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921. A New Phase of European Integration:Organized Capitalisms in Post-Ricardian Europe

Author:
Armin Schäfer and Martin Höpner
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
European Research Papers Archive
Abstract:
In the past, economic integration in Europe was largely compatible with the persistence of different national varieties of capitalism. While product market integration intensified competition, member states could build on and foster their respective comparative advantage. To date, this no longer unequivocally holds true. We contend that a new, 'Post-Ricardian' phase of European integration has emerged in which the Commission's and the ECJ's attempts to further economic integration systematically challenge the institutions of organized capitalism. This quest for liberalization has reached a point at which its output legitimacy is increasingly uncertain. As a result, the de-politicization of EU decisions proves increasingly unsuccessful. In addition, liberalization measures rely on a very generous interpretations of the 'four freedoms' that exceeds the amount of liberalization the member states agreed upon in the European treaties and, therefore, lacks input legitimacy. We show this by discussing recent struggles over the Services Directive, the Takeover Directive, and company law. In the current phase of European integration, the Commission's and the ECJ's liberalization attempts either transform the institutional foundations on which some of the member states' economic systems rely or they create political resistance to an extent that calls into question the European project. The case studies reveal evidence for both of these possibilities.
Topic:
Development and Economics
Political Geography:
Europe

922. The European Commission as Network Broker

Author:
Susana Borrás
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
European Research Papers Archive
Abstract:
Recent transformations in the European Union have been putting significant pressure on the management function of the European Commission. Examining its brokerage position in policy networks, this article asks what kind of role does the Commission have in the political interactions in Brussels after the year 2000. Developing a conceptual framework about brokerage roles in EU policy, the article uses a combination of quantitative and qualitative data in an empirical analysis of two very different cases where the Commission has been embattled the past years. The article argues that previous reports of the Commission's demise are much exaggerated, because it continues playing a leading role in managing interaction between multiple actors at different levels of governance. The empirical results show that the Commission is a resilient central network broker.
Topic:
Development, Economics, and Government
Political Geography:
Europe

923. Corporate Values in Local Contexts Work Systems and Workers' Welfare in Western and Eastern Europe

Author:
Marta Kahancová
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
European Research Papers Archive
Abstract:
Increased international competition poses challenges to companies' organizational practices, including human resource management. For multinational companies operating simultaneously in diverse local conditions this challenge implies a decision between either opting for universal best practices or adapting their employment strategy to differing local standards in host countries. What influences whether work practices are similar or differ when deployed in differing conditions? Why are some companies committed to their workers' welfare while others are not? This paper attempts to answer these questions by studying work practices, namely work systems and fringe benefits, in a Dutch multinational company (MNC) and its manufacturing subsidiaries in Western and Eastern Europe. Evidence suggests that the observed patterns are best explained by the interplay of three factors. Rational economic interest, company values, and local institutions yield subsidiary work practices that are embedded in, but not adapted to, local standards. The MNC's value system accounts for the fact that generous benefits are offered without a direct relation to the company's profit maximization and without external societal and institutional pressures to provide such benefits.
Topic:
Development, Economics, and Human Welfare
Political Geography:
Europe

924. Taxation and Democracy in the EU

Author:
Steffen Ganghof and Philipp Genschel
Publication Date:
02-2007
Content Type:
Working Paper
Institution:
European Research Papers Archive
Abstract:
Is corporate tax competition a threat to democracy in the EU? The answer depends crucially on a positive analysis of the effects of tax competition on national policy autonomy. Most analyses focus on direct effects on corporate tax rates and revenues. We contend that this focus is too narrow. It overlooks the fact that corporate tax competition also has important indirect effects on the progressivity and revenue-raising potential of personal income taxation. We elaborate on these indirect effects theoretically and empirically, and explore the implications for the normative debate on the EU's democratic deficit. Our findings show that European integration can constrain national redistribution in a major way: the democratic deficit is real. Greater political contestation over the EU's policy agenda is desirable in order to mitigate this deficit.
Topic:
Democratization, Development, and Economics
Political Geography:
Europe

925. Crony Capitalism and Democracy: Paradoxes of Electoracompetition in Russia's Regions

Author:
Gulnaz Sharafutdinova
Publication Date:
02-2007
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
The phenomenon of crony capitalism has been explored primarily with reference to its impact on economic growth. This study investigates the political implications of crony capitalism and, specifically, the interaction between political competition and crony capitalism. Based on a case study of political trajectories in two regions of the Russian Federation, I argue that under crony capitalism political competition can undermine the legitimacy of state authorities and such democratic institutions as the electoral mechanism. Played out in public during electoral campaigns, unrestricted political competition uncovers the predatory nature of crony elites engaged in struggle for power and wealth. Paradoxically, the electoral process itself gets discredited as an essential part of the overall institutional order in the process. Noncompetitive political systems avoid such negative tendencies, at least in the short run.
Topic:
Democratization and Economics
Political Geography:
Russia and Europe

926. Economic Survey of Hungary, 2007

Publication Date:
05-2007
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Budget consolidation is dominating the political agenda. The Hungarian government has embarked on an ambitious four-year consolidation programme following another election-year peak in the deficit in 2006 at 9.2% of GDP. The immediate revenue increases and spending cuts are temporarily damping growth. However, if all goes according to plan, the programme will bring dividends to the economy in the longer term. This payoff is crucially dependent on: Discipline in budgetary processes. Work needs to continue on strengthening budgetary mechanisms. A system of binding medium-term spending limits should be considered. Budgetary reform also needs to extend to the sub-national governments. Success in maintaining spending freezes. The re-scheduling that brought forward part of the 13th month payment to public-sector workers this year does not affect achievement of the 2007 fiscal target in accrual terms. Nevertheless, looking forward, strong resistance to spending pressures arising from revenue windfalls is of key importance. Implementation of the structural reform programme. The healthcare reforms that are expected to deliver a large share of fiscal savings are reasonably well advanced and a welcome cut in gas-price subsidies is already reducing government spending. The reforms in education are positive but the changes to the tuition–fee system in particular should go further. It is more uncertain, however, whether all the planned cuts in government administration will be realised. Successful reform of public spending requires the participation of the counties and municipal governments. There are potential savings in administrative overheads here too and sub-national governments are responsible for providing many government services. In-depth review of these issues in this Survey reveals a need to: Capture economies of scale. Political constraints preclude widespread mergers among the large number of small municipalities. However, the joint provision of services is widespread and should be encouraged further. Efforts to rationalise through replacement of county-level governments with regional assemblies should continue. Reform financing systems. The financing of sub-national government needs simplification and greater transparency and oversight in accounts. Also, the benchmarking of services via output and performance indicators needs to become more widespread. Reform of local taxation should include widening of property tax and removal of the local business tax. Hungary's low employment rate remains a key structural handicap to economic performance. There has been welcome reform of unemployment benefits and early-retirement pensions. Planned reforms to disability pensions look promising and a concrete proposal for old-age pension reform is in the pipeline. This Survey looks in depth at the issue of prolonged parental leave and other aspects of family policy: Current efforts to boost childcare services are welcome. Future reform needs to consider further strengthening of central-government provision requirements on municipalities regarding these services, matched by appropriate funding. A system of childcare vouchers for parents would be one way of increasing efficiency in the provision of services. Reform to the very long parental leaves should be considered, along with changes to the attendant system of additional cash benefits. Savings could be used to help fund increased childcare services.
Topic:
Development, Economics, and Government
Political Geography:
Europe

927. Economic Survey of Greece, 2007

Publication Date:
05-2007
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Growth performance over the last decade has been among the best in the OECD, though a precise calibration is not yet possible following the recent revisions to GDP data. High growth has been driven by a range of factors, some of which are transitory. It is particularly encouraging that growth has been sustained over the last two years, despite substantial fiscal consolidation, mainly being driven by investment and exports. However, significant further reforms are needed to ensure that good performance is sustained in the years to come. It is imperative to use this period of strong performance to tackle remaining weaknesses in product and labour markets and move fiscal policy further towards a sustainable position by vigorous continued consolidation and pension reform. The key challenge, in terms of political economy, is to manage the required reforms in a context where society may be unduly complacent because the “good times” appear to be continuing.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Europe and Greece

928. Economic Survey of Italy, 2007

Publication Date:
06-2007
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
A welcome economic recovery is under way in Italy. In part, this reflects the cyclical upswing in the rest of Europe, but there are also early signs of a more fundamental improvement, notably in terms of export and labour market performance. Even so, medium-term prospects remain challenging: Total factor productivity shows little signs of resurgence, high public indebtedness threatens fiscal sustainability and population ageing looms large. Without further reforms to restore economic dynamism, living standards will be dragged down relative to other countries. This Survey discusses policies undertaken by the government to address these challenges, notably to boost competition on product markets, achieve fiscal sustainability and make fiscal federalism work – all in support of growth and adjustment.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Europe and Italy

929. Competition Law and Policy in Sweden

Publication Date:
06-2007
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Sweden's 1993 Competition Act (CA) remains the foundation of a broad policy approach that includes prohibitions against restrictive agreements and abuse of dominance, control of concentrations, advocacy and support for academic research. Enforcement of this legislation by the Swedish Competition Authority (SCA) marked a shift towards a judicial, rules-based approach.
Topic:
Development, Economics, and Government
Political Geography:
Europe and Sweden

930. Economic Survey of Slovak Republic, 2007

Publication Date:
04-2007
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Following major economic reforms, the Slovak economy has grown strongly in recent years, driven by rapid productivity growth, but still has far to go to catch up to the per capita income levels in the advanced European countries. The incoming government has made achieving a more equal distribution of income a priority insofar as this can be done without damaging long-term growth prospects. There is considerable scope both to strengthen growth prospects and to reduce income inequality by raising employment rates, improving education outcomes (including by reducing the impact of socio-economic background), and by removing barriers to product-market competition. The new government has also reiterated its commitment to Slovakia's entry into the euro area in January 2009 and has taken steps to make it probable that Slovakia will satisfy the Maastricht criteria for entry on a sustainable basis. Policies may need to be adapted to support macroeconomic stability in the currency union.
Topic:
Development, Economics, and Poverty
Political Geography:
Europe, Eastern Europe, and Slovakia