerly unemployed, but also the formerly inactive, and used the relaxed immigration policies to attract foreign workers, especially from Ukraine and the Western Balkans. Czechia, Hungary, Slovenia and Slovakia and most recently Poland have become net receivers of migrants, while in Bulgaria immigration largely compensates for the natives who go abroad. However, immigration from non-European countries as a general solution to the problem of labour shortages in the region is highly problematic in the current domestic political context. Overall, both our findings for the EU-CEE region over recent years and the experience of Western Europe during the ‘golden age’ (1950-1973) suggest that labour shortages are not in themselves an obstacle to rapid structural change and income growth. However, for such an economic model to be sustainable, more active government policies will be needed, such as greater public investment in education and training, higher minimum wages in order to encourage automation, and more extensive welfare networks in order to deal with the possible negative short-run side-effects of automation.
Topic:
Migration, Labor Issues, European Union, Populism, Vocational Training, Investment, Labor Market, Trade Unions, and Immigration Policy
Political Geography:
Europe

404. US Arms Sales Reveal Discord in Taiwan's Defense Strategy

Author:
Ethan Kessler
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Chicago Council on Global Affairs
Abstract:
Washington has started selling arms that serve a "porcupine" defense strategy to Taiwan. Whether Taipei fully embraces this new approach remains to be seen. Taiwan, claimed by China as a rogue province and armed by the United States, is at a crossroads. Should it continue buying big-ticket US arms, such as advanced fighter jets and tanks, to counter Chinese forces in case of a blockade or invasion? Taipei’s longstanding conventional strategy, which calls for these kinds of arms, views the ambiguous US defense commitment as concerning. Since Washington may not intervene against a Chinese attack, conventionalists want to hold on to Taiwan’s traditional, long-range weapons. Conventionalists also claim that buying big-ticket arms strengthens Washington’s political commitment to Taiwan. However, officials and experts increasingly see another strategy as prudent. Recent Chinese economic growth and military modernization have greatly enhanced Beijing’s capabilities, to the point that many believe Taiwan could not hold out alone against a Chinese invasion. Reformers thus argue that Taiwan needs to start building its forces around small, easily distributed weapons such as mobile anti-ship missiles and patrol boats and make greater investments in reserve forces and territorial defense. This “porcupine” defense strategy can theoretically buy more time for US forces to arrive in a war. The fate of Taiwan’s military strategy, which also depends greatly on political relations between Beijing, Taipei, and Washington, will help determine the strength of deterrence in the Taiwan Strait. A breakdown in this deterrence could lead to US-China war. The United States not only influences Taiwan’s strategy, but has a great stake in its future.
Topic:
Foreign Policy, Defense Policy, Military Affairs, Budget, Defense Spending, and Arms Sales
Political Geography:
China, Taiwan, Asia, North America, and United States of America

405. The Periphery Cannot Hold: Upper Nile since the Signing of the R-ARCSS

Author:
Joshua Craze
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Small Arms Survey
Abstract:
Upper Nile is in chaos. A once durable alliance between the national government in Juba and the Padang Dinka in Malakal has given way to a much more uncertain situation, in which the regime of South Sudanese President Salva Kiir sets feuding elites against each other. Disorder has proved an effective tool of rule. In Upper Nile, Kiir's regime has successfully peeled off Eastern Nuer commanders once loyal to Riek Machar's Sudan People's Liberation Army in Opposition (SPLA-IO). Following a brutal dry season campaign against the SPLA-IO waged by these commanders, Machar's opposition suffered an almost total collapse of support in Upper Nile. The rump of the SPLA-IO fighting forces had already split from Machar in 2021, and formed the Kitgwang faction, which hoped to acquire materiel and money in Khartoum to fund a renewed war. However, thanks to a regional realignment that means Sudan and South Sudan are allies, the Kitgwang found no succour in Khartoum, and was easily divided by Kiir's regime. The current fighting in Upper Nile is the fallout from the two parts of the Kitgwang being set against each other by the government. Clashes have displaced more than 10,000 people, and taken on a worryingly ethnic dimension that Kiir's regime will struggle to control.
Topic:
Politics, Armed Forces, and Conflict
Political Geography:
Africa, Sudan, South Sudan, and Upper Nile

406. 'And Everything Became War': Warrap State since the Signing of the R-ARCSS

Author:
Joshua Craze
Publication Date:
12-2022
Content Type:
Special Report
Institution:
Small Arms Survey
Abstract:
In Warrap state, home to South Sudanese President Salva Kiir and much of the country's political and military elite, many hoped that the signing of a peace agreement in 2018 would bring an end to the violence that had scarred their country for the previous five years. Instead, in Warrap, violence intensified, and pitted communities against each other in increasingly brutal tit-for-tat attacks that targeted women, children, homes, and the very capacities of communities to sustain life. At the war's end, everything became war. Such clashes are often dismissed as 'inter-communal violence' delinked from the politics of the peace agreement. 'And Everything Became War': Warrap State since the Signing of the R-ARCSS—a report from the Survey’s Human Security Baseline Assessment for Sudan and South Sudan (HSBA) project—demonstrates that the conflict raging in Warrap is instead deeply political, and a consequence of the way that Kiir's regime maintains power by setting feuding elites against each other. In Warrap, the South Sudanese state has suffered an almost total collapse in political legitimacy, and cattle-guards have emerged as the only actors on the ground with genuine community support that can resist the predatory state, even if they are also instrumentalized by it. 'And Everything Became War' is the first in-depth study of conflict dynamics in Warrap state since the beginning of the South Sudanese civil war. Based on extensive fieldwork, the report makes one central conclusion: as South Sudan enters its fourth year of ‘peace’, everything has become war, and the South Sudanese government is the war’s cause rather than the solution.
Topic:
Security, Politics, Treaties and Agreements, Conflict, and Elites
Political Geography:
Africa, Sudan, and South Sudan

407. Ecological Threat Report 2022: Analysing Ecological Threats, Resilience & Peace

Author:
Institute for Economics and Peace (IEP)
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Institute for Economics & Peace (IEP)
Abstract:
This is the third edition of the Ecological Threat Report (ETR), which analyses ecological threats in 228 independent states and territories. Produced by the Institute for Economics & Peace (IEP), the report covers over 3,638 sub-national administrative districts, or 99.99 per cent of the world's population, assessing threats relating to food risk, water risk, rapid population growth and natural disasters. Many ecological threats exist independently of climate change. However, climate change will have an amplifying effect, causing further ecological degradation. The research takes a multi-faceted, multidimensional approach by analysing risk at the national, administrative district and city level, while also assessing these entities by ecological threats, societal resilience and levels of peace. Additionally, the research provides projections to 2050. To assist the international community in prioritising its focus, IEP has identified the countries, administrative districts and cities most at risk. The main finding from the 2022 ETR is that without concerted international action, current levels of ecological degradation will substantially worsen, thereby intensifying a range of social challenges, including malnutrition, forced migration and illness. Current conflicts will escalate and multiply as a result, creating further global insecurity. A nexus of interrelated challenges sustains and feed off each other. Systemic effects compound, ensnaring countries in conflict traps that are difficult to escape. This nexus is explored in the ETR, highlighting the significant impact of high population growth, ecological collapses, weak societal resilience and their relationship to conflict. These issues need to be addressed systemically. Highlighting the gravity of the situation, 90 per cent of the 20 least peaceful countries face at least one catastrophic ecological threat, while 80 per cent have low societal resilience. Ten of the twelve countries with the highest ecological threat rating, in all four domains, currently suffer from conflict deaths, while 11 of these countries have moderate to high ratings for intensity of internal conflict.
Topic:
Natural Disasters, Water, Food Security, Peace, Resilience, Ecology, and Threat Assessment
Political Geography:
Global Focus

408. Global Peace Index 2022

Author:
Institute for Economics and Peace (IEP)
Publication Date:
07-2022
Content Type:
Special Report
Institution:
Institute for Economics & Peace (IEP)
Abstract:
This is the 16th edition of the Global Peace Index (GPI), which ranks 163 independent states and territories according to their level of peacefulness. Produced by the Institute for Economics and Peace (IEP), the GPI is the world’s leading measure of global peacefulness. This report presents the most comprehensive data-driven analysis to-date on trends in peace, its economic value, and how to develop peaceful societies. The GPI covers 163 countries comprising 99.7 per cent of the world’s population, using 23 qualitative and quantitative indicators from highly respected sources, and measures the state of peace across three domains: the level of societal Safety and Security; the extent of Ongoing Domestic and International Conflict; and the degree of Militarisation. In addition to discussing the findings from the 2022 GPI, the report includes an analysis of the military conflict in Ukraine. It covers likely increases in military spending, new and emerging uses of technology in the war, its impact on food prices and global shipping routes. The report also contains a deeper analysis on violent demonstrations around the world. This year’s results found that the average level of global peacefulness deteriorated by 0.3 per cent. Although slight, this is the eleventh deterioration in peacefulness in the last fourteen years, with 90 countries improving, 71 deteriorating and two remaining stable in peacefulness, highlighting that countries tend to deteriorate much faster than they improve.
Topic:
Security, Economics, Peace, and Russia-Ukraine War
Political Geography:
Global Focus

409. China Maritime Report No. 24: Incubators of Sea Power: Vessel Training Centers and the Modernization of the PLAN Surface Fleet

Author:
Ryan D. Martinson
Publication Date:
11-2022
Content Type:
Special Report
Institution:
China Maritime Studies Institute, U.S. Naval War College
Abstract:
The People’s Liberation Army Navy (PLAN) is building modern surface combatants faster than any other navy in the world. Before these new ships can be deployed, however, their crews must learn how to effectively operate them across the range of missions for which they were designed. In the PLAN, this “basic training” largely occurs at specialized organizations called Vessel Training Centers (VTCs). Since their creation in 1980, VTCs have played a key role in generating combat power for the fleet. But as China’s naval ambitions have grown, the VTCs have been forced to adapt. Since the early 2000s, and especially since 2012, they have faced tremendous pressure to keep pace with the rapid expansion and modernization of the PLAN surface fleet and its growing mission set, improve the standards and quality of vessel training, and uphold the integrity of training evaluations. This report argues that the PLAN’s VTCs have generally risen to the challenge, ensuring that new and recently-repaired ships can quickly reach operational units in a fairly high state of readiness.
Topic:
Armed Forces, Military Affairs, Maritime, Seapower, and People's Liberation Army (PLA)
Political Geography:
China and Asia

410. Political and Media Analysis on the Tigray Conflict in Ethiopia

Author:
Moses Tofa, Alagaw Ababu Kifle, and Hubert Kinkoh
Publication Date:
02-2022
Content Type:
Special Report
Institution:
European Institute of Peace (EIP)
Abstract:
This study reviews patterns of domestic and international media reporting and the role of disinformation, misinformation, and media bias in the Tigray conflict, which has been raging since November 2020. Since its outbreak, the conflict has evolved through four broad phases. Throughout these phases, the conflict was characterised by egregious violations of international human rights law, international humanitarian law and international refugee law. To analyse the role of the media in the conflict, this study reviewed local and international media, conducted interviews with local and international journalists and analysts, and consulted secondary literature. Patterns of reporting by international and local media exhibited fairly significant levels of divergence in the issues that were selected for reporting and how they were reported during these four phases of the conflict. The study found significant levels of disinformation, misinformation, and biased reporting that clouded accounts of the conflict and encouraged debates over highly contested issues. International media largely disregarded the role that the TPLF played in provoking the federal government to take military action, at times neglecting to mention the TPLF attack on the Ethiopian Northern Command and occasionally even accusing Prime Minister Ahmed Abiy of ordering a wanton attack on Tigray. International journalists either partially or completely ignored the historical context of the conflict. On the other hand, domestic Ethiopian media largely disregarded the violations that were committed by the federal government and were overly focussed on debunking the claims that were made by the TPLF. Overall, the study found a systematic pattern of local media biased towards the narrative of the federal government, whereas the international media were generally biased towards the narrative of the TPLF. As a result, the voice of the people who suffered the brunt of the fighting became the “casualty” of misinformation, disinformation and biased reporting.
Topic:
Human Rights, Politics, Media, Conflict, and Disinformation
Political Geography:
Africa, Ethiopia, and Tigray