This week's piece is on the progress towards completing the Financial Services Action Plan (FSAP). Amid continuing difficulties in key areas, pressure is growing for further advances in completing the single market for capital and financial services.
Topic:
International Political Economy and International Trade and Finance
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
This week's piece focuses on the role of ERM II in the East European accession candidate countries. The EU's Exchange Rate Mechanism has emerged as the primary vehicle for the integration of the CEEC-10 accession countries into the European Monetary Union.
Topic:
International Political Economy and International Trade and Finance
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
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.
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Europe has been the driving force of economic policy in Spain over the last four decades and the key factor behind the modernization and globalisation of the Spanish Economy. The accession to the EEC in 1986 was a crucial step in the process of economic and political integration.
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The purpose of this paper is to use the fifteenth anniversary of the accession of Portugal and Spain to the European Union as an opportunity to reflect on what has happened to both countries since 1986. It examines the integration process and how it has affected political, economic and social developments in Portugal and in Spain over the last fifteen years. In our view, and on balance, Spain and Portugal have benefited from accession. Since the last century, the obsession of Spanish and Portuguese reformists has been to make up the lost ground with modernized Europe. EU membership has been a critical step in this direction. The record of the past fifteen years is that this dream is becoming an economic reality. Despite impressive achievements, however, namely, since 1986, Portugal's average per capita income has grown from 56 percent of the EU average to about 74 percent, whereas Spain's has grown to 83 percent—both Iberian countries still have a long way to go to reach the EU average wealth. In addition, the question of Iberian and/or European citizenship, and its impact on the Portuguese and Spanish, remains open.
Topic:
Government, International Trade and Finance, and Political Economy
At the strong initiative of the Mayors of the ci ties of Niš, Skopje and Sofia, and with the active support of the EastWest Institute's Programme for Transfrontier Cooperation, a long-term process was launched to intensify transfrontier cooperation between the border regions of the Republic of Bulgaria, the FY R Macedonia and the FR of Yugoslavia. The overall objective of this initiative is to employ intensified cross-border cooperation as a tool for regional economic development and integration within this Niš-Skoplje-Sofia Triangle, as well as to foster conditions of prosperity, security and peaceful co-existence between neighboring peoples and states.
Topic:
Development, Economics, and International Trade and Finance
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.
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