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1. Challenges to Transatlantic Digital Infrastructure: An EU Perspective

Author:
Anselm Küsters, André Wolf, and Eleonora Poli
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Recent disruptions in the Baltic Sea and elsewhere highlight the integral role of digital and physical conduits such as gas pipelines, telecommunications cables and undersea data cables in maintaining European connectivity and security. Overall, the EU’s responses to emerging challenges to its digital sovereignty, particularly from China and Russia, aim to enhance the security and resilience of its digital landscape, from the Global Gateway Strategy to the Gaia-X project. However, the complexity of the submarine cable infrastructure requires a broader and more holistic assessment of the opportunities and obstacles to ensuring the uninterrupted flow of information across borders. Ultimately, a concerted transatlantic effort is needed to strengthen the backbone of Europe’s digital infrastructure against both man-made and natural adversities, thereby securing a future where sovereignty and resilience are paramount for both the EU and the US.
Topic:
International Political Economy, Politics, Infrastructure, European Union, Institutions, Transatlantic Relations, and Digital Policy
Political Geography:
Europe

2. Chips: EU’s Ambition in a Transatlantic Technology Bridge

Author:
Nicola Bilotta
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Semiconductors are vital building blocks of digital technologies. In line with its aspiration for strategic autonomy, the EU has recognised vulnerabilities in its chip supply chain, which heavily relies on foreign firms. The intricate relationship between economic security and open trade underlies the EU’s quest to bolster its domestic capacity while enhancing connections with key global partners. Despite the challenges of finding a policy balance, fostering transatlantic cooperation in the semiconductor domains remains a key ambition. To cultivate a more balanced and effective partnership with the US, the EU should capitalise on its comparative advantages to amplify and fortify its strategic positioning in the global supply chain.
Topic:
International Political Economy, Science and Technology, Governance, European Union, Transatlantic Relations, and Industry
Political Geography:
Europe

3. A G7/G20 Pact for Sustainable Urbanisation? Building on the Positive Legacy of Italy’s G20 Presidency

Author:
Nicholas J. A. Buchoud, Michael Keith, Susan Parnell, and Martin van der Pütten
Publication Date:
02-2022
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The G20 as we know it emerged from the 2008 global financial crisis. What is rarely acknowledged, however, is that this grouping of the world’s twenty largest economies emerged at a time when the world was fast becoming more “urban” than “rural”. The impact of urbanisation on the world economy has received scant attention in global decision-making arenas because the post-2008 stabilisation of the global financial system came with significant costs. In particular, the financial crisis had important recentralising effects. The OECD, for instance, has regularly underlined the lasting impact of the financial crisis on sub-national investment capabilities.
Topic:
International Political Economy, Infrastructure, Governance, Urbanization, G20, and Sustainable Development Goals
Political Geography:
Europe and Italy

4. Firm Profits and Government Activity: An Empirical Investigation

Author:
Petar Jolakoski, Branimir Jovanovic, Joana Madjoska, Viktor Stojkoski, and Dragan Tevdovski
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
If firm profits rise to a level far above than what would have been earned in a competitive economy, this might give the firms market power, which might in turn influence the activity of the government. In this paper, we perform a detailed empirical study on the potential effects of firm profits and markups on government size and effectiveness. Using data on 30 European countries for a period of 17 years and an instrumental variables approach, we find that there exists a robust relationship between firm gains and the activity of the state, in the sense that higher firm profits reduce government size and effectiveness. Even in a group of developed countries, such as the European countries, firm power may affect state activity.
Topic:
Development, Economics, Government, International Political Economy, and Profit
Political Geography:
Europe and Global Focus

5. Interrelationships between Human Capital, Migration and Labour Markets in the Western Balkans: An Econometric Investigation

Author:
Michael Landesmann and Isilda Mara
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The South-North migration corridor, i.e. migration flows to the EU from Africa, the Middle East and EU neighbouring countries in the East, have overtaken the East-West migration corridor, i.e. migration flows from Central and East European countries to the EU15 and the European Free Trade Association (EFTA). This is likely to dominate migration flows into the EU+EFTA over the coming decades. This paper applies a gravity modelling approach to analyse patterns and drivers of the South-North migration corridor over the period 1995-2020 and explores bilateral mobility patterns from 75 sending countries in Africa, the Middle East and other EU neighbours to the EU28 and EFTA countries. The study finds that income gaps, diverging demographic trends, institutional and governance features and persisting political instability, but also higher climate risks in the neighbouring regions of the EU, are fuelling migration flows along the South-North corridor and will most likely continue to do so.
Topic:
Economics, International Political Economy, Migration, Labor Issues, European Union, Human Capital, and Labor Market
Political Geography:
Europe

6. The Political Economy of Law Enforcement

Author:
Matías Dewey, Cornelia Woll, and Lucas Ronconi
Publication Date:
01-2021
Content Type:
Research Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The legal order is the legitimate foundation of liberal democracy. Its incomplete enforcement of the law can therefore appear dysfunctional, reflecting weak institutions, state capture, and corrupt practices. This paper casts doubt on such categorical assessments by systematically examining the reasons for and intentions behind incomplete enforcement. It argues that law enforcement is part of the political process that is deeply affected by the constellation of actors concerned. Choices over law enforcement produce social order that is analytically distinct from the production of legal norms and their formal implementation. By analyzing different types of partial enforcement, its rationales, and intended effects, we propose an approach that studies law enforcement as an integral part of public policy analysis and of the study of socioeconomic orders.
Topic:
Economics, International Political Economy, Law Enforcement, Law, Police, and Legal Sector
Political Geography:
Europe and Global Focus

7. The Good, the Bad and the Ugly: Taking Stock of Europe’s New Trade Policy Strategy

Author:
Fredrik Erixon
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This Policy Brief takes stock of the EU Trade Policy Review – the Commission’s proposed strategy for trade. Despite appearances, the Review doesn’t come close to its billing as a strategy for the new geopolitics of trade. In fact, the Review is weak on key geopolitical developments and rather gives the impression that the EU doesn’t have an ambition to shape outcomes. Obviously, the Review is anchored in Europe’s general economic climate: defensiveness on globalization, competition and digitalization. It follows that Europe is getting increasingly detached from world developments. There are several good parts in the Review. The Commission wants to revive and reform the World Trade Organisation, and it’s clear about what factors that have made the Geneva-based trade body dysfunctional. The Review also acknowledges that the EU will seek a closer alliance with the United States and use that for constructive purposes. Finally, it is welcome that the Commission proposes some new instruments for dealing with market distortions caused by foreign subsidies and protectionism in government procurement. All these initiatives can achieve good outcomes. However, they all require that Europe makes changes in its own policies and positions. The bad parts in the Review are Europe’s weak agenda for getting better market access in the growth regions in the world and its continued passivity on matters related to China. Europe’s main trade-policy challenge in the next decade is to ensure that businesses and consumers in Europe get better integrated with a world-market dynamism that predominantly will come from the Asian region. Absent a realistic and medium-term strategy for dealing with challenges connected to the rise of China, Europe will have difficulties getting the EU-China Comprehensive Agreement on Investment approved. Europe needs an actionable agenda for addressing bilateral frictions with China and problems that occur outside bilateral trade. Finally, the ugly part of the trade strategy are all the commercial policies in the EU – with strong effects on trade – that aren’t recognized or only casually mentioned in the Review. The latter category includes the ambition to introduce an autonomous carbon border tax on imports. Such a policy comes at a high political and economic cost, and the measure’s effect on reducing global carbon emissions is at best very negligible.
Topic:
Globalization, International Political Economy, International Trade and Finance, Treaties and Agreements, European Union, Geopolitics, Digital Economy, and Trade
Political Geography:
Europe

8. What is Wrong with the German Economy? The Case for Openness to Technology and Human Capital

Author:
Philipp Lamprecht
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Advanced economies like Germany need to focus more on attracting foreign high-skilled labour and become better at importing foreign technology and business models. This might not sit well with current thinking of economic sovereignty in Berlin, but it is a necessary step for improving technology-penetration, competitiveness and productivity. Supply of high-skilled labour is getting more difficult to obtain and the cost of generating and adopting new ideas is increasing. Policymakers need to create the right conditions to open their markets to foreign technology and high-skilled labour. But openness alone is only a necessary condition – not a sufficient one. Policymakers also need to focus on creating the right environment domestically to attract a specialised and highly-skilled labour force, despite fierce competition from around the globe. The crucial question is to what extent companies make use of innovation capacities that can be obtained from international recruitment. Our analysis focuses on what German policymakers can do to increase openness for, and its attractiveness to, the high-skilled labour. Germany’s policy framework should focus on public policy initiatives aimed at increasing the incentives and removing obstacles for firms to attract the global high-skilled labour force. To stay attractive, Germany’s policies should also target issues of bottleneck regulation to facilitate field-testing new technologies and to support innovation sandbox processes of companies. And German policies should focus on the regulatory environment, notably the type of regulations that policymakers pursue. Many current regulations in Germany do not sufficiently allow for experimentation of technologies and ideas.
Topic:
International Political Economy, Science and Technology, Labor Issues, Regulation, Human Capital, Innovation, and Skilled Labor
Political Geography:
Europe and Germany

9. 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

10. Covid-19 and the Danger of Self-sufficiency: How Europe’s Pandemic Resilience was Helped by an Open Economy

Author:
Johan Norberg
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
During the Covid-19 pandemic, Europe has benefitted strongly from being an open economy that can access goods and services from other parts of the world. Paradoxically, some politicians in Europe think that dependence on foreign supplies reduced the resilience of our economy – and argue that Europe now should wean itself off its dependence on other economies. In this Policy Brief, it is argued that self-sufficiency or less economic openness is a dangerous direction of policy. It would make Europe less resilient and less capable of responding to the next emergency. It is key that people, firms and governments can get supplies from other parts of the world. It is diversification, not concentration of production, that will make Europe more resilient when the next emergency hit. We don’t know where the next crisis will come from. Nature will throw nasty surprises at us, and we will make stupid mistakes, some of which will have devastating consequences. What we do know, though, is that we stand a better chance to fight the next emergency if we get richer and improve our technology. The best policy for resilience is one that encourages specialisation and innovation – and, when the emergency hit, allow for people to improvise in search for solutions. For that to happen, we need openness to goods, services and technology from abroad.
Topic:
Health, International Political Economy, Innovation, Economic Cooperation, Pandemic, and COVID-19
Political Geography:
Europe and Global Focus