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51. Digitalisation of Poland's post-COVID economy – how to make the best use of the EU Recovery Fund?

Author:
Jan Hagemejer and Karolina Zubel
Publication Date:
01-2021
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In this report, we show that the level of digitalisation of the Polish economy as a whole is behind European benchmarks and that it is insufficient. This has two dimensions – one is the overall low digital literacy of Polish society and the low demand for digital services, while the other is the insufficient digitalisation of business activities which stems from inefficient programmes and incentives in this respect. These dimensions overlap – human capital deficiencies reduce the benefits from digitalisation efforts on the part of enterprises while digitalisation itself is performed in an inefficient way. We analyse digitisation in several sectoral dimensions to understand the challenges facing specific segments of the Polish economy. We show that the deficiencies in digitalisation are uneven: small firms are lagging behind large firms, while manufacturing firms use existing digital solutions in inefficient ways, lacking integration and strategic vision. Given the existing empirical evidence, improvements in these areas can positively contribute to the costs of running a business and to the way a business is organised as well as improve the allocative efficiency. Improving the degree of the use of digital technology in manufacturing can contribute to maintaining the cost-competitiveness of the sector while digital process innovations can shift it towards non-price competitiveness. Improvements in the digitisation (and digitalisation) of the services sector will help with consumer outreach and facilitate entering foreign markets, in particular for small firms. Last but not least, in light of the identified list of needed improvements, we comment on the potential use of the EU Recovery Fund which was agreed in July 2020 to mitigate the social and economic damage of the COVID-19 pandemic in EU MS. Thanks to this earmarked budget, the European Commission (EC) will be able to borrow EUR 750 billion from capital markets and redistribute it among MS as grants and loans between 2021 and 2027.
Topic:
Demographics, Labor Issues, European Union, Economic Growth, Social Policy, Trade, and COVID-19
Political Geography:
Europe and Poland

52. Thinking Beyond the Pandemic: Monetary Policy Challenges in the Medium- to Long-Term

Author:
Marek Dabrowski
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance. This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Topic:
Monetary Policy, Economic Growth, Trade, Pandemic, and COVID-19
Political Geography:
Europe and Global Focus

53. Learning from Tumultuous Times: An Analysis of Vulnerable Sectors in International Trade in the Context of the Corona Health Crisis

Author:
Oliver Reiter and Robert Stehrer
Publication Date:
07-2021
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The COVID-19 pandemic marks an unprecedented shock to global growth and trade and brought international dependencies into the spotlight. This triggered discussions on resilience and robustness of global value chains. In this paper we assess which products can be considered as vulnerable to trade shocks at the global level – referred to as ‘risky’ products – by constructing a ‘product riskiness indicator’ for 4700 globally traded products based on components such as market concentration, clustering tendencies, network centrality of players, or international substitutability. In a second step the bilateral imports of risky products are matched to multi-country input-output tables enabling the analysis of the importance of internationally sourced risky products by country and using industries. Higher-tech industries are more prone to supply-chain vulnerability given the large share of risky products in high-tech product categories. Third, we apply a ‘partial global extraction method’ to assess the GDP impact of reshoring. Assuming that imports of risky products are re-shored from non-EU27 to EU27 countries suggests an increase in the EU27 GDP of up to 0.5%. The non-EU27 countries lose from such re-shoring activities accordingly. This suggests that it is also in the interest of the supplier countries and industries to assure robust or at least resilient supply chains. Finally, selected policy aspects in the context of the envisaged EU Open Strategic Autonomy are debated.
Topic:
International Trade and Finance, European Union, Economic Growth, COVID-19, and Health Crisis
Political Geography:
Europe

54. To Grow or Not to Grow: Belarus and Lithuania

Author:
Thorvaldur Gylfason and Eduard Hochreiter
Publication Date:
09-2021
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We compare the economic growth performance of Belarus and Lithuania since the collapse of the Soviet Union in 1991. Our interest in this country pair is driven by the two countries´ interwoven histories as well as by the fact that Belarus remains autocratic and strongly tied to Russia, while Lithuania has reinvented itself as a democratic market economy fully integrated into the EU. Our aim is to better understand the extent to which the growth differential between the two countries can be traced to increased efficiency, i.e., total factor productivity, in the use of capital and other resources via, inter alia, better institutions (intensive growth) as opposed to sheer accumulation of capital (extensive growth), the hallmark of Soviet economic growth. To this end, we compare the development of some key determinants of growth in the two countries since the 1990s. A simple growth accounting model suggests that advances in education at all levels, good governance, and institutional reforms have played a more significant role in raising economic output and efficiency in Lithuania than in Belarus, which remains marred by problems related to weak governance as well as autocratic rule. Further, as in Estonia and Latvia, the EU perspective has made a significant contribution to growth in Lithuania. The Russian connection has done less for Belarus. Finally, we touch upon the impact of the corona virus on the economies of the two countries.
Topic:
European Union, Economy, Economic Growth, Post-Soviet Space, and Autocracy
Political Geography:
Russia, Europe, Lithuania, and Belarus

55. Firm Foundations: The Statistical Footprint of Multinational Corporations as a Problem for Political Economy

Author:
Timur Ergen, Sebastian Kohl, and Benjamin Braun
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The discipline of comparative political economy (CPE) relies heavily on aggregate, country- level economic indicators. However, the practices of multinational corporations have increasingly undermined this approach to measurement. The problem of indicator drift is well-documented by a growing critical literature and calls for systematic methodological attention in CPE. We present the case for a rocky but ultimately rewarding middle road between indicator fatalism and indicator faith. We illustrate our argument by examining two important cases – Sweden’s recent export success and the financialization of non-financial corporations in France. A careful parsing of the data suggests corrections to common characterizations of the two cases. Swedish exports have been reshaped by intragroup trade among foreign subsidiaries of domestic corporations. The growth of financial assets held by French firms is attributable to the growth of foreign direct investment and to cumulative revaluation effects, while what remains of financialization is concentrated among the very largest firms. Based on these findings, we propose a methodological routine that parses data by zooming in on the qualitative specifics of countries, sectors, and firms, while using all available options for disaggregation.
Topic:
Political Economy, Economic Growth, Multinational Corporations, and Financialisation
Political Geography:
Europe, France, and Sweden

56. It’s Time for a New Deal

Author:
Constantine Michalopoulos
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The prospects of the Greek economy are mostly good with growth continuing for the fourth straight year. But there is a sense of disappointment, as the recovery has not been very strong and pre-crisis income levels will not be regained for another decade. There are two main reasons for the sluggish recovery: The European creditors have imposed on Greece the requirement to run a primary budget surplus of 3.5% of GDP for five years to ensure that they get repaid—a requirement that constricts growth of the Greek private sector—through heavy taxation of consumers and business. And domestic investment is sluggish, although there are plenty of unutilized resources, such as those provided by the European Structural Funds. There is a need for a new deal with the European Institutions: the Europeans should be more relaxed about getting repaid because of Greece’s much improved access to the European capital markets and be willing to accept a Greek government commitment to a significantly lower primary budget surplus for the next several years. In exchange the Greek government should commit to a commensurate increase in domestic investment through reforms of the banking sector as well as greater public sector investment spending.
Topic:
Government, Financial Crisis, Economy, Economic Growth, and Public Spending
Political Geography:
Europe and Greece

57. The Future is Green, Digital and Social: Europe’s new growth model and its Recovery Plan

Author:
Christina Kattami
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The policy brief* outlines the agenda of the new Commission before the outbreak of the coronavirus pandemic, and aims to analyse the ways in which the crisis has reinforced and strengthened key points of that agenda. It further outlines the Commission’s Recovery Plan proposal, and examines its links to the aspiring green and digital transition. Finally, it showcases the legal base and timeline of the Recovery Plan proposal and highlights the main points of agreement and contention across the Member States, outlining the July deal of the European Council and the ensuing resolution of the European Parliament. It overall argues for the need of a holistic recovery, that takes into account the unprecedented policy window brought by public and private funding, and ensures that the eventual indebtedness of the next generation is at least compatible with the aspirations and goals of an economy and society of the future.
Topic:
Science and Technology, European Union, Economic Growth, Institutions, Coronavirus, and Sustainability
Political Geography:
Europe

58. What role for health in the new Commission?

Author:
Simona Guagliardo
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
As the Juncker Presidency hands over its mandate baton to Ursula von der Leyen, all eyes are on the energised new President and her ambitions bestowed upon her cabinet. Despite some progress, more efforts to improve Europe’s health policy is still needed if it is to tackle unprecedented challenges like demographic changes, environmental degradation and the rapidly changing world of work. Newly-appointed Health Commissioner Stella Kyriakides has been entrusted with a considerable portfolio, indicating an arduous yet promising five years ahead of her. In this Policy Brief, policy analyst Simona Guagliardo argues that von der Leyen’s agenda for a “Union that strives for more” offers a unique opportunity to build a strong case for placing health and well-being at the centre of her policy triad: economic growth fuelled by technological innovation and environmental protection. The EU and its member states must recognise the centrality of people’s health and well-being vis-à-vis economic growth; ensure that health is a constant factor in all policymaking; and deliver on their promises of social fairness, equality and inclusion.
Topic:
Environment, Health, Science and Technology, European Union, and Economic Growth
Political Geography:
Europe

59. Four Years of Trump. The US and the World

Author:
Mario Del Pero, Paola Magri, Gary C. Jacobson, Michele Alacevich, Gabriella Sanchez, Scott L. Greer, Mario Del Pero, William F. Wechsler, and Erik Jones
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Unprecedented and unpredictable: this is how US President Donald Trump's administration has repeatedly been labelled. Beyond the frequent tweets and bombastic rhetoric, however, lie a more conventional four years, as the United States navigated an ever-evolving international reality, compounded by a global pandemic and one of the deepest economic recessions in over a century. This Report analyses the continuity and changes that occurred during Trump’s presidency. Domestically, it investigates the growing political polarization, the country's pre-pandemic economic performance, Trump's approach towards regular and irregular migration, and the US’ response to a healthcare emergency. At the international level, this volume looks at how the US stance has changed vis-à-vis China, the Middle East, and Europe. Which long-term trends has President Trump had to ride through? What was his trademark, and what might be his lasting legacy?
Topic:
Economics, Globalization, Immigration, European Union, Inequality, Economic Growth, Engagement, Donald Trump, COVID-19, Polarization, and Disengagement
Political Geography:
China, Europe, Middle East, North America, and United States of America

60. EU MONITOR: Has the time come for a Czech Regional Policy?

Author:
Vít Havelka
Publication Date:
01-2020
Content Type:
Special Report
Institution:
Europeum Institute for European Policy
Abstract:
Over the past 5 years, the Czech Republic has experienced unprecedented GDP growth, moving the country from 83% of EU average GDP in 2013 to 91% of the EU average GDP in 2019. At the same time, the Czech wage increased by more than 7% in 2013 in the last three years. This phenomenon is addressed by our Vít Havelka in the latest issue of the EU Monitor. The following decade will likely be determining for the future success of the Czech Republic. The global economy and its supply chains are undergoing a significant shift; Asian states are slowly becoming innovative leaders rather than being a cheap labour pool. Furthermore, the Czech Republic is heavily dependent on the automotive industry3, which is under pressure not only by stricter emission regulation, but also disruptive market change such as autonomous systems, digitalization and electrification. It is likely that old market strategies will prove obsolete as it happened in case of cell phones. Along with the changing global economy, the Czech Republic is nearing to a point where it will not be fully able to rely on the EU Cohesion Policy anymore. The country has reached the threshold of 90% EU ́s average GDP, and if the current economic development remains the same, the Czech Republic will not have access to Cohesion Funds after the coming MFF, and it will receive significantly less money from the EU budget. The problem is that regional disparities within the Czech Republic remain high, especially between the capital city Prague and the rest of the country. Simultaneously, since the EU accession in 2004, the Czech Republic relied mainly on the EU Cohesion Policy in terms of providing funding for regions, supplementing the EU ́s activity only with minor national contributions. As a result, the country does not have a well-developed culture of regional policy that would be nationally funded, and there is not even a discussion in the media about national solidarity with disadvantaged regions. The following paper aims at discussing a possible way forward for the Czech Republic, especially in the context of expected changes in global economy and simultaneous decrease of EU Funding that could help mitigate the impact of economic disruptions. The focus will be laid on possible If the whole automotive left the Czech Republic, Deloitte estimates that the Czech GDP would decrease by 25% and 1,4 million Czechs would lose their reaction to lower income from the EU, as it is presumed that a solid regional policy is crucial in maintaining internal cohesion and contributes to mitigation of economic turbulences.
Topic:
European Union, GDP, Global Political Economy, and Economic Growth
Political Geography:
Europe and Czech Republic