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  • Author: Luca Franza
  • Publication Date: 04-2021
  • Content Type: Working Paper
  • Institution: Istituto Affari Internazionali
  • Abstract: Hydrogen is the most promising vector for harnessing North Africa’s largely untapped renewable energy potential. Low-carbon hydrogen produced in North Africa can play an important role in enabling the European Union and Italy to reach their increasingly ambitious decarbonisation targets as a complement to electrification and locally produced renewables. It is estimated that the EU could achieve cost savings by producing at least part of its future renewable energy needs in neighbouring high-yield regions. Italy is set to play a particularly important function as both a gateway and a catalyst for North African hydrogen exports. In turn, North Africa stands to benefit from hydrogen both as a source of revenues and as an instrument of diversification, industrialisation and local economic development. This would in turn improve social resilience, increase political stability, reduce the risk of radicalisation and limit migration flows. Italy has a particularly strong strategic interest in all of these areas, given its geographic location in the Central Mediterranean and marked exposure to social, political and security developments in North Africa. North African hydrogen could also create profitable business opportunities for several Italian companies. In sum, hydrogen can contribute to fighting climate change while preserving positive trade interdependence across the Mediterranean. Strong coordination between the private sector and policy-makers is going to be key to abate costs along the hydrogen value chain and launch successful international hydrogen trade schemes.
  • Topic: Energy Policy, European Union, Trade, Imports, Hydrogen
  • Political Geography: Europe, North Africa, Italy, Mediterranean
  • 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: Zsolt Darvas
  • Publication Date: 02-2020
  • Content Type: Working Paper
  • Institution: Bruegel
  • Abstract: Global trade and finance data indicates that the pre-2008 pace of economic globalisation has stalled or even reversed. The European Union has defied this trend, with trade flows and financial claims continuing to grow after the recovery from the 2008 global economic and financial crisis. Immigration, including intra-EU mobility, has also continued to increase.
  • Topic: Globalization, Immigration, European Union, Finance, Economic Growth, Global Financial Crisis, Trade
  • Political Geography: Europe
  • Author: George Tzogopoulos
  • Publication Date: 01-2020
  • Content Type: Working Paper
  • Institution: Hellenic Foundation for European and Foreign Policy (ELIAMEP)
  • Abstract: With President Donald Trump and Prime Minister Kyriakos Mitsotakis scheduled to meet early this January, Dr. George Tzogopoulos, Research Fellow at ELIAMEP, outlines the course of Greek-American relations from 2015 onwards. Dr. Tzogopoulos argues that Athens and Washington DC have entered a period of strong cooperation that can be further consolidated in 2020. Defense, energy and trade are the main focal points. The agenda includes the need to create a new security environment in the Mediterranean – with Greece playing a key role. The excellent status of Greek-American relations creates new opportunities for closer bilateral cooperation on defense, energy and trade. The region of Northern Greece becomes of gradually higher significance for the US. US foreign policy towards Greece reflects its interest in restraining Russian influence. While anti-Americanism in Greece is declining, there is widespread concern in the domestic public sphere on whether the US will support Greece in the case of a crisis with Turkey in the Eastern Mediterranean. US support to the trilateral cooperation of Greece-Israel-Cyprus will be reinforced through the Eastern Mediterranean Security and Energy Partnership Act. The US-Greece Strategic Dialogue and NATO Mediterranean Dialogue are useful instruments for strengthening Greece’s role in the South, contributing towards a new security landscape.
  • Topic: Security, Energy Policy, Bilateral Relations, Trade
  • Political Geography: Europe, Greece, North America, United States of America
  • Author: Lennart Kaplan
  • Publication Date: 01-2020
  • Content Type: Working Paper
  • Institution: German Development Institute (DIE)
  • Abstract: In the framework of the Agenda 2030 for sustainable development, France and Germany face common challenges, ranging from security to global health. Against this background, this paper discusses opportunities and barriers for a French-German leadership in international donor coordination.
  • Topic: Security, Climate Change, International Cooperation, Trade, Donors
  • Political Geography: Europe, France, Germany
  • Author: Mahdi Ghodsi, Hüseyin Karamelikli
  • Publication Date: 05-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: Economic sanctions are intensively used by international institutions to enforce political objectives. Since 2006 the EU has been implementing general sanctions against the whole economy of Iran, affecting their trade relations. Since 2007, and following the imposition of sanctions by the UN Security Council, the EU has also implemented smart sanctions targeting Iranian entities and natural persons associated with its military activities. In a non-linear autoregressive distributed lag (NARDL), this paper investigates the impact of general and targeted EU sanctions against Iran on quarterly bilateral trade values between the 19 members of the euro area (EA19) and Iran between the first quarter of 1999 and the fourth quarter of 2018. The results indicate that general sanctions have strongly hampered trade flows between the two trading partners. The impact of general sanctions on the total imports of the EA19 from Iran is more than four times stronger than on the total exports of the EA19 to Iran. Moreover, the EU’s general sanctions have hampered trade in almost all sectors, except for the primary sectors. Furthermore, our study finds that the impact of smart sanctions targeting Iranian entities and natural persons is much smaller than the impact of general sanctions on total trade values and the trade values of many sectors. Smart sanctions affect the exports of most sectors from the EA19 to Iran, while they are statistically insignificant for the imports of many sectors from Iran. Thus, this paper provides evidence on the motivations behind smart sanctions, which target specific individuals and entities rather than the whole economy, unlike general sanctions, which have a negative impact on ordinary people.
  • Topic: United Nations, Sanctions, Trade, Trade Policy
  • Political Geography: Europe, Iran, United Nations, European Union
  • Author: Amat Adarov, Robert Stehrer
  • Publication Date: 04-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: The paper studies the drivers of productivity at country and sectoral levels over the period 2000-2017 with the focus on the impact of capital accumulation and structure. The analysis confirms an especially important role of ICT and intangible digital capital for productivity growth, particularly in the manufacturing sectors. While backward global value chain participation and EU integration are also found to be instrumental for accelerating productivity growth, the impact of inward foreign direct investment is not robustly detected when the data is purged from the effects of special purpose entities and outlier countries.
  • Topic: Economics, Foreign Direct Investment, European Union, Digital Economy, Capital Flows, Trade
  • Political Geography: Europe, Global Focus
  • Author: Anthony Edo, Jacques Melitz
  • Publication Date: 12-2020
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: The scale of the rise in personal wealth following the Black Death calls the life-cycle hypothesis of consumption into consideration. This paper shows for the first time that the wealth effect of the Black Death on the price level continued in England for generations, up to 1450. Indeed, in absence of consideration of the wealth effect, other influences on the price level do not even appear in the econometric analysis. The separate roles of coinage, population, trade, wages and annual number of days worked for wages all also receive attention and new results follow for adjustment in the labor market.
  • Topic: Economics, International Political Economy, Infectious Diseases, Population, Trade, Labor Market
  • Political Geography: Europe, England
  • Author: Chad P. Bown, Jennifer A. Hillman
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: The United States, the European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It first provides a brief history of subsidy disciplines in the General Agreement on Tariffs and Trade and the World Trade Organization (WTO) predating any concerns introduced by China. It then describes contemporary economic problems with China’s approach to subsidies, their impact, and the apparent ineffectiveness of the WTO’s Agreement on Subsidies and Countervailing Measures to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems—in a manner analogous to how the Organization for Economic Cooperation and Development took on agricultural subsidies in the 1980s—before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
  • Topic: Economics, World Trade Organization, Tariffs, Trade
  • Political Geography: Japan, Europe, Asia, North America, United States of America, European Union
  • Author: Uri Dadush, Marta Dominguez-Jimenez, Tianlang Gao
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Bruegel
  • Abstract: China and the European Union have an extensive and growing economic relationship. The relationship is problematic because of the distortions caused by China’s state capitalist system and the diversity of interests within the EU’s incomplete federation. More can be done to capture the untapped trade and investment opportunities that exist between the parties. China’s size and dynamism, and its recent shift from an export-led to a domestic demand-led growth model, mean that these opportunities are likely to grow with time. As the Chinese economy matures, provided appropriate policy steps are taken, it is likely to become a less disruptive force in world markets than during its extraordinary breakout period.
  • Topic: Economics, Governance, European Union, Investment, Trade
  • Political Geography: China, Europe, Asia
  • Author: Nicholas Crawford
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: International Institute for Strategic Studies
  • Abstract: China has become the largest lender to developing countries, and a major investor there too. As a result, it has a major stake in many countries facing political and economic instability. Western policymakers involved in responding to instability and crises overseas need to understand how China navigates these situations. China’s approach is similar in some respects to that of Western states, but there are also important differences. China’s policy towards countries facing political and economic instability is driven by four main concerns: It seeks to strengthen and maintain its partnerships with those countries to ensure they remain open to and supportive of the Chinese government and its businesses. China is determined to protect its financial interests, businesses and citizens from the harms that result from instability. It is concerned to see its loans repaid, its investments secure, its workers safe and its supply chains undisrupted. It wants to maintain its narrative of non-interference. Any intervention in the politics or policies of its partner states must be seen as being at the invitation of their governments (although China may pressure its partners for consent). China wants to increase its influence in the world, independently and distinctively. It is increasingly proactive in its response to instability in partner countries. Some responses seek to address the instability directly; other responses are intended to protect Chinese interests in spite of the instability. This paper analyses the political economy of China’s responses to instability, identifies the types of responses China undertakes, and assesses these responses.
  • Topic: Human Rights, International Cooperation, Developing World, Political stability, Trade
  • Political Geography: Africa, United States, China, Europe, Beijing, Asia
  • Author: Maciej Bałtowski, Piotr Kozarzewski
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: The paper discusses the role of the state in shaping an economic system which is, in line with the welfare economics approach, capable of performing socially important functions and achieving socially desirable results. We describe this system through a set of indexes: the IHDI, the World Happiness Index, and the Satisfaction of Life index. The characteris-tics of the state are analyzed using a set of variables which describe both the quantitative (government size, various types of governmental expenditures, and regulatory burden) and qualitative (institutional setup and property rights protection) aspects of its functioning. The study examines the “old” and “new” member states of the European Union, the post-communist countries of Eastern Europe and Asia, and the economies of Latin America. The main conclusion of the research is that the institutional quality of the state seems to be the most important for creation of a socially effective economic system, while the level of state interventionism plays, at most, a secondary and often negligible role. Geographical differentiation is also discovered, as well as the lack of a direct correlation between the characteristics of an economic system and the subjective feeling of well-being. These re-sults may corroborate the neo-institutionalist hypothesis that noneconomic factors, such as historical, institutional, cultural, and even genetic factors, may play an important role in making the economic system capable to perform its tasks; this remains an area for future research.
  • Topic: Demographics, Economy, Economic Growth, State, Economic Policy, Institutions, Trade, Welfare
  • Political Geography: Europe, Eastern Europe, Asia, Latin America, European Union
  • Author: Amat Adarov, Robert Stehrer
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: In the age of globalisation, international trade and foreign direct investment (FDI) have become integral elements of cross-country production sharing. In this paper we empirically assess the impact of FDI, as well as capital dynamics and structure, on the formation of global value chains (GVC) and trade in value added at country and sectoral levels based on a database constructed for a sample of European countries over the period 2000-2014. The analysis reveals that inward FDI is especially conducive to the formation of backward linkages while outward FDI facilitates forward GVC participation, especially in high-tech manufacturing sectors. A particularly robust influence of FDI and capital accumulation on GVC integration is identified in the textile and clothing industry. While capital accumulation in general intensifies GVC linkages for most sectors, ICT capital appears to be especially instrumental for backward integration of electrical and transportation equipment sectors.
  • Topic: Globalization, International Trade and Finance, Foreign Direct Investment, Trade, Global Value Chains
  • Political Geography: United States, Japan, Europe
  • Author: Martin T. Braml, Gabriel Felbermayr
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: The world runs a trade surplus with itself: Exporters report larger values of exports than what importers report as imports. This is a logically impossible but well known empirical fact. Less well known, in recent years, more than 80 percent of the global surplus is a trade surplus that the EU has with itself. In this paper, we show that this self-surplus of the EU amounts to a striking 307 billion Euro in 2018. It persists in goods, services, and secondary income accounts. It also exists within the Euro Area, and is strongest between neighboring countries. Around the 2004 Eastern Enlargement the EU’s self-surplus quadrupled. Balance of payments data from the United Kingdom appear highly distorted. We argue that the phenomenon is not only due to measurement error. Rather, a large fraction of the EU’s self-surplus puzzle seems related to fraud in value added tax. The loss in tax income could amount to as much as 64 billion Euro per year.
  • Topic: International Political Economy, European Union, Trade, Trade Policy
  • Political Geography: Europe
  • Author: Valérie Mignon, Antonia Lopez-Villavicencio
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
  • Topic: Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Eurozone, Trade, Imports
  • Political Geography: China, Europe, Eastern Europe
  • Author: David Koranyi
  • Publication Date: 04-2018
  • Content Type: Working Paper
  • Institution: Institute for Development and International Relations (IRMO)
  • Abstract: There has been much controversy around Nord Stream 2, a planned extension of the undersea gas pipeline stretching from Russia to Germany. By lying down two extra pipes in addition to the two already in operation since 2011-2012, the second phase would see the doubling of the capacity of the route, from 55 to 110 billion cubic meters (bcm) and commence operations in 2019 at a cost of 9.5 billion euros. This would mean that over 70% of Russian gas exports could be channeled through a single pipeline through Germany. Nord Stream 2, coupled with constructing the �irst two lines of Turkish Stream (with a capacity of 31.5 bcm) would also allow for the complete circumvention of the Ukrainian transit route.
  • Topic: European Union, Gas, Trade
  • Political Geography: Russia, Europe, Turkey, Germany
  • Author: Zbigniew Polański
  • Publication Date: 12-2017
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: This paper contrasts the impact of the 1929 and 2008 world crises on the Polish economy. Her much better performance during the recent crisis can be explained by two groups of factors: first, by very different stabilization policies and second, by distinct structural developments (resulting both from authorities' structural policies and spontaneous processes). It is emphasized that several factors responsible for Poland's superior performance during the 2008 crisis also contributed to her economic success vis-à-vis other European Union countries.
  • Topic: Financial Crisis, Economic structure, Economic Growth, Global Financial Crisis, Trade
  • Political Geography: Europe, Poland, European Union
  • Author: Robert Stehrer, Roman Stöllinger, Sandra Leitner
  • Publication Date: 11-2017
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: Global trade patterns are changing rapidly. Emerging economies are increasing their share of exports overall and intensifying competition in nearly all sectors. Using a gravity-based approach, this report examines the future profile of European Union (EU) world market shares at the aggregate and sectoral level. It further points towards the changing patterns of trade within the EU. Based on the results, some conclusions on EU industrial policy are drawn.
  • Topic: Industrial Policy, International Trade and Finance, Global Markets, Economic Growth, Trade
  • Political Geography: Europe, Global Focus, European Union
  • Author: Renata Karkowska
  • Publication Date: 11-2017
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: The goal of this study is to identify empirically how country-level development, taking into account the financial and macroeconomic environment, affect the risk profiles of the banking sector in Europe. Through a dataset that covers 3,399 European banks spanning the period 1996-2011, and the methodology of panel regression, the empirical findings document the heterogeneity of banking risk determinants. I examine the implications of bank leverage that manifest itself as spreading and growing instability. The study contributes to and combines the different strands of literature and understanding of the importance of the links between the variables. It also contributes to the literature by focusing on a group of countries from Central and Eastern Europe and the Commonwealth of Independent States that have not been studied before. The extended model provides a causal link between risk in the banking sector and the growth of the financial market and macroeconomy. I apply four measures of country-level development that are available in previous studies: share of foreign ownership in the banking sector; the financial freedom index; the real growth rate; and stock market capitalization. Using these measures, I obtain different results which highlight the fact that the effect of macroeconomic and financial development on banking sector risk-taking is ambiguous.
  • Topic: Financial Markets, Economic Growth, Banks, Trade Liberalization, Macroeconomics, Trade
  • Political Geography: Europe, Eastern Europe, Central Europe, European Union
  • Author: Jakub Zowczak, Kamil Pruchnik
  • Publication Date: 09-2017
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: The aim of this paper is to analyze how different models of transformation in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) increased or decreased the risk of being stuck in the middle-income trap (MIT). The key finding is that the CEE and CIS countries are, from a definition point of view, not materially at risk of the MIT as out of nine selected MIT definitions, none of the CEE or CIS countries were “stuck” more than three times. At the same time, the CEE countries are more at risk of falling into the MIT than the CIS countries; however this is because the CIS is a poorer region and is not near the lower MIT thresholds. The CEE countries had a better start at the beginning of the transformation and on average implemented a better set of transformation models; however, some CEE countries are now struggling to permanently join the advanced countries and CIS countries are, on average, far behind that. The literature review on transformation models and the analysis of the “jumps” in the World Bank ranking classification suggest that while the MIT is not a concern for CEE or CIS countries, in order to speed up convergence, CIS countries might consider more shocks and consistently following free market related approaches. The study fills a gap in the literature on the MIT which has thoroughly analyzed the Asian and Latin American countries but has provided little analysis of the CEE and CIS countries.
  • Topic: Finance, Economic Growth, Economic Policy, Trade
  • Political Geography: Europe, Eastern Europe, Central Europe
  • Author: Hrvoje Butković, Višnja Samardžija
  • Publication Date: 05-2016
  • Content Type: Working Paper
  • Institution: Institute for Development and International Relations (IRMO)
  • Abstract: The team of IRMO researchers has published a study about the nonstandard work in Croatia in the period since outbreak of the economic crisis, based on the desk research and the interviews. The study is focused on the activities of the trade unions and employers related to increase of the nonstandard work in the sectors of construction, metal industry, retail trade, public healthcare and agency work. The research was published within the project ‛PRECARIR – The rise of the dual labour market: fighting precarious employment in the new member states through industrial relations’ which IRMO implements as a partner from Croatia while it is coordinated by the Dublin City University (DCU). Together with nine other national studies it was published as a CELSI Research Report at the webpage of the CELSI institute from Bratislava. The study was reviewed by three scientific reviewers, and it will be presented at an international conference concerning the nonstandard work in Ljubljana on the 31st May 2016 and at the final conference of the PRECARIR project in Dublin 20th June 2016.
  • Topic: Labor Issues, Health Care Policy, Unions, Trade
  • Political Geography: Europe, Eastern Europe, Croatia, Southern Europe
  • Author: Barbara Błaszczyk, Wiktor Patena
  • Publication Date: 11-2015
  • Content Type: Working Paper
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: The study concerns the effects of Polish privatisation program conducted in the years 2008-2011. After drawing a broad picture of this process we investigate the performance of 59 privatised companies, and finally focus on a deeper analysis of three companies, which is the core part of our study. We test the hypotheses that privatisation increases a company's profitability, labour productivity, capital investment spending, plow-back ratio and leverage. In case studies, we additionally explore the effect of privatization on each company’s value. The outcomes concerning the larger group of companies are partly ambiguous (with four hypotheses confirmed and four rejected). Profitability has been not visibly improved, although a number of positive initiatives and improvements in performance occurred. By contrast, the three case studies showed a significant improvement of profitability and all other performance indicators observed, as well as a considerable increase of company value. Our results show that privatisation works, though its full effects need time to occur.
  • Topic: Privatization, Financial Markets, Economy, Economic Growth, State, Innovation, Trade
  • Political Geography: Europe, Central Asia, Caucasus, Eastern Europe, Poland