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1. Made in Europe: An EU Green Industrial Plan to respond to the challenge of US and Chinese protectionism

Author:
Alekos Kritikos and George Pagoulatos
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The EU needs to urgently formulate a response to US and Chinese protectionism. US decarbonization legislation poses a threat of deindustrialization for Europe. Europe needs a plan to support EU green, industrial and technological competitiveness, while protecting European cohesion and the single market, and promoting European strategic autonomy. Relaxing EU state aid rules must be an inevitable first component of Europe’s response. But this would overwhelmingly benefit the stronger economies of Germany and France, undermining EU cohesion and the integrity of the single market. Thus, the second component of EU response must be a European Sovereignty Fund, of a size commensurate to the magnitude of the challenge. The new Fund must support value chain categories that include as many EU member states as possible. SURE, extended to encompass the energy crisis and green transition, should be an integral part of the mix, and so should promoting technological skills and reskilling for the “Clean Tech Economy”. Investment funding should seek to contribute to vertical integration, including as many stages in the supply chain as possible. It should contribute to the return of specific supply chains and production units from third countries to the EU and seek to include the EU’s weakest economies. Subsidies should rise if the investment is cross-border in nature and carry a bonus if made in an EU region with a low GDP per capita compared to the EU average. Funding could also promote European strategic autonomy by including cross-border partnerships of EU member states in the defence technology industry. It should involve new funding rather than simply recycling money from existing programmes, and certainly avoid deploying undisbursed resources from the Recovery & Resilience Fund.
Topic:
European Union, Investment, Industry, Protectionism, and Strategic Autonomy
Political Geography:
China, Europe, and United States of America

2. The investment gap: the UK’s efforts to replace the European Investment Bank

Author:
Peter Jurkovic and Stephen Hunsaker
Publication Date:
09-2023
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
Following Brexit, the UK lost access to funding from the European Investment Bank. In this report, Stephen Hunsaker and Peter Jurkovic detail the impact this has had on the UK development finance landscape. The report outlines not only the role that development banks play in providing longer term financing for projects the private sector might be reluctant to support, but also the specific role the European Investment Bank played in infrastructure investments in the UK prior to 2020. It also explores the potential and ongoing implications of a lack of access to that investment despite the existence of a number of UK based banks intended to fill the gap.
Topic:
European Union, Finance, Economy, Brexit, Investment, Banking, and European Investment Bank
Political Geography:
United Kingdom and Europe

3. An EU global gateway … to what?

Author:
Fanny Sauvignon and Stefania Benaglia
Publication Date:
11-2023
Content Type:
Commentary and Analysis
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
What is Global Gateway’s unique offer? How does it beat the competition? Why is Global Gateway a values-based offer and what does this entail in practical terms? Amid criticism and comparisons, the EU’s Global Gateway deserves scrutiny and effort to define its purpose and added value, both within and outside the EU. Initially designed as a foreign policy strategy, Global Gateway has not been put to its intended use. Instead, the first two years of implementation have highlighted conceptual and structural challenges that fall short of the EU’s international needs and ambitions. Up to now, it has focused on delivery, namely Team Europe, flagship projects, and investment packages. The EU’s projected power and credibility with its international partners is at stake. However, trusted and resilient connectivity links are difficult to build without putting the foreign policy versus development debate to rest. Differentiating the EU’s offer from its competitors and addressing dwindling credibility requires strong and coherent international leadership. As this CEPS Explainer outlines, resources aggregation approach ‘à la IMEC’, holds the potential to better connect narrative to implementation and build the EU’s external power. Developing on from this, the strategic connectivity clusters (SCCs) approach streamlines international connectivity cooperation.
Topic:
Foreign Policy, European Union, Investment, and Engagement
Political Geography:
Europe

4. Lessons from the T20: Five Priorities for Italian Infrastructure Investment

Author:
Fulvio Bersanetti, Nicola Bilotta, Raffaele Della Croce, Valeria Lauria, and Nicolò Russo Perez
Publication Date:
01-2022
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
As states and societies continue to struggle with the pandemic, a fundamental element of the post-Covid recovery will be the capacity to revive both public and private investments in infrastructure, thereby boosting growth and employment. Differently than previous crises, reorienting infrastructure investment to respond to the new social and environmental needs will also be needed, starting with health and poverty reduction, as well as climate change and the digitalisation drive. Italy is no exception. Under the Recovery and Resilience Facility (RRF) promoted by the European Union, Italy will receive 191 billion euro in which infrastructure investments will play a fundamental role. To unlock its full economic potential and pursue a successful post-Covid recovery, Italy should embrace five key priorities for infrastructure investment.
Topic:
Infrastructure, Finance, Sustainable Development Goals, Investment, and COVID-19
Political Geography:
Europe and Italy

5. China, Europe, and the Pandemic Recession: Beijing’s Investments and Transatlantic Security

Author:
John R. Deni, Chris Alden, Erik Brattberg, Roger Cliff, Mark Duckenfield, R. Evan Ellis, Nicholas Nelson, and Laura Speranza
Publication Date:
05-2022
Content Type:
Special Report
Institution:
The Strategic Studies Institute of the U.S. Army War College
Abstract:
Given the depth and breadth of the pandemic-induced recession in Europe, private companies in need of capital and governments looking to shed state-owned enterprises may be tempted to sell shares, assets, or outright ownership to investors with liquidity to spare. Of greatest concern is the role that China might play in Europe, building Beijing’s soft power, weakening allied geopolitical solidarity, and potentially reprising the role it played in the 2010s, when its investments in Europe expanded dramatically. More specifically, there is concern over China’s investments in infrastructure and sensitive technologies relevant to American and allied military operations and capabilities. Whether Europe is prepared and able to parry Beijing’s economic statecraft is somewhat unclear, given varied attitudes toward China and the patchwork of investment screening mechanisms across the continent. Regardless, the outcomes will have significant implications for US security and for the Defense Department specifically. In support of US European Command (EUCOM) and the Department of Homeland Security (DHS), the U.S. Army War College’s Strategic Studies Institute (SSI) assembled an interdisciplinary team to examine these issues and offer actionable policy recommendations for military leaders and decisionmakers on both sides of the Atlantic.
Topic:
Security, Military Affairs, Economy, Investment, Transatlantic Relations, COVID-19, State-Owned Enterprises, and Recession
Political Geography:
China, Europe, Asia, and United States of America

6. Raising EU productivity through innovation

Author:
Reinhilde Veugelers and Frederic Warzynski
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Research and development is seen as a key contributor to growth because it generates knowledge, leading to new or improved products through product innovation, and makes firms more efficient at producing goods through process innovation. Firm level studies generally find evidence of strong positive productivity effects for firms that invest in R&D. In this context, digital systems could be an important driver of productivity growth, particularly in combination with investments in R&D. But there has been little hard evidence of a significant productivity boost from digital technologies. How the relationship between productivity growth, innovation and digital technology adoption plays out is particularly important for the European Union, where productivity growth has long been weak. Researchers from the MICROPROD project have assessed the effect of technology investment on productivity and performance. Combining recent unique firm-level data and state-of-the art research methodologies, MICROPROD research provides a better overview of which firms are most likely to adopt digital technologies and to innovate, and to turn these investments into productivity growth.
Topic:
European Union, Investment, Innovation, and Productivity
Political Geography:
Europe

7. Investors beware: Europe’s top firms are highly exposed to China

Author:
Ties Dams and Xiaoxue Martin
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Europe’s top firms are highly exposed to China, and therefore to China-related geopolitical risk. This risk is only set to increase in the coming years, as geopolitical tensions between China, the US and the EU are not expected to decrease. Moreover, case studies of LVMH, HSBC, ASML and BMW show that some of Europe’s biggest listed firms could and should offer investors more transparency on their risk-management strategies. Intelligence on China and geopolitical risk exposure is key for investors, and investors that get ahead of the curve may have the edge in the long term. This report is aimed at investors in Europe’s biggest listed firms. It argues that investors have a growing need for transparency amongst European biggest companies with regard to their strategies in dealing with China-related geopolitical risk. Even investors without direct interests in China are or will be affected by China-related geopolitical risk due to the various forms of exposure of companies in the European home market. This means that investors may be increasingly exposed to the risks linked to great power competition, without having the knowledge necessary to anticipate geopolitical changes. As geopolitical tensions between China, the US and the EU are not expected to decrease, investors would be wise to seek greater transparency about European companies’ exposure to the Chinese market – and indeed get ahead of the curve and gain a competitive advantage by investing in those firms that have forward-looking geopolitical strategies in place. This report aims to put this point on investors’ strategic agenda by making the following three points: Europe’s top firms are highly exposed to China. China-related geopolitical risk is spreading. Case studies suggest that Europe’s top firms may not be sufficiently transparent about geopolitical risk management.
Topic:
Geopolitics, Business, Investment, and Risk
Political Geography:
China and Europe

8. FDI Spillover Effects on Innovation Activities of Knowledge-using and Knowledge-creating Firms: Evidence from an Emerging Economy

Author:
Iraj Hashi, Mehtap Hisarciklilar, Slavo Radošević, Nebojša Stojčić, and Nina Vujanović
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The beneficial effects of innovation for firms’ performance and competitiveness are well documented, but it has been suggested in recent years that innovation regimes differ between advanced and emerging economies. While advanced economies rely on knowledge generation, their emerging counterparts follow mainly a knowledge-use regime through the application of existing knowledge and technology. Climbing up the technological ladder can be helped through spillovers from foreign investors to local firms. We investigate whether FDI spillovers influence different phases of the innovation process (from decision to innovate to productivity) among knowledge-using and knowledge-creating firms in an emerging European economy. The results show that the innovation process in emerging economies is closer to the imitation than the creation of novel products. Local firms benefit from foreign counterparts in the early phase of the innovation process. Stronger FDI effects are found among firms that undertake innovation through knowledge use rather than through knowledge generation.
Topic:
Emerging Markets, International Trade and Finance, Foreign Direct Investment, Economy, Investment, and Knowledge Systems
Political Geography:
Europe

9. Shared fortunes: Why Britain, the European Union, and Africa need one another

Author:
Nicholas Westcott
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
European Council on Foreign Relations (ECFR)
Abstract:
Britain and Africa are deeply connected through their history and people as much as through trade, investment, aid, and culture. They can both benefit greatly from this relationship – especially in areas where their interests converge, including economic development, security, education, and climate. But political forces on both sides could push them apart – even as, increasingly, Britain needs Africa more than Africa needs Britain. The British government and the EU need to understand the relationship in its geostrategic context – the influence of China, Russia, Gulf states, and others affects African countries’ views on their place in the world. A closer and more responsive relationship between Britain, Africa, and the EU would have significant benefits for all sides – partly because each is weaker individually than they are together, and because Britain still has strengths that are most useful in cooperation with others. But this will only be possible if the British government significantly changes its approach to Europe as well as to Africa.
Topic:
Foreign Policy, European Union, Investment, and Trade
Political Geography:
Africa, United Kingdom, and Europe

10. Applying an intergenerational mindset to European technology investments

Author:
Fabian Zuleeg
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
Russia’s war of aggression in Ukraine and the upcoming winter of discontent have accelerated the permacrisis, with serious consequences, not just in the short term, but also for Europe’s future. If the EU proves unable to work together and address today’s strategic challenges, member states risk leaving future generations with a Europe that is economically, politically, and socially fragmented and constrained. But this is not the moment for defeatism. Rather, the EU should adopt an intergenerational approach across all policy areas, asking: how will our reactions to today’s severe challenges affect future generations? This should include a common investment strategy: to counter our common societal challenges and crises, the EU should invest in technology and education, increasing Europe’s human and intellectual capital. However, despite technology’s prominence in the EU political agenda, the Union still struggles to make decisive steps to achieve global leadership in many areas. This Discussion Paper argues that the EU should have access to and control over new technologies to guarantee that these “public goods” are, at least in part, in common ownership. Taking equity stakes in technology should be at the heart of the European Sovereignty Fund, announced by Ursula von der Leyen in her 2022 State of the Union speech. Additionally, member states should work together to create a better environment for future private investment by harnessing the power of the Single Market and completing the Capital Markets Union. By adopting this intergenerational mindset, the EU can start the process of building technological wealth which will be accessible to everyone and help tackle Europe’s fundamental challenges. This new investment strategy will offer hope and ensure that the EU can provide peace, prosperity, and sustainability for the current and, more importantly, future generations.
Topic:
Education, Science and Technology, European Union, Investment, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine