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Begin New Search Topic COVID-19 Political Geography Europe Content Type Policy Brief Publishing Institution Bruegel Publication Year within 3 Years

1. Can Chinese growth defy gravity?

Author:
Alicia Garcia-Herrero
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Chinese growth, astounding since the beginning of the reform era, has slowed in the last decade. We offer a baseline estimate (based on the current trend) of China’s medium-term growth rate, which we project to fall to 2.4 percent by 2035. Several factors create uncertainty around this baseline. China’s rapid aging is already incorporated into our long-term growth scenario, but its impact on growth will depend on how China’s remaining urbanisation process spreads over time, how the shrinking labour supply affects labour productivity and whether the decline in total factor productivity growth, reflecting the lack of reform during the last decade and possibly the rising role of the state, can be reversed. Investment in China, for decades the largest factor in China’s growth, is expected to contribute less to growth given the increasingly low return on assets, particularly on state-led investment. The rapid piling up of public debt is also becoming a heavy burden for the Chinese economy. Finally, the COVID-19 pandemic may have left significant scarring effects, such as structurally high youth unemployment and low investment confidence. On the upside for China, the rise in human capital and research and development expenditure may support innovation and growth, but the magnitude of this effect is uncertain, because it is unclear if higher innovation will translate into higher total factor productivity, and because of the United States’s push to contain China technologically.
Topic:
Industrial Policy, European Union, Economic Growth, and COVID-19
Political Geography:
China, Europe, and Asia

2. Does Europe need a Health Union?

Author:
Anne Bucher
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Health outcomes in the European Union are good by international standards, even compared to other developed economies, and improved continuously before COVID-19. This reflects the alignment of the objectives of improving health and wellbeing with the overall socio-economic objective of prosperity, and suggests that a radical overhaul of EU health policy is not needed. However, the EU could benefit from closer integration in some areas and be more effective in delivering a high level of health protection. Action could be taken in the following areas: The European Commission’s November 2020 Health Union package to increase resilience to cross-border health threats is ambitious, in particular with the establishment of the Health Emergency Response Authority, which extends the scope of cooperation in health emergencies. The EU should pursue further the Health Union approach to address cross-border externalities and enhance health security. It could, for instance, do more to tackle anti-microbial resistance, or define minimum requirements for the resilience of health systems. For non-communicable diseases, the EU should tap the economies of scale of research and knowledge organised at EU level, and put in place systems for the surveillance of non-communicable diseases and consolidation of scientific knowledge. This could be achieved through an extension to non-communicable diseases of the European Centre for Disease Prevention and Control mandate. The ‘Health in all Policies’ principle is a key channel to deliver good health outcomes at EU level. EU scientific agencies provide health risk assessments in a number of areas, but the EU should better organise, coordinate and consolidate the scientific knowledge that underpins health-protection measures in sectoral legislation, and should more systematically apply better regulation rules to the health impacts of EU policies. The EU should support the digital transformation of health systems and set high targets for the European Health Data Space initiative, which is a critical infrastructure for the future of health research, regulation and policymaking. Several non-health EU policy objectives (cohesion policies, European Pillar of Social rights, economic governance) are linked to the performance of health systems. A common understanding on how to measure this performance would inform these policies in a consistent way. Moreover favourable health outcomes in the EU have not reduced health inequalities, which remain high between and within EU countries. Monitoring of health inequalities, including those related to access to and quality of healthcare, should be improved as an initial step.
Topic:
Health, European Union, Regional Integration, and COVID-19
Political Geography:
Europe

3. Promotion of high capacity broadband to rebuild and recover from the pandemic

Author:
J. Scott Marcus, Alicia Garcia-Herrero, and Lionel Guetta-Jeanrenaud
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Promoting high-quality fixed and mobile broadband for all, at an affordable price, is an important enabler of the digital transformation of society and will help close the digital divide. This became clearer than ever during the pandemic, when broadband access was a crucial enabler of remote work, distance learning, telemedicine and e-commerce. It has always been challenging to provide broadband access to all at an affordable price. The pandemic, global geopolitical tension and Russia’s invasion of Ukraine have exacerbated supply-chain disruptions in ways that make this even more difficult and potentially expensive. Promotion of broadband deployment, adoption and use are all important for both fixed and mobile broadband; however, different policy levers are needed in each case, on both the supply and demand sides. The market will not always deliver complete solutions. Consequently, there is a role for regulation, targeted industrial policy and public finance. Promotion of competition, combined with prompt and efficient provision of access to resources such as electromagnetic spectrum and access to land and rights of way, can be particularly important. G20 countries and others now seek a future-proof, sustainable and equitable recovery, meaning new sources of public revenues need to be considered. Broadband can be boosted by judicious use of recovery funds and expected new tax revenues arising from global tax reforms agreed within the Organisation for Economic Co-operation and Development.
Topic:
Infrastructure, Digital Economy, Innovation, COVID-19, and Inclusion
Political Geography:
Europe and Global Focus

4. Blending the physical and virtual: a hybrid model for the future of work

Author:
Monika Grzegorczyk, Mario Mariniello, Laura Nurski, and Tom Schraepen
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The pandemic has shown that many workers can efficiently work remotely, with benefits for wellbeing and even productivity. The European Union should develop a framework to facilitate hybrid work.
Topic:
European Union, Work Culture, Innovation, Strategic Competition, Pandemic, and COVID-19
Political Geography:
Europe and Global Focus

5. The great COVID-19 divergence: managing a sustainable and equitable recovery in the European Union

Author:
Gregory Claeys, Zsolt Darvas, Maria Demertzis, and Guntram B. Wolff
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The COVID-19 pandemic has led to the biggest global recession since the Second World War. Forecasts show the European Union underperforming economically relative to the United States and China during 2019-2023. Southern European countries have been particularly strongly affected. While the ICT sector has benefitted from the COVID-19 crisis, tourism, travel and services have suffered. Business insolvencies have, paradoxically, fallen. While total employment has almost recovered, the young and those with low-level qualifications have suffered employment losses. Inequality could rise. The pandemic may lead to medium to long-term changes in the economy, with more teleworking, possibly higher productivity growth and changed consumer behaviour. Policymakers must act to prevent lasting divergence within the EU and to prevent scarring from the fallout from the pandemic. The first priority is tackling the global health emergency. Second, we warn against premature fiscal tightening and recommend instead additional short-term support from national budgets. Over the medium term, fiscal policymakers will need to gradually move away from supporting companies through subsidies, towards tax incentives for corporate investment. A review of the European fiscal framework is needed to achieve the EU’s green goals more rapidly. The quality of public finances, how policymakers spend resources and the associated reforms are of central importance to prevent scarring. Improving the efficiency of insolvency procedures will be crucial for speedy and effective recovery. Targeted labour market policies for the young and less-qualified are needed. As teleworking becomes a more permanent feature of the EU’s labour markets, it will be crucial to adapt social security and taxation systems in the context of the single market for labour. The EU should resist protectionist calls in the wake of the pandemic. Rigorous competition policy enforcement and an integrated EU market have been beneficial for European convergence and growth. Capital markets have an important role to play in a speedy recovery.
Topic:
Governance, European Union, Inequality, and COVID-19
Political Geography:
Europe

6. Economic crisis in the Middle East and North Africa

Author:
Marek Dabrowski and Marta Dominguez-Jimenez
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
In the 2010s, the economic situation in the Middle East and North Africa (MENA) deteriorated as a result of lower oil and other commodity prices, a new round of domestic political instability, continuous intra-regional conflicts, stalled economic and governance reforms and, finally, the COVID-19 pandemic. The growth of real GDP, which slowed after the global financial crisis of 2008-2009, further decelerated in the second half of the 2010s and became negative in 2020 as result of the COVID-19 shock. Fiscal balances have deteriorated, even in the oil-exporting countries, and public debt has grown rapidly. MENA countries continue to face numerous long-term socio-economic and institutional challenges including high unemployment (especially youth unemployment), low female labour-market participation rates, the poor quality of education, costly and ineffective public sectors, high military and security spending, high energy subsidies and trade protectionism. Only comprehensive long-term reform programmes can address these challenges. The European Union is MENA’s second largest trading partner after the region itself, and is one of two main sources of foreign direct investment and a major aid donor. However, given the critical importance of the MENA region to its own security and stability, the EU’s engagement in conflict resolution and in supporting economic and political transformation of the region is insufficient and should be intensified. The EU should also update and upgrade its existing association agreements with the countries of the Southern and Eastern Mediterranean, including their free trade provisions.
Topic:
International Trade and Finance, Governance, European Union, Trade, COVID-19, and Economic Crisis
Political Geography:
Europe, Middle East, and North Africa

7. The nonsense of Next Generation EU net balance calculations

Author:
Zsolt Darvas
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The estimation of payments from the European Union’s COVID-19 economic recovery fund, Next Generation EU (NGEU), to each EU country in 2021-2026 involves uncertainties, yet the overall magnitudes can be estimated with a reasonable degree of precision. In contrast, estimating member states’ contributions to the repayment of EU debt (which will be issued to finance NGEU spending) is burdened with enormous difficulties, primarily related to the uncertainty of gross national income projections up to 2058. Some numerical scenarios can be put forward to illustrate the difficulties in estimating the amounts of such future contributions.
Topic:
Economics, Governance, European Union, Macroeconomics, and COVID-19
Political Geography:
Europe