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1231. International — Weak Dollar

Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece is on the international implications of a weaker US dollar. Seventeen weeks of dollar weakness raise the questions of whether the dollar is on a sustained path of decline, and what the implications are internationally. The 6% nominal effective decline in the dollar since January 31 might be sustained due to US financial and macroeconomic factors. Overall, the effect would be positive for Europe and the United States, and might encourage domestic demand growth in export-oriented Asian economies.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

1232. International — Global Economy

Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
A textbook approach to economic growth suggests the world is in for a difficult period. However, there are reasons to believe that the global economy will defy convention. The global economy will continue to support US external imbalances for the medium term, barring marked deterioration in certain areas of US weakness. However, European integration and Asian development could provide alternative sources of global demand, relieving the current imbalance of global dependence on the US economy.
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
United States and Europe

1233. European Union — Insecure Recovery

Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the outlook for euro-area economic performance. Despite some indications of improvements in the global and euro-area economies, it is too early to assume that these signify a lasting recovery.
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
Europe

1234. United States/European Union — WTO Sanctions

Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
US trade officials said last week that EU estimates of damages arising from US export subsidies were exaggerated. EU trade officials have asked the WTO to approve 4 billion dollars worth of trade sanctions against the United States, after the latter lost an appeal before the WTO on the tax treatment of foreign-source income — judged to be illegal export subsidies. Washington must amend its tax laws or face the prospect of retaliatory trade restrictions.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Europe, and Washington

1235. European Union — ECB Policy

Publication Date:
01-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the ECB's monetary and communication policy. The Governing Council of the ECB has appeared fairly unmoved either by widespread criticism of its communication policy or by growing pressure for lower interest rates. The ECB has no choice but to remain committed to its price stability mandate, despite the change in economic climate. However, in doing so, it remains vulnerable to the dilemmas posed by the combination of strong independence and a narrow mandate.
Topic:
Economics and Politics
Political Geography:
Europe

1236. Regulatory Europeanization, National Autonomy and Regulatory Effectiveness: Marketing Authorization for Pharmaceuticals

Author:
Jürgen Feick
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The EC harmonized market entry regulation for pharmaceuticals from the early sixties on, but it achieved neither its goal of uniform national regulatory decisions nor that of automatic mutual recognition. Subsequent attempts to Europeanize the procedures themselves resulted in two alternatives in 1995: a Centralized Procedure for innovative pharmaceutical products implemented at the EU level, and a Decentralized Procedure which tries to assure mutual recognition. First, the paper analyzes the distinctive modes of Europeanization employed in these regulatory alternatives, examining both their impact on the effectiveness of European governing and the balance they strike between European interventionism, national participation and national autonomy. Second, it tries to assess whether Europeanization furthers the goals of pharmaceutical market entry policy as defined in European regulations – public health protection, creation of a single market and the reduction of regulatory costs to industry. There is little evidence that the public's health is less well protected when regulation is Europeanized. Only the Centralized Procedure contributes significantly to the goal of establishing a single market. Regulatory costs in terms of approval time did go down especially for pharmaceutical firms using the Centralized Procedure, mainly because of efficiency-enhancing legal provisions and institutionally induced regulatory competition between national authorities.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
Europe

1237. The European Social Model: Coping with the Challenges of Diversity

Author:
Fritz W. Scharpf
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
European integration has created a constitutional asymmetry between policies promoting market efficiencies and policies promoting social protection and equality. National welfare states are legally and economically constrained by European rules of economic integration, liberalization, and competition law, whereas efforts to adopt European social policies are politically impeded by the diversity of national welfare states, differing not only in levels of economic development and hence in their ability to pay for social transfers and services but, even more significantly, in their normative aspirations and institutional structures. In response, the "Open Method of Coordination" is now applied being in the social-policy field. It leaves effective policy choices at the national level, but tries to improve these through promoting common objectives and common indicators and through comparative evaluations of national policy performance. These efforts are useful but cannot overcome the constitutional asymmetry. Hence there is reason to search for solutions which must have the character of European law in order to establish constitutional parity with the rules of European economic integration, but which also must be sufficiently differentiated to accommodate the existing diversity of national welfare regimes. The article discusses two such options, "Closer Cooperation" and a combination of differentiated "framework directives" with the Open Method of Coordination.
Topic:
Civil Society, Economics, and Political Economy
Political Geography:
Europe

1238. Does a Switch of Budget Regimes Constrain Managerial Discretion? Evidence for Italian Public Enterprises' Investment

Author:
Elisabetta Bertero and Laura Rondi
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study examines the effect of the hardening of the budget constraint on the investment behaviour of Italian state owned enterprises (SOEs). It carries out a natural experiment that exploits the 1987 shift of budget regimes due to the pressure of European Union economic policies on the Italian government.Drawing from the theory of capital market imperfections, we apply the empirical framework for the analysis of investment-cash flow sensitivity to a panel of state-owned manufacturing firms during the period 1977-93. We parallel state firms to Anglo-Saxon public corporations which, under separation of ownership and control, are afflicted by agency problems, managerial discretion, misallocation of free cash-flow and overinvestment. We argue that, under a soft budget constraint, state firms' managerial discretion and, in particular, collusion between managers and vote-seeking politicians, lead to wasteful investment.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe and Italy

1239. Hardening a Soft Budget Constraint Through 'Upward Devolution' to a Supranational Institution: The Case of Italian State-Owned Firms and the European Union

Author:
Elisabetta Bertero and Laura Rondi
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper contributes to the literature on the role of decentralization in hardening the budget constraint of public enterprises. Following Qian and Roland the study adopts a 'federalist' approach. However, it interprets federalism as the upward devolution of domestic economic policies to a supranational authority and examines its role in disciplining public enterprises operating in a soft budget regime. The methodology is a case study of the shift in budget regime in Italy in the late 1980s. The study shows that a determinant role in driving this shift was played by European economic policies. The discipline imposed by participation in the EMS, the Single Market Programme and, later, the requirements to enter the EMU pushed the Italian government toward a much tougher approach to its budget deficit.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Europe

1240. Turkey's Elections and the United States

Author:
Philip H. Gordon and Henri J. Barkey
Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
The landslide victory of an Islamic party in a Turkish election would hardly seem to be good news for Americans at anytime. Butwithwarlooming inIraq,Turkeytrying torecoverfromits worst financial crisis ever, emerging questions about European defense and NATO, Cyprus talks at a critical stage, and Ankara's application for membershipinthe EuropeanUnioninthe balance, the November3electoralvictory oftheJusticeand DevelopmentParty(AKP)probably struck many U.S. observers as the wrong outcome at the wrong time.
Topic:
NATO, Economics, and Politics
Political Geography:
United States, Europe, and Middle East