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362. Slower Growth
- Author:
- John H. Makin
- Publication Date:
- 02-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- The average forecast for 2005 U.S. growth is 3.5 percent, with some prognosticators hoping for 4 percent. This forecast is predicated upon the assumption that the economy is on a sustainable expansion path, where consumption will be supported by steady growth of employment and household incomes. The 3.5 percent growth forecast for 2005 is identical to the mean growth rate of the U.S. economy since 1947. However, there is good reason to believe that the consensus forecast is too high. This possibility has important consequences because U.S. growth must be sustained at least at average levels to avoid a sharp drop in global growth. There are no signs of higher growth in Europe and Asia. Growth in Japan is looking weaker, while Chinese growth is moderating.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- United States, Japan, China, Europe, and Asia
363. Does Financial Openness Promote Economic Integration? Some Evidence from Europe and the CIS
- Author:
- Fabrizio Carmignani and Abdur Chowdhury
- Publication Date:
- 12-2005
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- We study whether financial openness facilitates the economic integration of formerly centrally planned economies with the EU- 15. Two dimensions of economic integration are considered: cross-country convergence of per-capita incomes and bilateral trade in goods and services. We find that more financially open economies effectively catch-up faster and trade more with the EU-15. These integration-enhancing effects occur over and above any effect stemming from domestic financial deepening and other factors determining growth and trade.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- Europe
364. Theorising European Strategic Culture: Between Convergence and the Persistence of National Diversity
- Author:
- Christoph O. Meyer
- Publication Date:
- 06-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- This working document focuses on the dynamics and scope of strategic culture–building in the context of the European Union's aspirations to develop a European security and defence policy (ESDP). It argues that the notion of strategic culture can be useful in assessing the context in which the ESDP will develop further as well as its performance in matters of conflict prevention, management and resolution. Nevertheless, in order to be conceptually and empirically useful, strategic culture needs to be disaggregated into collective norms about the means and ends of security policy, as well as its different carriers such as political elites, societies and armed forces. The paper examines the convergence thesis and suggests three theories to explain convergence informed by realist, constructivist and regional theories of political change. Yet the paper also argues that these forces can affect national strategic cultures differently, depending on the countries' geopolitical positions, the institutional stickiness of domestic ideas, values and norms, and the degree to which such norms are subject to partisan or societal contention. On this basis, the paper advances some hypotheses about the actual extension of the convergence process, which will need to be validated by further empirical study.
- Topic:
- Defense Policy, Economics, and International Trade and Finance
- Political Geography:
- Europe
365. Economic Prospects for Kaliningrad: Between EU Enlargement and Russia's Integration into the World Economy
- Author:
- Evgeny Vinokurov
- Publication Date:
- 06-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- The Kaliningrad oblast of Russia is currently an important focal point of discussions between the European Union and Russia. Although small in terms of geography and population, Kaliningrad has grown in importance due to the EU enlargement process. Since the break–up of the Soviet Union, the oblast has become an exclave of Russia, and it is now set to also become an enclave within the EU. This paper examines the state of Kaliningrad's economy and trade. The economic crisis that took place in Russia in the 1990s had severe consequences for Kaliningrad, as old patterns of production and trade were disrupted. Since 1999, however, the regional economy has grown with impressive speed. Kaliningrad's Special Economic Zone (SEZ) status has played a crucial role in determining its new patterns of production and trade specialisation. The paper argues that the SEZ regime has made the region's economic growth faster but also vulnerable.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Russia, Europe, and Asia
366. Business Cycle Synchronisation in the Enlarged EU: Co-Movements in the New and Old Members
- Author:
- Zsolt Darvas and Gyorgy Szapary
- Publication Date:
- 03-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- It is generally recognised that countries wanting to join a monetary union should display the optimal currency area properties. One such property is the similarity of business cycles. We therefore undertook to analyse the synchronisation of business cycles between the EMU-12 and the eight new EU members from Central and Eastern Europe (CEECs), for which the next step to be considered in the integration process is entry into the EMU. In contrast to the usually analysed GDP and industrial production data, we extend our analysis to the major expenditure and sectoral components of GDP and use several measures of synchronisation. The main findings of the paper are that Hungary, Poland and Slovenia have achieved a high degree of synchronisation with EMU for GDP, industrial production and exports, but not for consumption and services. The other CEECs have achieved less or no synchronisation. There has been a significant increase in the synchronisation of GDP and also its major components in the EMU members since the start of the run-up to EMU. While this lends support for the existence of OCA endogeneity, it cannot be unambiguously attributed to it because there is also evidence of a world business cycle. Another finding is that the consumption-correlation puzzle remains, but its magnitude has greatly diminished in the EMU members, which is good news for common monetary policy.
- Topic:
- Economics, International Cooperation, and International Trade and Finance
- Political Geography:
- Europe
367. Searching for the Determinants of IT Investment: Panel Data Evidence on European Countries
- Author:
- Paolo Guerrieri, Cecilia Jona-Lasinio, and Stefano Manzocchi
- Publication Date:
- 01-2004
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies
- Abstract:
- The aim of this paper is to identify the degree of information technology (IT) adoption in individual European economies and to analyse the determinants of IT investment among a panel of EU countries. We first analyse the dynamics of IT investment expenditure in 15 European countries from 1992 until 2001 and, by means of a cluster analysis, we draw a picture of IT diffusion in Europe. By clustering the European countries according to their shares of IT spending over GDP, we identify three fairly stable groups of fast, medium and slow adopters. We then build an econometric equation of the determinants of IT investment to use with panel data in estimations for five European economies over the period of 1980 to 2001. We consider aggregate IT investment as well as separate investment in hardware or software. Financial conditions, income growth and comparative advantage turn out to affect IT investment, but we find that the determinants of hardware investment only partially overlap with those of software.
- Topic:
- Economics, International Trade and Finance, and Science and Technology
- Political Geography:
- Europe
368. Can Europe deliver growth? The Sapir Report and Beyond
- Author:
- Jean-Pierre Casey and Jacques Pelkmans
- Publication Date:
- 01-2004
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- The SAPIR report (Sapir et al., 2003) is important for Europe. The justification of and search for higher economic growth in the EU ought to be on the very top of the EU agenda everywhere. Offering a very rich and useful survey of many issues related to European growth, or indeed the lack of it, the report's analysis is insightful and should be compulsory reading for policy-makers and political leaders. Sapir et al.'s policy recommendations are numerous and rightly touch economic as well as institutional aspects at EU level.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Europe
369. European and American Approaches to Antitrust Remedies and the Institutional Design of Regulation in Telecommunications
- Author:
- J. Gregory Sidak and Damien Geradin
- Publication Date:
- 01-2004
- Content Type:
- Working Paper
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- In the United States and the European Union, the topic of remedies in network industries cuts across antitrust law and sector-specific regulation, including telecommunications. The legal and economic understandings of a “remedy” are not always synonymous. In both legal systems, a remedy is the corrective measure that a court or an administrative agency orders following a finding that one or several companies had either engaged in an illegal abuse of market power (monopolization in the US and abuse of dominance in the EC) or are about to create market power (in the case of mergers). With the exception of merger control where remedies seek to prevent a situation from occurring, legal remedies are retrospective in their orientation. They seek to right some past wrong. They may do so through the payment of money (whether that is characterized as the payment of damages, fines, or something else). Or they may seek to do so through a mandated change in market structure (“structural” remedies), as in the case of divestiture, or in the imposition of affirmative or negative duties (“behavioral” remedies). United States v. Microsoft Corp (U.S. Court of Appeals for the D.C. Circuit, 2001). presented the tradeoff between these various remedial alternatives.
- Topic:
- Government and International Trade and Finance
- Political Geography:
- United States and Europe
370. Economic Survey of the Czech Republic, 2004
- Publication Date:
- 11-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Following accession to the European Union the big issue for the Czech Republic is to strengthen growth prospects. Growth potential at present is somewhat above 3 per cent, implying a moderate pace of catch-up to living standards in the EU and elsewhere. There is room for greater ambition in growth performance, and it is welcome to see this reflected in the programme of the new Czech government. This Survey underscores four main challenges. Fiscal consolidation is the dominant challenge for macroeconomic policy, and is not only necessary to cope with ageing and to bring down the tax burden but is also needed to fulfil euro-area entry conditions. A welcome programme of fiscal reform has begun, including proposals for a system of multi-year aggregate spending ceilings and significant expenditure cuts. However, to date, mainly revenue-raising measures have been implemented while the full impact of expenditure measures is yet to be realised. The attempt to secure broad political consensus on pension reform is commendable, but it must be underscored that whatever reform is finally implemented, it will have to bring considerable fiscal savings. Health-care reform also has to deliver savings, but concrete proposals have yet to be made. To facilitate assessment of the true fiscal position, extra-budgetary funds need to be more fully integrated in mainstream government budgeting procedures. Also, with the further decentralisation of public services, the need for good budgeting practices and accountability in regional and municipal governments is all the more important. The Central Bank and the Ministry of Finance have formulated a transparent strategy for entering the euro area, that foresees minimising the time spent in ERM II. Annual reports will assess the economic conditions in relation to the Maastricht Criteria and a request to enter ERM II will only being made if the probability of a positive first assessment by the EU authorities is high. The choice of a 3 per cent inflation target for the run-up to euro entry is justifiable on medium-term grounds. However there may be some difficulty communicating the consistency of this target with the Maastricht criterion for price stability. The Czech authorities should therefore pay close attention to how the Maastricht criteria are interpreted and applied by the European Commission and the ECB and adjust their communication strategy accordingly. Most of the catch-up in living standards will have to come from boosting productivity growth. This means swifter re-allocation of resources across firms as well as stronger in-firm productivity growth. While the Czech Republic is a strong competitor for attracting foreign direct investment, policy towards poorly performing firms and business start-ups has problems, slowing down the exit and entry of firms. Bankruptcy procedures are cumbersome, often long and usually end up in liquidation, with asset stripping not uncommon. Reforms have long-since been planned, and it is welcome that new legislation looks finally set to go ahead. The legislation aims at strengthening the role of creditors, speeding up proceedings and allowing composition to play a bigger role. Likewise, efforts to streamline business registration are welcome and should be implemented as soon as possible. The general business climate is also damaged by issues in network industry competition, as some services, notably internet, are expensive in international comparison. Mobility between jobs and regions is weak. Administrative extensions of collective wage agreements, strict employment protection legislation (EPL) on individual dismissals, rent control, severe poverty traps (particularly for families) and a high tax wedge have contributed to considerable long-term unemployment. The Roma population is hit especially hard in this respect. Migration is to some extent mitigating the labour-market rigidities with Slovaks filling skilled vacancies and other eastern Europeans (mainly Ukrainians) taking up unskilled jobs that are unattractive for locals. Tackling the unemployment problem requires measures across a wide front, but most notably social benefit reform is needed along with reduction in the tax wedge as well as easing of EPL. The widespread social and economic exclusion of the Roma needs more attention, particularly in the education system. A more open immigration policy is needed to address immediate issues such as the inconsistency between granting work permits as well as for better alignment of immigrants' skills with those needed on the Czech labour market.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Europe, Ukraine, and Czech Republic