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451. The significance of the tobacco product manufacturing to Poland’s economy

Author:
Adam Śmietanka, Anna Malinowska, Grzegorz Poniatowski, and Jan Hagemejer
Publication Date:
07-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This report, prepared by a team of economists from CASE, is a continuation of the 2018 analysis The significance of the tobacco product manufacturing to Poland’s economy commissioned by JTI Polska Sp. z o.o. The purpose of the research whose results are presented in this report is to assess the economic significance, challenges and development prospects of the tobacco product manufacturing, trade and distribution sector in Poland. In the report we analyze a cross-section of the tobacco industry and its significance for the economy as a whole. We also present the significant barriers to the sector’s growth, i.e. the illicit market, costs of compliance and regulatory uncertainty, and we also model the long-term macroeconomic effects of potential changes in the industry. To the best of our knowledge, at the moment this is the most comprehensive economic study of the sector.
Topic:
Economic growth, Fiscal Policy, Manufacturing, Trade, and Tobacco
Political Geography:
Europe and Poland

452. Increasing the International Role of the Euro: A Long Way to Go

Author:
Marek Dabrowski
Publication Date:
08-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Topic:
European Union, Economic growth, Central Bank, Currency, and Trade
Political Geography:
Europe

453. Is the economy doomed to a long recession?

Author:
Andrzej Halesiak and Andrzej Rzońca
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic. A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
Topic:
Financial Crisis, Economy, Economic growth, Crisis Management, Fiscal Policy, and Trade
Political Geography:
Global Focus

454. Study and Reports on the VAT Gap in the EU-28 Member States: 2020 Final Report

Author:
Adam Śmietanka, Grzegorz Poniatowski, and Mikhail Bonch-Osmolovsky
Publication Date:
10-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported. In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019. Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion). The Policy Gap and its components remained stable. For the EU overall, the average Policy Gap level was 44.24 percent. Of this, in 2018, 10.07 percentage points were due to the application of various reduced and super-reduced rates (the Rate Gap) and 34.17 were due to the application of exemptions without the right to deduct. The results of the econometric analysis show that the VAT Gap is influenced by a group of factors relating to the current economic conditions, institutional environment, and economic structure as well as to the measures and actions of tax administrations. Out of a broad set of tested variables, GDP growth and general government balance appeared to explain a substantial set of VAT Gap variation across time and countries. Within the control of tax administrations, share of IT expenditure proved to have the highest statistical significance in explaining the size of the VAT Gap. In addition, the VAT Gap appeared to be inter-related with the values of risky imports of goods, indicating the role of fraud in driving the overall share of the VAT Gap. Since the COVID-19 recession will likely have a dire impact on the EU economies, the VAT Gap in 2020 is forecasted to increase. If the EU economy contracts by 7.4 percent in 2020 and the general government deficit jumps as forecasted in the Spring Forecast of the European Commission, the Gap could increase by 4.1 percentage points year-over year up to 13.7 percent and EUR 164 billion in 2020. The hike in 2020 could be more pronounced than the gradual decrease of the Gap observed over the three preceding years. Moreover, a return to the VAT Gap levels observed in 2018 and 2019 will take time and require significant action from tax administrations. This Report has been written for the European Commission, DG TAXUD, for the project TAXUD/2019/AO-14, “Study and Reports on the VAT Gap in the EU-28 Member States”, and is a follow-up to the seven reports published between 2013 and 2019.
Topic:
European Union, Fiscal Policy, VAT, and COVID-19
Political Geography:
Europe and Global Focus

455. The Rule of Law and its Social Reception as Determinants of Economic Development. A Comparative Analysis of Poland and Germany

Author:
Christopher Hartwell, Kateryna Karunska, Krzysztof Głowacki, and Maria Krell
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The rule of law, by securing civil and economic rights, directly contributes to social prosperity and is one of our societies’ greatest achievements. In the European Union (EU), the rule of law is enshrined in the Treaties of its founding and is recognised not just as a necessary condition of a liberal democratic society, but also as an important requirement for a stable, effective, and sustainable market economy. In fact, it was the stability and equality of opportunity provided by the rule of law that enabled the post-war Wirtschaftswunder in Germany and the post-Communist resuscitation of the economy in Poland. But the rule of law is a living concept that is constantly evolving – both in its formal, de jure dimension, embodied in legislation, and its de facto dimension, or its reception by society. In Poland, in particular, according to the EU, the rule of law has been heavily challenged by government since 2015 and has evolved amid continued pressure exerted on the institutions which execute laws. More recently, the outbreak of the COVID-19 pandemic transformed the perception of the rule of law and its boundaries throughout the EU and beyond (Marzocchi, 2020). Against this background, this study examines the rule of law as a determinant of economic development in Germany and Poland from both the de jure and de facto perspectives.
Topic:
Economic growth, Rule of Law, Trade, and Economic Development
Political Geography:
Europe, Poland, and Germany

456. Guidebook: Direction: An Efficient State

Author:
Gvantsa Ichkiti, Hasmik Grigoryan, Agnieszka Kulesa, Salome Kandelaki, and Stanislav Bieliei
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The Polish Decentralisation Guidebook aims at presenting in a synthetic way the experience of Poland regarding the re-introduction of local government and the decentralisation process since 1989. Its main goal is to provide representatives of central and regional authorities, experts, and representatives of opinion-forming circles in Armenia and Georgia with relevant information and knowledge. The idea of the authors of this Guidebook was to facilitate mutual learning between the countries, the exchange of good practices, and lessons learned. The territorial division of Armenia was established in 1995. Now the country has two levels of administrative division – regions and communities – and the local self-government is exercised only on the level of communities. In the case of Georgia, administrative reform aimed at introducing local government started in 1997. Currently, self-government in Georgia is exercised on just one level – in municipalities (including self-governing cities and self-governing communities). Poland’s experience, in which local government units are established on all three levels of territorial division, might be useful to Armenia and Georgia, if they wish to further reform their territorial administration and pursue decentralisation. This Guidebook is comprised of four main parts. The first part is devoted to the presentation of the Polish experience in five selected areas: Empowerment of local communities Financing of local government units Providing public services Absorption of external funds by local governments Crisis responses The second part is dedicated to the presentation and analysis of needs and main blocking points in decentralisation in Armenia, while the third one concentrates on Georgia. Both of them are structured around the five above-listed areas. The last but very most important section of this Guidebook provides a set of recommendations for Armenia and Georgia based on the Polish experience in introducing local government and decentralisation. The country-specific sections of this Guidebook were prepared mainly on the basis of the results of desk research. This included reviewing the existing literature, relevant state strategies and action plans as well as reports developed by local and international organisations. Key legal acts were also reviewed. In addition, interviews with representatives of local municipalities and other stakeholders were carried out in Armenia and Georgia. This Guidebook was developed as part of the project called ‘Direction: an efficient state. Polish experiences of decentralisation and modernisation, lessons learned for Armenia and Georgia’ co-funded by the Ministry of Foreign Affairs of the Republic of Poland. It is the joint work of three partner institutions: CASE – Center for Social and Economic Research based in Warsaw, the Tbilisi-based Georgian Institute of Politics (GIP), and the Analytical Centre on Globalization and Regional Cooperation (ACGRC) from Yerevan.
Topic:
Demographics, Labor Issues, Governance, Economic growth, Social Policy, Trade, and Decentralization
Political Geography:
Eastern Europe, Poland, and Armenia

457. Standard Operating Procedure (SOP) for Slum Upgradation and Delisting in Odisha

Author:
Scaling City Institutions for India (SCI-FI)
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
In continuation to the Government of Odisha’s landmark initiative of the Odisha Liveable Habitat Mission (OLHM), also known as the JAGA Mission, launched in 2018, and the successful implementation of the Odisha Land Rights to Slum Dwellers Act 2017, basic infrastructure upgradation and delisting of slums emerge as the next critical steps towards transforming these informal settlements into liveable habitats, integrated with the urban area. Towards this end the Scaling City Institutions for India (SCI-FI) initiative at the Centre for Policy Research (CPR) as knowledge partner supported Housing and Urban Development Department, GoO to prepare a 'Standard Operating Procedure (SOP) for Participatory Slum Upgradation and Delisting’. The SOP intends to benefit the key stakeholders by laying down the procedure and benchmarks for undertaking participatory integrated slum level infrastructure upgradation and establishing procedure and documentation for delisting of the slum, to integrate it to the rest of the urban area. This SOP will act as an enabler for ULBs partnering with the Slum Dwellers’ Associations to ensure the availability of adequate basic services to mainstream the slums into the city fabric. This SOP lays down the integral steps to realise community-level benefits building on land rights distribution towards achieving the broader vision of a Liveable Habitat for all.
Topic:
Development, Poverty, Urban, Land Rights, and Slums
Political Geography:
South Asia and India

458. Improving Housing for Urban Poor: Learnings from BLC Implementation in Kerala

Author:
Aparna Das, Anindita Mukherjee, Baisakhi Sarkar Dhar, Sudeshna Chatterjee, Arushi Gupta, and Aastha Jain
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
The Government of Kerala dovetailed its state housing programme with the national scheme of Pradhan Mantri Awas Yojana in 2015 to realise the vision for ‘Housing for All’. The State Poverty Eradication Mission of the Government of Kerala, or Kudumbashree, is the state-level nodal agency for implementing the scheme in Kerala. The PMAY (U) is converged with the LIFE Mission (Livelihood, Inclusion and Financial Empowerment), the comprehensive housing scheme of the Kerala government, and is implemented as PMAY (U)-LIFE. In Kerala, the PMAY’s Beneficiary-led Individual House Construction or Enhancement (BLC) vertical emerged as the most preferred vertical, owing to an increased subsidy outlay by the Government of Kerala. Further, recognising the lack of state-owned land as a significant hindrance to the uptake of the BLC scheme, the state government converged the implementation of the BLC scheme with the third phase of the LIFE Mission in 2017. This convergence provided an additional subsidy to the landless households to purchase private land, thereby enabling their inclusion under the ambit of the BLC scheme in the state. This report is based on a primary assessment of the state of habitat improvement in Kerala, under the ambit of PMAY (U)-LIFE, through a quantitative household survey in three cities of Kerala – Kochi, Trivandrum and Mukkam. It finds that the State’s interventions towards the Housing for All agenda have underscored the importance attributed to the landless and the homeless in the state, rather than slum dwellers exclusively. The State’s interventions have also successfully demonstrated an approach towards enabling livelihoods through housing and imbibing financial empowerment among women. While the Kerala model has exhibited various successful interventions to achieve a higher uptake of the BLC under PMAY, Kerala now needs to focus on adopting a city-wide, inclusive spatial planning approach. This report concludes by advocating for the provision of allied basic civic infrastructure across the new and existing housing in the state and for a spatial integration of the beneficiaries, to ensure habitat improvement.
Topic:
Poverty, Governance, Urban, and Housing
Political Geography:
South Asia and India

459. Improving Housing for Urban Poor: Learnings from BLC Implementation in Odisha

Author:
Aparna Das, Anindita Mukherjee, Baisakhi Sarkar Dhar, Sudeshna Chatterjee, Arushi Gupta, and Aastha Jain
Publication Date:
11-2020
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
In response to the national housing scheme, the Pradhan Mantri Awas Yojana (PMAY), the Government of Odisha designed the Odisha Urban Housing Mission – Awaas in 2015 to realise the goal of housing for all in the state. With an additional outlay as subsidy from the state government and the Centre to the economically weaker sections for building houses on their own land, the Beneficiary-led ‘Individual House’ Construction or Enhancement (BLC) vertical emerged as the most preferred. During the initial days of implementation, the lack of documentary evidence for the land occupied by slum dwellers continued to exclude the majority from the purview of the BLC subsidy. To address this impediment and to enable a wider traction of the scheme, the State introduced the Odisha Land Rights to Slum Dwellers Act, 2017, entitling the urban poor to rights on the land parcels they had been residing on, depending on the tenability. After the completion of the pilot phase of the Act, the Hon’ble Chief Minister of Odisha launched the JAGA Mission, to expand the land rights programme and to transform the existing slums into liveable habitats, with the provision of all essential civic urban infrastructure. Against this background, this report aims to understand (a) the impact of the distribution of Land Rights Certificates (LRCs) among the urban poor on their ability to leverage the housing subsidy under BLC and (b) the existing conditions and challenges in the construction of houses through BLC under PMAY in Odisha. For this purpose, a stratified sample survey of 250 households was carried out in three cities of Odisha – Dhenkanal, Gopalpur and Berhampur – in addition to Key Informant Interviews (KIIs). The study finds that the dissemination of land rights to the urban poor, after the commencement of the JAGA Mission, enhanced the potential beneficiary base in the state for leveraging available BLC housing subsidies. However, the ensuing ‘house only’ approach in the State and the limited focus on improving access to basic services require urgent redressal. While the steps adopted by the Government of Odisha are vital to address the issues of urban planning and housing for slum dwellers, there is now a looming need to adopt a multi-pronged approach towards ensuring an overall habitat improvement and an integration of slums into the city fabric.
Topic:
Poverty, Governance, Urban, and Housing
Political Geography:
South Asia and India

460. Powering Through the Pandemic

Author:
Ashwini K. Swain
Publication Date:
07-2020
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
The disruption caused by the Covid-19 pandemic are consequential for India’s long-term electricity goals. While exacerbating the existing weaknesses in the sector, the pandemic could also affect the trend toward an electricity transition. This report is an attempt to understand the impact of the pandemic on India’s electricity, government responses, and thus, suggest a structural approach to building a resilient electricity future. We find that the Covid-19 caused disruptions in the electricity sector are pervasive and have alarming secondary effects and long-term consequences. While the Central and state governments have been swift to recognise the disruptions, the band-aid approach, focused on fixing existing patterns in the sector, appears inadequate to challenges. Ironically, the long-term electricity reform agenda – proposed in major legislative and policy amendment proposals – shaped in times of a pandemic has failed to internalise the challenges thrown-up and insights gained from the Covid-19 experience. The combination of Covid-19 disruptions, technological driven cost reductions in renewable energy, and the longstanding financial and governance problems of the sector combine to create a ‘critical juncture’ for the sector- a moment to envision a new and alternative configuration of technology, institutions and politics that could transform Indian electricity. While this a long-term and complex conversation, the report suggests illustrative pathways toward these goals.
Topic:
Government, Electricity, Pandemic, and COVID-19
Political Geography:
South Asia and India