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5021. Speed of Convergence and Relocation: New EU Member Countries Catching up with the Old

Author:
Kari E. O. Alho, Ville Kaitili, and Mike Widgrén
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Economic convergence of the EU's new member countries (NMCs) towards the incumbent EU countries (EU-15) is of paramount importance for both partners, not only in terms of real income but also in nominal terms. In this study we build a dynamic, computable general equilibrium model, starting from the Balassa-Samuelson two-sector framework, then modify and enlarge it (with, among other things, endogenous capital formation, consumption behaviour and labour mobility) to address several other issues such as uncertainty, welfare and sustainability in terms of foreign indebtedness. At the same time we make flows of foreign direct investment (FDI) endogenous in order to evaluate the impact convergence has on the EU-15 and the inter action between the two regions through FDI. We find that in a general equilibrium setting, fears of adverse effects resulting from a relocation of EU-15 manufacturing to the NMCs are not well founded.
Topic:
International Relations, Development, Economics, and Foreign Direct Investment
Political Geography:
Europe

5022. The Rise of China with Special Reference to Arms Supplies

Author:
Peter Brookes, Bruno Tertrais, and Alexei D. Voskressenski
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Like the rest of the world, Europe has been fascinated by the emergence of China for a long time, and there has been an official relationship between the EU and the People's Republic of China for 30 years now. This relationship was upgraded in 1998. It now takes the form of a China-EU summit every year, the latest having taken place in December 2004. The EU became China's main trading partner in 2004, with trade between the two parties soaring to €160 billion.
Topic:
Arms Control and Proliferation and Development
Political Geography:
China, Europe, and Asia

5023. Financial Consequences of Widowhood in Europe: Cross-Country and Gender Differences

Author:
Namkee Ahn
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
We document in this paper the financial consequences of widowhood using both cross-section and panel data from the European Community Household Panel. The research reveals that there are large differences across countries. For example, widowed persons in Greece and Portugal have the lowest income – less than a half that of those widowed in Austria. Cross-country differences decrease somewhat if we consider household income net of housing costs, owing to the higher share of home ownership in low-income countries. Further, the income reduction upon widowhood is generally larger for widows than it is for widowers. The difference in income between the genders is largest in Denmark, Spain, Austria and Finland, where widower s enjoy an income that is more than 30% higher that of widows. The main culprit of the differences in income between widows and widowers lies in pension regulations. As today's elderly women an d those approaching old age spent their working years in an era where women worked at home, raised children and did not participate in the labour market, many depend mostly on survivorship pensions as their main source of income. Yet in most countries this kind of pension tends to be much lower than the applicable old-age pension, owing to the prevailing pension laws. Consequently, the financial situation of widows is unlikely to improve in the medium term unless pension regulations change.
Topic:
International Relations, Demographics, and Economics
Political Geography:
Europe, Finland, Greece, Denmark, and Spain

5024. A Gravity Model under Monopolistic Competition

Author:
Kari E. O. Alho
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper presents an alternative derivation of the gravity equation for foreign trade, which is explicitly based on monopolistic competition in the export markets and which is more general than previously seen in the literature. In contrast with the usual specification, our model allows for the realistic assumption of asymmetry in mutual trade flows. The model is estimated for trade in Europe, producing evidence that trade flows and barriers do indeed reveal strong asymmetry. We then carry out a simulation, based on the estimated model, of the general equilibrium effects (through trade) of the UK's possible entrance into the economic and monetary union.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United Kingdom and Europe

5025. Impact of Public R Financing on Private R Does Financial Constraint Matter?

Author:
Jyrki Ali-Yrkkö
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This study analyses how public R financing impacts companies. Our main goal is to study whether public and private R financing are substitutes or complements, and whether this impact differs between financially constrained and unconstrained companies. Our company-level panel data cover the period from 1996 to 2002. The statistical method employed in the research takes into account the possibility that receiving public support may be an endogenous factor. Our results suggest that public R financing does not crowd out privately financed R Instead, receiving a positive decision to obtain public R funds increases privately financed R Furthermore, our results suggest that this additionality effect is bigger in large firms than in small firms.
Topic:
Emerging Markets and Industrial Policy
Political Geography:
Europe

5026. WTO Agricultural Negotiations: A Comparison of the Harbinson Proposal and the Swiss Formula

Author:
Martina Brockmeier, Marianne Kurzweil, Janine Pelikan, and Petra Salamon
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The WTO agricultural negotiations of the Doha round are a key issue in the public debate. This paper analyses the effects of different options to improve market-access on the basis of a GTAP model, comparing the impact of the Harbinson proposal and the Swiss formula on trade balances. An extended version of the GTAP model is used to first project a base run that includes factors arising from Agenda 2000, EU enlargement, the EBA agreement and the EU's mid-term review. The policy simulation run additionally includes the WTO negotiations. Here, the model is differentiated between three experiments. While the first experiment simply implements the Harbinson proposal, the second one additionally takes into account an adoption of the EBA agreement by all industrialised countries. In the third experiment, the tariff cuts are based on the Swiss formula using a coefficient of 33 instead of the tiered approach of the Harbinson proposal.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

5027. Integration and Conditional Convergence in the Enlarged EU Area

Author:
Ville Kaitila
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This working paper analyses conditional convergence in Europe and also tries to assess the impact that arises from integration. Using a pooled mean-group estimation method, we first analyse the conditional convergence of GDP per labour force in the area covering the 15 member states of the European Union (EU-15) in 1960-2002. Conditional convergence is well-documented for the EU- 15. Higher investment, lower public consumption and lower inflation have contributed positively to GDP growth. Deeper European integration is shown to have accelerated growth when inflation is not included in the specification, but not otherwise. The evidence on the effect of integration on growth is therefore mixed. We then apply the same method to estimate the growth of GDP per labour force in the new EU member states – the eight Central and Eastern European countries (CEECs) – for the period 1993-2002. These countries are shown to have converged conditionally towards the average level of GDP per labour force in the EU-15. Higher investment and lower public consumption have also supported growth in the CEECs.
Topic:
International Relations and Development
Political Geography:
Europe

5028. Scenarios for Modelling Trade Policy Effects on the Multifunctionality of European Agriculture

Author:
Jerzy Wilkin, Janet Dwyer, David Baldock, Hervé Guyomard, and Dorota Klepacka
Publication Date:
01-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The ENARPRI partners agreed in February 2004 to prepare a precise specification for the scenarios that partners would attempt to model in their own national contexts, to examine the impacts of trade-related changes upon the multifunctionality of EU agriculture. This paper outlines a suite of five scenarios covering anticipated domestic (EU) policy under different possible outcomes from the Doha round, broadly based upon the status quo (with mid-term review), full decoupling of domestic support and full decoupling plus reductions in (decoupled) domestic support, with variants in relation to export subsidies and the scale of pillar 2 measures. In all cases it is recognised that national or sub-national models will require an additional level of national or regional specification before they can be run, and that each national team will be required to do this drawing upon their own domestic knowledge and discussion with relevant experts. Each of the models that will be used to undertake these analyses is then briefly reviewed to identify its general approach and the multifunctionality indicators that can be covered. These indicators are then set in the broader context that considers other potential indicators of multifunctionality and their rationales. The paper concludes with some additional commentary about the significant differences, and thus the difficulties, of attempting to undertake this exercise for any of the new member states.
Topic:
International Relations and Agriculture
Political Geography:
Europe

5029. Multilateral Market-Access Reforms of the Doha Round: A Preliminary Assessment of Implications for EU Agricultural Trade

Author:
Wusheng Yu and Hans G. Jensen
Publication Date:
01-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The July package of the Doha Round of trade negotiations stipulates that a tiered-formula approach should be used to significantly reduce market access barriers across countries, implying that the EU would have to make larger cuts to its high external tariffs, in comparison with many other WTO members such as the US. This paper provides a preliminary assessment of the likely impact of the tiered-formula reform approach on EU agricultural sectors. Numerical simulations of a multilateral market-access reform scenario show that such cuts would lead to across-the-board decreases in intra-EU trade flows, as compared with a baseline projection. While intra-EU trade flows would decrease, the EU's trade with the rest of the world would increase. Yet such increases would not be symmetric – imports into the EU would increase more than exports, resulting in larger external trade deficits or smaller external trade surpluses in many EU agricultural products. Further, the resulting adjustments in member states' production and net trade positions are not equal: the new member states would generally lose part of their export shares in the EU market to external competitors, as highlighted in the cases of bovine meat and dairy products.
Topic:
Economics, Human Welfare, and International Trade and Finance
Political Geography:
United States and Europe

5030. What Prospects for the European Constitutional Treaty? - Monitoring the Ratification Debates

Author:
Sebastian Kurpas, Marco Incerti, and Justus Schönlau
Publication Date:
01-2005
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
Following the success of the EPIN survey on the European elections 2004 (EPIN Working Paper No. 11), the authors decided to use a similar approach for monitoring the current ratification process of the European Constitutional Treaty. Accordingly, the findings presented in this paper are based on the results of a survey conducted among national experts associated with the European Policy Institutes Network (EPIN). As such, they are inherently subjective, but nevertheless wellinformed. The report draws on survey data collected in 20 EU member states, supplemented by additional sources of information on the remaining countries where available. While the actual outcomes may prove our findings wrong in one respect or another, they do indicate interesting developments and differences in the respective member states. The added value of this EPIN survey lies in its broad comparative scope and analysis rather than its offering an in-depth assessment of each national debate. (For the latter, special country reports are envisaged at a later point in time.) The EPIN Ratification Monitor project plans to publish regular updates on the rapidly changing situation.
Topic:
International Relations, Government, and Treaties and Agreements
Political Geography:
Europe