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1. Challenges to Transatlantic Digital Infrastructure: An EU Perspective

Author:
Anselm Küsters, André Wolf, and Eleonora Poli
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Recent disruptions in the Baltic Sea and elsewhere highlight the integral role of digital and physical conduits such as gas pipelines, telecommunications cables and undersea data cables in maintaining European connectivity and security. Overall, the EU’s responses to emerging challenges to its digital sovereignty, particularly from China and Russia, aim to enhance the security and resilience of its digital landscape, from the Global Gateway Strategy to the Gaia-X project. However, the complexity of the submarine cable infrastructure requires a broader and more holistic assessment of the opportunities and obstacles to ensuring the uninterrupted flow of information across borders. Ultimately, a concerted transatlantic effort is needed to strengthen the backbone of Europe’s digital infrastructure against both man-made and natural adversities, thereby securing a future where sovereignty and resilience are paramount for both the EU and the US.
Topic:
International Political Economy, Politics, Infrastructure, European Union, Institutions, Transatlantic Relations, and Digital Policy
Political Geography:
Europe

2. Transatlantic Tech Bridge: Digital Infrastructure and Subsea Cables, a US Perspective

Author:
Julia Tréhu and Megan Roberts
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
The importance of digital infrastructure for global communication and connectivity is only growing. Within this varied sector, subsea cables play a central role in ensuring seamless internet traffic globally. What are the US’s strategic and economic interests in digital infrastructure, particularly subsea cables? Within the context of larger economic and geopolitical competition, US policy is multifaceted, from aiming to secure the physical security of infrastructure and guarding against espionage and technology leakage, to boosting economic competitiveness and supporting domestic firms. Overall, digital infrastructure, and undersea cables in particular, are a key element of a larger US strategy of outcompeting China. Although evaluations among allies of the relative threat posed by China and Chinese-owned digital infrastructure vary, broadly shared goals of resiliency, security, and increased connectivity mean there are potential areas for deeper EU-US cooperation, including partnerships with third countries, that align with their respective strategic visions and represent a solid base for further transatlantic coordination.
Topic:
International Political Economy, Infrastructure, Governance, Transatlantic Relations, and Digital Policy
Political Geography:
North America and United States of America

3. Chips: EU’s Ambition in a Transatlantic Technology Bridge

Author:
Nicola Bilotta
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Semiconductors are vital building blocks of digital technologies. In line with its aspiration for strategic autonomy, the EU has recognised vulnerabilities in its chip supply chain, which heavily relies on foreign firms. The intricate relationship between economic security and open trade underlies the EU’s quest to bolster its domestic capacity while enhancing connections with key global partners. Despite the challenges of finding a policy balance, fostering transatlantic cooperation in the semiconductor domains remains a key ambition. To cultivate a more balanced and effective partnership with the US, the EU should capitalise on its comparative advantages to amplify and fortify its strategic positioning in the global supply chain.
Topic:
International Political Economy, Science and Technology, Governance, European Union, Transatlantic Relations, and Industry
Political Geography:
Europe

4. Developmental States in Africa: The Mauritian Miracle

Author:
Anwar Seman Kedir
Publication Date:
04-2023
Content Type:
Journal Article
Journal:
Journal of Academic Inquiries
Institution:
Sakarya University (SAU)
Abstract:
A developmental state is both a theoretical construct and a description of the political economy of certain nations, primarily in East Asia, over a specified time period. Theoretically, a developmental state is a particular type of state with a high degree of autonomy and solid institutional competence, allowing it to undertake a series of effective state-interventionist policies in pursuit of developmental objectives. Statism and state autonomy underpin the conceptual framework of the developmental state. The developmental state defied the neoclassical orthodoxy in development economics. Despite lacking the attributes of the mainstream neoclassical consensus in development economics and facing an uphill battle from such institutions, developmental states in various regions of the world have achieved high levels of economic growth. This study seeks to investigate the developmental state trajectories of Mauritius in relation to vital elements of developmental states. In an effort to do so, this study poses the following question: "What accounts for Mauritius' development state success in Africa?". By looking at the link between institutional building and economic performance, the study finds that Mauritius has replicated key developmental state institutions, including embedded and autonomous bureaucracy, making it one of Africa’s most successful developmental states.
Topic:
Development, International Political Economy, and Intervention
Political Geography:
Africa and Mauritius

5. A G7/G20 Pact for Sustainable Urbanisation? Building on the Positive Legacy of Italy’s G20 Presidency

Author:
Nicholas J. A. Buchoud, Michael Keith, Susan Parnell, and Martin van der Pütten
Publication Date:
02-2022
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The G20 as we know it emerged from the 2008 global financial crisis. What is rarely acknowledged, however, is that this grouping of the world’s twenty largest economies emerged at a time when the world was fast becoming more “urban” than “rural”. The impact of urbanisation on the world economy has received scant attention in global decision-making arenas because the post-2008 stabilisation of the global financial system came with significant costs. In particular, the financial crisis had important recentralising effects. The OECD, for instance, has regularly underlined the lasting impact of the financial crisis on sub-national investment capabilities.
Topic:
International Political Economy, Infrastructure, Governance, Urbanization, G20, and Sustainable Development Goals
Political Geography:
Europe and Italy

6. Signaling Virtue or Vulnerability? The Changing Impact of Exchange Rate Regimes on Government Bond Yields

Author:
Zsófia Barta, Lucio Baccaro, and Alison Johnston
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
Do exchange rate regimes affect the conditions under which developed countries borrow? This paper argues that they do, but their impact on yields depends on the prevailing macroeconomic context. When investors regard inflation as the most relevant risk to bond holdings, monetary union has a distinct advantage over floating and fixed exchange rates because of its credible in-built mechanism to control inflation. However, once default is seen as the most relevant risk, exchange rate rigidity becomes a liability due to its constraining effect on governments’ ability to respond to adverse shocks. We test our argument with a moving window panel analysis for twenty-three OECD countries from 1980 to 2017. We find that before the late 2000s, inflation was penalized under floating and (to a lesser extent) fixed exchange rate regimes, but not in countries in monetary union. Since the 2010s, inflation carries no penalty under any exchange rate regime. Variables linked to default risk (debt and entitlement spending) did not affect yields under any exchange rate arrangements until the mid-2000s. Afterwards, countries in monetary union (and to a lesser extent in fixed exchange rate regimes) were significantly penalized for public debt and entitlement spending, whereas countries with floating regimes were not. Our results speak to the literatures on governments’ institutional commitments and “room to move.”
Topic:
International Political Economy, Financial Markets, Bonds, Exchange Rates, and Euro
Political Geography:
Global Focus

7. Trade Liberalization along the Firm Size Distribution: The Case of the EU-South Korea FTA

Author:
Sonali Chowdhry and 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, and Trade
Political Geography:
Europe, South Korea, and European Union

8. Restructuring Sovereign Bonds: Holdouts, Haircuts and the Effectiveness of CACs

Author:
Chuck Fang, Julian Schumacher, and Christoph Trebesch
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Sovereign debt crises are difficult to solve. This paper studies the “holdout problem”, meaning the risk that creditors refuse to participate in a debt restructuring. We document a large variation in holdout rates, based on a comprehensive new dataset of 23 bond restructurings with external creditors since 1994. We then study the determinants of holdouts and find that the size of creditor losses (haircuts) is among the best predictors at the bond level. In a restructuring, bonds with higher haircuts see higher holdout rates, and the same is true for small bonds and those issued under foreign law. Collective action clauses (CACs) are effective in reducing holdout risks. However, classic CACs, with bond-by-bond voting, are not sufficient to assure high participation rates. Only the strongest form of CACs, with single-limb aggregate voting, minimizes the holdout problem according to our simulations. The results help to inform theory as well as current policy initiatives on reforming sovereign bond markets.
Topic:
Debt, Economics, International Political Economy, Law, and Credit
Political Geography:
Global Focus

9. Global Environmental, Social and Governance (ESG) Capital Allocation Strategies Between Impact Ambitions and Measurement Challenges

Author:
Sara Lovisolo
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Responsible investment as a capital allocation strategy has evolved from its ethical and political origins to embrace science-based considerations and outcome-based approaches in the context of the urgent action required in response to climate change and the Sustainable Development Goals. This shift can pose both threats and opportunities to companies seeking to get access to a diversified investor base. The investment environment companies are faced with varies depending on the geographical context and the investment style of investors. In particular, the rise of passive investment – that is the replication of financial indices in the construction of fund portfolios – is an important tool for the integration of sophisticated environmental, social and governance (ESG) factors in investment strategies. The US, Europe, Asia-Pacific and Africa present different levels of maturity and strengths in the space of responsible investment, calling for ad-hoc responses from investee companies. Across all jurisdictions the challenge of effectively measuring the impact of responsible investment is one investors and policymakers alike are still grappling with. Paper prepared in the framework of the IAI-Eni Strategic Partnership, July 2021.
Topic:
Climate Change, International Political Economy, Foreign Direct Investment, and Sustainable Development Goals
Political Geography:
Global Focus

10. An International Digital Yuan: (Vane) Ambitions, (Excessive) Alarmism and (Pragmatic) Expectations

Author:
Nicola Bilotta
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
Days after the European Central Bank (ECB) publicly disclosed its roadmap for a digital euro project on 24 July, the People’s Bank of China (PBoC) published a white paper describing the advancements of its plan for a digital yuan (e-CNY). While the EU roadmap outlines an investigation phase which will end in five years, China has already introduced several pilot experiments for its e-CNY. In June 2021, the e-CNY was employed in more than 70.7 million transactions for a value of 34.5 billion yuan by 20.8 million retail users and 3.5 million corporate users.
Topic:
International Political Economy, Political Economy, Governance, Finance, Currency, and Digital Policy
Political Geography:
China and Asia

11. The Italian G20 Presidency: A Post-Summit Assessment

Author:
Ettore Greco
Publication Date:
11-2021
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
Was Prime Minister Mario Draghi correct in describing the G20 Rome Summit held under the Italian presidency a “success”? Or, rather, was UN Secretary-General António Guterres right to highlight his dissatisfaction with the Summit’s outcome? Assessments of the Italian G20 presidency depend on where the bar is set, what terms of reference are adopted and what relevance or urgency is given to each individual dossier. At the same time, the evolving international context also has to be taken into consideration.
Topic:
Foreign Policy, International Political Economy, Governance, and G20
Political Geography:
Europe and Italy

12. The Good, the Bad and the Ugly: Taking Stock of Europe’s New Trade Policy Strategy

Author:
Fredrik Erixon
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This Policy Brief takes stock of the EU Trade Policy Review – the Commission’s proposed strategy for trade. Despite appearances, the Review doesn’t come close to its billing as a strategy for the new geopolitics of trade. In fact, the Review is weak on key geopolitical developments and rather gives the impression that the EU doesn’t have an ambition to shape outcomes. Obviously, the Review is anchored in Europe’s general economic climate: defensiveness on globalization, competition and digitalization. It follows that Europe is getting increasingly detached from world developments. There are several good parts in the Review. The Commission wants to revive and reform the World Trade Organisation, and it’s clear about what factors that have made the Geneva-based trade body dysfunctional. The Review also acknowledges that the EU will seek a closer alliance with the United States and use that for constructive purposes. Finally, it is welcome that the Commission proposes some new instruments for dealing with market distortions caused by foreign subsidies and protectionism in government procurement. All these initiatives can achieve good outcomes. However, they all require that Europe makes changes in its own policies and positions. The bad parts in the Review are Europe’s weak agenda for getting better market access in the growth regions in the world and its continued passivity on matters related to China. Europe’s main trade-policy challenge in the next decade is to ensure that businesses and consumers in Europe get better integrated with a world-market dynamism that predominantly will come from the Asian region. Absent a realistic and medium-term strategy for dealing with challenges connected to the rise of China, Europe will have difficulties getting the EU-China Comprehensive Agreement on Investment approved. Europe needs an actionable agenda for addressing bilateral frictions with China and problems that occur outside bilateral trade. Finally, the ugly part of the trade strategy are all the commercial policies in the EU – with strong effects on trade – that aren’t recognized or only casually mentioned in the Review. The latter category includes the ambition to introduce an autonomous carbon border tax on imports. Such a policy comes at a high political and economic cost, and the measure’s effect on reducing global carbon emissions is at best very negligible.
Topic:
Globalization, International Political Economy, International Trade and Finance, Treaties and Agreements, European Union, Geopolitics, Digital Economy, and Trade
Political Geography:
Europe

13. What is Wrong with the German Economy? The Case for Openness to Technology and Human Capital

Author:
Philipp Lamprecht
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Advanced economies like Germany need to focus more on attracting foreign high-skilled labour and become better at importing foreign technology and business models. This might not sit well with current thinking of economic sovereignty in Berlin, but it is a necessary step for improving technology-penetration, competitiveness and productivity. Supply of high-skilled labour is getting more difficult to obtain and the cost of generating and adopting new ideas is increasing. Policymakers need to create the right conditions to open their markets to foreign technology and high-skilled labour. But openness alone is only a necessary condition – not a sufficient one. Policymakers also need to focus on creating the right environment domestically to attract a specialised and highly-skilled labour force, despite fierce competition from around the globe. The crucial question is to what extent companies make use of innovation capacities that can be obtained from international recruitment. Our analysis focuses on what German policymakers can do to increase openness for, and its attractiveness to, the high-skilled labour. Germany’s policy framework should focus on public policy initiatives aimed at increasing the incentives and removing obstacles for firms to attract the global high-skilled labour force. To stay attractive, Germany’s policies should also target issues of bottleneck regulation to facilitate field-testing new technologies and to support innovation sandbox processes of companies. And German policies should focus on the regulatory environment, notably the type of regulations that policymakers pursue. Many current regulations in Germany do not sufficiently allow for experimentation of technologies and ideas.
Topic:
International Political Economy, Science and Technology, Labor Issues, Regulation, Human Capital, Innovation, and Skilled Labor
Political Geography:
Europe and Germany

14. No, China Does Not Make Everything!

Author:
David Henig and Anna Guildea
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
China is now the world’s leading manufacturer, with goods exports rising from $63 billion in 1990 to $2.5 trillion in 2018. The popular assumption is that everything is now made in China, and that falling manufacturing employment in the EU and US is due to this. The assumption is wrong. China is the world’s largest goods exporter, but other countries have also experienced increases. One reason is that China is also the world’s second largest importer of goods, at $2.1 trillion in 2018.
Topic:
International Political Economy, Exports, Manufacturing, and Trade
Political Geography:
China

15. Digital Futures for Europe

Author:
Meelis Kitsing
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
There isn’t one model for success in the digital future; there are many. Europe is now debating what policies that could help to power entrepreneurship and growth in Europe’s economy, and some are arguing that Europe should make itself technologically sovereign – independent from the big platforms from the US. This is not the right approach – partly because there cannot be just one model applied in Europe if it is to become more successful in technology and competitiveness. This briefing paper argues that is far more important for Europe to create a better environment for companies to experiment and discover with new business models, and to learn from the past platform success while they do so. That requires a much greater space for entrepreneurship and that the EU and national governments stay away from excessive regulations that strain new business growth. Europe can be a powerful region that shapes rules and standards globally – “the Brussels effect”. But that isn’t the future for Europe if it ensnares entrepreneurs in red tape – “the Brussels defect”.
Topic:
International Political Economy, Digital Economy, Entrepreneurship, Economic Growth, and Digital Policy
Political Geography:
United States and Europe

16. Covid-19 and the Danger of Self-sufficiency: How Europe’s Pandemic Resilience was Helped by an Open Economy

Author:
Johan Norberg
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
During the Covid-19 pandemic, Europe has benefitted strongly from being an open economy that can access goods and services from other parts of the world. Paradoxically, some politicians in Europe think that dependence on foreign supplies reduced the resilience of our economy – and argue that Europe now should wean itself off its dependence on other economies. In this Policy Brief, it is argued that self-sufficiency or less economic openness is a dangerous direction of policy. It would make Europe less resilient and less capable of responding to the next emergency. It is key that people, firms and governments can get supplies from other parts of the world. It is diversification, not concentration of production, that will make Europe more resilient when the next emergency hit. We don’t know where the next crisis will come from. Nature will throw nasty surprises at us, and we will make stupid mistakes, some of which will have devastating consequences. What we do know, though, is that we stand a better chance to fight the next emergency if we get richer and improve our technology. The best policy for resilience is one that encourages specialisation and innovation – and, when the emergency hit, allow for people to improvise in search for solutions. For that to happen, we need openness to goods, services and technology from abroad.
Topic:
Health, International Political Economy, Innovation, Economic Cooperation, Pandemic, and COVID-19
Political Geography:
Europe and Global Focus

17. The EU Green Deal and Its Industrial and Political Significance

Author:
Hosuk Lee-Makiyama
Publication Date:
02-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The European Green Deal, the flagship initiative of the incumbent European Commission, aims to cut greenhouse gas (GHG) emissions to 55% by 2030 (from the current target of cutting 40% of 1990 levels) by overhauling fiscal, trading and regulatory regimes. Brussels is well-placed to deliver the interregional distribution or the minutiae of technical regulations that this challenge calls for. Energy diversification is also central to EU competitiveness and strategic autonomy. But this initiative is not costless: its official impact assessment points to a GDP loss of additional -0.3 to -0.7%, by 2030, relative to the previous level of ambition. The full loss could be up to -2.5%. These costs are also unevenly, and the inability to cushion asymmetrical shocks have nearly torn the Union apart in the past. A carbon-neutral Europe could also make losers out of today’s winners among stakeholders and give the EU a significantly different industrial structure, forcing over-exporting Northern Europe into reforms that are probably overdue. Most importantly, the gap between the financing needed and the financing available is unprecedented. The success of the European Green Deal and a cost-efficient transition hinge on the rapid and effective mobilisation of investments – as the diffusion period for new energy-related technology is 40-50 years. Therefore, a smart climate policy does not just distribute costs and investments between different groups, but also over time: The investments are needed now, if we are to reap their benefits before 2050.
Topic:
Environment, Industrial Policy, International Political Economy, European Union, Green Technology, Sustainability, and Green Deal
Political Geography:
Europe

18. Global Trade Today is Global Value Chains

Author:
David Henig
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In the last 25 years global value chains have come to dominate global trade in a way surprisingly little discussed or understood. To meet the policy challenges of today and the future we need to understand the key characteristics of this new global trade and how they came about. The OECD estimate around 70% of total trade takes place in global value chains. Using their definition as where “the different stages of the production process are located across different countries”, and considering both goods and services inputs, this may be an understatement. The example most commonly used is the automotive sector, with 30,000 parts and associated services like satellite navigation going into one car. However there are many others. Modern primary commodity production is optimised by technology developed in other countries, diverse services and goods are frequently combined to create new product offerings, and most international business to consumer transactions are facilitated by leading global platforms. Positively this new globalization has provided consumers with an unprecedented choice of products at affordable prices. More challengingly it has seen governments struggle with the question of how they can best influence modern trade, amid signs of a backlash and simple demands for ‘more domestic manufacturing’. The popular global narrative that feeds such demands is one that has a traditional view of trade as a set of simple primary or manufactured goods transactions. Policymakers must move on from this narrative, making their choices, and explaining them clearly, on the basis of global value chains.
Topic:
International Political Economy, International Trade and Finance, Trade, and Global Value Chains
Political Geography:
Global Focus

19. Risk Shocks and Divergence between the Euro Area and the US in the aftermath of the Great Recession

Author:
Thomas Brand and 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, and Risk
Political Geography:
United States, Europe, and Global Focus

20. On the economic desirability of the West African monetary union: would one currency fit all?

Author:
Cécile Couharde, Carl Grekou, and Valérie Mignon
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
In this paper, we investigate from a policy coordination viewpoint the desirability of the West African monetary union project, ECO. Our approach is built around the inclusion of national objectives in the regional integration perspective. Thanks to cluster analysis, we identify two groups of countries with relatively homogenous sustainable exchange rate paths in West Africa. We also find that no single currency peg nor a freely floating exchange rate regime would be preferable for any of the countries or groups of economies. Overall, our findings argue in favor of two ECOs —at least in a first step, i.e., one for each of the two identified zones. Each ECO would serve as a virtual anchor —with some flexibility— for the considered group, and would be determined by a basket of currencies mainly composed of euro and US dollar.
Topic:
Economics, International Political Economy, Monetary Policy, and Currency
Political Geography:
West Africa

21. Information in the First Globalization: News Agencies and Trade

Author:
Pierre Cotterlaz and Etienne Fize
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper documents the effect of information frictions on trade using a historical large-scale improvement in the transmission of news: the emergence of global news agencies. The information available to potential traders became more abundant, was delivered faster and at a cheaper price between countries covered by a news agency. Exploiting differences in the timing of telegraph openings and news agency coverage across pairs of countries, we are able to disentangle the pure effect of information from the effect of a reduction in communication costs. Panel gravity estimates reveal that bilateral trade increased by 30\% more for pairs of countries covered by a news agency and connected by a telegraph than for pairs of countries simply connected by a telegraph.
Topic:
Economics, International Political Economy, Partnerships, Media, News Analysis, and Trade
Political Geography:
Global Focus

22. World Interest Rates and Macroeconomic Adjustments in Developing Commodity Producing Countries

Author:
Vincent Bodart, François Courtoy, and Erica Perego
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
With commodities becoming international financial securities, commodity prices are affected by the international financial cycle. With this evidence in mind, this paper reconsiders the macroeconomic adjustment of developing commodity-exporting countries to changes in world interest rates. We proceed by building a model of a small open economy that produces a non-tradable good and a storable tradable commodity. The difference with standard models of small open economies lies in the endogenous response of commodity prices which -due to commodity storage- adjust to variations in international interest rates. We find that the endogenous response of commodity prices amplifies the reaction of commodity exporting countries to international monetary shocks. This suggests that commodity exporting countries are more vulnerable to unfavourable international monetary disturbances than other small open economies. In particular, because of the existence of the commodity price channel, even those small open commodity-exporting economies that are disconnected from international financial markets can be affected by the international financial cycle.
Topic:
Economics, International Political Economy, Monetary Policy, Finance, Commodities, Interest Rates, Exports, and Price
Political Geography:
Global Focus

23. GARCH Analyses of Risk and Uncertainty in the Theories of the Interest Rate of Keynes and Kalecki

Author:
Hubert Gabrisch
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study attempts to identify uncertainty in the long-term rate of interest based on the controversial interest rate theories of Keynes and Kalecki. While Keynes stated that the future of the rate of interest is uncertain because it is numerically incalculable, Kalecki was convinced that it could be predicted. The theories are empirically tested using a reduced-form GARCH-in-mean model assigned to six globally leading financial markets. The obtained results support Keynes’s theory – the long-term rate of interest is a nonergodic financial phenomenon. Analyses of the relation between the interest rate and macroeconomic variables without interest uncertainty are thus seriously incomplete.
Topic:
Economics, International Political Economy, Economic Theory, Interest Rates, Macroeconomics, Keynes, Models, and Michał Kalecki
Political Geography:
Global Focus

24. Marching to Good Laws: The Impact of War, Politics, and International Credit on Reforms in Ukraine

Author:
Artem Kochnev
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The paper investigates determinants of investments in state capacity and institutional change in contemporary Ukraine. After formulating a simple sequential two-stage model of investments in state capacity, the paper estimates autoregressive distributed lag and vector autoregressive models to verify its predictions. The paper finds little evidence for the impact of conflict intensity and access to international credit on the pace of reform progress. It finds a statistically significant effect for the intensity of political competition and changes of real wages, albeit these results are sensitive to robustness checks.
Topic:
Economics, International Political Economy, War, Labor Issues, Credit, International Business, State Capitalism, and Models
Political Geography:
Ukraine

25. Firm Profits and Government Activity: An Empirical Investigation

Author:
Petar Jolakoski, Branimir Jovanovic, Joana Madjoska, Viktor Stojkoski, and 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, and Profit
Political Geography:
Europe and Global Focus

26. Breaking Through the Digital Ceiling: ICT Skills and Labour Market Opportunities

Author:
David Pichler and Robert Stehrer
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses the impact of ICT-skills on individuals’ labour market mobility patterns, in particular job-to-job, employment- to-unemployment and unemployment-to-employment transitions. Based on the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) and longitudinal EU-SILC data, individuals’ labour market outcomes are examined over the period 2011-2017 in nine EU countries and the UK. Our results indicate that individuals with strong ICT skills have better opportunities and are therefore not only more likely to change jobs more frequently but are also less likely to face unemployment. Furthermore, ICT skills support unemployment exit towards medium and high digital occupations. A certain minimum level of ICT skills also supports unemployment exit towards low digital occupations but seems to make employment in such occupations less likely once this threshold is crossed. Overall, ICT skills have less predictive power for transition towards medium digital occupations. Thus, while ICT skills appear to improve labour market opportunities significantly, it seems that there are still jobs that require relatively few ICT skills.
Topic:
Economics, International Political Economy, Science and Technology, Digital Economy, Labor Market, Information Technology, and Skilled Labor
Political Geography:
Global Focus

27. Exploring ‘Non-Tariff Measures Black Box’: Whose Regulative NTMs on Which Products Improve the Imported Quality?

Author:
Mahdi Ghodsi
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Regulative non-tariff measures (NTMs), such as technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures, have frequently been imposed to regulate the quality of imported goods when the market fails to address some issues of concern regarding harmful products with low standards. The impact of NTMs on trade values and trade volumes has been extensively modelled and analysed in the literature, while their quality impact has usually been studied using the unit values of imports. In this paper a monopolistic competition framework is presented, in which firms choose both the quality and the price of their exports subject to the compliance costs of NTMs behind the border and a fixed cost of technological change. Using the solutions of this model including NTMs, the quality of products at the six-digit level of the harmonised system (HS) traded globally and bilaterally during the period 1996–2017 is estimated. Using these estimates, the impacts of TBTs and SPS measures on trade values, volume, unit value and quality are estimated. On average and across all global bilateral trade, TBTs restrict imports while improving quality significantly. SPS measures stimulate trade and improve the average imported quality. Then, by estimating the importer-specific impact of NTMs on traded value, quantity, unit value, quality, and quality-adjusted price for each product, the ‘NTM Black Box’ is opened and analysed. This provides evidence of whether the quality of traded goods to an importing country has been upgraded despite the trade restrictiveness of NTMs.
Topic:
Economics, International Political Economy, International Trade and Finance, and Non-Tariff Measures
Political Geography:
Global Focus

28. Net Migration and its Skill Composition in the Western Balkan Countries between 2010 and 2019: Results from a Cohort Approach Analysis

Author:
Sandra Leitner
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In view of the scarcity of reliable and detailed data on migration this paper develops the novel cohort approach, which allows us to deduce from annual Labour Force Surveys (LFS) the extent and skill composition of net migration. It is based on representative age cohorts who are followed over time and whose change in size and composition provides information about the extent and skill composition of net migration. As concerns skill composition, the analysis differentiates between four educational levels (Low, Medium-general, Medium-VET and High). The analysis is applied to the six Western Balkan countries (for the period 2010-2019), which lack official, comprehensive and domestic migration statistics, particularly in terms of the skill composition of migrants. The analysis shows that during the period analysed all six Western Balkan countries experienced net emigration which, however, differs across countries in terms of magnitude and particular age pattern. A further breakdown of net migration by highest level of education shows that net emigration in the region mainly occurs among the medium- and low-educated. Contrary to widespread perception, the analysis finds evidence of brain gain in terms of partly substantial net immigration of the highly educated in all countries except Albania, Bosnia and Herzegovina and Kosovo. Brain gain is highest among those in their early to mid-20s to early 30s. As this is the age at which students usually complete tertiary education, this is likely to be related to students returning to their home countries after graduating from tertiary education abroad.
Topic:
Economics, International Political Economy, Migration, Labor Issues, and Skilled Labor
Political Geography:
Balkans

29. Interrelationships between Human Capital, Migration and Labour Markets in the Western Balkans: An Econometric Investigation

Author:
Michael Landesmann and 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, and Labor Market
Political Geography:
Europe

30. The Political Economy of Law Enforcement

Author:
Matías Dewey, Cornelia Woll, and Lucas Ronconi
Publication Date:
01-2021
Content Type:
Research Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The legal order is the legitimate foundation of liberal democracy. Its incomplete enforcement of the law can therefore appear dysfunctional, reflecting weak institutions, state capture, and corrupt practices. This paper casts doubt on such categorical assessments by systematically examining the reasons for and intentions behind incomplete enforcement. It argues that law enforcement is part of the political process that is deeply affected by the constellation of actors concerned. Choices over law enforcement produce social order that is analytically distinct from the production of legal norms and their formal implementation. By analyzing different types of partial enforcement, its rationales, and intended effects, we propose an approach that studies law enforcement as an integral part of public policy analysis and of the study of socioeconomic orders.
Topic:
Economics, International Political Economy, Law Enforcement, Law, Police, and Legal Sector
Political Geography:
Europe and Global Focus

31. Business & Peace 2021

Publication Date:
05-2021
Content Type:
Special Report
Institution:
Institute for Economics & Peace (IEP)
Abstract:
Rather than asking what businesses can do for peace, this study differentiates itself by focusing on what peace can offer businesses. The Institute for Economics & Peace (IEP) sees this as an important, but missing step in business analysis. In order for the private sector to engage with peacebuilding, investors first need to see the benefits of peace to their investment decisions. This work shows that economic performance can be predicted by movements in the same socio-economic developmental factors that affect peacefulness. These conditions are known as Positive Peace. The global economic impact of violence was $14.4 trillion in 2020. This is broadly equivalent to the entire economy of China. If humanity were to reduce violence by ten per cent per annum, the savings of $1.4 trillion would broadly equate to adding an economy the size of Russia’s or Brazil’s every year to the global fold. The burden of violence on an economy is self-evident. However, this report focusses on the converse perspective: countries that improve their underlying conditions, as gauged by IEP’s measures of peace, create the potential for a significant peace dividend for business.
Topic:
Economics, International Political Economy, Business, Peace, and International Business
Political Geography:
Global Focus

32. Assisting Uzbekistan's parliament with specific issues pertaining to Uzbekistan's WTO accession process

Author:
Iljir Baftijari, André-Philippe Ouellet, and Ayong Lim
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
This Memorandum is prepared to guide the Beneficiary through Uzbekistan’s accession process to the World Trade Organization (hereinafter WTO). Uzbekistan’s accession process began in December 1994 but remained dormant until July 2020. Now, the Uzbek government has expressed enthusiasm for pursuing accession to the WTO. The Memorandum offers a general overview of the accession process and addresses specific questions relating to Uzbekistan’s WTO accession. The findings in this Memorandum are based largely on comparative research of recent WTO accessions with a focus on the WTO members in the Eurasian region. We have reviewed the documents submitted during Eurasian WTO members’ accession process, along with the academic sources discussing such accessions. We also analysed Uzbekistan’s current trade relationships to evaluate the pros and cons of Uzbekistan’s accession to the WTO. We likewise analysed the considerations pertaining to EAEU membership by focusing on other WTO members in the region. Finally, to analyse the potential changes to two laws submitted by the Beneficiary with regards to its accession process. We thus have reviewed the two Uzbek acts against the backdrop of: WTO Covered Agreements, the WTO Checklist for accessions, and other amended legislation of members that recently acceded to the WTO accessions for consistency
Topic:
International Law, International Political Economy, International Trade and Finance, Trade, WTO, and Parliamentarism
Political Geography:
Uzbekistan

33. Social clauses in trade agreements: implications and action points for the private sector in developing countries

Author:
Anna Liz Thomas, Jarrod Suda, and Gaia Grasselli
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
Since the 1990s, more free trade agreements have come to include social clauses, which make reference to domestic and international labour standards. As this international legal web continues to grow, so too will the questions and concerns from employers and businesses. This Tradelab report, for the International Organisation of Employers, provides practical guidance for those employers and businesses. It does so by taking the diverse array of actors, the tensions within, and the opportunities set forth by free trade agreements and elaborating upon them using three case studies.
Topic:
International Political Economy, International Trade and Finance, Treaties and Agreements, Labor Issues, Free Trade, Trade, International Business, and Labor Market
Political Geography:
Global Focus

34. Tracing the evolution of service robotics: Insights from a topic modeling approach

Author:
Ingrid Ott, Ivan Savin, and Chris Konop
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Taking robotic patents between 1977 and 2017 and building upon the topic modeling technique, we extract their latent topics, analyze how important these topics are over time, and how they are related to each other looking at how often they are recombined in the same patents. This allows us to differentiate between more and less important technological trends in robotics based on their stage of diffusion and position in the space of knowledge, where some topics appear isolated while others are highly interconnected. Furthermore, we propose a novel approach to match the constructed topics to the IFR classification of service robots based on frequency and exclusivity of words overlapping between them. We identify around 20 topics belonging to service robotics. Our results corroborate earlier findings, but also provide novel insights on the content and stage of development of application areas in service robotics. With this study we contribute to a better understanding of the highly dynamic field of robotics and contribute to new practices of utilizing the topic modeling approach.
Topic:
International Political Economy, Science and Technology, Robotics, and Models
Political Geography:
Global Focus

35. Resolving Human Wildlife Conflict in Botswana Through Social Protection

Author:
Israel R. Blackie
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
This policy brief is based on a national tracer survey covering 66 villages in Botswana. The main aim of the study was to ascertain the magnitude and social impacts of human wildlife conflict (HWC) on victims and their families. In addition, the study sought to assess the relevance and effectiveness of the ex gratia compensation scheme to victims of wild animals’ attack which was introduced in 2015. The key findings reveal that local people exposed to life threatening wildlife attacks express fear and animosity towards wild animals, and also feel rejected and disappointed from a fragmented government service delivery system. Major policy recommendations to be considered by government and other stakeholders include provision of comprehensive therapeutic rehabilitation and reconstructive surgery to HWC victims, comprehensive compensation according to the severity of injuries sustained, and establishment of an Ex Gratia Scheme or Ex Gratia Tribunal.
Topic:
Economics, Environment, International Political Economy, Sustainability, Ecology, and Wildlife
Political Geography:
Africa and Botswana

36. An Analysis of the Effects of Oil Price Fluctuations on the Conduct of Monetary Policy in the Economic

Publication Date:
03-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
For many years, the economies of the Economic and Monetary Community of Central Africa, like most of the world’s economies, have been confronted with numerous fluctuations in the price of raw materials on international markets. For these predominantly extroverted economies, that is, those dependent on export earnings, these price variations have consequences for their macroeconomic performance and the conduct of economic policy. Like most economic crises in the world in the past, the pandemic caused by the new Coronavirus that has been raging since 2020 has also brought with it many changes. Between the confinement measures taken by public authorities to curb the spread of the virus and the resulting slowdown in global economic activity, there has been an inevitable significant drop in global oil demand. The direct consequence of such a scenario is the fall in oil prices on world markets, which is very bad news for the public finances of oil-exporting countries. The main objective of this report is to analyze the effects of oil price fluctuations on the conduct of monetary policy in the CEMAC. We start from the observation that oil shocks are the source of strong inflationary pressures in these economies. It is the responsibility of monetary policy to ensure price stability. Thus, after analyzing the effects of oil price fluctuations on the world economy as well as the macroeconomic and financial implications of these fluctuations on the economies in 2020, we use a Vector Auto Regressive model to analyze the contribution of oil price shocks on the historical dynamics of macroeconomic variables in the various CEMAC countries between 2001 and 2020. Then, we use a Panel Smooth Transition Regression model to analyze the impact of oil price changes on monetary policy in the CEMAC.
Topic:
Economics, International Political Economy, Oil, Natural Resources, Monetary Policy, Global Markets, Inflation, and Macroeconomics
Political Geography:
Africa, Cameroon, and Central Africa

37. Should We Consider A Post-Covid-19 Reform Of The VAT In Cameroon?

Publication Date:
03-2021
Content Type:
Special Report
Institution:
The Nkafu Policy Institute
Abstract:
The COVID-19 pandemic so far has had a profound impact on the global economy. The containment measures adopted by governments to curb the spread of the disease have curtailed business activities, making it impossible for companies to adequately meet their tax obligations. As a result, forecasts for customs revenues and internal tax resources have been revised downward, mainly due to the closure of borders. Collected both at the borders and within the country, Value Added Taxes revenues have naturally been very negatively affected by the crisis. In Cameroon, losses related to value added tax in 2020 were estimated at CFAF 298.017 billion, representing 50.73 percent of recorded tax losses, which is hardly surprising. Value-added taxes are identified as the main source of tax revenue in Cameroon. They were estimated at 44.73% of tax revenue in 2019 and about 7% more than in 2016. The importance of VAT in tax revenue mobilization requires an examination of the Cameroonian tax system, particularly the factors that could explain a reform of the tax. Moreover, given that Cameroon is at high risk of external debt distress (IMF, 2018), there is an urgent need to find new ways to ensure the continued sustainability of public finances. This Tax Policy Letter analyzes the rationale for VAT reform in Cameroon. First, we present the severity of the economic repercussions of the coronavirus health crisis at the level of VAT revenues in Cameroon. Noting that VAT is the main source of indirect tax revenue – 60.19% in 2019 compared to 54.54% in 2016, for example – we then examine the guiding principles that govern its collection and application in Cameroon. A careful examination of these principles has allowed us to analyze the benefits associated with a reform of this tax on final consumption.
Topic:
Economics, International Political Economy, Tax Systems, Macroeconomics, Fiscal Policy, and Revenue Management
Political Geography:
Africa and Cameroon

38. Land Tenure Security, Credit Access and Agricultural Productivity in Cameroon

Author:
Tchinda Kamdem Eric Joel and Kamdem Cyrille Bergaly
Publication Date:
01-2020
Content Type:
Research Paper
Institution:
African Economic Research Consortium (AERC)
Abstract:
Cameroonian farmers face two tenure systems: a modern regime and a customary regime. These two regimes are perpetually confronting each other, putting farmers in a total uncertainty as to the regime to adopt to ensure the sustainability of their ventures. This study aims to assess the influence of land tenure security on agricultural productivity through credit access. To achieve this goal, a two-stage sampling technique was applied to data from the third Cameroon Household Survey (ECAM 3). The number of farmers selected for the analysis was 602. These data were analysed using descriptive and three-step recursive regression models. The results of the analysis reveal that land tenure security improves agricultural productivity through the credit access it allows. A proof of the robustness of this result has been provided through discussion of the effects of land tenure security in different agro-ecological zones and through a distinction between cash crops and food crops. The overall results confirm that land tenure security positively and significantly influences agricultural productivity. The regression has also shown that the size of the farm defined in one way or another, the perception of farmers on their level of land tenure security and therefore indicates the intensity with which land tenure security influences agricultural productivity. The recorded productivity differential indicates that smallholder farmers, because they keep small farms, feel safer and produce more than those who keep medium-sized farms. The results also show that land tenure security significantly improves the value of production per hectare of food products that are globally imported into Cameroon. Therefore, we recommend that the public authorities promote land tenure security by reinforcing the unassailable and irrevocable nature of land title, but also by easing the conditions of access to it.
Topic:
Agriculture, Development, Economics, International Political Economy, Economic structure, and Economic Policy
Political Geography:
Africa and Cameroon

39. Restraining Ourselves: Helping by Not Hurting

Author:
Nathan Nunn
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
In this brief, I discuss the current state of economic development policy, which tends to focus on interventions, usually funded with foreign aid, that are aimed at fixing deficiencies in developing countries. The general perception is that there are inherent problems with less-developed countries that can be fixed by with the help of the Western world. I discuss evidence that shows that the effects of such ‘help’ can be mixed. While foreign aid can improve things, it can also make things worse. In addition, at the same time that this ‘help’ is being offered, the developed West regularly undertakes actions that are harmful to developing countries. Examples include tariffs, antidumping duties, restrictions on international labor mobility, the use of international power and coercion, and tied-aid used for export promotion. Overall, it is unclear whether interactions with the West are, on the whole, helpful or detrimental to developing countries. We may have our largest and most positive effects on alleviating global poverty if we focus on restraining ourselves from actively harming less-developed countries rather than focusing our efforts on fixing them.
Topic:
Development, Economics, International Political Economy, Developing World, and Economic Development
Political Geography:
United States and Global Focus

40. Beyond Compliance and Cooperation? Rethinking Corporate Social Responsibility in Global Value Chains in the Age of COVID-19

Author:
Peter Lund-Thomsen and Jacob Ramirez
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
In this article, we explore whether COVID-19 has led to a rethink of the two dominant ways of conceptualizing corporate social responsibility (CSR) in global value chains (GVCs): the compliance and cooperation paradigms. Hence, we examine whether any changes have taken place in the drivers, main features, theoretical underpinnings, and limitations of these two approaches to CSR in GVCs in the light of COVID-19. We contend that COVID-19 has been associated with an expanded version of the compliance paradigm. However, COVID-19 has not directly challenged the cooperation approach as a conceptual model. Instead the partial failure of buyers to act responsibly in relation their purchasing practices and restrictions on international travel have highlighted the limitations of this approach in the age of COVID-19. The conclusion highlights the main findings, research and policy implications of this analysis.
Topic:
International Political Economy, Business, Economic Policy, Pandemic, Global Value Chains, and COVID-19
Political Geography:
Global Focus

41. The FDI-led Growth Regimes of the East-Central and South-Eastern European Periphery

Author:
Dragos Adascalitei and Cornel Ban
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
The East-Central European countries that joined the EU in the 2000s are the unsung success of economic development. This paper discusses the consolidation of an export-led growth model in this region by drawing on an alternative school of thought to Varieties of Capitalism: growth regimes. By focusing on three distinct time periods (2000-2008, 2008-2012 and 2012-2019), it shows that despite marginal shifts towards consumption-led growth through personal debt or wage increases, the core of the region’s economic model continues to be heavily dependent on exports. Combining IPE and CPE analytical frameworks, we show that the consolidation of the CEE export-led model has both systemic and national roots. Specifically, we argue that growing international competition from Asia in the beginning of 2000s has forced firms in Western economies to seek alternative sources of competitiveness that involved a mix of wage moderation at home and expansion towards the East. The internationalization of Western firms met capital hungry Eastern governments, which were all too happy to use FDI to restore the competitiveness of their outdated SOEs. Backed by a social bloc that involved domestic and foreign capital as well as workers in the tradeable sectors, the export-led growth model took off and generated growth rates well above those in core countries. The 2000s also saw an increase in debt fueled consumption, that partially compensated for the lack of wage growth in the region. The crisis provided an opportunity to put an end to hybridization and to reinforce the export-led component of growth through short-term austerity measures and deeper labor market reforms. These changes consolidated the export-led model that remained in place even amidst political reconfigurations that, at least rhetorically, aimed to fight the economic dependency of the region on FDI. After the crisis ended, however, the closing of the debt-finance consumption channel combined with the German export boom to the rest of the world and local demographic decline to put upwards pressure on wage-financed consumption increases without inflationary or external balance problems. Yet despite historically low spreads in the region’s bond markets, this did not count as a full Kaleckian turn, however, with the region’s contribution of consumption to GDP growth remaining far below both consumption-led growth regimes and balanced ones.
Topic:
Economics, International Political Economy, Foreign Direct Investment, Economic Growth, Exports, State-Owned Enterprises, and Consumerism
Political Geography:
Eastern Europe and Central Europe

42. THE BRICS COUNTRIES’ MONETARY AND FINANCIAL POWER: WHAT HAS CHANGED SINCE THE 2008 GLOBAL FINANCIAL CRISIS AND WHY IT MATTERS

Author:
Luiza Peruffo
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
The grouping of the BRICS countries is controversial in several ways. First, because its origins do not have a political foundation: Brazil, Russia, India and China were first put together as an acronym created in the financial market (O’NEILL, 2001) and this was eventually transposed onto the political world. The group’s advocates have argued that the geopolitical initiative that followed made sense because it brought together countries of continental proportions, large economies, with huge domestic markets –an argument that falls apart with the inclusion of South Africa in 2010. In addition, there is the issue of the disproportionate economic power between China and the other members of the bloc. Moreover, many argue that there are few common interests between the economies, which have such diverse productive structures, and therefore it would be unlikely that they could form a cohesive group (see STUENKEL, 2013, pp. 620-621 for a review of criticisms of the group).
Topic:
Economics, International Political Economy, Global Financial Crisis, and Economic Cooperation
Political Geography:
Russia, China, India, South Africa, and Brazil

43. A COMPARATIVE ANALYSIS OF THE BRICS COUNTRIES IN THE INTERNATIONAL DEVELOPMENT COOPERATION FIELD

Author:
Augusto Leal Rinaldi and Laerte Apolinário Júnior
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
The first decade of the 21st century gave way to a series of international political-economic dynamics with the potential to reorganize global power (IKENBERRY, 2018; KITCHEN; COX, 2019; MAHBUBANI, 2009; MEARSHEIMER, 2018, 2019). Among the changes, one common reference is the rise of the BRICS –Brazil, Russia, India, China, and South Africa –and, consequently, their performance for demanding reforms of the global governance system (COOPER, 2016; HURRELL, 2018; ROBERTS; ARMIJO; KATADA, 2018; STUENKEL, 2017). The emerging economies have invested in consolidating their new status by acting in different branches of global governance, demanding changes and policies to see a reasonable parity between their economic weight and ability to participate as real decision-makers. In this context, international regimes are a crucial dimension to consider.
Topic:
Development, International Cooperation, International Political Economy, Geopolitics, International Development, Economic Development, and Economic Cooperation
Political Geography:
Russia, China, India, South Africa, and Brazil

44. ECONOMIC REBALANCING AND GEOECONOMIC CHALLENGES FOR CHINA: THE CASE OF INTRA-BRICS TRADE AND FOREIGN DIRECT INVESTMENTS

Author:
Marcelo Milan and Leandro Teixeira Santos
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
This article examines the geoeconomic challenges brought to China by the effects of trade and foreign direct investment (FDI) flows, and consequently by the nature and composition of international economic alliances, mainlycooperation among underdeveloped nations(Glosny, 2010), of rebalancing3of its drivers of growth4. It evaluates likely impacts on other BRICS countries, given the economic linkages developed during the past couple of decades, as an example of what may happen to broader geoeconomic arrangements as the process of rebalancing deepens
Topic:
International Political Economy, Foreign Direct Investment, Geopolitics, and Economic Cooperation
Political Geography:
Russia, China, India, South Africa, and Brazil

45. GEOGRAPHY, INTERNATIONAL TRADE AND INSTITUTIONS: AN ECONOMETRIC ANALYSIS OF THE BRICS

Author:
Marcelo Corrêa, Luiz Michelo, and Carlos Schonerwald
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
After two decades of intense debate about the determinants of economic development, with authors examining the variables that characterize geography, institutions and international trade, BRICS countries were left behind. Thus, in order to fill this gap, this paper uses econometrics of panel data to analyze the economic performance of these developing nations. Mainstream economists have run into serious problems to deal with these particular determinants within the traditional endogenous growth model, and they have not come up with an agreement, so they keep trying to figure out who is the “winner of this competition”. Empirical evidence shows that there is not a unique explanatorydeterminant, and recognizing which of them can provide the best understandingdepends on the particularities of each case (ROS, 2013).Examining BRICS as a group of countries demonstrates that these specific developing nations share some remarkable features. They are rapidly-growing nations with a vast amount of land and growing participation in international trade. So, empirical tests are feasible and desirable in order to understand their recent development. However, they are also different in many aspects, mostly in terms of institutional characteristics. Thus, our goal is to find out if the econometrics of panel data can shed some light on this ongoing debate.
Topic:
International Political Economy, International Trade and Finance, Trade, Trade Policy, Economic Cooperation, and Geography
Political Geography:
Russia, China, India, South Africa, and Brazil

46. BRICS STUDENTS EDUCATION IN CHINA FROM 2010 TO 2018: DEVELOPMENT, PROBLEMS AND RECOMMENDATIONS

Author:
Cheng Jing
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
Attracting international students is an important way to promote the internationalization of one country’s higher education, and to enhance youth and education exchanges between countries. As the biggest developing country in world, China has attachedimportance to the international students education in China since 2010 so as to improve the quality of China’s higher education and promote its internationalization. What’s striking is that in September of 2010, for the first time, the Ministry of Education of the People’s Republic of Chinafrom the perspective of national strategymapped out a plan targeting the international students educationin China, and releasedStudy in China Program, which was designed to “promote the communication and cooperation between China and other countries in education, promptthe sustainable and healthy development of the international students education in China and improve the internationalization of Chineseeducation”. This program highlightedthat China would“accelerate the quota of scholarship step by step in accordance with the need of national strategy and development”, with the targets of attracting 500,000 international students by 2020 and “making China the top destination country in Asia for international students”（China’s Ministry of Education, 2010:647).
Topic:
Education, International Political Economy, and Geopolitics
Political Geography:
Russia, China, India, South Africa, and Brazil

47. Making Peace with Climate Adaptation

Author:
Louise Van Schaik, Camilla Born, Elizabeth Sellwood, and Sophie de Bruin
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Climate change poses risks to poor and rich communities alike, although impacts on the availability and distribution of essential resources such as water, food, energy and land will differ. These changes, combined with other social, political and economic stresses and shocks, can increase tensions within and between states, which, if unmanaged, can lead to violence. Climate-related changes to transboundary waters, food security and trade patterns, sea levels, and Arctic ice, as well as the transition to a low-carbon economy, have profound geopolitical implications. Largescale climate-related migration may also affect the stability of states, and relations between states. Climate action itself may prove destabilizing: (mal)adaptation can disrupt economic and social relations, particularly if implemented without appropriate political economy analysis and risk assessments. In response to analyses linking climate change to security, peace and security actors increasingly realize that interventions to promote peace and stability are more likely to be effective if they incorporate such analyses. At the United Nations, member states have agreed to shift towards a “preventive” approach to conflict risks, grounded in sustainable development. The UN leadership is adjusting institutional structures to better understand and respond to climate-related security risks at all levels, including a newly established climate security mechanism in New York. Many regional intergovernmental institutions have also recognized the links between climate change, peace and security. Some, such as the Intergovernmental Authority on Development in East Africa and the European Union, have incorporated climate-related factors into their conflict early-warning mechanisms. We are only just beginning to understand the realities of adapting to unprecedented climate change, however. Climate-related factors will need to be incorporated systematically into political analysis, risk assessment, and early warning, accompanied by deeper integration of climate-security risk assessment into planning and political engagement in the field. Similarly, more consistent analysis of climate-related security risks must contribute to politically informed, conflict-sensitive adaptation strategies.
Topic:
Conflict Prevention, Climate Change, International Political Economy, Peace, and Sustainability
Political Geography:
Global Focus

48. Economic Costs of Ex ante Regulations

Author:
Hosuk Lee-Makiyama and 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, and Trade
Political Geography:
Europe

49. Open RAN: The Technology, its Politics and Europe’s Response

Author:
Hosuk Lee-Makiyama and Florian Forsthuber
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This policy brief explores the implications of Open RAN concept and its technical and political developments in the mobile network industry. Open RAN is not necessarily a new technology in itself, but represents a combination of existing technologies, e.g. virtualisation, AI, commercial off-the-shelf parts and open interfaces. Its proponents promise more secure networks without ‘high-risk vendors’ but Open RAN could introduce new systemic risks that must be addressed due to its reliance on open source software. While the proponents also promise significantly reduced costs, it is still inconclusive whether Open RAN in itself reduces the total costs of deploying a 5G network. Economic evidence shows that the equipment market is a buyers’ market due to a higher concentration amongst operators. The number of vendors is less critical for prices than the relative power between buyers and sellers. The network equipment market is the only ICT segment where the EU manufacturers are still global leaders. If various industry consortiums call for subsidies, the EU has the commercial policy instruments to countervail against them. Some industry voices suggest that a certain Open RAN specification could replace existing global specifications under 3GPP. However, as today’s market condition is not caused by the 3GPP standardisation, a solution is not to be found through developing alternative technical specifications. 3GPP is also more comprehensive than RAN. Thus, the question is whether Europe should try to sustain one common global umbrella of standards – or see the world balkanise into national or regional standards from 6G and onward. For better or worse, there will be regional fragmentation. The EU industrial policy could be facing a reality where network standards are politicised for commercial reasons – to pave way for an indigenous industry – which is unrelated to national security objectives. Also, EU operators may not react well if Open RAN open the door for cloud services to encroach into the telecom market. In conclusion, Open RAN has a raison d’etre as a promising new concept, even if it does not solve any geopolitical gambits. However, the EU have little to gain from government interventions in the RAN segment, which is just one element of the mobile network market.
Topic:
International Political Economy, Science and Technology, Global Markets, Digital Economy, Industry, and Information Technology
Political Geography:
Europe

50. Work for Others, not Yourself: Globalization, Protectionism and Europe’s Quest for Strategic Autonomy

Author:
Fredrik Erixon
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Protectionism and mercantilism are yet again at the centre of global economic policy. “America First” is the guiding ethos in a good part of US international economic policy. Beijing is taking a larger stake in China’s economy and hand out privileges to domestic firms. Europe is increasingly occupied by achieving “strategic autonomy” and to create European champions at the expense of competition. Old and disreputed economic doctrines are getting a new lease on life. Behind this new orientation in international economic policy stands the old idea that a strong economy is an economy not dependent on others. Human prosperity – our story of rags to riches – tells a very different story. Prosperity is generated when people collaborate and improve our collective intelligence. Open economies are much better at creating wealth because they operate by the principle that people should work for others, not themselves. They specialize – and in the process, they get far more dependent on others. Dependency is a factor of success; economic sovereignty is a sure way of depriving people of opportunity and prosperity.
Topic:
International Political Economy, International Trade and Finance, Global Markets, and Strategic Competition
Political Geography:
United States, China, and Europe