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29841. Being Special: The Rise of Super Clubs in European Football

Author:
Matt Andrews
Publication Date:
01-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Professional football clubs are ubiquitous in Europe. Every small to medium sized city has one. But most cities do not have an F.C. Barcelona or Bayern Munich or Manchester United. These are among the ‘super clubs’ of Europe: they win more games, attract more supporters, and make more money than other clubs. These clubs were not always the juggernauts one sees today, however. This paper looks at how they emerged. It tells more of an economic story than a sporting one, recounting a narrative similar to that one might tell about the emergence of successful multinational companies. According to this narrative, super clubs rise by producing increasingly more complex products because of expanding productive capabilities, providing growing opportunities for economic spillovers in the process. As indicated, this narrative focuses particularly on the ‘capabilities’ that have helped super clubs emerge. This focus draws on an emerging theory about economic complexity, which is used to frame the paper and is briefly introduced in section two (following an introduction to super clubs). The theory posits that production results from the creative combination of economic capabilities—or know-how. Some products require few common capabilities, are produced by everyone, and have relatively low value: like the average football club. Other products require many capabilities (including some that are rare), have high value, and are produced by a select group: like the super club. This theory is used to suggest two hypotheses about how football clubs become super: First, clubs do not become super by just producing better versions of the same products (a successful football team). Instead, over time, these clubs produce more complex, higher-value, globally consumed products. Second, clubs become super by accumulating new capabilities (or know-how) over time, manifest in new skills and people accessed through a range of ‘catalyst capabilities’ that source the skills. The catalyst capabilities include engagement mechanisms (through which skills are located and contracted), capital, infrastructure, and adaptive leadership. These hypotheses are put to the test in this study.
Topic:
Economics, Sports, and Economic Complexity
Political Geography:
Europe and European Union

29842. Value Subtraction in Public Sector Production: Accounting vs Economic Cost of Primary Schooling in India

Author:
Lant Pritchett and Yamini Aiyar
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We combine newly created data on per student government expenditure on children in government elementary schools across India, data on per student expenditure by households on students attending private elementary schools, and the ASER measure of learning achievement of students in rural areas. The combination of these three sources allows us to compare both the "accounting cost" difference of public and private schools and also the "economic cost"—what it would take public schools, at their existing efficacy in producing learning, to achieve the learning results of the private sector. We estimate that the "accounting cost" per student in a government school in the median state in 2011/12 was Rs. 14,615 while the median child in private school cost Rs. 5,961. Hence in the typical Indian state, educating a student in government school costs more than twice as much than in private school, a gap of Rs. 7,906. Just these accounting cost gaps aggregated state by state suggests an annual excess of public over private cost of children enrolled in government schools of Rs. 50,000 crores (one crore=10 million) or 0.6 percent of GDP. But even that staggering estimate does not account for the observed learning differentials between public and private. We produce a measure of inefficiency that combines both the excess accounting cost and a money metric estimate of the cost of the inefficacy of lower learning achievement. This measure is the cost at which government schools would be predicted to reach the learning levels of the private sector. Combining the calculations of accounting cost differentials plus the cost of reaching the higher levels of learning observed in the private sector state by state (as both accounting cost differences and learning differences vary widely across states) implies that the excess cost of achieving the existing private learning levels at public sector costs is Rs. 232,000 crores (2.78% of GDP, or nearly US$50 billion). It might seem counterintuitive that the total loss to inefficiency is larger than the actual budget, but that is because the actual budget produces such low levels of learning at such high cost that when the loss from both higher expenditures and lower outputs are measured it exceeds expenditures.
Topic:
Economics, Education, Government, Children, and Youth
Political Geography:
South Asia and India

29843. From Financial Repression to External Distress: The Case of Venezuela

Author:
Carmen M. Reinhart and Miguel Angel Santos
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Recent work has supported that there is a connection between domestic debt level and sovereign default on external debt. We examine the potential linkages in a case study of Venezuela from 1984 to 2013. This unique example encompasses multiple financial crises, cycles of liberalization and policy reversals, and alternative exchange rate arrangements. The Venezuelan experience reveals a nexus among domestic debt, financial repression, and external vulnerability. Unlike foreign currency-denominated debt, debt in domestic currency may be reduced through financial repression, a tax on bondholders and savers producing negative real interest rates. Using a variety of methodologies we estimate the magnitude of the tax from financial repression. On average, this financial repression tax (as a share of GDP) is similar to those of OECD economies, in spite of much higher domestic debt-to-GDP ratios in the latter. The financial repression "tax rate" is significantly higher in years of exchange controls and legislated interest rate ceilings. In line with earlier literature on capital controls, our comprehensive measures of capital flight document a link between domestic disequilibrium and a weakening of the net foreign asset position via private capital flight. We suggest these findings are not unique to the Venezuelan case.
Topic:
Debt, Finance, Capital Flows, Inflation, and Interest Rates
Political Geography:
South America and Venezuela

29844. Why Are Indian Children So Short?

Author:
Seema Jayachandran and Rohini Pande
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
India's child stunting rate is among the highest in the world, exceeding that of many poorer African countries. In this paper, we analyze data for over 174,000 Indian and Sub-Saharan African children to show that Indian firstborns are taller than African firstborns; the Indian height disadvantage emerges with the second child and then increases with birth order. This pattern persists when we compare height between siblings, and also holds for health inputs such as vaccinations. Three patterns in the data indicate that India's culture of eldest son preference plays a key role in explaining the steeper birth order gradient among Indian children and, consequently, the overall height deficit. First, the Indian firstborn height advantage only exists for sons. Second, an Indian son with an older sibling is taller than his African counterpart if and only if he is the eldest son. Third, the India-Africa height deficit is largest for daughters with no older brothers, which reflects that fact that their families are those most likely to exceed their desired fertility in order to have a son.
Topic:
Health, Poverty, Children, and International Development
Political Geography:
Africa, South Asia, and India

29845. Pyramid Capitalism: Cronyism, Regulation, and Firm Productivity in Egypt

Author:
Ishac Diwan, Philip Keefer, and Marc Schiffbauer
Publication Date:
03-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Using an original database of 469 politically connected firms under the Mubarak regime in Egypt, we explore the economic effects of cronyism. Previous research has shown that cronyism is lucrative. We address numerous questions raised by this research. First, do crony firms receive favorable regulatory treatment? We find that they do: connected firms are more likely to benefit from trade protection, energy subsidies, access to land, and regulatory enforcement. Second, does regulatory capture account for the high value of connected firms? In our sample, connected firms exhibit superior corporate performance relative to unconnected firms and this is systematically related to regulatory capture. Energy subsidies and trade protection, for example, account for the higher profits of politically connected firms. Third, do crony firms hurt growth? We exploit a natural experiment setting to show that the entry of politically connected firms into previously unconnected sectors slows employment growth and skews the distribution of employment towards less productive smaller firms.
Topic:
Economics, Economy, Business, Networks, and Cronyism
Political Geography:
Middle East, North Africa, and Egypt

29846. The Power of Transparency: Information, Identification Cards and Food Subsidy Programs in Indonesia

Author:
Abhijit Banerjee, Rema Hanna, Jordan C. Kyle, Benjamin A. Olken, and Sudarno Sumarto
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Can governments improve aid programs by providing information to beneficiaries? In our model, information can change how much aid citizens receive as they bargain with local officials who implement national programs. In a large-scale field experiment, we test whether mailing cards with program information to beneficiaries increases their subsidy from a subsidized rice program. Beneficiaries received 26 percent more subsidy in card villages. Ineligible households received no less, so this represents lower leakage. The evidence suggests that this effect is driven by citizen bargaining with local officials. Experimentally adding the official price to the cards increased the subsidy by 21 percent compared to cards without price information. Additional public information increased higher-order knowledge about eligibility, leading to a 16 percent increase in subsidy compared to just distributing cards. In short, increased transparency empowered citizens to reduce leakages and improve program functioning.
Topic:
Government, Humanitarian Aid, Food, Political and institutional effectiveness, and Social Policy
Political Geography:
Indonesia and Southeast Asia

29847. Harvard Journal of Middle Eastern Politics and Policy: Spring 2015

Author:
Jennifer Rowland, Nada Zohdy, Brian Katulis, Michael Wahid Hanna, Faysal Itani, Muhammad Y. Idris, Joelle Thomas, Tamirace Fakhoury, Farouk El-Baz, Kheireddine Bekkai, Amira Maaty, and Sarah McKnight
Publication Date:
01-2015
Content Type:
Journal Article
Journal:
Harvard Journal of Middle Eastern Politics and Policy
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Our Spring 2015 volume captures the troubling developments of the past year in the Middle East and North Africa. In 2014, the Syrian conflict that has so beguiled the international community spilled over into Iraq, with the swift and shocking rise of the Islamic State in Iraq and al-Sham (ISIS). ISIS is causing the ever-complex alliances in the region to shift in peculiar ways. In Iraq, US airstrikes provide cover for Iranian-backed militias fighting ISIS; while in Yemen, the United States supports a Saudi intervention against a different Iranianbacked armed group that has taken control of the Yemeni capital. Meanwhile, simmering political disputes in Libya escalated into a full-blown civil war, sparking concern in neighboring Egypt, where the old authoritarian order remains in control despite the country’s popular revolution. The Gulf countries contemplate their responses to record-low oil prices, continuing negotiations between the United States and Iran, and the threat of ISIS. And Tunisia remains one of the region’s only bright spots. In November, Tunisians voted in the country’s first free and fair presidential elections. This year’s Journal brings new analysis to many of these complex events and broader regional trends. We begin with the positive: an exclusive interview with former Tunisian Prime Minister Mehdi Jomaa. In this year’s feature articles: Brian Katulis zooms out to assess the Obama administration’s record in the Middle East over the past six years; Michael Wahid Hanna refutes the notion that the Iraqi and Syrian borders will need to be redrawn as a result of ISIS’ takeover; and Faysal Itani analyzes the US coalition’s strategy to defeat ISIS, arguing that it cannot succeed without empowering Sunni civilians. Muhammed Idris and Joelle Thomas turn to economics in an assessment of the United Arab Emirates’ efforts to go green. Tamirace Fakhoury points out a blind spot in the study of the Middle East and North Africa: how large diaspora communities affect political dynamics in their home countries. Farouk El-Baz takes us to Egypt, where he proposes a grand economic plan to pull the country out of poverty and set it on a path toward longterm growth. From Egypt, we move west to the oft-neglected country of Algeria, where Kheireddine Bekkai argues for more inclusive education policies on national identity. Finally, Amira Maaty comments on the region’s desperate need for robust civil societies, while Sarah McKnight calls for improvements in Jordan’s water policies.
Topic:
Security, Civil Society, Development, Environment, Migration, History, Natural Resources, Social Movement, Islamic State, Economy, Political stability, Arab Spring, Military Intervention, Identities, and Diversification
Political Geography:
Middle East, Algeria, North Africa, Syria, Egypt, Jordan, Tunisia, United Arab Emirates, and United States of America

29848. Ballots, Bullets, and Bargains: American Foreign Policy and Presidential Elections

Author:
Michael H. Armacost
Publication Date:
08-2015
Content Type:
Book
Institution:
Columbia University Press
Abstract:
Drawing on twenty-four years of experience in government, Michael H. Armacost explores how the contours of the U.S. presidential election system influence the content and conduct of American foreign policy. He examines how the nomination battle impels candidates to express deference to the foreign policy DNA of their party and may force an incumbent to make wholesale policy adjustments to fend off an intra-party challenge for the nomination. He describes the way reelection campaigns can prod a chief executive to fix long-neglected problems, kick intractable policy dilemmas down the road, settle for modest course corrections, or scapegoat others for policies gone awry. Armacost begins his book with the quest for the presidential nomination and then moves through the general election campaign, the ten-week transition period between Election Day and Inauguration Day, and the early months of a new administration. He notes that campaigns rarely illuminate the tough foreign policy choices that the leader of the nation must make, and he offers rare insight into the challenge of aligning the roles of an outgoing incumbent (who performs official duties despite ebbing power) and the incoming successor (who has no official role but possesses a fresh political mandate). He pays particular attention to the pressure for new presidents to act boldly abroad in the early months of his tenure, even before a national security team is in place, decision-making procedures are set, or policy priorities are firmly established. He concludes with an appraisal of the virtues and liabilities of the system, including suggestions for modestly adjusting some of its features while preserving its distinct character.
Topic:
Foreign Policy, Elections, and American Presidency
Political Geography:
United States
Publication Identifier:
9780231539135
Publication Identifier Type:
ISBN

29849. English Identity and Radical Politics

Publication Date:
10-2015
Content Type:
Research Paper
Institution:
Mile End Institute, Queen Mary University of London
Abstract:
The question of when a sense of cultural Englishness became salient, and what kind of collective interest the English feel is at stake in the domestic union, has become the focus of considerable academic debate as well as political interest.
Topic:
Nationalism, Politics, Domestic Politics, Identities, and International Community
Political Geography:
Britain and United Kingdom

29850. Migration Management of Syrians in Turkey in the framework of the EU’s Migration Policy

Author:
Turkish Economic and Social Studies Foundation (TESEV)
Publication Date:
11-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Turkish Economic and Social Studies Foundation – TESEV and Friedrich Naumann Foundation have organized, in collaboration with the Mersin Chamber of Commerce and Industry a conference titled “Migrant Management of Syrians in Turkey in the Framework of the EU Migration Policy” on October 20th, 2015 in Mersin. The opening remarks were made by Burhanettin Kocamaz, the Mayor of the Mersin Metropolitan Mucipality; Şerafettin Aşut, the Chairman of the Mersin Chamber of Commerce and Industry; and Prof. Dr. Aydın Uğur the Chairman of the Executive Board of TESEV. During three panels entitled as Migrant management in Turkey in the framework of the EU migration policy, Management of Syrian migrants in Turkey, and Being a Syrian migrant in Turkey, public authorities, academics, and Syrians have discussed the challenges and policy recommendations to improve Syrians’ lives and migrant management in Turkey.
Topic:
Migration, Refugee Issues, Refugee Crisis, and Syrian War
Political Geography:
Turkey, Middle East, and Syria

29851. Local Recommendations for Access to Justice in Turkey

Author:
Bürge Elvan Erginli, Gamze Nur Çelik, Koray Özdil, and Seda Akço Bilen
Publication Date:
11-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
The report “Local Recommendations for Access to Justice in Turkey” was developed under the project Enhancing Civic Participation and Confidence Building in the Judicial Reform Process and run in partnership with the Turkish Economic and Social Studies Foundation (TESEV) and Turkije Instituut, based in Leiden, Netherlands. The main objectives of the project are to identify, at a local level, the problems that prevent citizens in Turkey from accessing justice in judicial processes, to support local actors serving in the field of justice and law in turning identified problems into significant policy recommendations, and thus, to develop local recommendations for judicial reform.
Topic:
Environment, Law, Courts, and Justice
Political Geography:
Turkey, Middle East, and Netherlands

29852. Promoting Dialogue and Solutions: What European Legislators Think of Turkey

Author:
Aybars Görgülü, Mehmet Ünlü, Samuel Doveri Vesterbye, and Zerrin Cengiz
Publication Date:
11-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Full membership to the European Union (EU) has been a major foreign policy aspiration for any government leading Turkey in the past three decades. Accordingly, Turkey has been a candidate for EU membership since 1999 and accession negotiations started in 2005. Despite this positive momentum, Turkey is pretty far from full membership perspective as of mid-2015. A decade after the start of the accession negotiations, both sides seem quite busy with their internal problems and the official negotiation process is left into limbo. Although the current political climate does not offer an optimistic look, Turkey’s full membership aspirations are still present. It is clear that Turkey’s membership is different from any previous accession especially due to the size and the demography of the country. However, it should be noted that Turkey deserves a fair treatment and evaluation from the Union if the membership criteria are fully met. Here we face the question of how to tackle socio-cultural prejudice and discrimination with regards to Turkey’s accession process.
Topic:
Foreign Policy, European Union, and Discrimination
Political Geography:
Europe, Turkey, Middle East, and European Union

29853. Penal Policies and Institutions in Turkey: Structural Problems and Potential Solutions

Author:
Berkay Mandıracı
Publication Date:
03-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Penitentiaries and penal policies have been one of the many areas subjected to changes in the context of the judicial reform taking place in Turkey over the last several years. Officials have been inspired to develop new policies in this field by a number of factors: the rise in the number of inmates and the resulting capacity problem; the inefficacy of outdated municipal prisons; and the need to support the resocialization of inmates through new penal policies. Efforts to increase the resocializing impact of the penal system in Turkey and the mentality transformation aiming at overcoming the historical baggage the penal system carries in Turkey are positive. However, these have not yet produced satisfactory results. This is why human rights violations in penitentiaries in Turkey are still continuing. This report argues that the general aim of the penal regime should be based on ‘resocialization’. Therefore, individuals after going through all stages of the penal process and after facing their crime, should be given the opportunity to fully participate in society again. With this perspective the report assesses the current penal reform process in Turkey and puts emphasis on the need for a holistic penal regime that focuses on resocialization of offenders in all penal stages and applies international human rights standards.
Topic:
Human Rights, Prisons/Penal Systems, Reform, Criminal Justice, and Justice
Political Geography:
Turkey and Middle East

29854. Corruption Assessment Report for Turkey

Author:
Zerrin Cengiz, Pelin Yenigün Dilek, Ezgican Özdemir, Hande Özhabeş, R. Bülent Tarhan, Ayşe Üstünel Yırcalı, and H. Ceren Zeytinoğlu
Publication Date:
02-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
he Corruption Assessment Report for Turkey is the product of the research conducted by TESEV’s Good Governance program under the Southeast European Leadership for Development and Integrity (SELDI) initiative. This report documents the agenda of the first phase of the SELDI partnership that spans 2012 through 2014. Along with presenting evidence on the degree of corruption in Turkey, the report analyzes the current legal setting and the effects of corruption on the economy. It emphasizes the importance of a free judicial system, the role of civil society, and the benefits of international collaboration in fighting corruption. The report also offers possible solutions to fighting corruption, focusing on the elements that make corruption commonplace.
Topic:
Civil Society, Corruption, Accountability, and Transparency
Political Geography:
Turkey and Middle East

29855. The EU’s Niche in the South Caucasus: Old Partners, New Challenges

Author:
Daniel Khachatryan
Publication Date:
01-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Daniel Khachatryan is a Hrant Dink Foundation fellow at the Turkish Economic and Social Studies Foundation (TESEV) within the framework of the Support to the Armenia-Turkey Normalisation Process Programme financed by the European Union. Khachatryan’s academic background includes studies at Yerevan State University, University of Oslo and Fletcher School of Law and Diplomacy, Tufts University. In this article, Khachatryan dwells upon the possible steps to be taken by the EU towars the South Caucasus in order to define its role in the region by focusing on the recent developments in Azerbaijan, Armenia and Georgia. Daniel Khachatryan, Avrupa Birliği tarafından finanse edilen ve Hrant Dink Vakfı’nın yürütmekte olduğu “Ermenistan-Türkiye Normalleşme Süreci Destek Programı” kapsamında bursiyer olarak TESEV’de çalışmaktadır. Erivan Devlet Üniversitesi, Oslo Üniversitesi ve Tufts Üniversitesi’nde eğitimini tamamlamış olan Khachatryan bu makalesinde Azerbaycan, Ermenistan ve Gürcistan’daki gelişmelere odaklanarak Avrupa Birliği’nin Güney Kafkasya’daki yeri ve rolünü tanımlamak için atması gereken muhtemel adımlara ve mekanizmalara değinmektedir. Makale yalnızca İngilizce olarak yayınlanmıştır.
Topic:
Foreign Policy, Regional Cooperation, Bilateral Relations, Territorial Disputes, European Union, and Economy
Political Geography:
Europe, Turkey, Middle East, Armenia, Azerbaijan, Georgia, and South Caucasus

29856. Research on Public Trust in the Police in Turkey

Author:
Nur Kırmızıdağ
Publication Date:
01-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Research on Public Trust in the Police in Turkey, is based on survey data collected on a large-scale sample representative of Turkey. The report provides insights on perceptions of the public with regard to effectiveness/performance, legitimacy of the police and thereby lays bare the level of trust different segments in Turkey attribute to the police. The report utilizes sophisticated statistical methods and, for the first time in Turkey comprehensive scientific models on police trust are being applied giving the opportunity to comparatively analyze the results. Thus the following questions are examined in the report: What is the level of public trust towards police? What are the main components of police trust in Turkey? In how far do police legitimacy and police effectiveness/performance affect police trust in Turkey? What are the factors influencing public’s perception of police legitimacy and effectiveness? How does public’s perception of police legitimacy and effectiveness affect cooperation with and compliance to the police? How does this perception affect public’s toleration of police misconduct? How does public perception of police legitimacy, effectiveness and trust change with regard to different demographic factors in Turkey (political affiliation, ethnic background, religious affinity etc.)?
Topic:
Security, Law Enforcement, Democracy, Legitimacy, Statistics, and Police
Political Geography:
Turkey and Middle East

29857. Effects of the Syrian Refugees on Turkey

Author:
Oytun Orhan
Publication Date:
01-2015
Content Type:
Special Report
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
TESEV Foreign Policy Program and ORSAM (Center for Middle Eastern Strategic Studies) in order to understand the effects of Syrian asylum seekers to Turkey, visited Adana, Osmaniye, Hatay, Kilis, Gaziantep, Şanlıurfa, Mersin and Kahramanmaraş respectively during four different field study trips in three months. They held series of meetings with municipalities, professional organizations, chambers of trade and industry, civil society organizations, opinion leaders, locals and Syrians. This report has been prepared in the light of the observations and data gained from these field studies.
Topic:
Civil Society, Migration, Refugees, Refugee Crisis, Syrian War, Public Policy, and Services
Political Geography:
Turkey, Middle East, and Syria

29858. The Super Survey: Two Decades of Americans’ Views on Islam & Muslims

Publication Date:
11-2015
Content Type:
Special Report
Institution:
The Bridge Initiative, Georgetown University
Abstract:
In a climate of increased suspicion and skepticism towards Islam and Muslims, polling data collected over the years reveals how Americans have come to view their country’s third-largest religious group. This Super Survey, which compiles and analyzes polling questions collected by over a dozen polling organizations from 1993 to 2014, finds that Americans remain unfamiliar with Islam; feel more coldly towards Muslims than any other religious group; and tend to see Islam as “more violent” than other religions during national debates about military action in the Middle East. Additionally, while they have been supportive of mosques in their communities, a sizeable portion has favored various measures of religious profiling. In the twenty-first century, on average, six in 10 Americans has reported that they don’t know a Muslim personally. And while a plurality of Americans has reported having favorable views of Muslims since 2000, unfavorable views have persisted, with relatively little fluctuation over time.
Topic:
Islam, Religion, Public Opinion, Ideology, and Islamophobia
Political Geography:
United States

29859. Study to quantify and analyse the VAT Gap in the EU Member States. 2015 Report

Author:
Luca Barbone, Mikhail Bonch-Osmolovsky, and Grzegorz Poniatowski
Publication Date:
10-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This report provides estimates of the VAT Gap for 26 EU Member States for 2013, as well as revised estimates for the period 2009-2012. It is a follow-up to the report “Study to quantify and analyse the VAT Gap in the EU-27 Member Statess, published in September 2013 (hereafter: 2013 Report), and to the report “2012 Update Report to the Study to Quantify and Analyse the VAT Gap in the EU-27 Member States” , published in October 2014 (hereafter: 2014 Report). As in previous reports, it was not possible to include estimates for Croatia and Cyprus, due to as-yet-incomplete national account statistics for the two countries. The VAT Gap is an indicator of the effectiveness of VAT enforcement and compliance measures, as it provides an estimate of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies as well as miscalculations. As the VAT Gap in this study is based on a top-down approach, it does not readily lend itself to be deconstructed according to industrial sectors or other criteria (territorial, professional), and can be best used as a diagnostic tool in the context of its evolution over time. As discussed in previous reports, the VAT Gap is defined as the difference between the amount of VAT actually collected and the VAT Total Tax Liability (VTTL), in absolute or percentage terms. The VTTL is an estimated amount of VAT that is theoretically collectable based on the VAT legislation and ancillary regulations. This report calculates, for each country the VTTL on the basis of national accounts, by mapping information on standard, reduced rates and exemptions onto data available on final and intermediate consumption, as well as gross fixed capital formation, from national accounts and use tables. Thus, the quality of the VAT Gap estimates depends on the accuracy and completeness of national accounts data and use tables. The year 2013 saw a continuing overall unfavourable economic environment, as the GDP of the European Union was nearly stagnant. This contributed to a slowdown of nominal final consumption and of other economic aggregates that form the basis of the Value Added Tax. Six countries applied changes to standard or reduced rates in 2013, marking a relatively stable policy environment. During 2013, the overall VAT Total Tax Liability (VTTL) for the EU-26 Member States grew by about 1.2 percent, while collected VAT revenues rose by 1.1 percent. As a result, the overall VAT Gap in the EU-26 saw an increase in absolute values of about Euro 2.8 billion, to reach Euro 168 billion. As a percentage, the overall VAT Gap stayed constant at 15.2 percent. The median VAT Gap rose by 1.6 percentage point, to reach 13.9 percent. In 2013, Member States’ estimated VAT Gaps ranged from the low of 4 percent in Finland, the Netherlands and Sweden, to the high of 41 percent in Romania. Overall, 15 Member States decreased their VAT Gap, with the largest improvements noted in Latvia, Malta and Slovakia. 11 Member States saw an increase in the VAT Gap, generally of small magnitudes, with the largest deteriorations in Estonia and Italy. This report also provides new and expanded evidence on the Policy Gap for the EU-26. The Policy Gap is an indicator of the additional VAT revenue that a Member State could theoretically collect if it applied standard rate to all consumption of goods and services supplied for consideration. We provide here estimates of the Policy Gap adjusted to take into account items that could not easily be taxed even in an “ideal” system (imputed rents, public goods, financial services). The results moderate views of the relative importance of reduced rates and exemptions in reducing the revenue potential of VAT, and suggest that better enforcement remains a key component of any strategy of improvement of the VAT system. The results of this report and the underlying data were presented to Member States in advance of publication and discussed on several occasions with the representatives of Member States. Deviating approaches and views of Member States are noted in the relevant country section in Chapter 3. The authors are grateful for the constructive cooperation and helpful input of Member States.
Topic:
Economic Growth, Macroeconomics, Fiscal Policy, Innovation, VAT, and Trade
Political Geography:
Europe and European Union

29860. Transfer of know-how to small and mid-size businesses in Georgia – White paper

Author:
Maya Grigolia, Lasha Labadze, Pavol Minarik, Alena Zemplinerova, and Marek Vokoun
Publication Date:
09-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This report has been prepared in the framework of the project “Transfer of know-how to small and mid-size businesses” of the International Visegrad Fund (IVF) and USAID. It summarizes the conditions of the SME sector (small and medium size enterprises) in Georgia, identifies the main problems in their development and provides recommendations for further interventions based on the Czech experience, existing literature and a survey implemented among SME stakeholders. Georgia generally receives favorable evaluations of its business environment. It ranks high in indices of economic freedom and is among the top countries with respect to ease of starting and doing business. On the other hand, the SME sector suffers from several problems. The most serious obstacle to SME development seems to be in the area of finance; access to finance is difficult for SMEs and the cost of credit is high. Human capital and innovations are among the weak points of Georgian SMEs as well. The different shortcomings of the environment and markets call for different interventions. The paper is roadmap of concrete activities – it contains a set of recommendations to support SMEs development drawn on three different sources: first, the theoretical foundations of entrepreneurship policy, second, the Czech experience and know-how in the SME sector, and finally, the ideas of local experts and stakeholders generated during interviews and workshops. Activities and recommendations have been divided into “generic,” which relate to a particular determinant of business environment and have an impact across industries and sectors such as access to financing, education, developing skills training, R&D, innovation, export strategy, start-ups, and those which are “sector-specific,” such as banking, health and agriculture. Political stability, the main problem in Georgia, is beyond the scope of possible interventions.
Topic:
Development, Reform, Business, Economic Growth, Institutions, Innovation, and Trade
Political Geography:
Central Asia, Caucasus, Eastern Europe, and Georgia