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461. The Year to Date

Author:
John H. Makin
Publication Date:
03-2011
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The array of postbubble stresses and uncertainties identified in the January 2010 Economic Outlook (“The Year Ahead”) promised that the new year would see plenty of volatility in markets. That is exactly what is playing out as we move through the first quarter. As risks accumulate, it may be that 2010 is shaping up as a mirror image of 2009, reversing last year's down-then-up pattern with an up-then-down pattern this year.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States, Japan, China, and Europe

462. Do Germans support the euro?

Author:
Daniel Gros and Felix Roth
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyses public support for the euro in Germany. Drawing from the results of regular Eurobarometer surveys, it finds that the ongoing financial and sovereign debt crisis has reduced support for the euro among German citizens, but not dramatically so – at least not yet. In the 1990s, the German public was sceptical towards the euro. But since the introduction of euro banknotes and coins, a clear majority of citizens supports the euro – despite the financial and sovereign debt crisis. Moreover, on average, support for the euro is at a similar level in Germany as it is elsewhere in the euro area.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

463. The Enduring Popularity of the Euro throughout the Crisis

Author:
Felix Roth, Felicitas Nowak-Lehmann D., and Lars Jonung
Publication Date:
11-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyses the evolution of public support for the euro from 1990 to 2011, using a popularity function approach, focusing on the most recent period of the financial and sovereign debt crisis. Exploring a huge database of close to half a million observations covering the 12 original euro area member countries, we find that the ongoing crisis has only marginally reduced citizens' support for the euro – at least so far. This result is in stark contrast to the sharp fall in public trust in the European Central Bank. We conclude that the crisis has hardly dented popular support for the euro while the central bank supplying the single currency has lost sharply in public trust. Thus, the euro appears to have established a credibility of its own – separate from the institutional framework behind the euro.
Topic:
Economics, Regional Cooperation, and Financial Crisis
Political Geography:
Europe

464. Fiscal Asymmetries and the Survival of the Euro Zone

Author:
Paul R. Masson
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The independence of the European Central Bank (ECB), seemingly guaranteed by its statutes, is presently under attack. The ECB has been led to acquire large amounts of government debt of the weaker euro zone members, both to help contain their interest costs and to help protect the solvency of banks throughout the zone that hold their debt. This paper presents a model of a dependent central bank that internalizes the government's budget constraint. Using a Barro-Gordon framework, the model embodies both the desire to stimulate output and to provide monetary financing to governments. As a result of the inability to pre-commit to first-best policies, the central bank produces excess inflation — a tendency partially reduced in a monetary union. The model implies that not only shock asymmetries, but also fiscal asymmetries, are important in the membership calculus of desirable monetary unions. On the basis of this framework, calibrated to euro zone data, the current membership is shown not to be optimal: other members would benefit from the expulsion of several countries, notably Greece, Italy and France. A narrow monetary union centred around Germany is sometimes mooted as a preferable alternative, especially if it could guarantee central bank independence. However, simulation results suggest that such a narrow monetary union would not be in Germany's interest: though better than the euro zone with a dependent central bank, it would not internalize enough trade to make it more attractive than the resumption of monetary autonomy by Germany.
Topic:
Debt, Economics, Monetary Policy, and Governance
Political Geography:
Europe, Greece, France, Germany, and Italy

465. Europe's declining role in the G-20: What role for the EU in the club of the most important powers?

Author:
Juha Jokela
Publication Date:
12-2011
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Europe and the EU have played an influential role in the development and decision-making of the Group of Twenty (G-20). Europe's influence in shaping the developments in the group and, more broadly, in global governance is, however, declining. The G-20 Summit in Cannes provided Europe with an opportunity to re-assert its leadership. Its aspirations were, however, overshadowed by internal divisions heightened by the deepening European sovereign debt crisis. Even prior to the current crisis, the increasing global competition and decrease in standing turned EU members inward-looking. Instead of a further Europeanization of foreign policy and external relations, many have observed a tendency to re-nationalize European policy-making. This tendency will make it increasingly difficult for Europe to secure its standing and adapt to the on going transition of the world's economic and political power. Europe should reinvigorate its commitment to a joint external action as a matter of priority. The key question for Europe is whether it will manage to Europeanize the G-20 and gear it towards the multilateral principles which lie at the heart of European integration; or whether we will see the opposite process, namely a 'G-ization' of the EU in the sense of major(European)powers dominating increasingly informal European and global decision-making. It is in Europe's interests to further institutionalize the G-20 and tie it to the formal multilateral architecture of the world economy and politics.
Topic:
Foreign Policy, Development, Economics, International Trade and Finance, and Governance
Political Geography:
Europe

466. Organizing Regulatory Convergence Outside the EU Setting Policy-Specific Conditionality and Building Domestic Capacities.

Author:
Julia Langbein
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
Why is regulatory convergence towards EU rules more successful in some policy fields than in others within one EU neighboring country? By comparing Ukraine\'s convergence towards EU rules in the field of shareholders\' rights and technical standards, I challenge prominent explanations for policy change outside the EU that empha¬size misfit and adaptational costs, the institutionalization of EU rules or policy-specific conditionality. In order to deal with the shortcomings of these explanations, it is necessary to disaggregate incentives and capacities of various domestic actors within the particular policy fields. I argue that regulatory convergence in EU neighboring countries is more likely if external actors combine the application of policy-specific conditionality, such as access to the European market, with multiplex capacity-building measures that diversify demand among domestic state regulators and firms and empower them to make their claims.
Topic:
Economics, International Trade and Finance, Markets, and Regional Cooperation
Political Geography:
Europe and Ukraine

467. Industries in 2012: A report from the Economist Intelligence Unit

Author:
Steven Leslie
Publication Date:
12-2011
Content Type:
Working Paper
Abstract:
Business executives are sour about 2012. However, they are much more negative about the prospects for the global economy than for their own industries, and especially for their own companies. These are the headline findings from a global survey of more than 900 corporate decisionmakers about their expectations for 2012.
Topic:
Economics, Emerging Markets, Industrial Policy, International Trade and Finance, Global Recession, and Financial Crisis
Political Geography:
Europe

468. Outward FDI from Greece and its policy context

Author:
Aristidis P. Bitzenis and Vasileios A. Vlachos
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
With the fall of centrally planned economies in the Balkans, their liberalization and the opening of their borders to free trade and capital movements, Greece became more active in the generation of outward foreign direct investment (OFDI). Greece's OFDI stock increased from US$ 3 billion in 1990 to US$ 6 billion in 2000 and to US$ 38 billion in 2010. The Europeanization process of Turkey and the transition of the economies in the Balkans was accompanied by a gradual rise of FDI from Greece into those economies. More than half of Greece's OFDI stock – over US$ 20 billion in 2009 (67% of total) – is located in South-East Europe: in the Balkans, Cyprus and Turkey. While Greece's early OFDI flows were directed to the secondary sector to reduce costs, the bulk of later flows was directed to the services sector, as new markets were opened. This shift signifies the rise of major corporate players. The Greek Balkan policy, which commenced through the European Union, and the upgrading of the Athens Stock Exchange have positively affected Greece's position as a key regional investor. The expectations for sustaining this leading role, however, have been weakened recently since, due to the Greek sovereign debt crisis, Greek multinational enterprises (MNEs) disinvested US$ 1.6 billion from their FDI abroad in 2010.
Topic:
Debt, Economics, Foreign Direct Investment, and Financial Crisis
Political Geography:
Europe, Turkey, Greece, Balkans, and Cyprus

469. Inward FDI in Italy and its policy context

Author:
Marco Mutinelli and Lucia Piscitello
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
The attractiveness of the Italian economy for inward foreign direct investment (IFDI) has been traditionally limited, despite the country's locational advantages such as a large domestic market and a skilled labor force. The recent global crisis worsened the country's IFDI position, with flows falling from US$ 40 billion in 2007 to -US$ 11 billion in 2008 before recovering to US$ 20 billion in 2009 but down again to US$ 9 billion in 2010. Although the country's IFDI stock had grown since 2000 at a rate similar to that of the European Union as a whole, in 2010 IFDI stock contracted vis-à-vis 2009, reflecting how Italy, compared to other key European countries and to its own potential, continues to underperform. The main obstacles to exploiting the country's potential for IFDI lie both in the largely insufficient actions undertaken to attract and promote IFDI, and especially in the lack of coordination with other relevant policy measures (e.g. infrastructure development) within a broader framework aimed at regional and national development.
Topic:
Development, Economics, International Trade and Finance, and Foreign Direct Investment
Political Geography:
Europe and Italy

470. European Neighbourhood Policy: How to Reconcile EU's Offer with Neighbour's Expectations?

Author:
Beata Wojna and Monika Arcipowska
Publication Date:
11-2011
Content Type:
Policy Brief
Institution:
The Polish Institute of International Affairs
Abstract:
Since its launch in 2004, the ENP has succeeded in bringing about a strengthening of economic relations, especially trade, between the EU and its neighbours. However, the political record of the seven-year implementation of this policy is relatively poor. The violent, unprecedented socio-political changes in North Africa and the Middle East, which started in January 2011, revealed weaknesses and problems in the European policy towards its southern neighbours as developed in the framework of the Barcelona Process and the Union for the Mediterranean. Arab spring has shown that the EU support to introduce political reforms and to build and consolidate democracy in the southern neighbouring countries has yielded very limited results. The Eastern Partnership seems to be one of the few positive manifestations of the European Neighbourhood Policy's evolution in recent years but is not free from problems. The most tell-tale sign of the Eastern Partnership's deficiencies is a palpable relapse in democratisation.
Topic:
Foreign Policy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:
Africa, Europe, and Middle East