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  • Author: Mehdi Lahlou
  • Publication Date: 02-2021
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: The coronavirus pandemic has turned into a global economic crisis with severe social effects in the least developed countries, particularly in Africa. Pre-existing challenges related to widespread poverty, demographic growth, food insecurity and governance issues have been exacerbated by the pandemic. While migration remains one of the key elements of the partnership agenda between Africa and the European Union, the aggravating socioeconomic situation in the African continent due to the impact of COVID-19 and its implications for migration dynamics requires going beyond business-as-usual approaches. The renewed scenario calls for a more comprehensive and development-oriented approach to migration, requiring new policy initiatives addressing the wider set of conditions that, beyond constituting developmental challenges in their own right, also drive migration in North Africa as well as in Sub-Saharan African countries.
  • Topic: Economics, Migration, European Union, Mobility, Asylum, COVID-19
  • Political Geography: Africa, Europe, North Africa
  • Author: Petar Jolakoski, Branimir Jovanovic, Joana Madjoska, Viktor Stojkoski, Dragan Tevdovski
  • Publication Date: 02-2021
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: If firm profits rise to a level far above than what would have been earned in a competitive economy, this might give the firms market power, which might in turn influence the activity of the government. In this paper, we perform a detailed empirical study on the potential effects of firm profits and markups on government size and effectiveness. Using data on 30 European countries for a period of 17 years and an instrumental variables approach, we find that there exists a robust relationship between firm gains and the activity of the state, in the sense that higher firm profits reduce government size and effectiveness. Even in a group of developed countries, such as the European countries, firm power may affect state activity.
  • Topic: Development, Economics, Government, International Political Economy, Profit
  • Political Geography: Europe, Global Focus
  • Author: Michael Landesmann, Isilda Mara
  • Publication Date: 05-2021
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: The South-North migration corridor, i.e. migration flows to the EU from Africa, the Middle East and EU neighbouring countries in the East, have overtaken the East-West migration corridor, i.e. migration flows from Central and East European countries to the EU15 and the European Free Trade Association (EFTA). This is likely to dominate migration flows into the EU+EFTA over the coming decades. This paper applies a gravity modelling approach to analyse patterns and drivers of the South-North migration corridor over the period 1995-2020 and explores bilateral mobility patterns from 75 sending countries in Africa, the Middle East and other EU neighbours to the EU28 and EFTA countries. The study finds that income gaps, diverging demographic trends, institutional and governance features and persisting political instability, but also higher climate risks in the neighbouring regions of the EU, are fuelling migration flows along the South-North corridor and will most likely continue to do so.
  • Topic: Economics, International Political Economy, Migration, Labor Issues, European Union, Human Capital, Labor Market
  • Political Geography: Europe
  • Author: Sonali Chowdhry, Gabriel Felbermayr
  • Publication Date: 02-2021
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: In 2011, the EU-South Korea Free Trade Agreement (EUKFTA) entered into force. With its focus on non-tariff barriers (NTBs), it is a leading example of a deep new generation agreement. Using detailed French customs data for the period 2000 to 2016, we investigate how exporters of different size have gained from the agreement. Applying a diff-in-diff strategy that makes use of the rich dimensionality of the data, we find that firms with larger pre-FTA sizes benefit more from the FTA than firms at the lower end of the size distribution, both at the extensive (product) and the intensive margins of trade. The latter finding is in surprising contrast to leading theories of firm-level behavior. Moreover, we find that our main result is driven by NTB reductions rather than tariff cuts. In shedding light on the distributional effects of trade agreements within exporters, our findings highlight the need for effective SME-chapters in FTAs.
  • Topic: Economics, International Political Economy, Treaties and Agreements, Tariffs, Trade
  • Political Geography: Europe, South Korea, European Union
  • Author: Thomas Brand, Fabien Tripier
  • Publication Date: 03-2021
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: Highly synchronized during the Great Recession of 2008-2009, the Euro area and the US have diverged in the period that followed. To explain this divergence, we provide a structural interpretation of these episodes through the estimation for both economies of a business cycle model with financial frictions and risk shocks, measured as the volatility of idiosyncratic uncertainty in the financial sector. Our results show that risk shocks have stimulated US growth in the aftermath of the Great Recession and have been the main driver of the double-dip recession in the Euro area. They play a positive role in the Euro area only after 2015. Risk shocks therefore seem well suited to account for the consequences of the sovereign debt crisis in Europe and the subsequent positive effects of unconventional monetary policies, notably the ECB’s Asset Purchase Programme (APP).
  • Topic: Debt, Economics, International Political Economy, Global Recession, Finance, Europe Union, Economic Growth, Risk
  • Political Geography: United States, Europe, Global Focus
  • Author: Okko-Pekka Salmimies
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: Finnish Institute of International Affairs
  • Abstract: Finland is preparing a Strategic Programme for the Circular Economy this autumn. It offers an opportunity to strengthen policy coherence between domestic policies and different aspects of foreign policy relevant when promoting a circular economy.
  • Topic: Foreign Policy, Economics, Domestic politics
  • Political Geography: Europe, Finland, Scandinavia
  • Author: Fabio Bulfone
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Max Planck Institute for the Study of Societies
  • Abstract: The Great Recession renewed calls for a return of state activism in support of the European economy. The widespread nationalization of ailing companies and the growing activism of national development banks led many to celebrate the reappearance of industrial policy. By reviewing the evolution of the goals, protagonists, and policy instru- ments of industrial policy since the postwar period, this paper shows how state intervention never ceased to be a crucial engine of growth across the EU. It argues that the decline of the Fordist wage-led production regime marked a turning point in the political economy of industrial policy with the transition from inward-looking to open-market forms of state in- tervention. The main features of open-market industrial policy are then discussed referring to the cases of the internationalization of national champions in public service sectors and the proliferation across the EU of industrial clusters. Finally, the paper reviews postcrisis in- stances of state intervention and highlights how, rather than breaking with past tendencies, the Great Recession further accelerated the shift towards open-market industrial policy.
  • Topic: Development, Economics, Political Economy, Regional Cooperation, European Union, Integration, Industry
  • Political Geography: Europe
  • Author: Rudolf Furst
  • Publication Date: 05-2020
  • Content Type: Working Paper
  • Institution: Institute of International Relations Prague
  • Abstract: The Euro-Japanese rapprochement stimulates the Japanese interest in the new EU member states, which are then matched with Japanese investments and Japan’s global trade strategy. The V4 countries benefit from their geographical position, existing infrastructure and political stability, industrial tradition, and low labour costs, emphasizes Rudolf Fürst.
  • Topic: Economics, Bilateral Relations, Labor Issues, European Union, Political stability, Industry
  • Political Geography: Japan, Europe, Asia
  • Author: Alice Gambarin, Osman Ismail
  • Publication Date: 06-2020
  • Content Type: Working Paper
  • Institution: Oxford Economics
  • Abstract: This report explores the short-term effects of Covid-19 on the financial sustainability of the creative industries in the UK. Along with the tourism sector, Creative Industries (CIs) are among the most affected by the current Covid-19 crisis. Creative workers, one of the more vulnerable sectors of the workforce, are already seeing devastating impacts on their income, not only in turnover terms, but also in their charitable contributions and sponsorship. Leaving behind the more fragile part of the sector could cause irreparable socio-economic damage. We find that the Creative Industries are projecting a combined £77bn turnover loss over the course of 2020 compared to 2019 (-31%). This is expected to translate into a GVA shortfall of £29bn in 2020 compared to 2019 (-26%), over half of which is in London. In 2020, CIs are projecting a 122,000 drop in employment among employees (despite the Coronavirus Job Retention Scheme - JRS) and a further 287,000 job losses among self employed workers, compared to 2019 levels. In total, 409,000 CIs jobs are considered at risk, 27% of which are in London and 20% are in the South East.
  • Topic: Economics, Public Health, Pandemic, COVID-19, Socioeconomics
  • Political Geography: United Kingdom, Europe
  • Publication Date: 11-2020
  • Content Type: Working Paper
  • Institution: Oxford Economics
  • Abstract: The European music sector has a major impact on the economies of the EU and the UK. In 2018 the recorded music industry supported an €81.9 billion contribution to EU27 and UK GDP, according to a study by Oxford Economics, commissioned by IFPI. This was larger than the GDP of nine of the 28 EU Member States in that year. Of this contribution, €37.5 billion was generated by the music sector itself through its output, wages and tax payments. To give a sense of scale, this was 1.5 times larger than that made by the wine-making and brewing sectors. The European music sector also had a significant indirect impact on the labour market and fiscal position around Europe. We estimate the music sector supported 2 million jobs across the EU27 and UK, which meant that 1 in every 119 jobs in the 28 countries were dependent on the sector’s activities to some degree. All of this economic activity also benefited public finances, with the sector supporting a total contribution of €31.0 billion to EU27 and UK tax revenues, equivalent to 19.4% of the entire EU budget for the same year. In addition to this, we also conservatively estimate that the European music sector earned €9.7 billion in export revenue in 2018 from customers around the rest of the world. These earnings are 13% higher than all exports of European GI-protected wines to non-EU countries (including champagne).
  • Topic: Economics, Culture, Music, popular culture, Job Creation
  • Political Geography: Europe