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41. German Economy Summer 2021

Author:
Kiel Institute
Publication Date:
06-2021
Content Type:
Commentary and Analysis
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The German economy is picking up speed again. After the resurgence of the Covid-19 pandemic had interrupted the economic recovery in the winter half-year, GDP will expand at a fast pace in the further course of the year and exceed its pre-crisis level again. With the removal of the pandemic-related restrictions, activity will rebound, especially in those areas that were previously particularly burdened. Retail trade and contact-intensive services in particular are likely to benefit from the rebound in private household consumption. For the time being, however, the recovery will be delayed in the manufacturing industry. The strong global recovery has brought with it multi-layered supply bottlenecks that are noticeably hampering production in many firms. Despite the very good order situation, production in the manufacturing industry will therefore probably only gradually return to its recovery path in the second half of the year, provided that the supply bottlenecks then gradually ease. With the supply bottlenecks, price pressures have also increased, especially as economic momentum is high worldwide. Thus, prices for raw materials, intermediate goods and transport services have recently been on a broad upward trend. All in all, GDP is expected to grow by 3.9 percent this year and by 4.8 percent in 2022. Consumer prices will rise at a much faster rate of probably 2.6 percent this year and by around 2 percent in 2022.
Topic:
Economics, GDP, Economic Growth, Pandemic, Industry, and COVID-19
Political Geography:
Europe and Germany

42. Does Immigration Grow the Pie? Asymmetric Evidence from Germany

Author:
Eugenia Vella
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
This Policy brief by Eugenia Vella, Postdoctoral Research Fellow, elected to the position of Assistant Professor, Athens University of Economics and Business; Research Fellow, ELIAMEP and Fundació MOVE provides empirical evidence suggesting that net migration flows can have substantial demand effects. Using monthly administrative data (2006-2019) for Germany, we show that migration stimulates job openings, wages, house prices, investment, consumption, net exports, and output. Unemployment falls for natives (job-creation effect), driving a decline in total unemployment, while rising for foreigners (job-competition effect). The geographic origin of migrants and the education level of residents matter crucially for the effects. Overall, the evidence implies that the policy debate should focus on redistributive strategies between natives and foreigners.
Topic:
Migration, Immigration, Employment, and Economic Growth
Political Geography:
Europe and Germany

43. Recovery and reform in the EU’s most vulnerable regions

Author:
Alison Hunter and Marta Pilati
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
Europe’s most vulnerable regions, characterised by persistent low growth and poverty, face a systemic lack of specific EU support. These regions display particularly high levels of vulnerability to the social, economic and territorial impacts of COVID-19, which will affect their recovery trajectories. They risk being left further behind in the EU’s complex pathway towards ‘a green and digital recovery’. The Union’s lack of focus and action for investing in these most vulnerable regions must be addressed. First and foremost, EU institutions and member states should recognise that some territories will struggle much more than others in their recovery trajectories. Ignoring their plight would have potentially far-reaching consequences. The EU’s ‘convergence machine’ could be damaged irreparably, with long-term – and potentially political – consequences. Alison Hunter and Marta Pilati continue their extensive research on the Union’s low-growth, poor regions, calling for the founding of a specific EU initiative to support them as well as further targeting by the existing policy architecture. In particular, they recommend: creating an EU policy space for regions experiencing long-term low growth and poverty, to promote the value and visibility of place-based support; aligning Cohesion Policy and the Recovery and Resilience Facility for improved policy coherence and greater investment impact; and tailoring support for growth-enhancing reforms in the EU’s most vulnerable regions. The EU’s green and digital recovery strategy fails to account for the specific needs of its poor and low-growth regions. Existing disparities and fragmentation challenges across the Union could widen or even become entrenched, casting new doubts on the EU’s ability and commitment to strengthen its convergence agenda and execute a just transition. The fallout could lead to a rise in territorial and political tensions while leaving many vulnerable places behind. Hunter and Pilati outline an agenda for a new EU initiative that champions reform support for these vulnerable territories and improves their prospects for a digital and green recovery.
Topic:
Political Economy, Poverty, Reform, European Union, Digital Economy, Economic Growth, Green Technology, Recovery, COVID-19, and Economic Recovery
Political Geography:
Europe

44. Rethinking EU economic governance: The Stability and Growth Pact

Author:
Francesco De Angelis and Frederico Mollet
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
It is time to reimagine the EU’s economic governance. In early 2021, the EPC set out to do just that in its Rethinking EU Economic Governance Task Force. Drawing on insights from participating experts, academics and policymakers, this first Policy Brief in a series of EPC publications outlines how the debate on the Stability and Growth Pact (SGP), the EU’s framework for fiscal and macroeconomic surveillance, has evolved and the reform options that have surfaced. There is broad dissatisfaction with the SGP and how it has fared in an environment of prolonged low-interest rates, missed inflation targets and low growth. In February 2020, the European Commission launched a review of the SGP in an attempt to address its shortcomings, but it was quickly put on hold by COVID-19, when the fiscal rules were suspended. Half a year later, the Commission is finishing what it started. We are in a drastically different world since the European Commission launched the review. Not only has government debt increased significantly, but regional, economic and social divides have worsened, policymakers face inflationary pressures for the first time in decades, and the Recovery and Resilience Facility and accompanying EU-level bond issuance fundamentally changed the EU’s economic architecture. In parallel, there is a widespread acknowledgement that averting, as well as adapting to, the climate crisis requires a steep increase in public investment. Thanks to the EPC Task Force’s ongoing work, Francesco De Angelis and Frederico Mollet can pinpoint the SGP’s major flaws, post-COVID-19 challenges, and five broad categories of reform options: Interpretative flexibility to smooth fiscal adjustment paths and potentially place less emphasis on problematic indicators. Moderate non-treaty reforms to reduce complexity and procyclicality and increase enforceability. The ‘golden rule’ to exempt some public investments from the fiscal rules. Central fiscal capacity for macroeconomic stabilisation. Off-balance-sheet investments to increase public investment.
Topic:
Political Economy, Governance, European Union, Economic Growth, COVID-19, Economic Stability, and European Commission
Political Geography:
Europe

45. UK Green Growth Index

Author:
Oxford Economics
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Our UK Green Growth Index, produced on behalf of Lloyds Banking Group, assesses the degree to which each UK nation and region may be impacted by the challenges of the net zero transition, and how well placed they are to capitalise on green growth. The transition to net zero will require substantial investment and adaptation across the UK economy. This will create unique opportunities for British businesses to innovate, produce, and supply the goods and services needed to enable the transition, not only in the UK but globally. At the same time, for many parts of the economy the transition will create challenges due to the need to adapt products, processes, and skills. Our UK Green Growth Index, produced on behalf of Lloyds Banking Group, assesses the degree to which each UK nation and region may be impacted by these challenges, and how well placed they are to capitalise on green growth. Our research suggests that green growth opportunities are especially strong in Scotland, given its existing base of green economy activity and its access to a workforce with relevant skills. Similarly, Wales appears well placed to capitalise on green growth opportunities, although it may face greater disruption in the nearer term due to its reliance on high emitting industries. Northern Ireland is also relatively exposed to disruption and may need to accelerate efforts to put in place the factors needed to fully exploit green economy opportunities. Amongst English regions, the South East and South West appear to be best placed to capitalise on the green economy and are less exposed to disruption from the transition than many other parts of the UK. In contrast, Yorkshire and the Humber may face greater disruption and has further to go to develop some of the factors needed to capitalise on green growth. London is somewhat of an outlier: its status as a city-region with a service-orientated economy means it is much less exposed to the challenges than areas which rely more on industrial activity, but it also has less scope to capitalise on green economy opportunities in fields such as manufacturing and energy (although it is well positioned to develop as a centre for green finance and other professional services).
Topic:
Environment, International Trade and Finance, Economic Growth, and Green Technology
Political Geography:
United Kingdom and Europe

46. Three Dilemmas Facing the Indo-Pacific’s Regional Order

Author:
Arzan Tarapore
Publication Date:
06-2021
Content Type:
Special Report
Institution:
East-West Center
Abstract:
For decades, an international order delivered security and prosperity to the Indo-Pacific. The order was based on U.S. military hegemony and alliances that preserved the strategic status quo and multilateral cooperation that enabled economic development and growth. That order is now under strain. The COVID-19 pandemic is challenging the order’s founding principles, prompting some regional states to limit their interdependency in certain sensitive sectors under the guise of supply chain resilience. The pandemic was not the first challenge to test the order; serious threats began to emerge over a decade ago, with the global financial crisis of 2008, and were sharply exacerbated by China’s economic rise and strategic revisionism, which threatens U.S. military and economic primacy and the territorial status quo. The United States, India, and like-minded middle-power partners from the Indo-Pacific and Europe have struggled to respond effectively. The other contributions in this series on navigating U.S.-China competition in the Indo-Pacific show how these states have sought to recover from the pandemic while also answering structural threats of revisionism and economic headwinds from decoupling, protectionism and changing integration patterns. Cutting across those specific policy issues are three overarching dilemmas that each state will be forced to resolve when making policy. How policymakers navigate these dilemmas will define the policy settings of their regional strategy.
Topic:
Security, Economic Growth, Multilateralism, Regional Integration, Economic Development, Strategic Competition, and COVID-19
Political Geography:
China, Europe, South Asia, India, United States of America, and Indo-Pacific

47. Analyzing the Variables that Influence Access to Bank Financing for Small and Medium Enterprises in Kosovo and North Macedonia

Author:
Filloreta Kunoviku-Demiri, Qazim Tmava, and Esat A. Durguti
Publication Date:
09-2021
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
This study aims to analyze variables that influence access to bank loans by SMEs in Kosovo and North Macedonia. Research methodology is compound by primary and secondary data. We hypothesized that the age of the SMEs, business size, written business plan, collateral type, and business experience before starting as an owner, owner education, and owner gender influence access to bank loans for SMEs. Econometric model results revealed that age of the SMEs, business size, and written business plan has a significant influence on bank loans borrowed by SMEs, while, collateral type, business experience before starting as an owner, owner level of education, and owner gender have no significant influence on bank loans borrowed by SMEs in the Republic of Kosovo. Furthermore, from the results obtained we revealed that age of the SMEs, business size, written business plan, and owners’ level of education has a significant influence on bank loan borrowed by SMEs, whereas, collateral type, business experience before starting as owner and owners gender have no significant influence on bank loans borrowed by SMEs in the Republic of North Macedonia. The findings suggest some future lines of research at the end and provide recommendations for the main stakeholders of this field of study.
Topic:
Finance, Economic Growth, Banking, and Loans
Political Geography:
Europe, Kosovo, and North Macedonia

48. The European Court of Human Rights Through the Looking Glass of Gender: An Evaluation

Author:
Natalie Alkiviadou and Andrea Manoli
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Goettingen Journal of International Law
Institution:
The Goettingen Journal of International Law
Abstract:
Gender equality is of paramount importance for a functioning democracy and for economic growth. It is a central tenet of human rights law and has seen significant developments on the legislative, judicial, and policy levels of the Council of Europe. Through a mélange of theory, legislation, and jurisprudential analysis, this paper will assess developments in the European Court of Human Rights’ approach to the issue of gender equality. This will be achieved through a survey of case law involving domestic violence, child-bearing, and the wearing of religious dress by women. The paper will demonstrate that, despite the existence of significant milestones in the ambit of promoting gender equality, and, notwithstanding effective advancements made by this body, particularly vis-à- vis domestic violence case law, improvements to its approach remain necessary. More specifically, on one level, the Court denounces and works against gender inequality and discrimination but, on another, consciously or unconsciously, its approach and findings are marred by its own stereotypes, patriarchal influences, misconceptions, and preconceptions about what gender equality actually is and how it should be pursued.
Topic:
Gender Issues, International Cooperation, Economic Growth, Violence, and Equality
Political Geography:
Europe

49. The External Dimensions of the European Green Deal: The Case for an Integrated Approach

Author:
Svea Koch and Niels Keijzer
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The European Green Deal conveys the EU’s ambition to adjust and “green” its economic growth trajectory and become climate-neutral by 2050, as part of its contribution to the Paris Agreement and the Sustainable Development Goals. While being ambitiously pursued within the Union’s own borders, the Green Deal also has strong external ramifications, as the EU leaves a tremendous ecological footprint in other parts of the world. The EU has referred to this “external dimension” of the Green Deal without further defining it, and appears to primarily understand it as a reflection of the internal strategies and as a call for the EU’s partner countries to follow a sustainable recovery trajectory similar to its own. A number of proposed EU domestic strategies (e.g. biodiversity, blue economy or farm-to-fork) contain chapters on global aspects, yet the EU seems to follow a predominantly sectoral logic to implementing the external dimension of the Green Deal. This approach has certain shortcomings. For one, it creates uncertainty for partner countries on how to adapt to the EU’s new rules, regulations and standards, and the extent of EU support for adjusting to this. It also creates a vacuum for member state engagement by means of their economy, finance, climate and foreign policies. Last but not least, it lacks clear governance mechanisms to address potentially conflicting policy objectives and to strive for greater coherence of domestic and external EU policies. Ultimately, the EU needs to define the different external dimensions of the Green Deal and promote an integrated approach. Whereas this applies universally to all partner countries of the EU, we focus in particular on developing countries in this paper. We consider these dimensions to be (1) promoting the Green Deal in bilateral and regional cooperation, (2) ensuring coherence and addressing negative spillovers, both in trade and domestic policies and (3) the EU’s global leadership in multilateral fora. Combining those three dimensions and governing them across EU institutions and member states allows for the external response to become an integral part of the EU Green Deal. Such an integrated approach allows the EU to claim leadership vis-à-vis other global powers, make credible commitments in multilateral fora for successful “green diplomacy”, and use its market and regulatory power to transform itself and others. In its bilateral relationships, the EU needs to strike a “deal” in the true sense of the word: together formulating and “owning” cooperation agendas that are clear in terms of what is in it for the EU’s partners and how the EU will cushion the potential negative adjustment costs of partners. Overall, the EU needs to avoid a “projectisation” of the external dimension of the Green Deal and clarify how the different Commission services and member states aim to work together to deliver the Green Deal, including through its various external policy areas, of which development is just one.
Topic:
Climate Change, Development, European Union, Economic Growth, and Green Deal
Political Geography:
Europe

50. The European Central Bank’s Monetary Policy Strategy Review: the key to a return to sustainable growth in Europe

Author:
Nicolas Goetzmann
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
On 23 January 2020, a few weeks before the Covid19 pandemic began, Christine Lagarde, President of the European Central Bank (ECB), announced that a "strategy review" would be held with the aim of evaluating the monetary policy conducted since May 2003, the date of the last "review". Faced with an inflation rate significantly below 2%, whereas its objective is "below but close to 2% over the medium term", the ECB had no choice but to carry out such a procedure.
Topic:
Monetary Policy, Economic Growth, European Central Bank, and Sustainability
Political Geography:
Europe