Search

Begin New Search Topic Economic Growth Political Geography Europe

31. The international role of the euro and the dollar: Forever in the lead?

Author:
Martin Mühleisen
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The international monetary system has been surprisingly resilient over the past two years, considering the size of pandemic and geopolitical shocks that hit markets during this period. Liquidity injections by the major central banks helped stabilize economic activity and avoid disruptions to capital flows or foreign exchange markets. Major exchange rates remained range-bound throughout most of the crisis, even if the dollar has appreciated sharply in recent months. Volatility is likely to pick up as monetary policy responds to high inflation, but there should be no doubt that the dollar-based monetary order has withstood a major test during the past two years. This feat has been even more remarkable as the global security landscape has deteriorated in dramatic fashion, and Russia’s invasion of Ukraine has brought international tensions to a level not seen since the 1961 Cuban missile crisis. Moreover, while the dollar’s safe haven status remains firmly established, the center of global economic activity has been shifting east. Asia has become an economic powerhouse, and China is on course to become the world’s largest economy over the next few years. It is a natural question whether China will challenge the United States and Europe for global economic leadership, and whether the renminbi will appear as a leading, if not dominant, currency. This paper argues that this is unlikely for the foreseeable future, in part because a larger global role for the renminbi would be inconsistent with the Chinese leadership’s current policy priorities. However, there is no room for complacency. With the post-World War II international order in gradual decline, the world could again reach a moment where unforeseen geopolitical events might lead to changes in long-held political and economic paradigms. The United States and Europe can reduce this risk by making their growth models more robust and sustainable. Moreover, keeping their global alliances intact could prevent a loss of influence that has heralded changes in the international monetary system in the past.
Topic:
Economic Growth, Currency, Financial Institutions, Digital Policy, Digital Currency, Dollar, and Euro
Political Geography:
Europe and United States of America

32. Beating burnout: identifying bad jobs and improving job quality

Author:
Mia Hoffmann and Laura Nurski
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
While European-wide information on burnout is scarce, national statistics show that stress-related absenteeism is on the rise, generating significant costs for firms and welfare states, while reducing worker wellbeing. Although manifested at the individual level, burnout is an occupational phenomenon, predicted most clearly by imbalances in job content (high workloads and low autonomy) and the social environment at work – two under-explored aspects of job quality. While the economy and society as a whole would benefit from a healthier workforce, market failures drive job quality below an optimal level, necessitating attention from policymakers. Measuring and intervening in job content is not straightforward, however, and has not been a main policy domain in Europe. Policy frameworks and interventions therefore tend to focus on other areas of job quality, such as the physical and contractual working conditions. To manage the burnout epidemic and mitigate the impact of the changing nature of work, job-quality policy needs to focus on the job-content aspects as well. Wellbeing outcomes of low job quality, such as burnout, need to be monitored at European level and can serve to evaluate the effectiveness of policy interventions in job quality.
Topic:
Labor Issues, Employment, Economic Growth, Inclusion, Workforce, and Well-Being
Political Geography:
Europe

33. For a new European growth strategy

Author:
Nicolas Goetzmann
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
The early 1990s saw the demise of the Soviet bloc, erasing more than forty years of competition with the United States: the rest of the decade witnessed the economic emergence of the People's Republic of China and the formal advent of the euro area as the economic powerhouse of the European Union. Two decades later, according to data published by the IMF, almost 60% of the world economy is now shared between these three dominant economic areas, the United States, China and the European Union, reshaping the face of the competition for global power.
Topic:
European Union, Economic Growth, Macroeconomics, and IMF
Political Geography:
China, Europe, and United States of America

34. Evaluating Macroeconomic Factors And Their Influence on Economic Growth: Empirical Evidence From Western Balkan Economies

Author:
Ereza A. Arifi
Publication Date:
06-2022
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
This research aimed to identify and evaluate the impact of some macroeconomic components on economic growth performance. The data applied in the analysis were secondary data, including six countries from 2005 to 2020. The econometric approach applied was the fixed effect regression approach to economic growth as a dependent variable. The study also applied several diagnostic tests and the Hausman test to select between fixed and random effects. The data provided after the analysis show that inflation and foreign direct investment have a significant positive impact, while public debt has a significant negative impact. Moreover, unemployment and population growth have shown statistically insignificant results. The study from the aspect of the original contribution provides arguments and applies two variables that are very little addressed in the context of economic growth. The study results provide critical information for policymakers, economists, and researchers and provide arguments for a sound and proactive debate on these variables.
Topic:
Economics, Economic Growth, Banks, and Macroeconomics
Political Geography:
Europe and Balkans

35. Operationalizing Growth Models

Author:
Lucio Baccaro and Sinisa Hadziabdic
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
We present a new methodology for operationalizing growth models based on importadjusted demand components. Applying the methodology to the latest release of OECD Input-Output Tables, we calculate the growth contributions of consumption, investment, government expenditures, and exports for sixty-six countries in the periods 1995 to 2007 and 2009 to 2018 and identify the respective growth models. We find that most countries are export-led or domestic demand-led and that other forms of growth are rare. Our results corroborate previous classifications in comparative political economy but also differ from them in significant respects. Importantly, our classification improves on previous ones by covering not just the advanced capitalist economies but also Central and Eastern European and South-East Asian and Latin American countries. In a further step, we illustrate how the new indicators can be used to analyze the “drivers” of different types of growth. This examination reveals that there is a clear trade-off between consumption- and export-led growth in advanced Western economies in the period 1995 to 2007 and a dependence of export-led growth in these countries on real exchange rate devaluation in the same period, while export complexity is not a significant predictor of export-led growth.
Topic:
Political Economy, Economy, Economic Growth, Exports, and Emerging Economies
Political Geography:
Europe, Latin America, and Southeast Asia

36. European Union cohesion project characteristics and regional economic growth

Author:
Zsolt Darvas, Jan Mazza, and Catarina Midoes
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Due to problems with existing methodologies that aim to identify the causal impact of European Union cohesion policy on economic growth, we adopted a novel methodology. We first estimated ‘unexplained economic growth’ by controlling for the influence of various region-specific factors, and then analysed its relationship with about two dozen characteristics specific to projects carried out in various regions in the context of EU cohesion policy. We found that the best-performing regions have on average projects with longer durations, more inter-regional focus, lower national co-financing, more national (as opposed to regional and local) management, higher proportions of private or non-profit participants among the beneficiaries (as opposed to public-sector beneficiaries) and higher levels of funding from the Cohesion Fund. No clear patterns emerged concerning the sector of intervention.
Topic:
European Union, Finance, Economic Growth, and Regional Integration
Political Geography:
Europe

37. Reviving and Reorienting Growth after the Pandemic: The Role of Local Infrastructure Investments

Author:
Nicola Bilotta
Publication Date:
12-2021
Content Type:
Special Report
Institution:
Istituto Affari Internazionali
Abstract:
The last decade has witnessed a progressive change in what had long been considered global priorities for achieving growth. The global financial crisis of 2007–2008 and the following European sovereign debt crises of 2011–2012 have brought to light important pitfalls in the functioning of globalized financial markets. Trade and financial liberalization policies have at times caused severe strains in some communities, raising concerns over the effects of rapid increases in international integration. Environmental and social risks have come to the forefront of the policy debate. The COVID-19 pandemic has brought enormous challenges to what was the normal way of living. All these events have had far-reaching consequences on the global economy. Currently, the world is facing at least three major shocks that are affecting health (COVID-19), prosperity (the recession) and the planet (climate change). These have been chosen as the three keywords for Italy’s G20 Presidency. These shocks are different in nature and have very diverse effects across countries, regions and municipalities. This calls for differentiated and targeted responses that take into account the specific needs of individual communities.
Topic:
Climate Change, Infrastructure, G20, Economic Growth, Investment, Integration, and COVID-19
Political Geography:
Europe, India, Vietnam, Philippines, United States of America, and Congo

38. China’s FDI in Europe and Europe’s Policy Response

Author:
Pyoung Seob Yang, Cheol-Won Lee, Suyeob Na, Taehyn Oh, Young Sun Kim, Hyung Jun Yoon, and Yoo-Duk Ga
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
China’s investment in the European Union (EU) increased significantly during the European financial crisis, but has been on the decline in recent years. The surge of Chinese investment has raised concerns and demands for analysis on the negative effects it could have on the EU companies and industries. In this context, the present study aims to analyze the main characteristics of Chinese investment and M&A in Europe, major policy issues between the two sides, the EU’s policy responses, and prospects of Chinese future investment in Eu-rope, going on to draw important lessons for Korea. To summarize the main characteristics of China's investment in Europe, the study found that the EU's share of China's overseas direct investment has continued to increase until recently. Second, investment in the Central and Eastern European Countries (CEECs) is gradually increasing, although it is still insignificant compared to the top five destinations in the EU: Netherlands, Sweden, Germany, Luxembourg and France. Third, China's investment in the EU is being made in pursuit of innovation in manufacturing and to acquire high-tech technologies. When it comes to China's M&A in Europe, the study found that the proportion of indirect China's M&As (via third countries (e.g. Hong Kong) or Chinese subsidiaries already established in Europe) was relatively higher than direct ones. Empirical factor analysis of investment also shows that China's investment in the EU is strongly motivated by the pursuit of strategic assets. Other factors such as institutional-level and regulatory variables are found to have no significant impact, or have an effect contrary to expectations. This suggests that China's investment in the EU is based on the Chinese government's growth strategy, and accompanies an element of national capitalism Today, It is highly expected that the COVID-19 pandemic will have a reorganizing effect on the global value chain (GVC) and Foreign investment regulation in the high-tech sector motivated by national security is emerging as a global issue as the US and the EU are tightening their control. As Korean companies are not free from the risk of falling under such regulations, a thorough and careful response is required. And for the Korean government, it is necessary to prepare legal and institutional measures regulating foreign investment in reference to the US and the EU.
Topic:
Foreign Direct Investment, Financial Crisis, European Union, Economy, Economic Growth, Global Value Chains, and COVID-19
Political Geography:
China, Europe, Asia, Korea, and United States of America

39. 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

40. 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