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  • 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, COVID-19
  • Political Geography: Europe
  • Author: Olivier Blanchard, Thomas Philippon, Jean Pisani-Ferry
  • Publication Date: 06-2020
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: The measures that most governments took in response to the sudden collapse in economic activity during the COVID-19 lockdowns nearly exclusively focused on protecting vulnerable workers and firms. These measures included unemployment benefits, grants, transfers, loans at low rates, and tax deferrals. As lockdowns are lifted, governments must shift policies toward supporting the recovery and design measures that will limit the pain of adjustment while preserving productive jobs and firms. This Policy Brief explores how such measures can be designed, with particular emphasis on Europe and the United States. The authors propose a combination of unemployment benefits to help workers, wage subsidies and partially guaranteed loans to help firms, and debt restructuring procedures for small and medium-sized companies handicapped by excessive legacy debt from the crisis.
  • Topic: Debt, Economics, Government, Labor Issues, Unemployment, Coronavirus
  • Political Geography: Europe, North America, United States of America
  • Author: Kristian Lundby Gjerde
  • Publication Date: 12-2020
  • Content Type: Policy Brief
  • Institution: Norwegian Institute of International Affairs
  • Abstract: Based on a mapping of mentions of country names in more than 30,000 Russian official speeches, press conferences, meeting transcripts, and official statements, this brief provides insights into changes to Russia’s engagement with the world during the 21st century. Without disentangling the subtleties of relations – such as their security, economic, or cultural dimensions and their benign or adversarial features – this approach allows the brief to sketch answers to questions that would otherwise be left to guesswork.
  • Topic: International Relations, Security, Economics, Culture
  • Political Geography: Russia, Europe, Eurasia
  • Author: Brendan Brown
  • Publication Date: 10-2020
  • Content Type: Policy Brief
  • Institution: Hudson Institute
  • Abstract: This policy study is based on the newly released book, Europe’s Century of Crises under Dollar Hegemony: A Dialogue on the Global Tyranny of Unsound Money, by Brendan Brown and Philippe Simonnot, published by Palgrave Macmillan. One hundred years ago, the United States emerged from the First World War and its immediate aftermath, including the Spanish flu pandemic, as the global monetary hegemon, exercising immense power over the Old Continent. This new power quickly became the source of huge instability in Europe, culminating in the collapse of the Weimar Republic. After World War II, the Bretton Woods system set new contours for US monetary hegemony, ultimately resulting in the great economic crisis of 1973–75. This woeful history continues to the present day: Dollar hegemony has not been a force for good. It could have been different. The United States and Europe would both have gained from a US hegemony based on sound money principle. Instead, the guiding characteristic of US monetary power has been inflation, especially around election time. According to the doctrine made notorious by Treasury Secretary John Connally, who served under President Nixon, “the dollar is our currency but your problem.” The US monetary regime’s further lurch toward fundamental unsoundness during the COVID-19 pandemic is not getting the new century of US monetary hegemony off to a new start. The “known unknown” is whether forces will emerge in Europe that will again challenge US inflationary dominance, as occurred under Germany’s leadership in the 1970s. Could high inflation in the post-pandemic US economy cause US monetary hegemony over Europe to crumble?
  • Topic: Economics, International Trade and Finance, History, Monetary Policy, Hegemony, Transatlantic Relations, COVID-19
  • Political Geography: Europe, United States of America
  • Author: Marta Dominguez-Jimenez, Niclas Poitiers
  • Publication Date: 02-2020
  • Content Type: Policy Brief
  • Institution: Bruegel
  • Abstract: Most foreign direct investment into Russia originates in the European Union: European investors own between 55 percent and 75 percent of Russian FDI stock. This points to a Russian dependence on European investment, making the EU paramount for Russian medium-term growth. Even if we consider ‘phantom’ FDI that transits through Europe, the EU remains the primary investor in Russia. Most phantom FDI into Russia is believed to originate from Russia itself and thus is by construction not foreign.
  • Topic: Economics, Energy Policy, Foreign Direct Investment, Governance, Sanctions, European Union, Global Political Economy
  • Political Geography: Russia, Europe
  • Author: Gary Clyde Hufbauer , Zhiyaou (Lucy) Lu
  • Publication Date: 10-2019
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: In early 2019, several important members of the World Trade Organization (WTO) submitted noteworthy proposals in a realm of international commerce that has evolved faster than rules to govern it: e-commerce or digital trade. While countries agree on less controversial subjects like banning unsolicited commercial electronic messages, the three leading WTO members—China, the European Union, and the United States—have big differences in their approaches to more challenging issues: data flows, data localization, privacy invasions by data collectors, transfer of source code, imposition of customs duties and internet taxes, and internet censorship. Their differing viewpoints lead Hufbauer and Lu to conclude that the prospect of reaching a high-level WTO e-commerce agreement is not promising. To reach an agreement, either most of the contentious issues must be dropped or the number of participating countries must be sharply reduced. A WTO accord, even of low ambition, would have value if only to establish basic digital norms on matters such as banning unsolicited commercial messages and protecting online consumers from fraudulent practices. A more ambitious accord covering the controversial issues should be negotiated in bilateral and/or plurilateral/regional pacts rather than in the WTO.
  • Topic: Economics, World Trade Organization, Finance, Privacy, Data
  • Political Geography: China, Europe, Asia, North America, United States of America, European Union
  • Author: Jacob Funk Kirkegaard
  • Publication Date: 09-2019
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: For years China has been one of the world’s most rapidly growing sources of outward foreign direct investment. Since peaking in 2016, however, Chinese outward investments, primarily to the United States but also the European Union, have declined dramatically, especially in response to changes in China’s domestic rules on capital outflows and in the face of rising nationalism in the United States. Concerns about growing Chinese influence in other economies, the ascendant role of an authoritarian government in Beijing, and the possible security implications of Chinese dominance in the high-technology sector have put Chinese outward investments under intense international scrutiny. This Policy Brief analyzes the most recent trends in Chinese investments in the United States and the European Union and reviews recent political and regulatory changes both have adopted toward Chinese inward investments. It also explores the emerging transatlantic difference in the regulatory response to the Chinese information technology firm Huawei. Concerned about national security and as part of the ongoing broader trade friction with China, the United States has cracked down far harder on the company than the European Union.
  • Topic: Economics, International Trade and Finance, National Security, Foreign Direct Investment, Investment
  • Political Geography: China, Europe, Asia, North America, United States of America
  • Author: Jeromin Zettelmeyer
  • Publication Date: 03-2019
  • Content Type: Policy Brief
  • Institution: Peterson Institute for International Economics
  • Abstract: ermany’s new National Industrial Strategy 2030, unveiled by Economy Minister Peter Altmaier in February 2019, advocates an aggressive industrial policy. Although it stays clear of the virulent economic nationalism of the 1930s and the protectionism of President Donald Trump, its tone and much of its content are unmistakably nationalist. Zettelmeyer concludes that three of Altmaier’s five proposals—attempting to further raise the German share of manufacturing, restricting non-EU imports of intermediate goods, and promoting national champions in Germany and the European Union—are bad policies. The two remaining ideas—preventing some foreign takeovers and ramping up state support for certain technologies—are somewhat easier to justify, based on either market failures or the risk of technological dependence on foreign companies susceptible to political interference. But even in these areas, the specific policies proposed may well do more harm than good.
  • Topic: Economics, Nationalism, European Union, Donald Trump
  • Political Geography: Europe, Germany
  • Author: Rolf Langhammer
  • Publication Date: 10-2019
  • Content Type: Policy Brief
  • Institution: Norwegian Institute of International Affairs
  • Abstract: Compared with previous ratings, China’s trade policy today is more positively acknowledged. Yet, China can still be criticised in particular because of its non-transparent subsidy policy, the privileged role of state-owned enterprises, the heavy hand of the state in general, the sluggish enforcement of intellectual property rights, and the prevalence of non-tariff barriers. Yet, it cannot be ignored that Chinese entrepreneurship mentality is highly developed outside state interference in world markets. Especially, in the digital economy, high motivation and a large pool of human skills act as drivers of innovations, so far mainly process innovations. The trade war with the US hurts China and is responded by China with asymmetrical retaliation. The more Chinese exports to the US in total are affected, the more costs will have to be borne by US consumers as options to shift to alternative suppliers become weaker. What President Trump would see as a “good” deal for the US is unclear. It can be thus presumed that the trade war will continue into 2020 and that it is in fact a tech war. The EU is affected as EU companies produce in China for the US market and in the US for the Chinese market. While it might gain from trade diversion effects in the short run, the negative effects on investment due to uncertainty weigh more heavily. The EU is tempted to negotiate a free trade agreement with China but rightly refuses to start negotiations before China is prepared to conclude an agreement on investment. The EU should not see China and the US on equidistance. Workable relations with the US are much more important. To conclude, China’s trade policy has improved relative to Western standards but still warrants further steps towards much less state influence. Yet, its global competiveness especially in the state-of-the-art digital economy is high and is owed to a strong entrepreneurial mentality.
  • Topic: Economics, European Union, Asia, Exports, Trade, Strategic Competition
  • Political Geography: China, Europe, Asia, United States of America
  • Author: Andreas Goldthau
  • Publication Date: 11-2019
  • Content Type: Policy Brief
  • Institution: German Council on Foreign Relations (DGAP)
  • Abstract: Global energy demand is shifting to Southeast Asia. This new trade flow is altering market power because it not only follows natural economic development, but also results from strategic trade and investment policies that promote national interests. In this context, the EU needs to account for the geo-economic side effects of the new European Green Deal.
  • Topic: Climate Change, Economics, Energy Policy, European Union, Risk, Trade
  • Political Geography: Europe, Asia, Southeast Asia