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  • Author: Anna Bocharnikova
  • Publication Date: 01-2021
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: This article investigates the dynamics of individual economic well‐​being in Estonia and Finland over three periods: (1) 1923–1938, when both countries were similarly situated; (2) 1960–1988, during which Estonia was under Soviet control; and (3) 1992–2018, after Estonian independence. Economic well‐​being is calculated using the purchasing power of wages in terms of the affordability of a minimal food basket. The results show that, in 1938, the purchasing power of wages in Estonia was 4 percent lower than in Finland; in 1988, it was 42 percent lower; and, by 2018, the gap had fallen to 17 percent. Consequently, as measured by the purchasing power of wages, well‐​being in Estonia and Finland was similar before the Soviet occupation, widely diverged during Soviet rule, and converged after Estonian independence, with the transition from plan to market.
  • Topic: Economics, Markets, Politics, History, Culture
  • Political Geography: Europe, Finland, Estonia
  • Author: Jesús Fernández‐​Villaverde
  • Publication Date: 06-2021
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The monetary arrangements of societies are the result of the interplay of technology and ideas. Technology determines, for example, which coins can be minted and at what cost. For centuries, minting small‐​denomination coinage was too costly to induce Western European governments to supply enough small change (Sargent and Velde 2002). Only the arrival of steam‐​driven presses fixed this problem (Doty 1998). Simultaneously, ideas about private property and the scope of government determined whether private entrepreneurs were allowed to compete with governments in the supply of small change (Selgin 2008). Technology and ideas about money engage dialectically. Technological advances shape our ideas about money by making new monetary arrangements feasible. Ideas about desirable outcomes direct innovators to develop new technologies.
  • Topic: Economics, Science and Technology, Monetary Policy, Cryptocurrencies
  • Political Geography: Europe, Global Focus
  • 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: Bayram Gungor
  • Publication Date: 01-2021
  • Content Type: Journal Article
  • Journal: The Rest: Journal of Politics and Development
  • Institution: Centre for Strategic Research and Analysis (CESRAN)
  • Abstract: The relationship among the FDI, GDP and Export has gained vast attention among the researchers and policy-makers. There are many studies on the interaction of these variables using various econometric approaches in the literature. However, it has seen that the findings have been different from country by country. Therefore, this study's main problematic is to estimate the coefficients that show the interaction among the FDI, GDP and Export covering 1980-2019 in Turkey. The ARDL Bounds Model and Granger Causality approach were selected to measure the coefficients statistically. Three models were executed to calculate the short-run and long-run coefficients. While the Model 1 and Model 3 were found statistically significant to explain the dependent variables, the Model 2 was found statistically insignificant. Because of this, the Model 2 was excluded from the study. The short- run coefficients were also found statistically significant to explain the dependent variables of the Model 1 and Model 3. While GDP affects the FDI positively in Model 1, GDP affects the Export negatively in Model 2. The ECT was found statistically significant at 0.01. The speeds of adjustment of the Model 1 and Model 3 were calculated as approximately 93% and 16% levels, respectively. Unlike the ARDL Bounds Model, the Granger Causality test was implemented to measure the variables' causal relationship. It was seen that there is only a unidirectional Granger causal relationship running from GDP to FDI in the Model 1 and from GDP to Export in the Model 2.
  • Topic: Economics, Foreign Direct Investment, GDP, Exports
  • Political Geography: Europe, Turkey, Asia
  • 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: 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: 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: 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: 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
  • Author: Marcin Terlikowski
  • Publication Date: 03-2020
  • Content Type: Special Report
  • Institution: The Polish Institute of International Affairs
  • Abstract: The European Defence Fund (EDF) is the EU’s newly established defence-industrial policy tool. It will enable co-financing from the Union’s budget collaborative research on defence technologies and joint-capability development programmes. Its goal is to strengthen the EU’s defence industry and, thereby, its military capacity. Implemented since 2017 only in a limited form, the EDF is planned to go full-fledged in 2021–2027. Yet, it will not bring the expected results if its budget remains limited and no consensus is found on the issue of the access of non-EU NATO states to the fund.
  • Topic: Defense Policy, Economics, Politics, Military Strategy
  • Political Geography: Europe
  • 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: Mario Del Pero, Paola Magri, Gary C. Jacobson, Michele Alacevich, Gabriella Sanchez, Scott L. Greer, Mario Del Pero, William F. Wechsler, Erik Jones
  • Publication Date: 11-2020
  • Content Type: Special Report
  • Institution: Italian Institute for International Political Studies (ISPI)
  • Abstract: Unprecedented and unpredictable: this is how US President Donald Trump's administration has repeatedly been labelled. Beyond the frequent tweets and bombastic rhetoric, however, lie a more conventional four years, as the United States navigated an ever-evolving international reality, compounded by a global pandemic and one of the deepest economic recessions in over a century. This Report analyses the continuity and changes that occurred during Trump’s presidency. Domestically, it investigates the growing political polarization, the country's pre-pandemic economic performance, Trump's approach towards regular and irregular migration, and the US’ response to a healthcare emergency. At the international level, this volume looks at how the US stance has changed vis-à-vis China, the Middle East, and Europe. Which long-term trends has President Trump had to ride through? What was his trademark, and what might be his lasting legacy?
  • Topic: Economics, Globalization, Immigration, European Union, Inequality, Economic Growth, Engagement , Donald Trump, COVID-19, Polarization, Disengagement
  • Political Geography: China, Europe, Middle East, North America, 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: 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: Stefan Jestl, Roman Römisch
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: This paper analyses the economic effects of a reallocation of Cohesion Policy expenditures across EU countries. We evaluate a shift from stronger (i.e. older) Member States to less-developed EU economies (i.e. CEE countries) and vice versa. On top of that, we also assess the effects of a general reduction in the Cohesion Policy budget. For evaluation, we construct a demand-driven macroeconomic model which spans country models of 21 EU economies and is calibrated based on empirical data for the period 1995-2018. Our results suggest that a shift of Cohesion Policy funds to more (less) developed countries would result in a higher (lower) overall economic performance. However, the reallocation would affect economic outcomes in EU economies unevenly. In addition to direct effects on demand and production, it is pivotal to take into account indirect effects via trade as well. As a result, Cohesion Policy seems to be confronted with a trade-off between long-run convergence and short-run economic performance.
  • Topic: Economics, International Political Economy, European Union, Economic Growth, Investment, Economic Cooperation
  • Political Geography: Europe, European Union
  • Author: Roman Römisch
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: This paper develops a simple method to consistently break down world input-output tables to regional input-output tables. They are used to estimate Cohesion Policy-induced demand spillovers in the EU, covering the years 2007-2018. Results indicate that Cohesion spillovers from less developed regions to other regions exceed 40% of their initial EU support in some cases. In addition, spillovers from the more developed regions are equivalent to 24% of their initial EU support. This shows that the existing trade and investment linkages across the EU regions are strong and not only run from less developed to more developed regions but also vice versa. Our results are good news for the net paying regions in the EU. Taking into account capacity growth effects, Cohesion Policy spillovers might well be a multiple of the pure demand spillovers estimated in this paper. Thus, for net paying regions, Cohesion Policy is not only an act of European solidarity but also a rational long-run economic growth policy.
  • Topic: Economics, International Political Economy, International Trade and Finance, European Union, Investment, Economic Cooperation
  • Political Geography: Europe
  • Author: Stefan Jestl, Ambre Maucorps, Roman Römisch
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: This paper analyses the effects of the EU Cohesion Policy (CP) on the economic growth of 276 European NUTS-2 regions between 2008 and 2016. Using a structural equation model (SEM) consisting of both a measurement component (with two latent variables) and a structural component, we estimate the impact of CP funding on the growth of GDP per capita across EU regions. The estimation also enables us to predict changes in the growth of GDP per capita based on a scenario of CP funding reallocation between member states. Overcoming the limitations of traditional linear regression, SEM modelling proves to be a promising method for impact evaluation, also allowing for the inclusion of indirect causal paths and feedback loops to depict, for example, cross-border economic spillover effects.
  • Topic: Economics, International Political Economy, European Union, Economic Growth, Investment, Economic Cooperation
  • Political Geography: Europe
  • Author: Julia Grübler, Oliver Reiter
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: Political debates and economic analyses often focus on single free trade agreements and their potential economic effects on participating trading partners. This study contributes to the literature by shedding light on the significance of trade agreements in the context of countries’ positions in worldwide trade agreement networks, by combining network theory with gravity trade modelling. We illustrate, both numerically and graphically, the evolution of the global web of trade agreements in general, and the network of the European Union specifically, accounting for the geographical and temporal change in the depth of agreements implemented. Gravity estimations for the period 1995-2017 distinguish the direct bilateral effects of trade agreements from indirect effects attributable to the scope of trade networks and countries’ positions therein.
  • Topic: Economics, International Political Economy, International Trade and Finance, Treaties and Agreements, Profit, Models
  • Political Geography: Europe, Austria
  • Author: Mahdi Ghodsi, Mohammad Sharif Karimi, Robert Stehrer
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: Until 2012, the Central Bank of Iran (CBI) used its policy rate to stabilise the rial’s exchange rate and, given a persistent current-account surplus, had accumulated sizeable currency reserves. In 2012, however, international sanctions against Iran intensified and the value of the rial halved against the US dollar. Since then Iran has followed a dual interest rate policy, with both a market rate and an official rate applied by the CBI to major imports. In recent years, as sanctions have cut access to foreign reserves, the gap between the two rates has widened substantially. Given these important changes in the exchange rate regime, this paper investigates the impact of the real exchange rate on the trade balance in Iran over the period 1997-2017. For this purpose, an asymmetric model is used, as the speed of the effects of changes in the exchange rate can be asymmetric. The results of the nonlinear autoregressive distributed lag model (NARDL) indicate that this is indeed the case. Results are generally consistent with the Marshall-Lerner condition: an exchange rate depreciation improves the trade balance, whereas an appreciation worsens it. However, the trade balance reacts more strongly in the short run to depreciations of the rial than to appreciations. Although the government could easily improve the trade balance in the short run through currency depreciation, policymakers should in the longer run promote non-oil exports to reduce dependency on oil and to diversify the economy.
  • Topic: Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Central Bank, Models
  • Political Geography: Europe, Iran
  • Author: Mahdi Ghodsi, Robert Stehrer
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: Eight multilateral rounds of negotiations under the General Agreement on Tariffs and Trade (GATT) and international agreements under the World Trade Organisation (WTO) have contributed significantly to the reduction of tariffs among WTO members. However, over the years legitimate reasons for the imposition of non-tariff measures (NTMs) within regulations have triggered their extensive use. Among these measures, technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures allow countries to impose restrictions on the import of low-quality products suspected of harming domestic consumers’ health, plant life or the environment. Such trade policy instruments may lead to higher standards in the import market, in addition to improving market efficiency through information requirements such as mandatory labelling. This paper analyses two types of regulative and standard-like NTMs – TBTs and SPS measures – and the quality improvement of traded products that is driven by their imposition, which might be a general underlying motive for the adoption of such regulations. Based on a model framework involving both the supply and the demand side of trade and using four types of measures of these NTMs, this paper assesses the impact of TBTs and SPS measures on the quality of traded products. A dummy variable measuring the existence of these NTMs and a count variable indicating their stringency are used in the analysis. Moreover, two other variables indicate flows of NTMs imposed in each year and stocks of these NTMs accumulated over years. The results indicate that TBTs and SPS measures do indeed imply a higher quality of traded products, which is also consistent with the model when NTMs enter as a specific trade cost. Stringent TBTs with more regulations imposed in each year (i.e. flows of count TBTs) have the largest impact on the quality of traded products. However, for SPS measures only the existence of a regulation (i.e. the dummy variable on flows of SPS measures) on a traded product has the strongest impact on its quality.
  • Topic: Economics, International Political Economy, International Trade and Finance, WTO, Non-Tariff Measures, GATT
  • Political Geography: Europe, Global Focus
  • Author: Alberto Costa, Jonathan Portes, Lauren McLaren, Marina Fernandez Reino, Tim Bale
  • Publication Date: 06-2020
  • Content Type: Video
  • Institution: UK in a Changing Europe, King's College London
  • Abstract: Our recent #IsolationInsight virtual event looked at what the UK’s post Brexit immigration regime could and should look like, considering also public opinion on immigration and the impact of the Covid-19 pandemic. Speakers: Alberto Costa, Conservative MP for South Leicestershire Professor Jonathan Portes, senior fellow at the UK in a Changing Europe Professor Lauren McLaren, @University of Leicester Marina Fernandez Reino, Migration Observatory Chair: Professor Tim Bale, deputy director at the UK in a Changing Europe
  • Topic: Economics, Migration, Politics, Immigration, Economy, Brexit, COVID-19
  • Political Geography: United Kingdom, Europe
  • Author: Ben Chu, Jonathan Portes, Meredith Crowley, Gemma Tetlow, Anand Menon
  • Publication Date: 06-2020
  • Content Type: Video
  • Institution: UK in a Changing Europe, King's College London
  • Abstract: Our recent #IsolationInsight event discussed the economics of the coronavirus pandemic and the UK’s departure from the EU. Speakers : Ben Chu, economics editor, @The Independent ; Professor Jonathan Portes, senior fellow, The UK in a Changing Europe ; Dr Meredith Crowley, senior fellow, The UK in a Changing Europe ; Dr Gemma Tetlow, chief economist, @Institute for Government ; Chair: Professor Anand Menon, director, The UK in a Changing Europe
  • Topic: Economics, European Union, Brexit, Pandemic, COVID-19
  • Political Geography: United Kingdom, Europe
  • Author: Ben Chu, Meredith Crowley, Gemma Tetlow, Thomas Sampson, Anand Menon
  • Publication Date: 10-2020
  • Content Type: Video
  • Institution: UK in a Changing Europe, King's College London
  • Abstract: At this Isolation Insight webinar, panelists discussed the economics of the Covid-19 pandemic and the UK's exit from the EU, six months after lockdown began and with less than three months left of the transition period. Speakers: Ben Chu, economics editor, The Independent; Meredith Crowley, senior fellow, UK in a Changing Europe; Gemma Tetlow, chief economist, Institute for Government; Thomas Sampson, associate professor, London School of Economics; Chair: Anand Menon, director, UK in a Changing Europe
  • Topic: Economics, European Union, Brexit, Transition, COVID-19
  • Political Geography: United Kingdom, Europe
  • Author: Lisa Ann Richey, Maha Rafi Atal
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: Centre for Business and Development Studies (CBDS), Copenhagen Business School
  • Abstract: As the global Covid-19 pandemic spread through Europe and North America, companies raced to communicate how they were responding to the crisis. Advertising that focuses on a company’s response to humanitarian crises is hardly new. Every holiday season features a parade of brands touting their seasonal partnerships with charitable causes. Yet these exercises in “Covid-branding” struck a particular nerve with both consumers and media commentators because so many of the brands stuck to the same script.
  • Topic: Economics, Markets, Communications, Advertising
  • Political Geography: Europe, North America, Global Focus
  • Author: Neda Korunovska, Zeljko Jovanovic
  • Publication Date: 04-2020
  • Content Type: Case Study
  • Institution: Open Society Foundations
  • Abstract: Roma communities in Europe face a much higher risk of death from COVID-19, as their situation, already marked by extreme racism and poverty, has been worsening in the last decade. However, the European Union member states covered in this policy brief—Bulgaria, Hungary, Italy, Romania, Slovakia, and Spain—have not responded with proportionate support. This brief argues that the COVID-19 crisis and the EU’s recovery plan in response both present an opportunity to improve the conditions of Europe’s Roma—not only in terms of rights, obligations, needs, but in the interests of sound political and economic decision-making across the region.
  • Topic: Economics, Health, Human Rights, Health Care Policy, Social Policy, Public Health, Pandemic, COVID-19
  • Political Geography: Europe, Bulgaria, Romania, Hungary, Spain, Italy, Slovakia
  • Author: Hosuk Lee-Makiyama, Badri Narayanan Gopalakrishnan
  • Publication Date: 10-2020
  • Content Type: Research Paper
  • Institution: European Centre for International Political Economy (ECIPE)
  • Abstract: Regulations are an indispensable part of an economy and are proven to generate a significant impact on the economic, environment and social landscape. Through an extensive survey of literature and empirical study, the paper contrasts the benefits and costs arising in the light of the imposition of ex ante regulations of attempting to regulate a market sector, before a market failure has even occurred. It diverges from the norm of regulating ex-post, i.e. addressing market failures as they arise, which is the case in most modern open economies. The study highlights the economic impacts of shifting from ex post to ex ante in the online services sector as stipulated by the proposals for the Digital Services Act. It estimates a loss of about 85 billion EUR in GDP and 101 billion EUR in lost consumer welfare, due to a reduction in productivity, after accounting for other control variables. These costs are equivalent to losing all the gains that the EU has achieved to date from all its bilateral free trade agreements; or losing the contribution of passenger cars to the EU trade balance with the rest of the world. In the context of the pandemic-induced economic contraction, the GDP loss is equivalent to one-quarter of EU current account surplus projected for 2020. The extraordinarily high costs and rarity of ex ante rules warrant a discussion on the true objectives of the Digital Services Act. It is unclear which market failures it is envisaged to address – or how these failures can be so critical for the well-being for the European citizens, yet so irreparable and impossible to remedy ex post.
  • Topic: Economics, Environment, International Political Economy, Markets, Treaties and Agreements, Social Policy, Trade
  • Political Geography: Europe
  • Author: Agnieszka Nitza-Makowska
  • Publication Date: 03-2020
  • Content Type: Journal Article
  • Journal: Nowa Polityka Wschodnia
  • Institution: Faculty of Political Science and International Studies, Nicolaus Copernicus University in Toruń
  • Abstract: The China–Pakistan Economic Corridor (CPEC) holds the potential to transform Pakistan along with its turbulent regional environment. In the short run, the multiple networks of infrastructure that the project provides will eventually improve Pakistan–European Union (EU) trade. Moreover, while the CPEC is unlikely to bring an immediate strategic shift in the bilateral dialogue, which is particularly lacking in political dynamics, its long-run promises can help to foster such dynamics. The project, if successful, can help Pakistan to establish a peaceful domestic environment and subsequently promote the country’s fresh image to reverse its soft power losses in Europe and beyond. This paper investigates contemporary Pakistan–EU relations, which have so far attracted little attention from international relations scholars. It presents the bilateral dynamics in the context of the CPEC, which is an unprecedented investment by China in Pakistan. The paper concludes by shedding light on the differences between China’s and the EU’s strategies vis-à-vis Pakistan. Despite the fact that the study focuses on one particular South Asian state, it can serve as a case study for the comparative analysis of China’s and the EU’s presence in third countries, especially those that, like Pakistan, have joined the Belt and Road Initiative.
  • Topic: International Relations, Economics, European Union, Belt and Road Initiative (BRI)
  • Political Geography: Pakistan, China, Europe, South Asia, Asia
  • 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: Aymeric Ortmans, Fabien Tripier
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: This paper studies how the announcement of the ECB’s monetary policies stopped the spread of the COVID-19 pandemic to the European sovereign debt market. We show that up to March 9, the occurrence of new cases in euro area countries had a sizeable and persistent effect on 10-year sovereign bond spreads relative to Germany: 10 new confirmed cases per million people were accompanied by an immediate spread increase of 0.03 percentage points (ppt) that lasted 5 days, for a total increase of 0.35 ppt. For periods afterwards,the effect falls to near zero and is not significant. We interpret this change as an indicator of the success of the ECB’s March 12 press conference, despite the “we are not here to close spreads” controversy. Our results hold for the stock market, providing further evidence of the effectiveness of the ECB’s March 12 announcements in stopping the financial turmoil. A counterfactual analysis shows that without the shift in the sensitivity of sovereign bond markets to COVID-19, spreads would have surged to 4.2% in France, 12.5% in Spain, and 19.5% in Italy by March 18, when the ECB’s Pandemic Emergency Purchase Programme was finally announced.
  • Topic: Debt, Economics, International Political Economy, Markets, Central Bank, COVID-19, Banking
  • Political Geography: Europe
  • Author: Gunther Schnabl
  • Publication Date: 10-2019
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Twenty years after the introduction of the euro, the European Monetary Union (EMU) is at its crossroads. Following the outbreak of the European financial and debt crisis in 2008, the European Central Bank (ECB) took comprehensive measures to stabilize the common currency. Interest rates were cut to and below zero and several asset purchase programs have inflated the ECB balance sheet (Riet 2018). Within the European System of Central Banks, large imbalances have emerged via the TARGET2 payments system, which can be seen as quasi-unconditional credit in favor of the southern euro area countries (Sinn 2018). While the ECB terminated its asset purchase program at the end of 2018 and is expected to increase interest rates in late 2019, financial instability is reemerging. Growing uncertainty about the fiscal discipline of the Italian government has triggered a significant increase in risk premiums on Italian government bonds. In particular, in Italy and Greece, but also in Germany, bad loans and assets remain stuck in the banking systems. In the face of the upcoming downswing, European banks do not seem ready for new financial turmoil. In this fragile environment, the future path of the EMU is uncertain. To enhance the stability of the EMU, a group of German and French economists has called for a common euro area budget, for a strengthening of the European Stability Mechanism as lender of last resort for euro area countries and banks, as well as for a common European deposit insurance scheme (Bénassy-Quéré et al. 2018). In response, 154 German economists have warned against transforming the EMU into what they call a “liablity union,” which systematically undermines market principles and wealth (Mayer et al. 2018). In 2018, a French-German initative to introduce a common euro area budget faced strong opposition from a group of northern European countries as well as from Italy, symbolizing the political deadlock concerning reforms of the EMU. This article explains the different views on the institutional setting of monetary policymaking in Europe from a historical perspective. It begins with a description of the economic and monetary order in postwar Germany. It then discusses the positive implications for the European integration process and the economic consequences of the transformation of postwar German monetary order. The final section offers some economic policy recommendations.
  • Topic: Economics, History, Monetary Policy, Reform, European Union, Banks, Currency
  • Political Geography: Europe, Germany
  • 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: 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: Alvaro Leandro, Jeromin Zettelmeyer
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper explains and evaluates three proposals to create “safe assets” for the euro area based on sovereign bonds, in which sovereign risk is limited through diversification and some form of seniority. These assets would be held by banks and other financial institutions, replacing concentrated exposures to their own sovereigns. The paper focuses on three ideas: (1) to create multitranche “sovereign bond-backed securities” (SBBS), of which the senior tranche would constitute a safe asset; (2) to create a senior, publicly owned financial intermediary that would issue a bond backed by a diversified portfolio of sovereign loans (“E-bonds”); and (3) to issue sovereign bonds in several tranches and induce banks to hold a diversified pool of senior sovereign bonds (“multitranche national bond issuance”). Public attention (including public criticism) has so far focused on the first idea; the other two have not yet been seriously debated. The authors find that none of the competing proposals entirely dominates the others. SBBS do not deserve most of the criticism to which they have been subjected. At the same time, E-bonds and multitranche national bond issuance have several interesting features—including inducing fiscal discipline—and warrant further exploration.
  • Topic: Economics, Sovereign Wealth Funds, Banks, Risk
  • Political Geography: Europe, Global Focus
  • 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: Maria C. Latorre, Zoryana Olekseyuk, Hidemichi Yonezawa, Sherman Robinson
  • Publication Date: 03-2019
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper examines 12 economic simulation models that estimate the impact of Brexit (Britain’s exit from the European Union). Most of the studies find adverse effects for the United Kingdom (UK) and the EU-27. The UK’s GDP losses from a hard Brexit (reversion to World Trade Organization rules due to a lack of UK-EU agreement) range from –1.2 to –4.5 percent in most of the models analyzed. A soft Brexit (e.g., Norway arrangement, which seems in line with the nonbinding text of the political declaration of November 14, 2018, on the future EU-UK relationship) has about half the negative impact of a hard Brexit. Only two of the models derive gains for the UK after Brexit because they are based on unrealistic assumptions. The authors analyze more deeply a computable general equilibrium model that includes productivity and firm selection effects within manufacturing sectors and operations of foreign multinationals in services. Based on this latest model, they explain the likely economic impact of Brexit on a wide range of macroeconomic variables, namely GDP, wages, private consumption, capital remuneration, aggregate exports, aggregate imports, and the consumer price index.
  • Topic: Economics, World Trade Organization, Brexit, Multinational Corporations
  • Political Geography: Britain, Europe, European Union
  • 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: Felipe González, Nicolas Véron
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: China's rapid rise and unique economic system and the increasingly aggressive and disruptive US trade policy are posing an unprecedented threat to the global rules-based trading and economic system. The European Union has critical interests at stake in the current escalation, even as it has so far been comparatively spared from US trade policy belligerence and China's reactions. In this context, the European Union should adopt an independent and proactive stance, building on recent efforts and going beyond them. The European Union, even more than the United States or China, has a strategic interest in the preservation of the global rules-based order embodied by the World Trade Organization (WTO). It must play a leading role in steering WTO reform and modernization, working closely with broadly aligned third countries such as Japan and other players. It should expand its outreach beyond its immediate negotiating counterparts in both the United States and China, and leading European officials at both the EU and member state levels should work at better understanding China. While strengthening its domestic policy instruments to address new challenges, such as the screening of foreign direct investment for security purposes, the European Union must also resist its own temptations of protectionism and economic nationalism. In support of these objectives, the European Union should prepare itself for difficult decisions, which may involve revising some of its current red lines in international trade negotiations. Conversely, the European Union should stand firm on principles such as refusing one-sided agreements and rejecting abusive recourse to national security arguments in trade policies. The European Parliament, in working with the European Council and the European Commission, will have a critical role to play in steering the European Union through these challenging times.
  • Topic: International Relations, Economics, Trade Wars, Trade Policy
  • Political Geography: China, Europe, Asia, North America, United States of America, European Union
  • Author: Alvaro Leandro, Jeromin Zettelmeyer
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper explains and evaluates three proposals to create “safe assets” for the euro area based on sovereign bonds, in which sovereign risk is limited through diversification and some form of seniority. These assets would be held by banks and other financial institutions, replacing concentrated exposures to their own sovereigns. The paper focuses on three ideas: (1) to create multitranche “sovereign bond-backed securities” (SBBS), of which the senior tranche would constitute a safe asset; (2) to create a senior, publicly owned financial intermediary that would issue a bond backed by a diversified portfolio of sovereign loans (“E-bonds”); and (3) to issue sovereign bonds in several tranches and induce banks to hold a diversified pool of senior sovereign bonds (“multitranche national bond issuance”). Public attention (including public criticism) has so far focused on the first idea; the other two have not yet been seriously debated. The authors find that none of the competing proposals entirely dominates the others. SBBS do not deserve most of the criticism to which they have been subjected. At the same time, E-bonds and multitranche national bond issuance have several interesting features—including inducing fiscal discipline—and warrant further exploration.
  • Topic: Economics, Regional Integration, Risk, Fiscal Policy
  • Political Geography: Europe
  • Author: John Wilkinson
  • Publication Date: 02-2019
  • Content Type: Working Paper
  • Institution: Max Planck Institute for the Study of Societies
  • Abstract: New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have giv- en NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociol- ogy of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.
  • Topic: Economics, Globalization, Sociology, Capitalism
  • Political Geography: Europe, Germany, Central Europe
  • Author: Anne De Tinguy, Annie Daubenton, Olivier Ferrando, Sophie Hohmann, Jacques Lévesque, Nicolas Mazzuchi, Gaïdz Minassian, Thierry Pasquet, Tania Sollogoub, Julien Thorez
  • Publication Date: 02-2019
  • Content Type: Special Report
  • Institution: Centre d'Etudes et de Recherches Internationales
  • Abstract: Regards sur l’Eurasie. L’année politique est une publication annuelle du Centre de recherches internationales de Sciences Po (CERI) dirigée par Anne de Tinguy. Elle propose des clefs de compréhension des événements et des phénomènes qui marquent de leur empreinte les évolutions d’une région, l’espace postsoviétique, en profonde mutation depuis l’effondrement de l’Union soviétique en 1991. Forte d’une approche transversale qui ne prétend nullement à l’exhaustivité, elle vise à identifier les grands facteurs explicatifs, les dynamiques régionales et les enjeux sous-jacents.
  • Topic: Defense Policy, Corruption, Democratization, Economics, Health, International Security, Natural Resources, Conflict, Multilateralism, Europeanization, Political Science, Regional Integration
  • Political Geography: Russia, Europe, Ukraine, Caucasus, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Armenia, Azerbaijan, Turkmenistan
  • Author: Ioannis Salavrakos
  • Publication Date: 08-2019
  • Content Type: Journal Article
  • Journal: Journal of Military and Strategic Studies
  • Institution: Centre for Military, Security and Strategic Studies
  • Abstract: he paper challenges the view that the fall of France in June 1940 is attributed to military errors of the French High Command and with the brilliant German offense in the Ardennes. The paper highlights that the French security strategy after the end of World War I failed because the country lacked the economic basis to implement its strategy. Thus the paper argues that the French endorsed an internal and external balancing strategy against Germany. The internal balancing strategy was associated with the ability of France to sustain powerful armed forces and obviously this was associated with high defense spending and a strong economy. The second part was associated with external balancing which was associated with the creation of alliances in Eastern Europe in order to block any German expansion. Again this was associated with strong economic relations between France and these states. This strategy was implemented during the 1919-1929 period however after the global economic crisis erupted the deterioration of the French economy made the continuation of this strategy impossible. Thus France was forced to follow a defensive strategy at the military level and the privileged bilateral economic relations with Eastern European countries were abolished and Germany replaced France as the major economic and trading partner of these states.
  • Topic: Economics, Regional Cooperation, Military Strategy, World War II
  • Political Geography: United Kingdom, Europe, France, Germany
  • Author: Ioannis Salavrakos
  • Publication Date: 12-2019
  • Content Type: Journal Article
  • Journal: Journal of Military and Strategic Studies
  • Institution: Centre for Military, Security and Strategic Studies
  • Abstract: The intellectual aspiration of the paper is to highlight the economic forces, which played an immense role in the wars in which Greece participated during the 1909-1923 period. These were four major conflicts: The two Balkan wars of 1912-1913 against the Ottoman Empire and Bulgaria; the First World War (1914-1918) and the Greek-Turkish war of 1919-1922. The tragic period started with Greek victories and ended with the greatest defeat of the modern Greek state. Although these conflicts were different, there is a clear nexus between them. In the Greek as well as the international bibliography, the majority of studies highlight the strategic, tactical, operational, diplomatic, psychological dimensions of the conflicts of the period, as well as, the personal motives of political and military leaders. Under this intellectual framework, the economic forces of the conflict are marginalized by most academics. The final conflict of the period is primarily known as the ‘Campaign of Asia-Minor’ in the Greek bibliography, whereas in the Turkish bibliography it is considered as ‘the Great Patriotic War.’ Thus in this article we aim to demonstrate that the conflicts of the period are connected and also that the Greek defeat of 1922 was the outcome of a chain of miscalculations which the Greek side has made, but above all it was the nexus of limited economic resources, diplomatic errors and wrong tactical decision making in the front. The structure of the article is as follows: The first section highlights the concept of ‘Megali Idea,’ which defined Greek foreign and defence policy during the 1844-1923 period. This section highlights the crucial developments of the 1909-1919 decade just before the war of the 1919-1922 period and demonstrates that the war developments were directly associated with those of the previous decade period. Thesecondsection analyses the strategic and tactical errors by the Greek side during the conflict and associates them with the economic forces. The third section highlights the Turkish tactical, economic and diplomatic advantages and demonstrates how these were associated to economic power. The fourth section provides an analysis based on the options, which the Greek side had but failed to materialize. Conclusions follow. (We point out that all the dates are with the new Gregorian calendar versus the old Julian calendar).
  • Topic: Economics, Military Strategy, Military Affairs, Conflict, Mobilization
  • Political Geography: Europe, Turkey, Greece, Balkans, Ottoman Empire
  • Author: Małgorzata Pawłowska, Melchior Szczepanik
  • Publication Date: 07-2019
  • Content Type: Special Report
  • Institution: The Polish Institute of International Affairs
  • Abstract: ND won the election with 39.9% of the votes. The governing left-wing Syriza took 31.5% while 8.1% voted for the Movement for Change (KINAL), a coalition built around PASOK, the main left-wing party before the last economic crisis.
  • Topic: Economics, Government, Politics, Elections
  • Political Geography: Europe, Greece
  • 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: Alicia Garcia-Herrero, Jianwei Xu
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Bruegel
  • Abstract: China’s economic ties with Russia are deepening. Meanwhile, Europe remains Russia’s largest trading partner, lender and investor. An analysis of China’s ties with Russia, indicate that China seems to have become more of a competitor to the European Union on Russia’s market. Competition over investment and lending is more limited, but the situation could change rapidly with China and Russia giving clear signs of a stronger than ever strategic partnership.
  • Topic: Economics, Markets, Bilateral Relations, Governance, Investment, Exports
  • Political Geography: Russia, China, Europe, Eurasia, Asia
  • 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
  • Author: Özgün Sarimehmet Duman
  • Publication Date: 09-2019
  • Content Type: Journal Article
  • Journal: Uluslararasi Iliskiler
  • Institution: International Relations Council of Turkey (UİK-IRCT)
  • Abstract: This article offers an inquiry into the increasing importance of privatisation policies in the European Union (EU). It evaluates the emphasis on international competitiveness and market efficiency to offer a comparative analysis of commodification, marketisation, liberalisation and privatisation policies in the pre- and post-crisis EU. It states that the EU introduced new mechanisms to explicitly promote privatisation policies in its member states after the Eurozone crisis. The article concludes that the EU’s lead in privatisation has functioned as a disciplinary mechanism for the member states to introduce and implement extensive privatisation policies. The EU has tended to consolidate neoliberalism through privatisation after the Eurozone crisis.
  • Topic: Economics, Privatization, Financial Crisis, European Union, Neoliberalism
  • Political Geography: Europe
  • Author: Saliha Metinsoy
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Centre for Global Political Economy, University of Sussex
  • Abstract: Why does the International Monetary Fund (IMF) assign more stringent labor conditions in some cases and not others? This paper argues that the Fund’s bureaucratic organizational culture and neoliberal economic beliefs dictate its interpretation of international economics and predict the stringency of labor conditions in its programs. Particularly, the Fund staff envisage that lower unit labor costs would indirectly increase competitiveness, boost exports, and contribute to the balance of payments in fixed exchange rate regimes, where currency depreciation is not possible. To this end, the Fund assigns more stringent labor conditions in fixed regimes compared to floating ones. To test this theory, the paper uses a mixed method. It firstly demonstrates the association between exchange rate regimes and the stringency of labor conditions in Fund programs in a global sample. It then complements this analysis by showing particular organizational habits and beliefs at work in two cases, namely in Latvia and Hungary in 2008 under their respective IMF programs. Furthermore, the paper shows that distribution of income away from labor groups (i.e. lowered wages) is in fact by design in IMF programs in an attempt to increase competitiveness in fixed regimes.
  • Topic: Economics, International Monetary Fund, International Development, Neoliberalism
  • Political Geography: Europe, Eastern Europe, Hungary, Latvia
  • Author: Michael Kende1, Nivedita Sen
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
  • Abstract: E-commerce has long been recognized as a driver of growth of the digital economy, with the potential to promote economic development. The benefits come from lower transaction costs online, increased efficiency, and access to new markets. The smallest of vendors can join online marketplaces to increase their sales, while larger companies can use the Internet to join global value chains (GVCs), and the largest e-commerce providers are now among the most valuable companies in the world.
  • Topic: Development, Economics, Science and Technology, World Trade Organization, Digital Economy, Economic Growth, Free Trade
  • Political Geography: United States, Europe, Switzerland, Global Focus
  • Author: Keith C. Smith
  • Publication Date: 02-2019
  • Content Type: Journal Article
  • Journal: American Diplomacy
  • Institution: American Diplomacy
  • Abstract: President Boris Yeltsin’s imperial views on the “near abroad,” and President Vladimir Putin’s regarding Russia’s alleged “sphere of influence” has left Russia considerably weaker than it would have been otherwise, and the world much more endangered.
  • Topic: Arms Control and Proliferation, Cold War, Diplomacy, Economics, Politics, Armed Forces, Reform, Gas
  • Political Geography: Russia, Europe, Ukraine, Soviet Union, Germany, Estonia, Latvia, United States of America, Baltic States
  • Author: Tarek A. Hassan, Laurence van Lent, Stephan Hollander, Ahmed Tahoun
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Using tools from computational linguistics, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the share of discussions in quarterly earnings conference calls on costs, benefits, and risks associated with the UK’s intention to leave the EU. Using this approach, we identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate the effects of these different kinds of Brexit exposure on firm-level outcomes. We find that concerns about Brexit-related uncertainty extend far beyond British or even European firms. US and international firms most exposed to Brexit uncertainty have lost a substantial fraction of their market value and have reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects of Brexit (the first moment), should it come to pass. Most prominently, firms expect difficulties resulting from regulatory divergence, reduced labor mobility, trade access, and the costs of adjusting their operations post-Brexit. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet had significant effects on firm actions.
  • Topic: Economics, Political Economy, Regional Cooperation, Brexit, Global Political Economy, Economic Policy
  • Political Geography: Britain, United States, United Kingdom, Europe, European Union
  • Author: Joseph Halevi
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This paper analyzes the early stages of the formation of the Common Market. The period covered runs from the end of WW2 to 1959, which is the year in which the European Payments Union ceased to operate. The essay begins by highlighting the differences between the prewar political economy of Europe and the new dimensions and institutions brought in by the United States after 1945. It focuses on the marginalization of Britain and on the relaunching of French great power ambitions and how the latter determined, in a very problematical way, the European complexion of France. Because of France’s imperial aspirations, France, not West Germany, emerged as the politically crisis prone country of Europe acting as a factor of instability thereby jeopardizing the process of European integration, Among the large European nations, Germany and Italy appear, for opposite economic reasons, as the countries most focused on furthering integration. Germany expressed the strongest form of neomercantilism while Italy the weakest.
  • Topic: Economics, Political Economy, Global Political Economy, World War II, Common Market
  • Political Geography: United States, Europe, Germany, Global Focus
  • Author: Joseph Halevi
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: This essay deals with the contradictory dynamics that engulfed Europe from 1959 to 1979, the year of the launching of the European Monetary System. It focuses on how the macroeconomic frame- work of stop-go policies in the 1960s ended up privileging external – intra-European - exports at the expense of domestic demand. The paper offers a very tentative explanation as to why stop-go policies, by weakening domestic demand, did not put an end to the to the ‘long boom’ earlier as they should have. The French crisis of 1968-69 leading to the demise of De Gaulle is discussed at length, as is the renewal of the German export drive in the wake of a nominal revaluation of the D-Mark in 1969. Finally, the revival of labor struggles in Italy in the same year is put in the context of the structural weaknesses of the Italian economy as analyzed by the late Marcello de Cecco. The conclusion is that European countries had neither the political culture nor the institutional mechanisms to coordinate mutually advantageous policies. Their so-called cooperation was an exercise in establishing hegemony while defending the interests specific to the dominant economic groups of each country. The essay then deals with the formation of the EMS as an expression of efforts to establish and enforce economic dominance.
  • Topic: Economics, Markets, History, Monetary Policy, Capitalism, Common Market, Macroeconomics
  • Political Geography: Europe
  • Author: Joseph Halevi
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: The paper highlights the position of German authorities, showing that they were quite lucid about the fundamental weaknesses inherent in a process that separated monetary from fiscal policies by giving priority to the centralization of the former. Instead of repeating the well known critiques levelled against the EMU – for which readers are referred to the unsurpassed treatment by Stiglitz, the essay highlights the splintering of Europe in the way in which it has unfolded during the 1990s and in the first decade of the present millennium. In particular the early economic and political origins of the terminal crisis of Italy are located between the late 1980s and the 1990s. France is shown to belong increasingly to the so-called European periphery by virtue of a weakening industrial structure and persistent balance of payments deficits. The paper argues that France regains its central role by political means and through its weight as an active nuclear military power centered on maintaining its imperial interests and posture especially in Africa. The first decade of the present millennium is portrayed as the period in which a distinct German economic area had been formed in the midst of Europe with a strong drive to the east with an increasingly powerful gravitational pull towards the People’s Republic of China.
  • Topic: Economics, International Political Economy, Political Economy, History, Macroeconomics
  • Political Geography: Africa, China, Europe, Asia, Germany, Global Focus
  • Author: Servaas Storm
  • Publication Date: 04-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Using macroeconomic data for 1960-2018, this paper analyzes the origins of the crisis of the ‘post-Maastricht Treaty order of Italian capitalism’. After 1992, Italy did more than most other Eurozone members to satisfy EMU conditions in terms of self-imposed fiscal consolidation, structural reform and real wage restraint—and the country was undeniably successful in bringing down inflation, moderating wages, running primary fiscal surpluses, reducing unemployment and raising the profit share. But its adherence to the EMU rulebook asphyxiated Italy’s domestic demand and exports—and resulted not just in economic stagnation and a generalized productivity slowdown, but in relative and absolute decline in many major dimensions of economic activity. Italy’s chronic shortage of demand has clear sources: (a) perpetual fiscal austerity; (b) permanent real wage restraint; and (c) a lack of technological competitiveness which, in combination with an overvalued euro, weakens the ability of Italian firms to maintain their global market shares in the face of increasing competition of low-wage countries. These three causes lower capacity utilization, reduce firm profitability and hurt investment, innovation and diversification. The EMU rulebook thus locks the Italian economy into economic decline and impoverishment. The analysis points to the need to end austerity and devise public investment and industrial policies to improve Italy’s ‘technological competitiveness’ and stop the structural divergence between the Italian economy and France/Germany. The issue is not just to revive demand in the short run (which is easy), but to create a self-reinforcing process of investment-led and innovation-driven process of long-run growth (which is difficult).
  • Topic: Economics, Capitalism, Global Political Economy, Macroeconomics, Eurozone
  • Political Geography: Europe, Italy
  • Author: Sandra E. Black, Jesse Rothstein
  • Publication Date: 01-2019
  • Content Type: Policy Brief
  • Institution: Economics for Inclusive Prosperity (EfIP)
  • Abstract: While private provision of goods often yields the efficient outcome, there are a number of goods that are not efficiently provided in the private market. Here, we outline two such situations: investments in child care and education, and insurance against risks created by business cycles, poor health, and old age. Because private markets work poorly for these goods, and the costs of market failure are large, standard economic reasoning implies a significant role for government provision. The reduction in economic insecurity that this would bring could help to improve political stability as well, by reducing the stakes that people perceive in discussions of trade, immigration, technological change, and countercyclical policy (Inglehart and Norris, 2016). Many observers (e.g, Hacker, 2018) have pointed to economic anxiety as a potential contributor to populist reactions in the U.S. and many European countries; a public sector that acts to reduce the risk that households face could ameliorate this, generating political spillovers and improving the state of the country more broadly.
  • Topic: Economics, Education, Health, Health Care Policy, Children, Economic Policy, Economic Theory
  • Political Geography: United States, Europe
  • Author: Carl Death
  • Publication Date: 09-2019
  • Content Type: Research Paper
  • Institution: Brown Journal of World Affairs
  • Abstract: Can protest really make a difference? Can social movements change any- thing? Do campaigns like those for fossil fuel divestment rapidly snowballing across campuses, cities, churches, and institutional investors in North America, Europe, and elsewhere have any real impact on global political economies of energy? This article argues that the answer to all of these questions is a qualified “yes.” The fossil fuel divestment campaign is a specific manifestation of environ- mental protest, which, since emerging in 2011, has changed some things and has the potential to change others more profoundly.1 Considering the case of the fossil fuel divestment campaign in detail can illuminate important insights about the role of protest in contemporary global politics. Protest movements can impact the world, as evidenced by both the fossil fuel divestment campaign and longer histories of other divestment movements that have contributed to significant struggles for structural change.
  • Topic: Climate Change, Economics, Natural Resources, Protests, Global Warming, Fossil Fuels
  • Political Geography: Europe, North America
  • Author: Stefan Jestl
  • Publication Date: 12-2019
  • Content Type: Working Paper
  • Institution: The Vienna Institute for International Economic Studies (WIIW)
  • Abstract: This paper examines the impact of income inequality on consumption-related household indebtedness at the household level. Using the first wave of the Eurosystem Household Finance and Consumption Survey data, the analysis sheds light on heterogeneous effects across euro area countries. The results suggest a positive impact of income inequality on consumption-related household indebtedness in a small sample of countries. We further employ a multilevel regression model to also take country’s macroeconomic characteristics into account, such as credit market and welfare state design. In this setting, we find an overall positive impact of income inequality on consumption-related household indebtedness.
  • Topic: Economics, Inequality, Economic Inequality, Macroeconomics
  • Political Geography: Europe
  • Author: José Pablo Martínez Romera
  • Publication Date: 12-2019
  • Content Type: Working Paper
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: The measurements of external image carried out in recent years to guide the "country-brand" strategies could have the potential to be used as economic intelligence tools. This way, public authorities would be able to foresee variations in those variables linked to the preferences of foreign citizens, such as investments, exports, tourism or immigration; helping them to design politics in these fields.
  • Topic: Economics, Intelligence
  • Political Geography: Europe, Spain
  • Author: Anand Menon
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: UK in a Changing Europe, King's College London
  • Abstract: The Prime Minister has set out a means of escaping the Brexit stalemate, but his new Brexit proposals have, as yet, not managed to overcome the impasse. What, though, would the plan mean for the UK economy? That is the question we seek to answer in what follows. As ever, we have been lucky enough to be able to draw on the skills and expertise of some of the leading experts in the field. The bulk of the work was done by Hanwei Huang, Jonathan Portes and Thomas Sampson, with contributions from Matt Bevington and Jill Rutter. Hanwei and Thomas used the LSE’s Centre for Economic Performance trade model to carry out the modelling. We hope you find the report interesting and informative. Brexit is clearly about more than economics, but the economic impact of leaving the EU nevertheless merits careful scrutiny.
  • Topic: Economics, Politics, European Union, Brexit, Boris Johnson
  • Political Geography: United Kingdom, Europe
  • Author: Kate Hooper
  • Publication Date: 04-2019
  • Content Type: Special Report
  • Institution: Migration Policy Institute (MPI)
  • Abstract: For much of the 20th century, Spain was a country of emigration, with millions of its nationals moving to countries in the Americas and in North and Western Europe. In the 1980s, however, immigration to Spain began to pick up. Since then, the country has developed a legal framework for labor migration that features the active involvement of employers, trade unions, and regional governments. This report examines Spanish migration policies for low- and middle-skilled workers, and how these have changed as a result of fluctuating demand for immigrant labor. It also offers a profile of the country’s immigrant population, highlighting how Spain’s relationship with countries outside the European Union are reflected in its labor migration pathways and citizenship policies. The economic crisis that began in 2008 and its lingering effects—including pervasive high unemployment rates, particularly among young people—have put strain on this relatively young immigration system. Certain mechanisms, including parts of the Collective Management System that allows employers to recruit groups of workers, remain paused. And austerity cuts to national immigrant integration funding have left it to autonomous communities, provinces, and municipalities to take the lead in this area. Still, the country's approach to admitting workers from non-EU countries could inspire innovation at the EU level. In the years to come, top priorities for Spanish immigration policymakers will likely include addressing ongoing irregular migration, the arrival of increasing numbers of Venezuelans fleeing economic and political crisis, and—as sectors such as construction recover—how to adapt entry pathways and labor protections accordingly.
  • Topic: Economics, Migration, Labor Issues, Financial Crisis, Employment
  • Political Geography: Europe, Spain
  • Author: Dany Bahar, Hillel Rapoport, Cem Özgüzel, Andreas Hauptmann
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: During the early 1990s Germany offered temporary protection to over 600,000 Yugoslavian refugees fleeing war. By 2000, many had been repatriated. We exploit this natural experiment to investigate the role of migrants in post-conflict reconstruction in the former Yugoslavia, using exports as outcome. Using confidential social security data to capture intensity of refugee workers to German industries –and exogenous allocation rules for asylum seekers within Germany as instrument– we find an elasticity of exports to return migration between 0.08 to 0.24. Our results are stronger in knowledge-intensive industries and for workers in occupations intensive in analytical and managerial skills.
  • Topic: Conflict Resolution, Economics, International Political Economy, Migration, Refugee Issues, Refugees, Exports
  • Political Geography: Europe, Yugoslavia, Germany
  • Author: Anthony Edo, Jacques Melitz
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: We perform the first econometric test to date of the influences of inflows of precious metals and population growth on the “Great Inflation” in Europe following the discovery of the New World. The English evidence strongly supports the near-equivalent importance of both influences. For 1500-1700, silver is the only relevant precious metal in the estimates. The study controls for urbanization, government spending, mortality crises and climatic changes. The series for inflows of the precious metals into Europe from America and European mining are newly constructed based on the secondary sources.
  • Topic: Economics, Government, International Political Economy, Urbanization, Inflation
  • Political Geography: Europe, England
  • Author: Fabien Tripier, Jérôme Héricourt, Thomas Grjebine
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: This paper investigates the role of sectoral reallocations in the divergence of productivity in Europe, based on a database for 33 sectors and 14 countries between 1995 and 2015. Using the contribution of sectoral productivity growth to Total Factor Productivity (TFP) at the country level, we highlight that variations in the relative size of sectors - less productive sectors growing relatively to more productive ones - have been at the origin of variable productivity losses in main European countries. Parallel to this divergence, European countries experienced heterogeneous real estate price dynamics, which took the form, in some economies, of massive boom-bust cycles. We investigate real estate shocks as a potential source of sectoral reallocations through a collateral mechanism. These shocks turn out to be a strong driver of productivity divergence between European countries.
  • Topic: Economics, International Political Economy, Real Estate , Productivity
  • 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: Virginie Coudert, Cécile Couharde, Carl Grekou, Valérie Mignon
  • Publication Date: 03-2019
  • Content Type: Working Paper
  • Institution: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Abstract: We assess cross-country heterogeneity within the eurozone and its evolution over time by measuring the distances between the equilibrium exchange rates’ paths of member countries. These equilibrium paths are derived from the minimization of currency misalignments, by matching real exchange rates with their economic fundamentals. Using cluster and factor analyses, we identify two distinct groups of countries in the run-up to the European Monetary Union (EMU), Greece being clearly an outlier at that time. Comparing the results with more recent periods, we find evidence of rising dissimilarities between these two sets of countries, as well as within the groups themselves. Overall, our findings illustrate the building-up of macroeconomic imbalances within the eurozone before the 2008 crisis and the fragmentation between its member countries that followed.
  • Topic: Economics, International Political Economy, Monetary Policy, European Monetary Union
  • Political Geography: Europe
  • Author: Daniel S. Hamilton
  • Publication Date: 01-2018
  • Content Type: Special Report
  • Institution: Center for Transatlantic Relations
  • Abstract: For decades the partnership between North America and Europe has been a steady anchor in a world of rapid change. Today, however, the transatlantic partnership itself has become unsettled and uncertain. Nowhere is this clearer than in the economic sphere. Voters across the United States and many parts of Europe have grown skeptical of open markets. Concerns about stagnant wages, widening income inequality, and pockets of stubbornly high unemployment have combined with fears of automation, digitization and immigration to swell economic insecurities on each side of the Atlantic. The election of Donald Trump as U.S. president and the decision by British citizens to leave the European Union have only added to transatlantic uncertainties. This state of division and mutual inwardness threatens the prosperity and ultimately the position of North America and Europe in the global economy and the broader global security system. This study charts possible paths by which Americans and Europeans can navigate this strange new world. It describes how the transatlantic economy is being transformed by domestic political uncertainties, the digital revolution, the changing nature of production, and the diffusion of global power and intensified global competition. It takes account of shifting trade relations among the United States, Canada and Mexico through NAFTA, and what Brexit and the rise of non-EU Europe may mean for the European Union and for transatlantic partnership.
  • Topic: Economics, International Trade and Finance, Treaties and Agreements, Partnerships, Brexit, Economic Growth, Trump, NAFTA
  • Political Geography: United Kingdom, Europe, Canada, North America, Mexico, United States of America, European Union
  • Author: Simon Kyte, David Goodger, Helen McDermott
  • Publication Date: 12-2018
  • Content Type: Commentary and Analysis
  • Institution: Oxford Economics
  • Abstract: A “no-deal” Brexit would cause a 5% drop in UK outbound travel and tourism trips in 2020, because of the stifled economic backdrop and impact of a weaker pound. Ireland and Spain would be the hardest hit from fewer UK visitors. In contrast, the weaker pound could mean that UK tourism inflows are 4% higher in a “no-deal” scenario, provided there is no travel disruption. But lower levels of domestic tourism mean that we would expect UK travel and tourism GDP to be 2% lower than our baseline forecast in 2020.
  • Topic: Diplomacy, Economics, Regional Cooperation, Tourism, European Union, Brexit
  • Political Geography: United Kingdom, Europe
  • Author: François Vallancourt, Jesús Ruiz-Huerta, Violeta Ruiz Almendral
  • Publication Date: 01-2018
  • Content Type: Working Paper
  • Institution: Fundación Alternativas
  • Abstract: Since 2009 Autonomous Communities have started to set their own Personal Income Tax rates for the first time. This is both the result of the 2009 rule change and the difficulties to get other public revenues during the years of the Great Recession. We will examine what the Autonomous Communitie s explicit choices have been and see how they compare to what Canadian Provinces have done. Before 2000, these provinces other than Québec were required to use a surtax approach that saw provinces collect personal income tax as a% of federal taxes (tax on tax) using the same number of brackets, boundaries of brackets and progressivity structure. Since 2000 they can and have chosen to use a tax on income approach as noted above. Thus they must make similar choices to those of Autonomous Communities for their Personal Income Tax since 2000.
  • Topic: Economics, Global Recession, Tax Systems, Recovery
  • Political Geography: Europe, Canada, Spain, North America, Western Europe
  • Author: Sandro Knezović
  • Publication Date: 02-2018
  • Content Type: Working Paper
  • Institution: Institute for Development and International Relations (IRMO)
  • Abstract: The European strategic landscape has changed dramatically over the course of the last decade. The post-Cold War mantra about the obsolescence of conventional threats in the wider European space proved to be short-sighted with developments at its eastern �lanks, while security dysfunctions in the MENA region and their immanent consequences for the safety of European citizens have loaded a heavy burden on compromise-building and decision-making in the �ield of the Common Security and Defence Policy (CSDP) of the EU. Furthermore, the approach of the new US administration to European security and the strategic consequences of Brexit have changed the wider framework in which security of 'the Old Continent' is to be determined, hence stimulating European leaders to rethink European security in a strive for strategic autonomy of their own. The very ambitiously phrased EU Global Strategy that came out in June 2016, served as both catalyst and umbrella document for such an endeavour. However, in order to achieve measurable progress in responding to contemporary security challenges, it was clear that the EU needs to develop a structural way for member states to do jointly what they were not capable of doing at the national level. This is so especially in the environment in which China, Russia and Saudi Arabia are championing the defence spending, right after the US, while European states are signi�icantly trailing behind. The fact that the EU collectively is the second largest military investor and yet far from being among the dominant military powers only emphasises the burning issue of ef�iciency of military spending and the level of interoperability among member states’ armies. High-level fragmentation of the European defence market and the fact that defence industries are kept in national clusters is clearly contributing to that. The reality on the ground is obviously challenging traditional methods of co-operation that operate mainly in ‘national boxes’ and calling for a paradigm change in the wider policy context of CSDP. However, it remains to be seen to which extent will this new security environment actually be able to push the European defence policy context over the strict national boundaries.
  • Topic: Security, Economics, Military Strategy, European Union
  • Political Geography: United States, China, Europe, Middle East, Asia, Saudi Arabia
  • Author: Oskar J. Chmiel
  • Publication Date: 01-2018
  • Content Type: Journal Article
  • Journal: Polish Political Science Yearbook
  • Institution: Polish Political Science Association (PPSA)
  • Abstract: In times of increasing significance for national policies which support inter- national economic cooperation, a special role is played by state trade support institutions (TSIs). This paper investigates whether such TSIs can be said to operate effectively, through an analysis of one essential element of the support provided to domestic entrepreneurs, namely export recommendations. The recommendations provided by Polish TSIs in respect of Turkey is employed as a case study. The theory of comparative advantage along with a neo- institutional perspective provide the conceptual framing for this analysis, in conjunction with both desk research, document analysis, and selected economic indices. Factors such as trade potential, comparative advantages, and the competitiveness of selected product groups exported by Polish firms to Turkey were also taken into account. The findings largely indi- cate that TSI export recommendations are adequate, and the majority of the recommended industries demonstrated considerable sales opportunities. Nevertheless, some discrepancies were also noted, which should be an issue for further investigation by both researchers and TSI analysts. Furthermore, the case study in this paper demonstrates that the choices within economic promotion policy – despite its partition between variously-oriented TSIs - were made on the basis of economic rationality.
  • Topic: Economics, Nationalism, Trade, Trade Support Institutions
  • Political Geography: Europe, Poland
  • Author: Dimitris Keridis
  • Publication Date: 10-2018
  • Content Type: Journal Article
  • Journal: Uluslararasi Iliskiler
  • Institution: International Relations Council of Turkey (UİK-IRCT)
  • Abstract: The migration and refugee crisis that erupted in 2015 landed recession riven Greece with a series of humanitarian, political, social, and financial as well as foreign policy and security challenges. Following a near disastrous open-borders policy steeped in leftist ideological parochialism, Athens aligned itself closely with Germany in support of the EU-Turkey deal that drastically reduced the human flows from Turkey into the EU and invited NATO naval forces to help monitor the implementation of the agreement. This paper is structured around two parts: the first part describes the immigration and refugee crisis itself, from a global, European and national-Greek perspective; the second part analyzes the risks to and policy responses of Greece and how they relate to the country’s overall geostrategic position, at a time when Europe is being redefined as it struggles to respond to a multitude of challenges.
  • Topic: NATO, Economics, Migration, Refugees
  • Political Geography: Europe, Turkey, Greece
  • Author: Marilena Koppa
  • Publication Date: 10-2018
  • Content Type: Journal Article
  • Journal: Uluslararasi Iliskiler
  • Institution: International Relations Council of Turkey (UİK-IRCT)
  • Abstract: This article explores the role of Greece in the Balkans since the end of Communism and the impact of the sovereign debt crisis that followed. Since the beginning of the 1990s, while Greece failed to accomplish its vocation at the political level, at the level of the economy the country acted as an important regional actor. The article examines the dynamics of the Greek crisis on the Balkan economies and analyses the major challenges for Greece in this new reality. At the same times, it tries to identify the triple crisis faced currently by Greece: at the level of credibility and status, at the level of mediation between the region and the EU and, finally, at the level of the gradual peripherisation of the country.
  • Topic: Debt, Economics, Migration, European Union, Crisis Management
  • Political Geography: Europe, Greece, Balkans
  • Author: Constantine A. Papadopoulos
  • Publication Date: 10-2018
  • Content Type: Journal Article
  • Journal: Uluslararasi Iliskiler
  • Institution: International Relations Council of Turkey (UİK-IRCT)
  • Abstract: The central argument of this essay is that, in order to understand the reasons behind the Greek economy’s inability to recover sooner from its 8-year recession, analysis must focus on the institutional, political and cultural traits of the country rather than take a primarily “economistic” approach and simply blame “excessive austerity” and/or the euro. In fact, it will be argued that Greece’s positive performance under the euro (until government actions derailed the economy) is generally underappreciated, suggesting that if the country’s institutional weaknesses are addressed, the economy will grow. If they are not, the country’s long-term economic potential will almost certainly remain unfulfilled.
  • Topic: Debt, Economics, Financial Crisis, Reform, Global Financial Crisis, Austerity
  • Political Geography: Europe, Greece
  • Author: Marek Dabrowski
  • Publication Date: 04-2018
  • Content Type: Special Report
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: In the last decade, advanced economies, including the euro area, experienced deflationary pressures caused by the global financial crisis of 2007-2009 and the anti-crisis policies that followed—in particular, the new financial regulations (which led to a deep decline in the money multiplier). However, there are numerous signs in both the real and financial spheres that these pressures are disappearing. The largest advanced economies are growing up to their potential, unemployment is systematically decreasing, the financial sector is more eager to lend, and its clients—to borrow. Rapidly growing asset prices signal the possibility of similar developments in other segments of the economy. In this new macroeconomic environment, central banks should cease unconventional monetary policies and prepare themselves to head off potential inflationary pressures.
  • Topic: Economics, Monetary Policy, Economic Growth, Inflation, Macroeconomics, Unemployment
  • Political Geography: Europe, Global Focus, European Union
  • Author: Grzegorz Poniatowski
  • Publication Date: 03-2018
  • Content Type: Special Report
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: The objective of this paper is to derive the characteristics of an effective fiscal governance framework, focusing on the incentives that ensure a commitment to the fiscal rules. We study this problem with the use of econometric tools, complementing this analysis with formal modelling through the lens of a dynamic principal-agent framework. Our study shows that both economic and institutional factors play an important role in incentivising countries’ fiscal efforts. Fiscal balances are affected not only by the economic cycle, but, among others, by the level of public debt and the world economic situation. We find that the existence of numerical fiscal rules, their strong legal entrenchment, surveillance mechanisms, and credible sanctions binding the hands of governments have a significant impact on curbing deficits. The relationship between the Commission and European Union (EU) Member States (MS), where the EU authorities act as a collective principal that designs contracts for MS, has elements in common with the assumptions of the principal-agent framework. These are: asymmetry of information, moral hazard, different objectives, and the ability to reward or punish the principal. We use a dynamic principal-agent model and show that to ensure good fiscal performance, indirect benefits should be envisaged for higher levels of fiscal effort. In order to account for the structural differences of exerting effort by different MS, it is efficient to adjust fiscal effort to the level of indebtedness. To ensure a commitment to the rules, MS with difficulties conducting prudent fiscal policies should be required to exert less effort than the MS with more modest levels of debt. The FIRSTRUN project is a European Union funded multinational research project that investigates the need for fiscal policy coordination in the EU.
  • Topic: Debt, Economics, Regional Cooperation, European Union, Fiscal Policy
  • Political Geography: Europe, European Union
  • Author: Grzegorz Poniatowski, Krzysztof Głowacki
  • Publication Date: 01-2018
  • Content Type: Special Report
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: This report, The Significance of the Tobacco Product Manufacturing to Poland’s Economy, presents the results of the first comprehensive analysis of the impact of tobacco product manufacturing on the Polish economy. The comprehensiveness of the study results from the subject range, covering the sector’s entire value chain: from tobacco cultivation, through processing of raw tobacco and manufacturing of tobacco products, to the distribution and sale of ready products. The report includes an in-depth analysis of current conditions, discusses the challenges facing the sector and attempts to estimate the development of the branches of the economy related to manufacturing of tobacco products in the future. The main purpose of this research was to analyze the economic significance of manufacturing of tobacco products. The economic effect of consumption of tobacco products was only a peripheral element of the research. Conducting such complex research was made possible by advanced methodology. The analytical work was built on three pillars: analysis of existing data, expert interviews and a computable general equilibrium (CGE) model expanded to include production and consumption of tobacco products.
  • Topic: Economics, Commodities, Fiscal Policy, Manufacturing, Tobacco
  • Political Geography: Europe, Poland
  • Author: Anders Åslund
  • Publication Date: 01-2018
  • Content Type: Special Report
  • Institution: Center for Social and Economic Research - CASE
  • Abstract: Over time, the necessary economic reforms have become so obvious that they have become politically possible in most places. The great problem has become the establishment of real property rights. By and large, Central and Eastern Europe have managed to accomplish that not least thanks to support from the European Union. In the former Soviet Union, however, only Georgia succeeded in that endeavor. The big question today is whether Ukraine will manage to do so, or whether it will be caught in a low-economic-growth trap. The three main elements that are needed are independent courts, autonomous prosecutors, and a law-abiding law enforcement, while no old secret police structures should be allowed to sabotage them.
  • Topic: Corruption, Democratization, Economics, Reform, Elections
  • Political Geography: Europe, Ukraine, Eastern Europe
  • Author: Vandana Gyanchandani
  • Publication Date: 08-2018
  • Content Type: Working Paper
  • Institution: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
  • Abstract: Three methodologies are used to enforce labour and environmental commitments in the US and EU trade agreements: cooperative, sanctions and composite. In-depth analysis of the scope of commitments, level of protection, institutional framework as well as types of informal and formal dispute processes elucidates the pros and cons of such methodologies. Sanctions approach weakens cooperation by misjudging the complexity of domestic policy adjustments through transnational governance. Cooperative mechanism within the NAAEC's composite design emerges as the best approach: Submission on Enforcement Matters (SEM). As it provides for an independent secretariat supported by civil society group and factual records as a sunshine remedy to review citizen submissions. However, the process is constrained by political clout, lack of managerial capacity and legal dilemmas around informal lawmaking (IN-LAW) procedures.
  • Topic: Economics, Environment, International Cooperation, International Trade and Finance, Labor Issues, Sustainable Development Goals, Global Political Economy
  • Political Geography: United States, Europe, Global Focus, European Union
  • Author: Robert Cox
  • Publication Date: 09-2018
  • Content Type: Journal Article
  • Journal: American Diplomacy
  • Institution: American Diplomacy
  • Abstract: The Europe-US relationship is based on two pillars: a belief in and a promotion of a rules-based international order; a shared set of common values. Both of these pieces of mortar are crumbling. But the partners are not yet in the divorce court. Meanwhile Europeans increasingly sense that their familiar and otherwise comfortable world has gone.
  • Topic: International Relations, Economics, European Union, Brexit
  • Political Geography: Europe, North America, United States of America
  • Author: Douglas Ajram, Charlie Harris, Christopher McKenna
  • Publication Date: 09-2018
  • Content Type: Case Study
  • Institution: Oxford Centre for Global History
  • Abstract: There is no better testament to the longevity of Berry Bros. & Rudd than its rich history of, and great capacity for, reinvention. The family firm began life as a grocery store in 1698, founded by a woman now known only as the Widow Bourne. It is now Britain’s oldest wine and spirits merchant, and one of the nation’s ten oldest family-run businesses, boasting six Masters of Wine – the most of any company in the world – as well as two Royal Warrants, a mark of recognition for tradespeople that provide goods or services to the British royal family.
  • Topic: Economics, International Trade and Finance, Political Economy, Food, Capitalism
  • Political Geography: Europe
  • Author: Ben Skarratt, Scarlett Mansfield, Christopher McKenna
  • Publication Date: 08-2018
  • Content Type: Case Study
  • Institution: Oxford Centre for Global History
  • Abstract: In the second half of the eighteenth century, a new garment entered European fashion. Noted for being exceptionally soft, warm, and light, it bore intricate patterns unlike anything Europeans had encountered before or had produced domestically. This product, a woollen shawl, originated in a region that would become so famous for its textiles that its name would pass into Western lexicons as a toponym for its woollen produce: Kashmir. The principal motif found on these shawls, known in India as the Buta, or kairi, would come to be called, in its altered form, Paisley in the West. Not only was the garment practical and aesthetically pleasing, its oriental origins, clear status as a luxury item, texture, and patterning enabled it to permeate European high fashion. Patronage by Empress Josephine of France, and later Queen Victoria, solidified this popularity. By the turn of the nineteenth century, Kashmir and the West regularly traded these textiles. A European industry, aimed at copying Indian originals, also thrived. The next six decades witnessed fervent European consumption of the shawl. This rapid consumption resulted in a host of changes to the production and designs of the garments. While the history of the shawl and its relationship to the West has been subject to distortion, hyperbole, and fiction, recent scholarship has made considerable headway in demystifying information about these products. It is now possible to relate how the Kashmir shawl first came into production, its emergence onto the world stage as a luxury textile, and its status as the principal medium by which the Buta/ Paisley motif entered into the pantheon of historic fashion designs.
  • Topic: Economics, Globalization, International Trade and Finance, Capitalism, Commodities
  • Political Geography: Europe, India
  • Author: Mark E. Spicka
  • Publication Date: 01-2018
  • Content Type: Book
  • Institution: Berghahn Books
  • Abstract: Through an examination of election campaign propaganda and various public relations campaigns, reflecting new electioneering techniques borrowed from the United States, this work explores how conservative political and economic groups sought to construct and sell a political meaning of the Social Market Economy and the Economic Miracle in West Germany during the 1950s.The political meaning of economics contributed to conservative electoral success, constructed a new belief in the free market economy within West German society, and provided legitimacy and political stability for the new Federal Republic of Germany.
  • Topic: Cold War, Economics, Elections, European Union, Political stability, Propaganda
  • Political Geography: Europe, Germany, West Germany, Central Europe
  • Author: Nuria G. Rabanal
  • Publication Date: 12-2018
  • Content Type: Journal Article
  • Journal: Journal on International Security Studies (RESI)
  • Institution: International Security Studies Group (GESI) at the University of Granada
  • Abstract: The aim of this work is to show the energy situation of the European Union (EU) across the analysis of its energy policy focusing in energy security. The facts show the important role of Russia as energy player and its influence in the design of energy strategy of the EU. As a reply of the strong dependency of Russian imports, European institutions have developed a strategy structured in two dimensions; internal and external one with the aim to guarantee the international cooperation with third countries, the increasing of internal energy market integration, the promotion of energy save, and the search of effective alternatives to conventional sources. The EU Strategy has designed a joint of measures that includes the increasing in the efficient use of conventional sources combined with higher levels in energy Investment, Innovation and technological Development (I+D+I), and the promotion of renewables. This is the way to change the classical energy model to a new one more compatible with the environment and a sustainable economic growth but also that implies a significant reduction of energy dependence.
  • Topic: Security, Economics, Energy Policy, European Union
  • Political Geography: Russia, Europe, Eurasia
  • Author: Christopher Smart
  • Publication Date: 11-2017
  • Content Type: Working Paper
  • Institution: Council on Foreign Relations
  • Abstract: The recent collapse in the U.S.-Russia relationship has roots that stretch back to fundamental misunderstandings at the end of the Cold War. Western democracies have watched with dismay as tightening political controls in Russia have throttled domestic pluralism, while Moscow’s roughshod foreign policy and military tactics have driven its neighbors into submission or open hostility. Russia has bemoaned what it sees as Western arrogance and a stubborn refusal to recognize its security concerns and great-power status. Today, Russia’s annexation of Crimea, support of Syrian repression, and, above all, meddling in the U.S. presidential election have shattered any desire in Washington—at least outside the Oval Office—to search for common ground. Indeed, amid congressional logjams on nearly every issue, overwhelming bipartisan majorities passed a stiffer sanctions regime. The narrative in Moscow, meanwhile, paints a consistent picture of Washington actively rallying Europeans to expand footholds around Russia’s borders with an ultimate goal of regime change in the Kremlin itself. In spite of President Donald J. Trump’s apparent eagerness to improve relations, deepening resistance across the political spectrum makes any progress fanciful at this stage.Whether either side understands how to get relations back on track remains uncertain. What is clear is that neither side wants to. Deep-seated U.S. mistrust and an unyielding Russian government seem likely to confine the bilateral relationship to a series of sour exchanges and blustery confrontations for now. Yet one persistent weakness will ultimately limit Russia’s foreign agenda: an economy that is likely to fall increasingly behind those of its major neighbors and partners. For now, Russia has largely learned to tolerate Western economic sanctions, and its companies have found ways to live with restricted access to finance. Without reform and economic integration with the West, however, Russian influence will drift toward the margins of global diplomacy. Russia’s economy will atrophy from a combination of hyperconcentrated decision-making, continuing dependence on hydrocarbons, and persistent financial isolation. Core goals of Russia’s foreign policy will steadily recede from view, including important elements of the economic agenda with its immediate neighbors, the European Union and China. Though a snapback of oil prices would undoubtedly delay any day of reckoning, even large new inflows of petro-profits will not fundamentally close the widening gap with major partners.
  • Topic: Foreign Policy, Economics, International Cooperation, Military Strategy
  • Political Geography: Russia, United States, Europe, North America
  • Author: Jefferey Bleich
  • Publication Date: 03-2017
  • Content Type: Journal Article
  • Journal: The Ambassador's Review
  • Institution: Council of American Ambassadors
  • Abstract: We grew up in a century defined by the Second Industrial Revolution. Today, that revolution is being eclipsed by a Digital Revolution. The uncertainty that we are experiencing in every aspect of our society is the same disorientation that occurred between 1870 and 1910 when the first Industrial Revolution ended and a second one began. It eventually vaulted nations like America and Australia to the top of the world order. But it also produced the Gilded Age, labor unrest, mass migrations, the Great Depression and two world wars. That era is closing, and we are now experiencing the new great dis­ruption that Silicon Valley promised. Digital technology—while solving crucial problems—is creating or compounding others. It has outstripped the capacity of government to control it and amplified the collapse of public confidence in democratic governments. It has inflamed rivalries between those who benefit and those who don’t. It has undermined standards—of altruism and of civility—that are necessary for us to find common ground. To appreciate this, we have to see where we’ve come from. A hundred and fifty years ago, we went through the same thing. Changes in technology revolutionized media, global integration and demographics. The changes were profound. In 1879, during a three-month period, both the electric light and a workable internal combustion engine were invented. Those two inventions alone produced over the next 40 years a dizzying number of new technologies. The telephone, phonograph, motion pictures, cars, airplanes, elevators, X-rays, electric machinery, consumer appliances, highways, suburbs and supermarkets—all were created in a 40-year burst from 1875 to 1915. Technology fundamentally transformed how people live. We’ve known for a while that the structures created by this Second Industrial Revolution were running their course, at least in advanced economies, and that it was being replaced by a new revolution, the digital revolution. Recently, the pace of these advances has started to build exponen­tially, and the pressure has been mounting. Everyone who has had to throw out their CD player for a DVD player for an iPod for an iPhone for Spotify knows what I mean. Further, the pace at which our world is being changed just keeps accelerating. Every year a new massive theory of disruption emerges: “the digital economy,” “the social network,” “the Internet of things,” “sharing economy” and “big data.” Last year, “machine learning”—where machines teach themselves things we do not know—was the buzzword. The word in Silicon Valley this year is “singularity”—where our species itself is altered by technology (gene-editing, bionics, artificial intelligence), creating a new hybrid species.
  • Topic: Economics, Education, Digital Economy, Higher Education, Digital Revolution
  • Political Geography: United States, Europe, Australia, North America
  • Author: Michael Emerson
  • Publication Date: 03-2017
  • Content Type: Commentary and Analysis
  • Institution: Centre for European Policy Studies
  • Abstract: A team of economists at CEPS was commissioned by the Policy Department on Economic and Scientific Policies for the Committee on Internal Market and Consumer Protection to assess the likely economic impact of Brexit on EU27, together with some scenarios for the terms of the UK’s secession. For the EU 27, the losses were found to be virtually insignificant, and hardly noticeable in the aggregate. For the UK, however, the losses could be highly significant, with various estimates running up to ten times greater as a share of GDP. Impacts on some member states – in particular Ireland – and some sectors in the EU27 could be more pronounced than the average for the EU27. Michael Emerson is Associate Senior Research Fellow, Matthias Busse is Researcher, Mattia Di Salvo is Research Assistant, Daniel Gros is Director and Jacques Pelkmans is Senior Research Fellow – all at CEPS.
  • Topic: Economics, Brexit, Global Political Economy
  • Political Geography: Europe
  • Author: Hans Martin Sieg
  • Publication Date: 03-2017
  • Content Type: Working Paper
  • Institution: Center for Transatlantic Relations
  • Abstract: This paper is part of CTR's Working Paper Series: "Eastern Voices: Europe's East Faces an Unsettled West." Since Moldova's November 2014 election, the country's image has changed drastically from the “success story” of the EU´s Eastern Partnership to that of a “captured state.” Moldova's politics continue to be defined by corruption and vested interests, which take advantage of weak state institutions and public administration, an ineffective judiciary and law enforcement agencies. This environment has enabled hostile takeovers of financial companies, often through concealed offshore operations, for criminal purposes, money-laundering schemes and a spectacular banking fraud, which was uncovered in autumn 2014. Low incomes have prompted hundreds of thousands of Moldovans to leave the country in search of a better life. Rivalries for political power, control over institutions, and economic assets have generated growing crises within different ruling coalitions, resulting in rapid changeover in governments, the break-up of major political parties and the formation of new parliamentary majorities with precarious democratic legitimacy. All of these factors have subjected Moldova to an unrelenting series of governmental, economic, financial and social crises since early 2015. The deeper causes of these crises can be traced to much earlier developments, however, and are deeply rooted in local structures.
  • Topic: International Relations, Corruption, Development, Economics, Reform, Elections, Geopolitics
  • Political Geography: Russia, Europe, Moldova, European Union
  • Author: Petr Kratochvil, Karel Svoboda
  • Publication Date: 12-2017
  • Content Type: Book
  • Institution: Institute of International Relations Prague
  • Abstract: Amid the ever-higher tensions between the West and Russia, the Czechs became more active on the political level in 2017, with the highlight being the official visit of President Zeman to Russia. However, several structural factors prevented this flurry of political activity from turning into tangible political or economic results. First, the ongoing sanction regime and Russia’s aggressive stance in the neighbourhood rendered any deeper economic or political co-operation difficult to achieve. Second, the focus on internal issues (the then upcoming presidential elections in both countries) made foreign policy a mere pawn in the domestic political games. Third, while President Zeman confirmed his role as one of the most vocal advocates of President Putin, the continuing polarisation of the public opinion as well as the re-grouping of Czech anti-Kremlin forces limited his influence on the day-to-day Czech policy vis-à-vis Russia.
  • Topic: Foreign Policy, Economics, Politics, Domestic politics
  • Political Geography: Russia, Europe, Czech Republic
  • Author: Štěpánka Zemanová, Miloslav Machoň
  • Publication Date: 12-2017
  • Content Type: Book
  • Institution: Institute of International Relations Prague
  • Abstract: In 2017, the domestic support of the Czech Republic’s external economic relations (EER) maintained its continuity and corresponded with the recent developments in the world economy and the EU’s proactive policies in the internal market. It derived from the recent updates of the Export Strategy of the Czech Republic for 2012–2020 and the Map of Global Export Opportunities 2016/17 and profited from the improved relations between the relevant stakeholders and their ever-extending activities as well as newly introduced export and investment promotion tools. The period was successful in terms of performance as the Czech Republic achieved both an extraordinary increase in exports and a remarkable rate of GDP growth. This was combined with a growing emphasis on sustainable development. On the other hand, several questions relating to the institutional architecture remained. The adaptation of the system to the needs of a 21st century small open economy will be a challenge, and its possible failure one of the main risks in the future.
  • Topic: Foreign Policy, Economics, European Union
  • Political Geography: Europe, Czech Republic
  • Author: Pete Collings, Osman Ismail
  • Publication Date: 01-2017
  • Content Type: Policy Brief
  • Institution: Oxford Economics
  • Abstract: Oxford Economics were appointed by the Gatwick Growth Board (GGB) to provide an independent assessment of Gatwick Airport's local, regional and national impact. The GGB was established in 2016 to examine the economic and social consequences of Gatwick Airport’s future plans for growth and expansion. The resulting study represents the most detailed assessment to date of Gatwick's economic footprint, and will provide evidence for the GGB's strategic work over the coming year. It finds that Gatwick Airport’s operations and services deliver very significant economic benefits for the UK, with its national GDP contribution reaching £5.3 billion in 2016, equivalent to 0.3% of the UK's total. Some 43 million passenger journeys passed through Gatwick during that year, underlining its position as a key component of national infrastructure. In addition, the report measures the Airport's wider impact, beyond its direct transport benefits to passengers and airlines. At the centre of a complex network of supply chains, Gatwick Airport enables activity throughout the Gatwick Diamond area, and beyond. The salaries sustained by employment at the Gatwick site also provide an invaluable contribution to the local consumer economy. The study also explores the potential for the Airport to deliver an even greater economic contribution in future.
  • Topic: Economics, Tourism, Transportation, Airline Companies
  • Political Geography: United Kingdom, Europe
  • Author: Andy Logan, Alice Gambarin
  • Publication Date: 04-2017
  • Content Type: Research Paper
  • Institution: Oxford Economics
  • Abstract: In total, UWE Bristol is estimated to have supported 8,280 jobs in the West of England, or one in every 79 people in employment in the area. Some 59 percent was as a result of the University’s expenditure, with the remainder of jobs stimulated by additional students’ and their visitors’ spending. The University contributed £400.1 million in gross value added to the West of England economy. This is equivalent to 1.3 percent of the local economy. As a result of this activity, in 2014/15, the University, its employees, additional students, and their visitors supported a £88.7million tax contribution to the Exchequer. The University had a major impact on businesses and the local economy through its role in the supply of graduate talent. A significant proportion of the thousands of graduates from the University annually are employed within the city-region, including many of those attracted to study at UWE Bristol from elsewhere.
  • Topic: Economics, Education, Tax Systems, Local, Higher Education, Public Service
  • Political Geography: United Kingdom, Europe
  • Author: Yakov Ben-Haim, Maria Demertzis, Jan Willem Van Den End
  • Publication Date: 02-2017
  • Content Type: Working Paper
  • Institution: Bruegel
  • Abstract: This paper applies the info-gap approach to the unconventional monetary policy of the Eurosystem and so takes into account the fundamental uncertainty on inflation shocks and the transmission mechanism. The outcomes show that a more demanding monetary strategy, in terms of lower tolerance for output and inflation gaps, entails less robustness against uncertainty, particularly if financial variables are taken into account. Augmenting the Taylor rule with a financial variable leads to a smaller loss of robustness than taking into account the effect of financial imbalances on the economy. However, in some situations, the augmented model is more robust than the baseline model. A conclusion from our framework is that including financial imbalances in the monetary policy objective does not necessarily increase policy robustness, and may even decrease it
  • Topic: Economics, International Political Economy, International Trade and Finance
  • Political Geography: Europe
  • Author: Andre Sapir, Dirk Schoenmaker, Nicolas Veron
  • Publication Date: 02-2017
  • Content Type: Policy Brief
  • Institution: Bruegel
  • Abstract: The United Kingdom’s exit from the European Union creates an opportunity for the remaining EU27 to accelerate the development of its financial markets and to increase its resilience against shocks. Equally, Brexit involves risks for market integrity and stability, because the EU including the UK has been crucially dependent on the Bank of England and the UK Financial Conduct Authority for oversight of its wholesale markets. Without the UK, the EU27 must swiftly upgrade its capacity to ensure market integrity and financial stability. Furthermore, losing even partial access to the efficient London financial centre could entail a loss of efficiency for the EU27 economy, especially if financial developments inside the EU27 remain limited and uneven.
  • Topic: Economics, International Political Economy, International Trade and Finance, Political stability, Brexit
  • Political Geography: Britain, Europe
  • Author: Zsolt Darvus
  • Publication Date: 01-2017
  • Content Type: Policy Brief
  • Institution: Bruegel
  • Abstract: The ‘poverty’ target set by the European Commission aims to lift “over 20 million people out of poverty” between 2008 and 2020 in the EU27. Progress to date against this target has been disappointing. Why is it so hard to reach the Europe 2020 ‘poverty’ target? What does the poverty indicator actually measure?
  • Topic: Economics, International Political Economy, International Trade and Finance, Poverty
  • Political Geography: Europe