Search

1901. Lavrov Visits Latin America to Try to Lure It to Russia's Side

Author:
Bartłomiej Znojek
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
On 17-21 April, the Russian Foreign Minister Sergey Lavrov visited Brazil, Venezuela, Nicaragua, and Cuba. During his trip, he argued that the goals and interests of Russia and most Latin American countries coincide. He also repeated false Russian narratives, for example, about the reasons for the invasion of Ukraine, portraying Russia as a victim of the policy of the West. While he used his stay in Brazil to legitimise the Russian narratives, in other countries, it was mainly about consolidating Russia’s ties with their authoritarian regimes, including cooperation on evading sanctions.
Topic:
Foreign Policy, Diplomacy, Sanctions, Narrative, and Russia-Ukraine War
Political Geography:
Russia and Latin America

1902. U.S. Re-Focuses Arctic Policy-The Consequences for Its Allies

Author:
Paweł Markiewicz
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The Biden administration is increasing the U.S. capabilities in countering the effects of climate change in the Arctic, an aim overlapping the rivalry with Russia and China in this region. The U.S. announced increasing investments in infrastructure projects and defence, for example, modernising the Coast Guard’s Arctic fleet. The planned measures provide an opportunity for closer American cooperation with their allies and may mark the beginning of a regional division of labour in the area of shared defence.
Topic:
Climate Change, Infrastructure, Investment, and Rivalry
Political Geography:
Russia, China, Arctic, and United States of America

1903. Triggering the Rule-of-Law Conditionality Mechanism against Hungary

Author:
Veronika Jóźwiak
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The mechanism that makes the payment of funds from the EU budget conditional on compliance with the principles of the rule of law is the newest instrument for protecting the Union’s financial and political interests. The tool allows the European Commission and the EU Council (Council) to exert influence on Member States that violate the fundamental principles of the Community. Triggering it against Hungary might result in a reduction of EU funds to the country as a consequence of rule-of-law violations for the first time in EU history. It is doubtful, however, that this will lead to systemic changes in Hungary.
Topic:
European Union, Rule of Law, European Commission, and Regional Politics
Political Geography:
Europe and Hungary

1904. Refugees from Ukraine Adapting to the European Labour Market

Author:
Jolanta Szymańska
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Due to the length of the war in Ukraine, more and more refugees from this country have decided to take up employment in the EU. Preliminary data indicate that they are integrating into European labour markets faster than refugees from other regions. However, the mismatch between their jobs and qualifications remains a challenge. Despite the refugees’ inclusion, the deteriorating economic situation in Europe may lead to negative perceptions in host countries.
Topic:
Economics, European Union, Refugees, and Labor Market
Political Geography:
Russia, Europe, and Ukraine

1905. China Adapts Policy in Response to Russia's Aggression Against Ukraine

Author:
Marcin Przychodniak
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
China perceives the Russian aggression against Ukraine as an expression of resistance to the U.S. and NATO hegemony and an important element of building a new international order that marginalises the West. Based on this, China is strengthening strategic cooperation with Russia, striving to weaken the international position of the U.S., the EU, and their partners, while testing reactions to a possible escalation of Chinese actions towards Taiwan, for example. President Xi Jinping expressed this policy course during his March visit to Russia. At the same time, China is trying to gain support from the countries of the Global South. This approach means a continuation of China’s assertive policy towards the European Union, among others.
Topic:
Foreign Policy, NATO, European Union, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, Ukraine, and Asia

1906. With Charisma, Stick, and Carrot: Reviewing the Effectiveness of EU Climate Diplomacy

Author:
Zuzanna Nowak and Stefania Kolarz
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Last year’s COP27 in Sharm el-Sheikh, Egypt, was a major challenge for EU climate diplomacy, which, despite the unfavourable external circumstances (e.g., the war in Ukraine and economic turbulence), contributed to the conference’s positive outcome. The EU, as a global leader in the fight against climate change, seeks to increase its influence with external partners. Many of them would not have joined the climate action without its support. In addition to participation in policy dialogue, among the EU’s main tools of influence are various types of incentives and forms of support, as well as leverage measures such as political conditionality. However, the effectiveness of these tools is still being refined.
Topic:
Climate Change, Diplomacy, European Union, and Influence
Political Geography:
Europe

1907. Climate Protection Litigation on the Rise

Author:
Szymon Zaręba
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In the last several years, national courts and international institutions have increasingly begun to treat conservative or climate-adverse actions by states as violations of their obligations under international law and human rights. This has been followed by some countries more affected by climate change and engaged in international bodies to put more pressure on Global North states to protect the climate. The sympathetic attitude of international courts towards such complaints may, in the long term, force the need for increased climate ambition or even compensation payments by, among others, Poland.
Topic:
Climate Change, Human Rights, International Law, Courts, and Litigation
Political Geography:
Europe, Poland, and Global Focus

1908. Implications of the Incursions into U.S. and Canadian Airspace

Author:
Marcin Andrzej Piotrowski
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In the first half of February, a series of serious incidents happened in the airspace of the U.S. and Canada involving shootdowns of four objects, with at least one confirmed as a Chinese balloon, likely used for intelligence. The U.S. administration is conducting an investigation to explain the various platforms, the equipment onboard, and their mission. Because further incidents cannot be excluded, some changes in the rhetoric of the Chinese government should be expected, as well as a higher readiness of air defence networks of the powers.
Topic:
Security, Defense Policy, Territory, and Airspace
Political Geography:
China, Canada, North America, and United States of America

1909. EU Seeks Greater Transparency in Wake of EP Corruption Scandal

Author:
Tomasz Zając
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The European Parliament (EP) corruption scandal, which began with the arrests of then current or former MEPs last December, showed that the mechanisms in place to ensure institutional transparency do not sufficiently protect against the influence of non-EU countries. In addition, the parliament’s internal standards are of limited effectiveness as penalties for non-compliance are not very severe and rarely applied. The effect of the scandal will most likely be to further increase the transparency of EP conduct. The probability of a new body to monitor ethical issues in EU institutions has also increased.
Topic:
Corruption, European Union, Transparency, and European Parliament
Political Geography:
Europe

1910. EU Member States Take a Position on the Emigration of Russians

Author:
Aleksandra Kozioł and Stefania Kolarz
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Hundreds of thousands of Russians have decided to emigrate as Vladimir Putin’s regime has increased repression of citizens with dissenting views of the government or unwilling to participate in the war in Ukraine. Some of them are trying to enter the EU, justifying it with humanitarian reasons. However, the Member States, which decide the granting of visas and residence permits, have different practices. Elaborating a unified approach remains a major challenge for the EU.
Topic:
Migration, European Union, Civilians, and Russia-Ukraine War
Political Geography:
Russia and Europe

1911. Member States Seek to Unmask Russian Espionage in the EU

Author:
Elzbieta Kaca
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Russian intelligence services are actively developing their networks of spies in the EU. While Member States are trying to counteract this and are undertaking coordinated action, many of them have limited operational capacities. Their cooperation at the EU level is hampered by differences in threat perceptions and a lack of mutual trust. With the aim of developing common competences, EU diplomacy can inform Member State societies about the growing scale of espionage threats by publishing regular reports on this subject.
Topic:
Intelligence, European Union, Espionage, and Threat Perception
Political Geography:
Russia, Europe, and Ukraine

1912. Evolution, not Revolution: Japan Revises Security Policy

Author:
Oskar Pietrewicz
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In December last year, the government of Kishida Fumio adopted three documents adapting Japan’s security policy to the deteriorating international situation. Its security and national defence strategies highlight challenges from China, Russia, and North Korea, as well as an increase in non-military threats. A third document specifies the need for a record increase in defence spending. Japan’s readiness to deepen cooperation with the U.S. and European countries and its criticism in its assessment of Russia’s aggression against Ukraine create the conditions for the further development of Japan’s cooperation with NATO and the Polish-Japanese dialogue on security.
Topic:
Security, Foreign Policy, Defense Policy, Regional Politics, and Russia-Ukraine War
Political Geography:
Russia, Japan, China, Asia, and North Korea

1913. Iceland Makes Changes to Foreign Policy after Russia's Aggression against Ukraine

Author:
Veronika Jóźwiak
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
The Russian aggression against Ukraine forced Iceland to adjust its foreign policy. As a small country without armed forces but covered by security guarantees as a NATO member, it wants to strengthen ties with its allies while resigning from contacts with Russia. Its partnership with the U.S. and the Nordic countries, as well as activity in international organisations and relations with Central European EU Member States, including Poland, have become even more important to the country.
Topic:
Foreign Policy, NATO, and Russia-Ukraine War
Political Geography:
Russia, Ukraine, and Iceland

1914. Security at Sea: A Turning Point in Maritime

Author:
Scott Tait
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Since the end of the Second World War, the United States has been the pre-eminent naval power and ultimate guarantor of global maritime security. It has also been one of the primary beneficiaries of the global maritime economic system, which in turn resourced its naval strength and increased the incentive to use that strength to protect the freedom of the seas. But a number of global changes, all likely beyond the United States’ control, are driving new dynamics in both security and economics in the maritime domain. These challenges include the return of great power competition at sea, the maritime consequences of climate change, increased pollution, the rapid rise of illicit trade and resource exploitation, and the erosion of maritime governance. These challenges are dynamic and inter-related—a change in one will often drive second and third order changes in the others. The United States has proven historically to be resilient and adaptive in the face of great challenges, and the maritime community has traditionally been a leader in innovation, collaboration, and positive-sum solutions. To meet the challenges of today and tomorrow, the United States should double down on those strengths, and work with allies to maintain and strengthen the rules-based international maritime system. Moreover, the United States should be a leader in envisioning changes to that system that will ensure it equitably meets the needs of all, accounts for the changes being driven by climate change and pollution, and anticipates a near-term future where autonomous systems will play a major role in the ecosystem.
Topic:
Security, Environment, Science and Technology, United Nations, and Maritime
Political Geography:
North America and United States of America

1915. Is the Pursuit of Nukes Driven by Leaders or Systems?

Author:
So Yeon (Ellen) Park
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Nuclear weapons are widely regarded as one of the most lethal aspects of military arsenals ever created. As such, international relations and security experts have long been concerned about their proliferation. To prevent the spread of nuclear weapons, both policymakers and academic researchers have focused on what are commonly thought to be the primary drivers of proliferation: security concerns and domestic politics and economies. This brief examines another important driver: the role of national leaders themselves. Based on a study of 1,400 leaders in office between 1945 and 2000, author Ellen Park shows that leader personality and experience drive decisions about whether—or not—to pursue nuclear weapons, a finding that holds true across countries (rather than being limited to a few unique cases). Put simply, the pursuit of nuclear weapons is systematically influenced by certain attributes of leaders, such as college major, socioeconomic background, and military and international experience. To predict when and where the spread of nuclear and other emerging technologies will emerge next, policymakers should promote interdisciplinary dialogue to cultivate leader profiles and expand their use.
Topic:
Security, Arms Control and Proliferation, Nuclear Weapons, and Leadership
Political Geography:
Global Focus

1916. Northeast Asia Defense Transparency Index 2021–22

Author:
Chi Fang and Jade Reidy
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Military tensions are on the rise in Northeast Asia as the likes of China, North Korea, and the United States flex their combat capabilities—but this does not mean that war is imminent. This is an important insight from the latest Northeast Asia Defense Transparency Index (DTI) for the period spanning 2021 to 2022. Carried out every two years by the University of California’s Institute on Global Conflict and Cooperation, the DTI offers a detailed examination of how open or closed major regional states are in disclosing information on their defense postures, including defense budgets, publication of official annual defense reports, legislative oversight, and the nature of external military activities. The 2021–22 DTI found that there was only a marginal decline in the overall defense transparency level for Northeast Asia, with Japan showing a noteworthy improvement in its transparency performance. The concealment of defense activities is often an indicator that countries are quietly making preparations for military conflict and contributes to declining trust and confidence. The evidence from this DTI that defense transparency is relatively stable in Northeast Asia is cause for cautious optimism that the long peace that the region has enjoyed remains intact for now. Transparency though is just one indicator of the overall state of defense affairs, and the powerful underlying currents that are the main determinants of war and peace, such as threat perceptions and arms dynamics, all appear to be trending negatively.
Topic:
Defense Policy, International Security, and Transparency
Political Geography:
China, North Korea, Northeast Asia, and United States of America

1917. Sentiment of Bangladeshi Residents Toward Covid-19 Lockdowns: Qualitative Analyses of Open-Ended Responses in a Large Panel Survey

Author:
Daryl Collins, Derry Moore, Pravarakya Reddy Battula, and Avinno Faruk
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
BRAC Institute of Governance and Development (BIGD), Brac University
Abstract:
This paper explores the public sentiment of Bangladeshi residents concerning the lockdowns imposed by the Bangladeshi government in 2021 in response to COVID-19. Through open-ended question design and analyses of natural language using NLP and sociolinguistic techniques, we show detailed, nuanced sentiments as well as common themes and discussions these sentiments are seated. Additionally, using a range of discursive analytical measures, we explore the interactions between enumerators and participants in live survey conditions, providing alternative methods to and potential field guidance for enumerator survey methods.
Topic:
Public Opinion, Survey, and COVID-19
Political Geography:
Bangladesh and South Asia

1918. Action for Peacekeeping Plus (A4P+): An Update on Monitoring and Implementation after Two Years

Author:
Daniel Forti
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
International Peace Institute
Abstract:
The UN secretary-general launched Action for Peacekeeping Plus (A4P+) in March 2021, three years after introducing the Action for Peacekeeping (A4P) initiative. A4P+ was conceptualized as a two-year implementation strategy for A4P that prioritizes urgent challenges facing UN peacekeeping. To monitor progress toward achieving these priorities, the UN has developed the A4P+ Plan and the A4P+ Monitoring Framework with specific results, deliverables, and indicators. To date, the UN Department of Peace Operations (DPO) has published two reports assessing the implementation of A4P+ and the impact of these efforts on UN peacekeeping operations. This issue brief takes stock of the monitoring and implementation of A4P+ over the past two years. It begins by explaining the A4P+ priorities and tracing their emergence out of the A4P initiative and Declaration of Shared Commitments. It then discusses highlights from the A4P+ Plan and the two progress reports published as of March 2023 and examines the benefits and limitations of current approaches to monitoring and implementing A4P+. The paper concludes that moving forward, UN officials will need to balance ambitious goals for progress with realistic expectations about what peacekeeping operations can achieve, and when. The UN will also have to decide whether to extend the current set of A4P+ priorities beyond 2023. Ultimately, while A4P+ can help grease the machinery of UN peacekeeping, its long-term impact will depend on member states delivering on their existing political, operational, and financial commitments.
Topic:
United Nations, Peacekeeping, and Monitoring
Political Geography:
Global Focus

1919. Accountability for Crimes against Peacekeepers

Author:
Agathe Sarfati
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
International Peace Institute
Abstract:
Since 1948, more than 1,000 UN personnel have been killed in malicious acts while serving in UN peacekeeping operations. Since 2013, the vast majority of fatalities have taken place in the Central African Republic (CAR), Mali, and the Democratic Republic of the Congo (DRC). To address this trend, the UN Secretariat and member states have increasingly focused on strengthening the policy framework on accountability to peacekeepers. They have also increasingly focused specifically on how to pursue justice for peacekeepers who have been victims of attacks. This paper focuses on advancing justice for crimes against peacekeepers as one aspect of the overall effort to enhance accountability to peacekeepers. It provides an overview of the role of UN peacekeeping operations in investigating and prosecuting crimes against peacekeepers and the UN’s growing focus on advancing and prioritizing accountability for these crimes. It then examines case studies of criminal cases supported by the UN missions in CAR (MINUSCA), Mali (MINUSMA), and the DRC (MONUSCO) in their respective host states and provides an overview of cross-cutting challenges they have faced. The paper concludes with recommendations to help the UN Secretariat, peacekeeping operations, the Security Council, and other member states accelerate the investigation and prosecution of crimes against peacekeepers in a consistent and balanced manner: The UN Secretariat should maintain a comprehensive approach to accountability, develop a common definition of crimes against peacekeepers, ensure that host states adhere to human rights standards when engaging with those accused of crimes against peacekeepers, and improve internal and external coordination in this area. UN missions should pursue a comprehensive approach to accountability, continue to support host-state investigations and prosecutions of those accused of crimes against peacekeepers, advocate for host-state authorities to pursue accountability, and ensure sustained documentation of and follow-up on cases. The Security Council should reinforce peacekeeping mandates to build the host state’s capacity to pursue accountability and encourage legal clarity on the nature of crimes against peacekeepers. UN member states should use the group of friends to offer new ideas on ways to promote accountability and use the Special Committee on Peacekeeping Operations to discuss ways to improve coordination in this area.
Topic:
Crime, United Nations, Peacekeeping, and Accountability
Political Geography:
Global Focus

1920. Peacekeeping in Nonpermissive Environments: Assessing Troop-Contributing Countries’ Perspectives on Capabilities and Mindsets

Author:
Fiifi Edu-Afful
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
International Peace Institute
Abstract:
Many peacekeepers are deployed in areas where ongoing armed conflicts or other situations of violence, including attacks against peacekeepers, have constrained their capacity to implement their mandate and protect themselves. This has led some troop-contributing countries (TCCs) to raise concerns about the high-risk environments to which their troops are deployed. One of the most critical issues when deploying troops to nonpermissive environments is ensuring they have the right capabilities and mindset. This paper interrogates TCCs’ perspectives on capabilities and mindsets and explores their implications for peacekeeping policy and practice. The goal is not only to deepen understanding of the UN’s progress on implementing the A4P+ priorities but, more importantly, to assess the state of play of peacekeeping in nonpermissive environments, drawing on the diverse perspectives of TCCs. The paper concludes by considering how capabilities and mindsets relate to accounta­bility for and accountability of peacekeepers. Failure to properly train, equip, and support troops being deployed to nonpermissive environments raises questions about whether the UN and TCCs are accountable to peacekeepers. Likewise, it is unclear to what extent peacekeepers should be held accountable for their performance when they have not been provided the proper equipment, training, and mindset.
Topic:
Environment, United Nations, Peacekeeping, and Armed Conflict
Political Geography:
Global Focus

1921. Forced Marriage by Non-state Armed Groups: Frequency, Forms, and Impact

Author:
Phoebe Donnelly and Emily Myers
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
International Peace Institute
Abstract:
Many non-state armed groups use forced marriage during armed conflict. This practice has been documented across all geographic regions, in every decade since the 1940s, and across armed groups with many different ideologies. Yet while policymakers, scholars, and practitioners recognize forced marriage as an important form of conflict-related sexual violence (CRSV), there are no frameworks for conceptualizing the frequency and range of forms of forced marriage that occur in conflict. To fill that gap, this paper introduces an original dataset tracking forced marriage in armed conflict and uses the data and illustrative examples to divide forced marriage in armed conflict into three types: member–member forced marriage, member–civilian forced marriage, and civilian–civilian forced marriage. This dataset can be a tool for policymakers and practitioners to understand the impacts of forced marriage in armed conflict and better design prevention strategies and survivor-centered responses. The report concludes with an overview of existing policy, legal, and programmatic responses to forced marriage in conflict settings, including by non-state armed groups, and provides recommendations for how these responses can better address this complex phenomenon: Data collection: Disaggregate data on CRSV by the form of violence (when possible), avoid linking sexual slavery and forced marriage, and gather more data on the unique needs of survivors of forced marriage. Criminal accountability: Continue prosecuting forced marriage as a distinct crime against humanity and promote the inclusion of forced marriage as a distinct crime against humanity during negotiations on the treaty on crimes against humanity. Sanctions: Continue to include information on CRSV in the reports of sanctions monitoring committees, ensure that sanctions listing criteria are applied against perpetrators of forced marriage, and ensure that every panel of experts includes at least one member with expertise on gender issues or CRSV. Reintegration: Factor the different types of forced marriage into the design of reintegration programs and provide support that considers the unique needs of individuals exiting forced marriage.
Topic:
Security, Armed Forces, Women, Peace, Armed Conflict, and Forced Marriage
Political Geography:
Global Focus

1922. Financing Loss and Damage at Scale: Toward a Mosaic Approach

Author:
Michael Franczak
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
International Peace Institute
Abstract:
The historic decision on loss and damage (L&D) at the 2022 UN Climate Change Conference (COP27) calls for a new fund and funding arrangements focused on addressing L&D. It also tasks a Transitional Committee to prepare recommendations on the new fund and funding arrangements for adoption at the 2023 UN Climate Change Conference (COP28) in Dubai. This decision reflects a recognition that existing funding arrangements are grossly inadequate to address the escalating scale of L&D. Addressing L&D will require both enhancing these existing arrangements and creating a new fund and funding arrangements, forming a mosaic of solutions across countries, institutions, and markets. This paper aims to aid the Transitional Committee and other stakeholders by providing an initial sketch of that mosaic. First, it examines existing arrangements, modalities, and sources of funding for addressing L&D from UN humanitarian agencies, multilateral development banks and international financial institutions, and insurance and bond markets. Second, it proposes reforms to existing arrangements that would address key finance gaps and bottlenecks. Third, it identifies elements of a new L&D fund that would complement existing arrangements and make use of innovative finance (including levies and bond issuances) to operate at scale. With roughly six months left until COP28, the Transitional Committee will need to work efficiently to achieve its mandate, which includes determining the fund’s institutional arrangements, modalities, structure, governance, sources of funding, and coordination and complementarity with existing funding arrangements. To this end, the paper recommends that it should: Begin securing financing before COP28, particularly innovative financing, which takes longer to secure than traditional donor contributions; Consult with the private sector to determine its role, including in the use of insurance mechanisms and risk pools, frontloading, and connections between L&D and jobs; Determine the form and role of triggers, including for slow-onset events; Consider how to address noneconomic losses, including displacement and forced migration; and Identify the actions, mechanisms, and institutions required to operationalize the fund, including an internal or external coordination mechanism.
Topic:
Climate Change, Development, United Nations, and Finance
Political Geography:
Global Focus

1923. The UN’s Response to the COVID-19 Infodemic

Author:
Gabriel Delsol and Albert Trithart
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
International Peace Institute
Abstract:
The COVID-19 pandemic has been accompanied by a related “infodemic.” This infodemic emerged as widespread demand for information about the public health emergency was met with large volumes of false and misleading information. Many of the national and international institutions leading the response to the COVID-19 pandemic, including the UN, quickly recognized that they also needed to respond to the infodemic. This led to a quick, broad-based response by a broad array of UN agencies and partners. To date, however, there has been no systematic mapping or assessment of the range of initiatives across the UN system. To begin filling that gap, this paper provides an overview of the UN system’s response to the COVID-19 infodemic across four areas: monitoring harmful information related to COVID-19; dispelling false information and providing authoritative information; building information resilience; and setting the agenda. It then assesses some of the successes and challenges of the response across four areas: external partnerships, including with governments, civil society, academia, and social media companies; coordination within the UN system; financial, human, and technological capacity; and impact assessment. The report concludes that the UN’s infodemic response finds itself at a pivotal point: Due to donor fatigue around COVID-19, funding for the infodemic response is falling even while the need for a robust infrastructure to address infodemics and other information disorders may be increasing. UN entities working to address the infodemic and other information disorders should therefore consider the following: Engaging in a consultative process to develop a shared understanding of the infodemic by defining its specific harms in relation to each of their mandates; Sustaining and building capacity to counter infodemics and other information disorders, both in communications departments and in other sections working on infodemic management; Adopting a more standardized, system-wide approach to the use of new technologies and engagement with technology platforms; and Continuing to strengthen long-term information resilience by building the capacity of governments to manage infodemics and supporting strong, independent media.
Topic:
Health, Science and Technology, United Nations, and COVID-19
Political Geography:
Global Focus

1924. Multipolarity After Ukraine: Old Wine in New Bottles?

Author:
Aldo Ferrari and Eleonora Tafuro Ambrosetti
Publication Date:
02-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
One year after the full-scale invasion of Ukraine, the war has exacerbated the rift between Russia and the “collective West”. While Western governments have been steadfast in punishing Russia for the invasion, other countries around the world have been more ambiguous, at times even choosing to side with Moscow politically or economically. These dynamics have revived the idea of a shift towards multipolarity along an anti-Western trajectory. Are we really heading in that direction? Are we facing increasing fragmentation due to the war or a re-consolidation of longstanding alliances? What principles underlie the formation of these blocs? What are the consequences of these dynamics for global security and the global economy? This Report aims to shed light on these questions, while also outlining the war’s possible future implications for the Russian Federation, the “West”, and the international order.
Topic:
Security, Governance, Economy, Multipolarity, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

1925. Europe and Russia on the Balkan Front. Geopolitics and Diplomacy in the EU’s Backyard

Author:
Giorgio Fruscione
Publication Date:
03-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
The war in Ukraine has taken its toll on the stability of the Balkans by reshuffling regional geopolitics and reviving diplomatic competition between the West and Russia. Since the summer of 2022, growing tensions between Kosovo and Serbia have raised concerns about a possible Russian involvement and pushed the European Union to react promptly. By brokering a new normalisation agreement, the West seeks to prevent new hotbeds in Europe and push Russia one step back from the Balkans. Meanwhile, the Russian invasion of Ukraine has given new momentum to the integration process of candidate states, making EU membership a tangible goal rather than an unattainable dream. Will the EU be able to stabilise the Balkans? Will Russia continue to exert its influence in the region? Are Belgrade and Pristina on the eve of a new phase in the normalisation process?
Topic:
Diplomacy, European Union, Geopolitics, Political stability, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Balkans

1926. The EU Indo-Pacific Bid: Sailing Through Economic and Security Competition

Author:
Filippo Fasulo
Publication Date:
04-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Over the past five years, the Indo-Pacific region's importance for Europe has grown significantly. However, the launch of the EU Strategy for cooperation in the Indo-Pacific in September 2021 and its subsequent implementation have been affected by growing polarisation between the US and China, and by a fast-changing scenario caused by the Russian invasion of Ukraine. This Report examines the state and perspectives of the EU's Indo-Pacific strategy, 18 months after its launch. Are there avenues for cooperation with regional military initiatives, such as the QUAD? How is the economic landscape changing, in particular after the start of negotiations for the Indo-Pacific Economic Framework for Prosperity (IPEF)? What are the main strategies of Indo-Pacific countries for the green transition? And how do the US, China, and ASEAN countries view and act in the Indo-Pacific region?
Topic:
Security, International Cooperation, Economy, Strategic Competition, and Russia-Ukraine War
Political Geography:
Europe, United States of America, and Indo-Pacific

1927. Enhancing Resilience in a Chaotic World: The Role of Infrastructure

Author:
Carlo Secchi and Alessandro Gili
Publication Date:
06-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Global infrastructure is at a crossroads. Sustainability and climate-resilience imperatives, new geopolitical headwinds, technology and connectivity issues, as well as the ongoing reconfiguration of global value chains, all call for a rethink in how infrastructure is designed, built and maintained. Leading world economic powers are envisaging new infrastructure plans that could fit in new trade and industrial strategies, with the ultimate goal to increase sustainability, economic competitiveness and resilience. Meanwhile, the use of digital technologies entails new risks for the security of critical infrastructure. How are global value chains changing, and how does this affect infrastructure? How could more resilient infrastructure transform economies? How to enhance the quality and sustainability of new and existing infrastructure? And how to safeguard security in critical infrastructure?
Topic:
Climate Change, Infrastructure, Economy, Sustainability, and Resilience
Political Geography:
Global Focus

1928. Section 232 reloaded: the false promise of the transatlantic ‘climate club’ for steel and aluminium

Author:
David Kleimann
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
In using the removal of Section 232 ‘national security’ tariffs on steel and aluminium imports as a bargaining chip, the United States demands that the European Union engage in negotiations on “global steel and aluminium arrangements to restore market-oriented conditions and address carbon intensity”. The US demand has reportedly been inspired by a blueprint that would establish an international institutional arrangement – labelled a ‘climate club’ – which would externalise market-access restrictions afforded by US Section 232 tariffs to the customs borders of club members. While the declared objective is to incentivise non-members to adopt low-carbon steel (and aluminium) production methods the US blueprint suffers from various design flaws including inefficient incentives, WTO inconsistency and incompatibility with the EU Carbon Border Adjustment Mechanism. The effectiveness of the proposed US scheme is severely compromised by the plethora of policy objectives it pursues, which go far beyond the goal of incentivising industrial decarbonisation in third countries, including secondary (ie protectionism) and tertiary (ie global power competition with China) objectives. The initial negotiation proposal submitted by the United States Trade Representative (USTR) to European Commission trade negotiators incorporates many if not all the problematic elements of this blueprint, setting the US on a collision course with the negotiation proposal put forward by the European Commission. This paper concludes that the adoption of the scheme proposed by USTR would result in a step backwards for international climate and trade cooperation, whereas not adopting the EU proposal would make for a missed opportunity. Given the sharply diverging negotiation positions and associated respective domestic constraints on both sides, however, policymakers should start to engage stakeholders now to manage expectations towards a low-ambition negotiation result, if any.
Topic:
Security, Climate Change, Industrial Policy, Governance, European Union, Economy, Trade Policy, and Transatlantic Relations
Political Geography:
Global Focus

1929. What should be done about Google’s quasi-monopoly in search? Mandatory data sharing versus AI-driven technological competition

Author:
Bertin Martens
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The first part of this paper focuses on competition between search engines that match user queries with webpages. User welfare, as measured by click-through rates on top-ranked pages, increases when network effects attract more users and generate economies of scale in data aggregation. However, network effects trigger welfare concerns when a search engine reaches a dominant market position. The EU Digital Markets Act (DMA) imposes asymmetric data sharing obligations on very large search engines to facilitate competition from smaller competitors. We conclude from the available empirical literature on search-engine efficiency that asymmetric data sharing may increase competition but may also reduce scale and user welfare, depending on the slope of the search-data learning curve. We propose policy recommendations to reduce tension between competition and welfare, including (a) symmetric data sharing between all search engines irrespective of size, and (b) facilitate user real-time search history and profile-data portability to competing search engines. The second part of the paper focuses on the impact of recent generative AI models, such as Large Language Models (LLMs), chatbots and answer engines, on competition in search markets. LLMs are pre-trained on very large text datasets, prior to usage. They do not depend on user-driven network effects. That avoids winner-takes-all markets. However, high fixed algorithmic learning costs and input markets bottlenecks (webpage indexes, copyright-protected data and hyperscale cloud infrastructure) make entry more difficult. LLMs produce semantic responses (rather than web pages) in response to a query. That reduces cognitive processing costs for users but may also increase ex-post uncertainty about the quality of the output. User responses to this trade-off will determine the degree of substitution or complementarity between search and chatbots. We conclude that, under certain conditions, a competitive chatbot markets could crowd out a monopolistic search engine market and may make DMA-style regulatory intervention in search engines redundant.
Topic:
Science and Technology, Governance, European Union, Digital Economy, Innovation, Artificial Intelligence, and Competition
Political Geography:
Europe

1930. What would Europeans want a European defence union to look like?

Author:
Francesco Nicoli, Brian Burgoon, and David Van der Duin
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
While the Russian invasion of Ukraine has created a new momentum for EU defence integration, the political feasibility of such integration remains disputed, as it may entail both additional financial costs and a loss of sovereignty. Furthermore, design of defence integration is inherently multidimensional, differing in terms of scope and level, governance and sources of financing, among other dimensions. To determine the extent of public support for European security cooperation, we conducted the first conjoint experiment ever fielded on public support for alternative defence union designs. We carried out a pre-registered, randomised conjoint experiment on a highly representative sample of the French, German, Italian, Dutch and Spanish populations in November 2022. This multidimensional conjoint experiment allows us to determine the causal link between policy features of potential defence pacts, and public support or opposition to such policy. Our results show that policy packages receiving the most support require joint EU-level governance, joint purchases of military equipment through joint procurement, and repurposing of existing national expenditure as the preferred form of financing. All in all, our results show not only that there is considerable cross-border support for defence integration in Western Europe, but also that citizens in different Western European countries have generally aligned preferences regarding the actual design of such policy, indicating that a compromise policy is feasible and publicly supported. Furthermore, our results support ongoing research on the nature of European solidarity at times of crisis, suggesting that European citizens are willing to support the creation of joint institutions and policies to face issues of common concern, and therefore indicating that major crises open important windows of opportunity to re-shape EU-level policies and institutions.
Topic:
Defense Policy, Governance, European Union, and Regional Security
Political Geography:
Europe

1931. China’s quest for innovation: progress and bottlenecks

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
As the Chinese economy continues to decelerate, the central government is investing heavily in innovation, doubling down on research and development (R&D) spending and STEM-oriented human capital. In this paper, we assess China’s progress so far, looking at the inputs to innovation (R&D and human capital) as well as intermediate targets, such as scientific research and patents. We then evaluate how China has fared with respect to the ultimate goal of commercialising this progress, by looking at the value-added of Chinese exports and the overall productivity of the economy. We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.
Topic:
Industrial Policy, European Union, Economic Growth, Innovation, and COVID-19
Political Geography:
China, Europe, and Asia

1932. Antitrust issues raised by answer engines

Author:
Christophe Carugati
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Rapid development of generative artificial intelligence chatbots like ChatGPT is leading search engine providers to move from search to answer engines. Unlike search engines, which provide search results in the form of blue links to content creators, answer engines generate personalised answers through a conversation with end users. This revolution impacts the internet ecosystem of content creators and the digital advertising market. This paper outlines some early antitrust issues related to answer engines, from the transition from search to answer engines (sections 2 and 3) and the response competition authorities should adopt (section 4). It finds that search and answer engines complement and compete with each other. While the answer-engine market is still at an early stage of development, it already raises some competition issues in relation to data scraping, vertical integration and unfair terms and conditions. Intervention by competition authorities is more likely than not to prevent market power in this new market. In this regard, competition authorities should act to preserve dynamic competition and minimise adverse effects on content creators. Finally, the paper concludes with several research questions for future research (section 5).
Topic:
Science and Technology, Governance, European Union, Digital Economy, Innovation, Artificial Intelligence, and Competition
Political Geography:
Europe

1933. A new measure of aggregate trade restrictions: cyclical drivers and macro effects

Author:
Julia Estefania-Flores, Davide Furceri, Swarnali A. Hannan, Jonathan Ostry, and Andrew K. Rose
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This paper presents a new measure of aggregate trade restrictions (MATR) using data from the International Monetary Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions. MATR is strongly correlated with existing measures of trade restrictiveness but is more comprehensive in terms of country and time coverage. It is available for an unbalanced sample of up to 157 countries during 1949-2019. We use MATR to re-examine how trade restrictiveness varies with the business cycle, and how the macroeconomy looks in the aftermath of changes in trade restrictiveness. For the sample as a whole, MATR is typically a-cyclical but this average finding is heterogeneous across income groups: aggregate trade restrictions are a-cyclical in advanced economies but are counter-cyclical in emerging market and developing economies, especially in response to increases in unemployment. As to macroeconomic effects, increases in MATR are robustly associated with declines in GDP and in labour productivity (as well as being adverse for a range of other macroeconomic indicators).
Topic:
Industrial Policy, Economy, Multilateralism, and Trade Policy
Political Geography:
Global Focus

1934. Employer perspectives on employee work location: collaboration, culture and control

Author:
Diane Mulcahy and Tatiana Andreeva
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This paper discusses employers’ experience of working fully remotely during the pandemic, and their approaches to returning to the office following the pandemic. We chose to focus on the point of view of the employer since it is relatively less explored; much more is available and written on the views and opinions of employees about remote work and return to office. To understand the employer’s perspective, we reviewed existing research evidence, and carried out eleven structured interviews with corporate leaders about their experiences with remote, in-office and hybrid work. Our literature review suggests that remote work does not have negative effects on performance. Similarly, the small sample of employers we interviewed experienced very strong company and employee performance while operating their businesses fully remotely. All employers we interviewed are implementing a hybrid return-to-office policy, although the specifics of the policies are different for each company. No employer was returning to full in-office work. We focused our literature review and interviews on the impact of remote work on employee collaboration, firm culture and manager control, which we call ‘the 3 Cs’. We found that leaders maintain a belief that employee collaboration is negatively impacted by remote work, but the evidence to support this assumption is mixed. Firm culture is often cited by employers as an important rationale for bringing employees back to the office, but the research evidence and our interviewees suggest that the notion of culture is vague and the idea that better culture is supported by in-office work is not supported by any data. Finally, the shift to remote work caused corporate leaders and front-line managers to worry about effectively managing employees they couldn’t see every day. We found that companies did not widely begin implementing employee monitoring systems in lieu of onsite management. Our interviews suggest that much learning remains to transition managers and leaders to effectively managing remote or hybrid employees and teams.
Topic:
Science and Technology, Employment, Innovation, Labor Market, and Remote Work
Political Geography:
Global Focus

1935. Global trends in countries‘ perceptions of the Belt and Road Initiative

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Drawing on global media reports, we conduct a sentiment analysis of the image of China’s Belt and Road Initiative (BRI) and the evolution of its image over time. Our main finding is that perceptions of the initiative deteriorated significantly in many geographies from 2017 to 2022. The notable exception is in sub-Saharan Africa where the BRI’s image remains positive, even if slightly less so than in the past. This is notwithstanding increases in debt levels with China, much of which now face potential restructuring. Furthermore, we find significant inter- and intra-regional differences in the average sentiment towards China’s landmark project, as well as a much worse image of the initiative in countries which, until today, are not part of the BRI. Finally, we focus on the European Union, Africa and China’s immediate neighbourhood to better understand the complexities behind the perceived benefits and challenges associated with China’s Belt and Road Initiative.
Topic:
Bilateral Relations, European Union, Geopolitics, Economy, and Trade
Political Geography:
China, Europe, and Asia

1936. Artificial intelligence adoption in the public sector: a case study

Author:
Laura Nurski
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This case study illustrates the drivers of and barriers to artificial intelligence adoption by organisations, and acceptance of AI by workers in the public sector. Several factors were crucial in the successful adoption of a human-centred approach to AI, including a fast discovery phase that involved workers (or end users) in the development early on, and aligning human resources, information technology and business processes. Subsidy support mechanisms were also specifically targeted and acquired to support the adoption. However, making AI support available to workers proved insufficient to ensure its widespread usage throughout the organisation. The slow adaptation of existing work processes and legacy IT systems was a barrier to the optimal usage of the technology. Moreover, the usefulness of the technology depended on both the task routineness and worker experience, thereby necessitating a rethinking of the work division between technology and workers, and between junior and senior workers. Successful human-centred roll-out of AI in Europe will therefore depend on the availability of, or investments in, complementary intangible organisational capital. Very little is currently known about these investments.
Topic:
Digital Economy, Economic Growth, Public Sector, Innovation, Artificial Intelligence, Inclusion, and Work
Political Geography:
Global Focus

1937. The hidden inequalities of digitalisation in the post-pandemic context

Author:
Cristiano Cadagnone and Maria Savona
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Digitalisation has a ‘hidden’ impact on employment, particularly on the invisible conditions of some jobs, as perceived by workers, that are relatively less explored in the literature and that could represent a substantial social cost, particularly in the aftermath of the financial crisis and the COVID-19 pandemic. We start by summarising a few main challenges of digitalisation, with a focus on the additional challenges brought about by the pandemic, the rise of platforms and alternative work arrangements, and the current attempts to regulate these. We then discuss the hidden aspects of inequality linked to the unmeasured side effects of digitalisation. Mental health in particular should be taken into account, particularly in the post-pandemic context, which has led to a significant amount of working from home. Also, the reduction of tasks previously done in the workplace in favour of remote working might limit social interactions, creativity and innovation potential. We conclude by suggesting areas for policy interventions.
Topic:
Labor Issues, Economy, Automation, and COVID-19
Political Geography:
Europe and Global Focus

1938. Pro- and anti-competitive provisions in the proposed European Union Data Act

Author:
Bertin Martens
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The proposed European Union Data Act gives users access and portability rights to the data generated by their use of tangible digital products and devices. This pro-competitive measure weakens the de-facto monopolistic control product manufacturers have over product data. However, the Data Act would also grant manufacturers a de-jure right to monopolistic pricing of data transfers to third-party service providers, restoring their control over data markets. Other anti-competitive provisions include restrictions on the use of data for competition purposes and a prohibition on transfering data to platforms identified as gatekeepers under the EU Digital Markets Act. Unnecessarily fuzzy definitions of products and data that fall under the Data Act would create uncertainty in implementation and incoherence with other EU data regulations. The Data Act should be simplified by dropping anti-competitive provisions and granting users and third-parties selected by users free access to all data generated by the use of a product or a service. This would increase competition in data-driven services and prevent users paying twice for their data. It would not disincentivise producers from investing in data-driven products and services. A further step could be the creation of a level playing field between producers and users in data-access rights. This can be achieved by introducing the principle of mutual exhaustion of data rights at point of sale. This would put all data co-generating parties in a position to generate economies of scale and scope in data aggregation, or data-driven externalities, to maximise innovation.
Topic:
Markets, Governance, European Union, and Digital Economy
Political Geography:
Europe

1939. The EU can manage without Russian liquified natural gas

Author:
Ben McWilliams, Giovanni Sgaravatti, Simone Tagliapietra, and Georg Zachmann
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Union has committed to eliminate all Russian fossil-fuel imports by 2027. Progress has been made, with sanctions on oil and coal already introduced. The glaring exception is natural gas, on which the EU has so far refrained from imposing limitations, owing to greater dependence on Russia. Nevertheless, pipeline gas imports have fallen by four-fifths following Russia’s weaponisation of gas supplies. However, Russia’s exports of liquified natural gas (LNG) to the EU have increased since the invasion of Ukraine. The EU needs a coherent strategy for these LNG imports. Our analysis shows that the EU can manage without Russian LNG. Anticipated impacts are not comparable to those felt in 2022 as Russian pipeline gas dried up. The regional impact would be most significant for the Iberian Peninsula, which has the highest share of Russian LNG in total gas supply. Meanwhile, the global LNG market is tight, and we anticipate that Russia would find new buyers for cargos that no longer enter Europe. We discuss the options available to the EU. Wait-and-see implies delaying any action until 2027, while soft sanctions would discourage additional purchases but not break long-term contracts. We argue instead for an EU embargo on Russian LNG, to reduce exposure to an unreliable and adversarial entity, and to limit the extent to which EU consumers fund the Russian state. The embargo may be designed to allow purchases only if they are coordinated via the EU’s Energy Platform, with limited volumes and below market prices. This could be accompanied by the implementation of a price cap on Russian LNG cargos that use EU or G7 trans-shipment, insurance or shipping services.
Topic:
European Union, Gas, Energy, and Green Economy
Political Geography:
Russia and Europe

1940. Rebooting the European Union’s Net Zero Industry Act

Author:
Simone Tagliapietra, Reinhilde Veugelers, and Jeromin Zettelmeyer
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
In March 2023, the European Commission published a legislative proposal for an EU response to the US Inflation Reduction Act: the Net Zero Industry Act (NZIA). It is an unconvincing policy proposal, both for what is in it and for what is not in it. The proposal has five problematic aspects. First, it takes a top-down approach, in which specific technologies are selected for preferential treatment. Preferable would be a technology-neutral approach open to all current and future technologies that help tackle the net-zero challenge. Second, its blanket 40 percent self-sufficiency benchmark for EU domestic cleantech manufacturing by 2030 sends a protectionist signal, is poorly defined and does not reflect the differences in EU capacity in the cleantech sector. Third, it relies on the acceleration of permitting procedures as the main policy instrument, although this is not the main obstacle to cleantech investment in the EU. Fourth, it proposes more strategic use of public procurement. While this is an objective to be supported, the specific proposals are likely to be ineffective because of the way they are designed. Fifth and not least, the NZIA would lack a governance structure that would ensure effective implementation. In addition, the NZIA does not tackle three critical issues. It does not address investment obstacles related to failures of the single market. It does not tackle the coordination problem at the core of developing an EU green industrial policy. Finally, it does not develop an EU-level funding strategy, but rather relies on state aid, with the related risk of fragmentation. The European Parliament and EU countries in the Council of the EU should reboot the proposal and refocus its objectives, sharpening its limited instruments, improving its governance, and adding financial incentives to ensure implementation. In parallel, the EU should develop a broader green industrial policy strategy that leverages the single market in a credible manner, building a solid new governance framework and a new EU-level funding approach.
Topic:
Climate Change, Industrial Policy, Governance, European Union, Trade Policy, and Industry
Political Geography:
Europe

1941. Can Chinese growth defy gravity?

Author:
Alicia Garcia-Herrero
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Chinese growth, astounding since the beginning of the reform era, has slowed in the last decade. We offer a baseline estimate (based on the current trend) of China’s medium-term growth rate, which we project to fall to 2.4 percent by 2035. Several factors create uncertainty around this baseline. China’s rapid aging is already incorporated into our long-term growth scenario, but its impact on growth will depend on how China’s remaining urbanisation process spreads over time, how the shrinking labour supply affects labour productivity and whether the decline in total factor productivity growth, reflecting the lack of reform during the last decade and possibly the rising role of the state, can be reversed. Investment in China, for decades the largest factor in China’s growth, is expected to contribute less to growth given the increasingly low return on assets, particularly on state-led investment. The rapid piling up of public debt is also becoming a heavy burden for the Chinese economy. Finally, the COVID-19 pandemic may have left significant scarring effects, such as structurally high youth unemployment and low investment confidence. On the upside for China, the rise in human capital and research and development expenditure may support innovation and growth, but the magnitude of this effect is uncertain, because it is unclear if higher innovation will translate into higher total factor productivity, and because of the United States’s push to contain China technologically.
Topic:
Industrial Policy, European Union, Economic Growth, and COVID-19
Political Geography:
China, Europe, and Asia

1942. The value added of central bank digital currencies: a view from the euro area

Author:
Maria Demertzis and Catarina Martins
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Different jurisdictions have set out different reasons for creating central bank digital currencies (CBDCs). Some countries, particularly those with already-operational CBDCs for retail purposes, aim to to promote financial inclusion. But in countries where most citizens have access to financial services, central banks are interested in CBDCs as an aspect of the increasing digitalisation of finance. Central banks could also choose to use CBDCs to guarantee in full citizen’s holdings (currently, deposits in commercial bank are only partially guaranteed), but this would trigger major changes in the financial system in terms of the role of commercial banks in intermediation and the role of fiat money. So far, central banks have not opted to go this way. In the euro area, consumers have multiple payment options and a very efficient retail payments system. The currency enjoys high levels of trust and is not challenged by the emergence of private currencies, such as Bitcoin, or by the risk that cash, a monetary system’s anchor, will disappear. Therefore, creating a CBDC for retail purposes in the euro area offers little obvious value added, at least for the foreseeable future. However, there is a strong case for building a CBDC that banks could use for cross-border wholesale purposes (ie with other currencies). Wholesale CBDCs could revolutionise the way that cross-border, cross-currency payments are made for two reasons. Cross-border payments are currently slow and inefficient. Pilot projects have shown that wholesale payments with CBDCs can generate substantial time and cost savings. Any two central banks that have operational wholesale CBDCs could settle transactions between themselves. This would be very different from the current system, as most settlements today are done via the dollar (and then the euro) infrastructure and use correspondent banks. The euro area and the United States would have to consider carefully from a geopolitical perspective how wholesale CBDCs might affect their global economic standing. By developing a CBDC for wholesale purposes, the European Union would be able to contribute to developing the global standard.
Topic:
Monetary Policy, Governance, Regulation, Central Bank, Digital Currency, and Euro
Political Geography:
Europe

1943. The rising cost of European Union borrowing and what to do about it

Author:
Gregory Claeys and Conor McCaffrey
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Debt issuance by the European Commission on behalf of the European Union has increased massively. Of the approximately €400 billion in outstanding EU debt as of May 2023, 85 percent has arisen from borrowing since 2020. Large-scale borrowing is expected to continue until 2026 to fund the remainder of NextGenerationEU, and concessional loans to support Ukraine. When these programmes were launched, interest rates were at historic lows – even negative for maturities below 10 years. However, interest rates rose sharply in 2022. Beyond the widespread rise in euro-denominated interest rates due to monetary tightening by the European Central Bank in response to the inflation surge, the EU has also faced a widening of the spread between its yields and those of major European issuers, including France and Germany. This widening is driven by a combination of market features, circumstantial factors and institutional features. The EU cannot affect the overall cyclical movement of interest rates and will have to learn to live with it, like sovereigns do. However, the European Commission should continue to try to narrow the spread with major European sovereigns by further developing the relevant market infrastructure and improving its issuance strategy. The Commission will not be able to do this alone. Institutional developments, including progress on the development of new own resources and a long-term substantial presence in the bond market, will be necessary to fully reap the benefits of EU borrowing. A large share of EU borrowing (around €421 billion in total by the end of 2026, in current prices) is intended to finance unprecedented non-repayable support: Recovery and Resilience Fund grants and additional funding for existing EU programmes under the EU budget. The interest costs associated with this part of the debt lie with the EU budget. Our estimates suggest that, because of the high current and expected levels of interest rates, this cost could be twice as high as what was initially estimated at the start of the EU’s 2021-27 budget cycle. As a result, because interest costs for the borrowing of the non-repayable support are accounted for under the EU budget’s ‘expenditure ceiling’, this will exert further pressure on the funding of important EU programmes, which are already affected by inflation. The EU should thus quickly review how interest costs are accounted for in its budget and financial framework.
Topic:
Debt, Budget, European Union, and European Commission
Political Geography:
Europe

1944. Adjusting to the energy shock: the right policies for European industry

Author:
Giovanni Sgaravatti, Simone Tagliapietra, and Georg Zachmann
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
In 2022, overall European Union industrial employment and output increased above 2021 levels, despite rocketing energy prices. However, output declined from energy-intensive industries including basic metals, chemicals, non-metallic minerals and paper, for which energy costs represent a much bigger share of production costs than for less energy-intensive manufacturing. Energy prices are likely to remain above historic levels for the foreseeable future. In its industrial strategy response to this context, the EU must ask first whether the energy-intensive parts of the value chain should be outsourced permanently. Conditional on the answer being no, the second question is how to reduce energy prices to ensure the competitiveness of the energy-intensive productions stages that remain in the EU. First, the EU could bridge the high energy price period with unconditional subsidies, which seems to be the preferred strategy currently. This will avoid irreversible large-scale relocation abroad but is expensive, does not help to drive down energy prices and poses risks of fragmentation within the EU. It will only succeed if internationally competitive energy supplies are made available quickly. Second, the EU could support decarbonised production processes built on large-scale deployment of domestic renewables, grid interconnectors and storage. This would accelerate the green transition and reduce clean-tech prices worldwide. However, EU taxpayers would bear the cost of new technologies, without any guarantee of solving the current cost-competitiveness issue. Third, the EU could facilitate imports of energy-intensive products, while helping EU industry move to higher value-added parts of the value chain. Subsidies could be given directly to industrial sectors that have not become structurally uncompetitive, while bringing down energy demand and thus energy prices. However, this strategy would result in temporarily higher unemployment and factory closures in energy-intensive industries, would need to accommodate concerns over excessive reliance on imports and would need to be engineered to address carbon leakage. Policymakers should implement a mix of these policies. The EU should subsidise existing energy-intensive industries only in clearly justified cases, while deciding which energy-intensive products can be left to international market forces. By choosing which decarbonisation investments should be supported in Europe, the EU can combine industrial competitiveness and environmental sustainability.
Topic:
Industrial Policy, European Union, Value Chains, Energy, and Green Economy
Political Geography:
Europe

1945. The longer-term fiscal challenges facing the European Union

Author:
Jeromin Zettelmeyer, Gregory Claeys, Zsolt Darvas, Lennard Welslau, and Stavros Zenios
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The pandemic and subsequent price shocks triggered by Russia’s invasion of Ukraine, have increased longer-term fiscal pressures in the European Union through higher debt, higher expected real interest rates and higher public investment needs. This Policy Brief makes some simple quantitative assessments of those effects and discusses policy implications, with the following results. First, long-term increases in primary fiscal balances required to offset higher debt and higher expected real interest rates are in the range of 0.5 percent to 1.5 percent of GDP for most EU countries. However, because of pre-existing differences in fiscal space, not all countries will need to undertake that adjustment, while some countries may need to adjust by substantially more. Among the 21 EU countries for which we have data to undertake this analysis, 14 will need to adjust by more than they were planning to do by 2025. Second, the required additional fiscal adjustment looks manageable, although it is substantial in some cases. To achieve medium-term debt-reducing primary balances, several EU countries will need to raise primary balances by more than 2 percent of GDP above their 2025 target, but no country will need additional fiscal adjustment of more than 3 percent of GDP. Third, market data suggests that the future path of real interest rates is very uncertain. Compared to the period immediately preceding the pandemic, longer-term expected real interest rates have increased by about 2 percentage points but remain low on average, at about 1 percent in real terms. Future developments depend on whether the structural factors that led to low interest rates in the first place persist or unwind. While interest rates might decline again, fiscal policymakers should not make plans that assume such a decline. Fourth, public spending needs for additional defence and climate spending run well above 1 percent of GDP per year. These needs do not appear to have been incorporated into current fiscal baselines, and hence will come on top of the adjustment described above. To ensure that fiscal adjustment does not defeat its purpose by slowing growth, it is essential that it is conducted gradually. In countries that require such adjustment, it should start as soon as cyclical conditions allow.
Topic:
Governance, European Union, Finance, and Fiscal Policy
Political Geography:
Europe

1946. Decentralised finance: good technology, bad finance

Author:
Maria Demertzis and Catarina Martins
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The emergence of cryptocurrencies/crypto assets has allowed the provision of a new form of financial services, including payments and loans, known as decentralised finance (DeFi). Crypto assets currently represent only about 1 percent of total global financial assets and it is unlikely, in its current form, that DeFi will become a substitute for the traditional financial system, for three reasons. First, while decentralisation is very innovative, in practice the technology required to replace the role of intermediary is slow and costly in terms of energy use. This has led some crypto networks to adopt more centralised solutions to the problem of verification. Second, the automaticity behind the transactions does not allow for any legal recourse. If something goes wrong, there is no way to stop or reverse a transaction once it has been initiated. It is very difficult to imagine DeFi scaling up without the ability to challenge outcomes. Third, and perhaps most importantly, DeFi is for the most part self-referential. Crypto assets are exchanged for other crypto assets without being employed in activities that stimulate economic growth by creating jobs or facilitating investment. It is not likely for DeFi to grow enough to replace traditional finance unless it helps growth. Nevertheless, the technology that enables DeFi and crypto assets, distributed ledger technology (DLT), is very innovative and has managed to remove the intermediary without compromising the safety and finality of financial transactions. Hence, it is likely that the technology behind crypto assets and DeFi will feed into the mainstream and offer efficiency gains.
Topic:
Science and Technology, Regulation, Finance, Digitalization, and Digital Currency
Political Geography:
Global Focus

1947. Will China’s new financial regulatory reform be enough to meet the challenges?

Author:
Martin Chorzempa and Nicolas Veron
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Effective financial supervision plays a crucial role in maintaining financial stability and a healthy financial system. China’s leadership has made financial risk a core priority, and in reforms approved in March 2023, it reassigned regulatory responsibilities, creating a new supervisory body that will take over some responsibilities from the central bank, the banking and insurance regulator, and the securities regulator. The aim is that a change to the financial supervisory architecture (who does what in financial supervision) will make China’s system more effective and stable. In this policy brief, we argue that this incremental reform will not solve the core issues China faces in financial supervisory effectiveness. We provide an overview of China’s large and complex financial system, including its largely state-owned banks (some of which are the largest in the world by assets), securities markets and other financial intermediaries. Traditional divisions between different types of activities and institutions have been blurred by the rise of large financial conglomerates, risk-transfer techniques and internet-based finance. Reforms in 2018 to China’s supervisory architecture did not eliminate perceived shortcomings, including failures to effectively regulate financial conglomerates, fintech and regional banks. We then survey global benchmarks against which China’s financial supervisory architecture can be compared, including the United States and European Union. China’s supervisory system is already more streamlined, at least on paper, than either of these most comparable global counterparts. Like them, China’s system does not correspond exactly to any of the three textbook archetypes of supervision: sectoral, twin-peaks or integrated supervision. Ultimately, the effectiveness of China’s financial supervisory architecture suffers from excessive state intervention in the financial system through other channels, including through the unique and pervasive influence of the communist party, which hampers supervisory independence and makes it difficult to establish accountability for regulatory failures. While the recently announced reform may improve coordination across supervisory bodies, coordination within the new quasi-integrated supervisor, across central departments, and between them and local branches, will remain a challenge.
Topic:
Reform, Regulation, Finance, and Financial Stability
Political Geography:
China and Asia

1948. The potential of sovereign sustainability-linked bonds in the drive for net-zero

Author:
Alexander Lehmann and Catarina Martins
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
European Union governments have for some years issued green bonds that raise funds for climate-related spending. These bonds have been received well in capital markets but because they promise a certain use of proceeds, they complicate budget management and may not match investors’ claims of having an impact on national climate policies. Public commitments made by major investors and asset owners suggest that limiting climate transition risks and the assessment of the alignment of sovereigns with net-zero targets will now become key determinants of portfolio allocation. Yield differentials in bond markets are already beginning to reflect transition risks that arise from the inadequate pursuit by issuers of climate targets. Unlike standard green bonds, sustainability-linked bonds (SLBs) create a link between performance (outcome) indicators and the financial terms of the bonds. SLBs have grown rapidly in importance in private markets and are now being assessed by sovereign issuers. We show that sovereign SLBs could help incentivise climate policies in EU countries, and accelerate emission reductions. They would be an effective tool for signalling commitment. A common EU framework for issuance by EU countries would enhance capital market integration and the transparency of national policies, and would limit climate transition risks in EU capital markets more broadly.
Topic:
Climate Change, European Union, Finance, Carbon Emissions, and Sovereign Bonds
Political Geography:
Europe

1949. Phased European Union electricity market reform

Author:
Georg Zachmann and Conall Heussaff
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
In an environment of record-breaking electricity prices driven by a gas supply shock and below-average electricity generation, reforming the design of the European electricity market is seen as a means to delink consumer costs from volatility in short-term power markets. Electricity markets should meet three objectives: fairness, optimal investment and optimal operation. The current market design has achieved these objectives to varying degrees. Faced with the unprecedented shock, the electricity system has operated well, but electricity markets have struggled to achieve fair outcomes and investments have not been driven by market-based cashflows. Further complicating market reform, the power system is being changed radically by decarbonisation. The electricity system is becoming more decentralised and digitalised, with an active demand side. These transformations will have consequences for the optimal electricity market design in the later stages of the energy transition. Reform proposals have focused on increasing the share of long-term contracts in the remuneration of generation technologies. Different long-term contracting regimes have structural implications for the functioning of electricity markets, especially in relation to the roles of the state and the market, and the responsibilities of national governments and European Union institutions. A phased approach should be taken to EU electricity market design reform. In the near-term, reform should seek to protect consumers and drive investment. An assessment should also be made of what market design will best meet the fairness, investment and operational objectives in a decarbonised system, and what the conceptual role of electricity markets should be during the transition. This process should start as soon as possible so well thought-through proposals are available when the next European Commission takes office.
Topic:
Markets, Reform, European Union, Electricity, and Green Economy
Political Geography:
Europe

1950. A model for a participative approach to digital competition regulation

Author:
Christophe Carugati
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Digital competition regulations often put in place participative approaches to ensure competition in digital markets. The participative approach aims to involve regulated firms, stakeholders and regulators in the design of compliance measures. The approach is particularly relevant in complex and fast-evolving digital markets, where whole industries often depend on the behaviours of the regulated firms. The participative approach enables stakeholders and regulated firms to design compliance measures that are optimal for all because they ensure legal certainty for regulated firms, save time for regulators and take into account the views of stakeholders. However, the participative approach is subject to regulatory capture. The regulated firms and stakeholders might try to promote their interests to the regulator. This could result in endless discussions at best, and the adoption of inappropriate solutions following intense lobbying at worst. A governance model is necessary to ensure that the participative approach works without risks of regulatory capture. The model should define clearly each participant's role, duties and rights. There should be: 1) equal and transparent access of all stakeholders to the dialogue; 2) the presentation of tangible and evidence-based solutions from stakeholders and regulated firms; 3) public decisions from the regulator that contain assessments of the proposed solutions, with guidance to clarify rules; and 4) compliance measures proposed by the regulated firm in line with the guidance. The model should provide an assessment framework for the proposed solutions to identify the most effective. The assessment should rely on the principle of proportionality to assess whether the proposed compliance measure is proportionate, to ensure the effectiveness of the regulation. Finally, the model should safeguard against regulatory capture thanks to transparency rules and external monitoring.
Topic:
Regulation, Digital Economy, Innovation, Stakeholders, and Competition
Political Geography:
Global Focus

1951. How Europe should answer the US Inflation Reduction Act

Author:
David Kleimann, Niclas Poitiers, André Sapir, Simone Tagliapietra, Nicolas Veron, Reinhilde Veugelers, and Jeromin Zettelmeyer
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The 2022 United States Inflation Reduction Act (IRA) is a significant and welcome climate law. It also includes trade-distortive subsidies, including local-content requirements prohibited under World Trade Organisation rules – the first time the US has done this and a blow to the international trading system that could trigger protectionism in other countries. The expected IRA green subsidies are of similar size to those available in the European Union, except in renewable energy production, where EU subsidies remain far larger. However, there are important qualitative differences. Some IRA subsidies discriminate against foreign producers while EU subsidies do not. IRA clean-tech subsidies are simpler and less fragmented, and they focus mainly on mass deployment of green technologies rather than innovation. The IRA will likely harm Europe through its competitiveness effect, while it will likely benefit climate transition in Europe and most of the rest of the world. However, the magnitude of both effects is very uncertain, partly because the IRA will induce substitution away from Chinese inputs. By forcing the reorganisation of supply chains, the IRA may make the EU and other economies more competitive relative to China. It may also initially slow the green transition. But in the longer run, this effect should be outweighed by the reduction in the cost of clean tech driven by the IRA. In responding to the IRA, the EU should not just seek to protect its competitiveness relative to the US but to pursue broader aims, including competitiveness in general, speedy decarbonisation and broad foreign policy and development policy goals. These aims imply that the EU should not impose local-content requirements of its own, should not loosen state-aid rules and should not mimic the IRA’s approach to manufacturing subsidies. Rather, it should focus on boosting its structural competitiveness, formulate a trade policy response that includes reform of the international subsidies regime, and develop an instrument for EU-level subsidies that focuses on early-stage development and increasing EU resilience to trade disruptions.
Topic:
Governance, European Union, Inflation, and Trade
Political Geography:
Europe

1952. Climate versus trade? Reconciling international subsidy rules with industrial decarbonisation

Author:
David Kleimann
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The vast environmental subsidies that may be required for the transition to net-zero greenhouse gas emissions are starting to generate international trade and political frictions between the world’s largest economies. This puts (supra-)national industrial decarbonisation efforts on a collision course with international subsidies rules and national countervailing duty (ie anti-foreign subsidy) laws and regulations. International cooperation will be essential to defuse such tensions before they escalate and impede effective climate policy rollouts, and before they lead to economic countermeasures that create new barriers to trade in environmental goods. This requires agreement on permissible environmental subsidy practices that minimise distortions. Meanwhile, it will be crucial to provide financial transfers to assist poorer economies with industrial decarbonisation at the same time as those poorer economies are suffering from the cross-border negative economic impacts of otherwise net-global-welfare enhancing environmental subsidies paid out by wealthy countries. Various forums can host the technical and political negotiations necessary to set the parameters of net global-welfare enhancing subsidies. These include the G7, the G20, the Organisation for Economic Co-operation and Development, the World Trade Organisation’s Trade and Environment Committee and WTO Trade and Environmental Sustainability Structured Discussions, and the Coalition of Trade Ministers on Climate.
Topic:
Climate Change, Political Economy, Trade, Carbon Emissions, Subsidies, and Decarbonization
Political Geography:
Global Focus

1953. How best to ensure international digital competition cooperation

Author:
Christophe Carugati
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Large digital firms pose similar competition issues worldwide, such as promoting their own services over those of rivals, or imposing unfair terms and conditions. Competition authorities have opened several antitrust investigations and policymakers have proposed digital competition regulations to tackle these issues. G7 competition authorities have called for several years for international cooperation on digital markets. They want competition cases and laws around the world that are consistent and work together. However, the question of how this can be done remains. A toolbox for international cooperation in competition enforcement already exists, but it does not provide for cooperation in competition policy and has shortcomings in relation to competition enforcement. Current and proposed legislation targets the largest digital firms to tackle the characteristics of digital markets, such as multi-sidedness, and the same or very similar behaviours, such as self-preferencing. Legislation in different jurisdictions addresses these issues with similar rules. While there is some convergence, some rules diverge in substance and some are at high risk of divergence in interpretation. Inconsistency is thus likely to arise from a divergence of interpretation rather than substance. The solution would be to ensure a coherent approach to competition in digital markets. This could be done by developing a framework based on four elements: (1) adoption of common legal phases for future digital competition laws to ensure clarity; (2) adoption of a common legal interpretation through guidance drafted by international forums, such as the International Competition Network (ICN); (3) adoption of common technical requirements developed in the context of ICN technical workshops, when the rules require it; and (4) the implementation of an international monitoring committee within the ICN to evaluate whether competition authorities and courts enforce the rules consistently. The impact of the framework might be limited because of the non-binding nature of the approach, and the focus on specific competition-related legislation, excluding laws that can also address the issues, such as civil law. Countries can overcome these limitations if they are willing to cooperate to ensure a consistent approach.
Topic:
Markets, Digital Economy, Digital Cooperation, and Competition
Political Geography:
Global Focus

1954. Preparing for the next winter: Europe’s gas outlook for 2023

Author:
Ben McWilliams, Simone Tagliapietra, Georg Zachmann, and Thierry Deschuyteneer
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Union has so far weathered the energy crisis brought on by Russia’s invasion of Ukraine in February 2022 and will manage winter 2022/23 even if Russia abruptly halts all pipeline gas flows. However, preparations must be made for winter 2023-24. In particular, gas storage facilities should be 90 percent full by 1 October 2023. We assess the demand reduction needed if the 90 percent storage target is to be achieved. Our assessment takes into account EU imports, exports to refill gas storage facilities in Ukraine and Moldova, the weather and the situation in power markets, where gas demand is highly dependent on non-gas energy sources. Assuming limited Russian exports continue, and weather conditions are typical, demand up to 1 October 2023 must remain 13 percent lower than the previous five-year average. The EU should therefore extend its demand-reduction target, which is currently set to expire on 31 March 2023. Two variables will determine how easily the target can be met: 1) liquified natural gas (LNG) supply, and 2) the nature of demand reductions. Plans for rapid deployment of regasification units will alleviate concerns over LNG import infrastructure capacity. However, the EU will continue to compete internationally for LNG cargoes, and will remain vulnerable to global dynamics. Strong economic growth in China, for example, could further tighten markets. The way demand is reduced will determine the economic consequences. So far, large reductions in industrial gas demand have not been accompanied by dramatic drops in industrial output, suggesting good substitution options. However, hardly any gas was saved in the power sector last year, because of weak nuclear and hydro output. The return of French nuclear output will therefore be a huge positive. Finally, households have reduced gas demand, partly driven by warmer than usual weather. Record numbers of heat pumps were deployed in 2022, suggesting the start of a structural shift away from gas demand for heating. Policy should support a continued structural shift away from gas. This involves enabling rapid deployment of renewables and the accompanying grid infrastructure, energy-efficiency measures, help for households that want to switch to cleaner heating, and collaboration with industry to accelerate adoption of new low-carbon production methods.
Topic:
Security, Gas, Energy, Russia-Ukraine War, and Green Economy
Political Geography:
Europe

1955. Mateship Amongst Competition: Recommendations for the U.S.-Australia Alliance

Author:
Randall G. Schriver and Wallace "Chip" Gregson
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Project 2049 Institute
Abstract:
The U.S.-Australia alliance is one of the deepest and most comprehensive alliances in existence. In this report, a bipartisan study group co-chaired by Project 2049 Chairman Hon. Randall Schriver and LtGen Wallace “Chip” Gregson identify three key priorities for the U.S.-AUS alliance. Then, they explore recommendations to address these priorities in four main spheres: political, defense, trade, and resource security. Their recommendations range from minor adjustments of current alliance institutions to expansive changes such as the broadening of ITAR. They conclude by reaffirming the current strength of the U.S.-AUS alliance, and that its current challenges present an opportunity to demonstrate how like-minded allies can “lift as one” and deliver a robust, agile, and sustainable response in the face of an increasingly unstable security environment.
Topic:
Security, Foreign Policy, Bilateral Relations, Alliance, and Strategic Competition
Political Geography:
Australia, North America, and United States of America

1956. The Long‐​Run Effects of Immigration: Evidence across a Barrier to Refugee Settlement

Author:
Antonio Ciccone and Jan Nimczik
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Some 280 million people around the world are first‐​generation immigrants; in Organisation for Economic Co‐​operation and Development countries, first‐​generation immigrants make up around 14 percent of the population. The economic effects of immigration have become better understood in recent decades. A new focus of research on the effects of immigration is its long‐​run impact on productivity, wages, and income. We contribute to this research by examining the long‐​run economic effects of the arrival of refugees in what would become West Germany after the end of World War II (WWII) in 1945. This period was characterized by one of the largest population movements in modern times. Between 1945 and 1949, millions of people from Czechoslovakia, Hungary, Poland, Romania, and eastern parts of prewar Germany were displaced westward. When the Federal Republic of Germany (West Germany) was founded in 1949, these refugees made up around 15 percent of the country’s population.
Topic:
History, Immigration, Refugees, Resettlement, and World War II
Political Geography:
Europe, France, Germany, and United States of America

1957. The Political Economy of Anti‐​bribery Enforcement

Author:
Lauren Cohen and Bo Li
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
A level playing field for firm competition is a fundamental requirement for any market to maximize its potential and achieve productive efficiency. When government favors a set of firms or individuals over others, distortions arise that reverberate throughout entire industries, affecting sales, production, innovation, and more. This is not to say that barriers to firms may not sometimes naturally arise, but if a finger is placed on the scale by government to allow certain firms to gain some unerodable advantage, this can have large implications on allocation and overall economic development.
Topic:
Corruption, Political Economy, Law Enforcement, Accountability, and Bribery
Political Geography:
Global Focus

1958. The Economic Effects of the English Parliamentary Enclosures

Author:
Leander Heldring, James A. Robinson, and Sebastian Vollmer
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In 1808, the English agriculturist Arthur Young stumbled on something interesting. He noticed that the adjacent Cambridgeshire parishes of Childersley and Hardwicke in England had startlingly different economic outcomes, even though they were divided only by a hedgerow. In Hardwicke, wheat yields were 16 bushels per acre, whereas in Childersley, on the other side of the hedgerow, they were 24 bushels per acre—50 percent higher. What could explain the difference? It wasn’t economic fundamentals, because Childersley consisted of similar soil. Rather, Young attributed the difference to the fact that the land in Hardwicke remained in “common field” while the land in Childersley was enclosed.
Topic:
Agriculture, History, Economy, Enclosure, and Parliament
Political Geography:
Europe and England

1959. Uncle Sucker: Why U.S. Efforts at Defense Burdensharing Fail

Author:
Justin Logan
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In 2022, the United States counted 50 of the world’s 195 countries as formal treaty allies, not including dozens more informal security relationships. U.S. allies do not carry a proportionate share of the burden of their defense; Washington’s allies account for roughly 36 percent of world economic output but only 24 percent of world military spending. In every alliance, the United States is the most important member and gives more than it gets in return. American politicians and the American public regularly express frustration with allies’ behavior. In 1959, for example, President Dwight D. Eisenhower lamented that the insufficient defense efforts of U.S. allies in Europe meant that the Europeans were close to “making a sucker out of Uncle Sam.” Things have gotten worse since 1959. Today, America’s alliances act as transfer payments from U.S. taxpayers to taxpayers in allied countries. History and theory both suggest that hectoring allies is unlikely to produce much change. Allies know that they can pocket the gains from U.S. commitments, then spend their own money in the ways they believe benefit them most. Policymakers should evaluate alliance commitments in the context of the net contributions of U.S. allies to U.S. defense, weighed against the costs and benefits of a non‐​alliance. The only way to produce more equitable burdensharing is to make allies doubt the strength of the U.S. commitment: the stronger the belief in the U.S. commitment, the harder it is to get allies to defend themselves. Unless policymakers fundamentally change their approach to alliances, there is little hope that defense burdens can be spread more equitably.
Topic:
History, Alliance, Defense Spending, Military, and Burden-sharing
Political Geography:
North America and United States of America

1960. Disease Mix and How Economic Freedom Matters for Health Outcomes

Author:
Vincent Geloso, Kelly Hyde, and Ilia Murtazashvili
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
We investigate the institutional foundations of public health. We argue that a key distinction in analysis of disease is between diseases of commerce (diseases associated with movement of people and with affluence) and diseases of poverty (primarily noncommunicable diseases that depend on wealth and income). We show that the mix of disease – the ratio of communicable diseases and those associated with longevity to diseases of poverty – increases in economically free countries. We argue that increasing burdens of diseases of commerce reflects the quality of institutions, as those diseases are better than living shorter, brutish lives where diseases of poverty claim many lives. This analysis also highlights an institutional trade‐​off: economically free institutions reduce certain types of disease while contributing to others.
Topic:
Health, Infectious Diseases, Economy, Institutions, and Public Health
Political Geography:
Global Focus

1961. The Fiscal Impact of Immigration in the United States

Author:
Alex Nowrasteh, Sarah Eckhardt, and Michael Howard
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The National Research Council and the National Academy of Sciences (NAS) published groundbreaking investigations into the economics of immigration in 1997 and 2017. Both publications contained thorough literature surveys compiled by experts, academics, and think tank scholars on how immigration affects many aspects of the U.S. economy. The 2017 NAS report included an original fiscal impact model as a unique contribution to immigration scholarship. Its findings have been used by policymakers, economists, journalists, and others to debate immigration reform. Here, we acquired the exact methods used by the NAS from its authors to replicate, update, and expand upon the 2017 fiscal impact model published in the NAS’s The Economic and Fiscal Consequences of Immigration. This paper presents two analyses: a measure of the historical fiscal impacts of immigrants from 1994 to 2018 and the projected long‐​term fiscal impact of an additional immigrant and that immigrant’s descendants. An individual’s fiscal impact refers to the difference between the taxes that person paid and the benefits that person received over a given period. We use and compare two models for these analyses: the first follows the NAS’s methodology as closely as possible and updates the data for more recent years (hereafter referred to as the Updated Model), and the second makes several methodological changes that we believe improve the accuracy of the final results (hereafter referred to as the Cato Model). The most substantial changes made in the Cato Model include correcting for a downward bias in the estimation of immigrants’ future fiscal contributions identified by Michael Clemens in 2021, allocating the fiscal impact of U.S.-born dependents of immigrants to the second generation group, and using a predictive regression to assign future education levels to individuals who are too young to have completed their education. Other minor changes are discussed in later sections. Immigrants have a more positive net fiscal impact than that of native‐​born Americans in most scenarios in the Updated Model and in every scenario in the Cato Model, depending on how the costs of public goods are allocated. The Cato Model finds that immigrant individuals who arrive at age 25 and who are high school dropouts have a net fiscal impact of +$216,000 in net present value terms, which does not include their descendants. Including the fiscal impact of those immigrants’ descendants reduces those immigrants’ net fiscal impact to +$57,000. By comparison, native‐​born American high school dropouts of the same age have a net fiscal impact of −$32,000 that drops to −$177,000 when their descendants are included (see Table 31). Results also differ by level of government. State and local governments often incur a less positive or even negative net fiscal impact from immigration, whereas the federal government almost always sees revenues rise above expenditures in response to immigration. With some variation and exceptions, the net fiscal impact of immigrants is more positive than it is for native‐​born Americans and positive overall for the federal and state/​local governments.
Topic:
Immigration, History, and Fiscal Policy
Political Geography:
North America and United States of America

1962. The Impact of Regulation on Innovation

Author:
Philippe Aghion, Antonin Bergeaud, and John Van Reenen
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
There is considerable research on the economic impacts of regulations but relatively few studies about their impact on technological innovation. Moreover, most analyses focus on the costs and benefits of regulation at a point in time, rather than on its effects over time. Yet potential effects on economic growth are likely to be much more pronounced in the long run. Many scholars have been concerned that slower growth in countries with heavy labor regulations could be due to firms’ reluctance to innovate given the burden of red tape. For example, the slower growth of Southern European countries and parts of Latin America have often been blamed on onerous labor laws.
Topic:
Labor Issues, Regulation, Economic Growth, and Innovation
Political Geography:
Global Focus

1963. Balance of Trade, Balance of Power: How the Trade Deficit Reflects U.S. Influence in the World

Author:
Daniel Griswold and Andreas Freytag
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The U.S. trade deficit is a misunderstood symbol of U.S. economic strength and influence in the world. The deficit is not driven by unfair trade abroad or industrial weakness at home and, as the Trump years show, cannot be “fixed” through higher tariffs. Instead, the trade deficit is driven by a persistent net inflow of foreign capital, which reduces interest rates and fuels economic output. Contrary to myth, the trade deficit is not a cause of deindustrialization or a loss of manufacturing jobs. In fact, the current balance of trade points to America’s continuing influence in global affairs—as a haven for global investment, as a robust producer and buyer of global goods and services, and as the provider of a strong dollar that remains at the center of the global economy. Policymakers should reject measures that restrict trade and foreign investment and instead seek to expand America’s commercial ties to the rest of the world.
Topic:
Foreign Policy, Economy, Trade, and Trade Deficit
Political Geography:
North America and United States of America

1964. Course Correction: Charting a More Effective Approach to U.S.-China Trade

Author:
Clark Packard and Scott Lincicome
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Over the past several years the U.S.-China economic relationship has soured and become subordinated to broader concerns about national security and geopolitics. After a decades‐​long reform agenda in China that lifted hundreds of millions out of grinding poverty, Chinese president Xi Jinping has increasingly turned inward—reembracing Maoist socialism and heavy‐​handed central planning. Washington’s response to these worrisome developments has been reflexively hawkish economically, scattershot, and woefully inadequate for the economic challenge that China presents.
Topic:
National Security, Bilateral Relations, Economy, and Trade
Political Geography:
China, Asia, North America, and United States of America

1965. The Vagaries of the Sea: Evidence on the Real Effects of Money from Maritime Disasters in the Spanish Empire

Author:
Adam Brzezinski, Yao Chen, Felix Ward, and Nuno Palma
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The Columbian voyage of 1492 marked the beginning of three centuries in which vast amounts of monetary silver were shipped from America to Spain. During that time, Spain’s money supply was subjected to the vagaries of the sea. Maritime disasters that resulted in the loss of silver‐​laden ships gave rise to random contractions in the amount of money that arrived in Spain. We studied these maritime disasters to obtain estimates of the causal effects of changes in the money supply on economic output and prices.
Topic:
Imperialism, History, Economy, and Maritime
Political Geography:
Europe and Spain

1966. The Future of the WTO: Multilateral or Plurilateral?

Author:
James Bacchus
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Since its 1947 inception as the General Agreement on Tariffs and Trade, the World Trade Organization (WTO) has generally practiced an all‐​or‐​nothing approach to multilateral negotiations in which the consensus of all WTO members was for trade liberalization. Although this approach worked throughout the second half of the 20th century, its shortcomings were laid bare by the failure of the Doha Development Agenda and the inability of WTO members to achieve further broad, multilateral trade liberalization. Today, amid heightened animosity toward additional trade liberalization, prospects for the traditional consensus‐​based approach seem dimmer than ever.
Topic:
Treaties and Agreements, World Trade Organization, Multilateralism, and Trade
Political Geography:
Global Focus

1967. The Regressive Nature of the U.S. Tariff Code: Origins and Implications

Author:
Lydia Cox
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Tariffs are often thought of as taxes that fall uniformly across goods or industries. In reality, however, the U.S. tariff schedule is extremely complex—the modern‐​day tariff code comprises 4,394 pages of tariffs on 19,347 varieties of goods. As a result, there is a lot of variation in tariff rates, even within narrowly defined categories of goods. We study this complexity through the lens of a little‐​known but consequential pattern in the modern U.S. tariff schedule: tariff rates are systematically higher on low‐​value versions of goods relative to their high‐​value counterparts. For example, the tariff on a $400 handbag made of reptile leather is 5.3 percent, while the tariff on an $8 plastic‐​sided handbag is 16 percent. Through a comprehensive analysis of U.S. tariffs over the past 100 years, we show that this regressive pattern is, and has been, a systematic feature of tariffs for decades. Our findings are emblematic of a more fundamental feature of U.S. tariff policy: tariffs set to meet policy objectives of the past have persisted through vast changes in the economic landscape and, despite their historical origins, are still affecting consumers today.
Topic:
Economics, Tariffs, and Trade Policy
Political Geography:
North America and United States of America

1968. Global Inequality in Well‐​Being Has Decreased across Many Dimensions: Introducing the Inequality of Human Progress Index

Author:
Chelsea Follett and Vincent Geloso
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The world has seen dramatic, global human progress across a broad range of indicators in recent decades, but have those gains been widely shared? The Inequality of Human Progress Index (IHPI) measures relative gaps in global development. It surveys international inequality across a greater number of dimensions than any prior index. By analyzing inequality in a multidimensional way, the IHPI takes inequality more seriously than those indexes that focus on income inequality alone. The IHPI considers material well‐​being and seven additional metrics: lifespan, infant mortality, adequate nutrition, environmental safety, access to opportunity (as measured by education), access to information (as measured by internet access), and political freedom. Across all but two of those dimensions, the world has become more equal since 1990. Globalization and market liberalization over the past few decades have not only raised absolute living standards but also reduced overall inequality.
Topic:
Development, Inequality, Economy, and Well-Being
Political Geography:
Global Focus

1969. Information Manipulation and Repression: A Theory and Evidence from the COVID-19 Response in Russia

Author:
Natalia Lamberova and Konstantin Sonin
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The COVID-19 pandemic has called for provision of public goods and services that require a high state capacity, including producing and distributing vaccines, enforcing mask mandates, limiting potential super‐​spreader events, and so on. The rationale for public intervention was that private actions, such as getting vaccinated, wearing masks, and avoiding large gatherings, have benefits to broader society, so they are likely to be undersupplied by individuals on their own. In these circumstances, one might expect the power of the state coercing others into compliance to be beneficial. Are authoritarian leaders, less constrained by institutions and less accountable to voters, better equipped to deal with health emergencies?
Topic:
Authoritarianism, Repression, Public Health, and COVID-19
Political Geography:
Russia and Eurasia

1970. Indian Nationalism and the Historical Fantasy of a Golden Hindu Period

Author:
Swaminathan S. Anklesaria Aiyar
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
India’s ruling Bharatiya Janata Party (BJP) promotes its Hindu nationalist agenda by claiming that India was the world’s richest region under glorious Hindu rule for thousands of years before being conquered by Muslim invaders in the 11th century and British invaders in the 18th century. BJP politicians say foreign invaders transformed a “golden bird” into an impoverished chattel. Prime Minister Narendra Modi has promised to restore India to its historical eminence. To support their narrative, BJP partisans often cite historian Angus Maddison, who estimated that India accounted for 32 percent of the world’s gross domestic product in 1 CE (during the Hindu period), but this number plummeted to 4 percent by the time British rule ended in 1947. But a closer look at Maddison’s work shows that the BJP is cherry‐​picking data to create a bogus historical narrative. In 1 CE, India’s per capita income was below the world average, at a pathetic $450. It did not rise at all during the following thousand years of Hindu rule. It did not worsen after the Muslim and British conquests, as BJP partisans claim, though it improved very slowly. The supposedly golden Hindu period was one of stark poverty and economic stagnation. Disease, drought, and war kept India’s population stagnant at 75 million people throughout a thousand years of Hindu rule in India, when just staying alive was a challenge. Under Muslim and British rule, death rates fell and the population grew, and it grew still more after independence. Both in terms of income and life expectancy, the “golden period”—if it can be called that—is today, not in the Hindu era.
Topic:
Nationalism, Economy, Domestic Politics, and Bharatiya Janata Party (BJP)
Political Geography:
South Asia and India

1971. Skilled Immigration, Task Allocation, and the Innovation of Firms

Author:
Anna Maria Mayda, Gianluca Orefice, and Gianluca Santoni
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Immigration continues to be a hotly debated topic in several destination countries. Policy and academic discussions have focused on different types of immigration, depending on the host country. While research is voluminous on the United States and countries with skill‐​points‐​based immigration systems, the discussion in Europe has mostly centered on lesser‐​skilled migrants and political refugees, as they represent the largest proportion of arrivals. However, Europe has been receiving skilled migrants in increasing numbers. For example, in France, the share of college‐​educated immigrants is 23 percent— lower than in the United States, Canada, or the UK—but it increased by 11 percentage points between 1995 and 2010.
Topic:
Immigration, Economy, Innovation, and Skills
Political Geography:
Global Focus

1972. Rational Eviction: How Landlords Use Evictions in Response to Rent Control

Author:
Eilidh Geddes and Nicole Holz
Publication Date:
07-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
As housing prices rise, cities are turning to rent control policies, hoping to ensure longterm affordable housing. Typically, rent control policies require leases to be renewed at statutorily limited rent increases. Rent control policies reduce the returns from operating in the rental market, creating well‐​studied incentives for landlords to leave the rental market. Many rent control policies—including San Francisco’s—feature vacancy decontrol provisions, which allow landlords to reset rents to market rates when tenants move. These policies limit the reductions in returns to operating in the rental market but create incentives for landlords to induce tenant turnover, possibly through evictions. The more tenants move, the more often a landlord can raise rents to market rates.
Topic:
Markets, Economy, Eviction, Housing, and Rent
Political Geography:
North America and United States of America

1973. Central Bank Digital Currency: The Risks and the Myths

Author:
Nicholas Anthony and Norbert Michel
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Central bank digital currencies (CBDCs) have the potential to radically transform the American financial system—ultimately usurping the private sector and endangering Americans’ core freedoms. Although CBDCs have gained the attention of politicians, central bankers, and the tech industry, this experiment should be left on the drawing board. This paper provides a summary of why Congress should explicitly prohibit the Federal Reserve and the Department of the Treasury from issuing a CBDC.
Topic:
Finance, Economy, Fiscal Policy, Banking, and Digital Currency
Political Geography:
North America and United States of America

1974. Self‐​Service Bans and Gasoline Prices: The Effect of Allowing Consumers to Pump Their Own Gas

Author:
Vitor Melo
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Billions of people live in countries that ban self‐​service fueling at gasoline stations, including some of the world’s largest countries by population, including China, India, and Brazil, among many others. The impact of these bans is largely understudied despite their prevalence presumably because this policy is often implemented at the national level and because there have been no policy changes in these countries that allow for an assessment of these bans on gasoline prices.
Topic:
Gas, Regulation, Economy, and Consumer Behavior
Political Geography:
North America, Global Focus, and United States of America

1975. Formula for a Crisis: Protectionism and Supply Chain Resiliency—the Infant Formula Case Study

Author:
Scott Lincicome, Gabriella Beaumont-Smith, and Alfredo Carrillo Obregon
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
It has become accepted wisdom in Washington that the COVID-19 pandemic revealed how openness to international trade and investment increases U.S. vulnerability to economic shocks and contributes to widespread shortages of food, medicine, and other essential goods. This official narrative, however, ignores ample economic research showing that, while disruptions are inevitable in a modern economy, the alternative to free trade—a protectionism‐​driven onshoring of global supply chains—carries its own risks and can even heighten vulnerability by inhibiting natural market adjustments to economic shocks. The infant formula crisis, which lasted for most of 2022 and was unique to the United States, provided an unfortunate real‐​world lesson in this regard.
Topic:
International Trade and Finance, Free Trade, Resilience, COVID-19, and Supply Chains
Political Geography:
North America and United States of America

1976. The Ukraine effect: demise or rebirth of the global order?

Author:
Bobo Lo
Publication Date:
05-2023
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
The Russian invasion of Ukraine has sharpened the commitment of Western governments to a liberal vision of international order. But it is a different story elsewhere. Many countries, particularly in the Global South, regard the rules-based order as an artificial Western construct, and the Ukraine war as a matter of geopolitics rather than norms and principles. Events in Ukraine have reinforced Washington’s views about two competing visions of global order — one democratic, the other autocratic. However, such binarism has little resonance beyond the West. For the Global South, the divide that matters is with the Global North. This is not only about relative influence and status in the international system, but also diverging priorities. A rules-based international order is achievable, but not as commonly imagined in the West. The post-Cold War template of unalloyed US global leadership and Western-dominated institutions is no longer tenable. The only viable order is one that is more inclusive and representative, reflecting a world where power is increasingly diffuse, and global cooperation is critical in meeting threats such as climate change and human insecurity.
Topic:
Multilateralism, International Order, and Russia-Ukraine War
Political Geography:
Russia and Ukraine

1977. Chips, subsidies, security, and great power competition

Author:
John Edwards
Publication Date:
05-2023
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
Government subsidies to industry in leading economies are large and growing, with potentially deep, wide-ranging, and unpredictable consequences for the world. It is not clear what rules, if any, will apply in this new era of industry competition, nor whether the measures will be effective in denying frontier technology to rival economies. The impacts of industry subsidies and export controls, including for countries such as Australia, hang on their implementation — beneficial in so far as they speed tech innovation, but detrimental if they split the global economy into competing blocs.
Topic:
Security, Economy, Subsidies, Competition, and Microchips
Political Geography:
Australia and Global Focus

1978. Southeast Asia Aid Map - Key Findings Report

Author:
Alexandre Dayant, Grace Stanhope, and Roland Rajah
Publication Date:
06-2023
Content Type:
Commentary and Analysis
Institution:
Lowy Institute for International Policy
Abstract:
Official development finance plays an important role in financing Southeast Asia’s development, equivalent to around 10% of total government development spending in the region. China is Southeast Asia’s single largest development partner and leads infrastructure financing. Yet, implementation problems have seen the scale of China’s financing decline in recent years. Traditional development partners collectively still dominate development financing in Southeast Asia at 80% of the total. The multilateral development banks lead the way, followed by Japan, Europe, and South Korea. The United States and Australia are mid-sized players. India and the Middle East have become notable sources of non-traditional development finance, with the Islamic Development Bank playing an important role. Climate development finance is increasing, but Southeast Asia will need more support if it is to transition towards resilient, low-carbon development. Intraregional development cooperation is growing, but only makes up a small part of development finance in Southeast Asia.
Topic:
Climate Change, Development, Humanitarian Aid, Finance, and Economy
Political Geography:
Asia and Southeast Asia

1979. Follow the money: connecting anti-money laundering systems to disrupt environmental crime in the Amazon

Author:
Melina Risso, Carolina Andrade Quevedo, Lycia Brasil, Vivian Calderoni, and Maria Fe Vallejo
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Igarapé Institute
Abstract:
Environmental crime became the world’s third most lucrative illicit economy after drug trafficking and smuggling, with estimates of $110 to $281 billion in annual profits. Between 2006 and 2016, environmental crimes grew at a rate of 5% to 7% per year, a pace two or three times faster than that of global GDP growth. Money laundering is part of the criminal machinery that plunders the Amazon Rainforest. The study “Follow the Money: connecting anti-money laundering systems to disrupt environmental crime in the amazon” reveals the need for systems, agencies, and institutions responsible for preventing money laundering to turn their attention to the connections between this illicit practice and environmental crimes. The Igarapé study shows that the money laundering cycle follows three stages before the laundered funds can enter the financial system: placement, layering, and integration. However, not all proceeds from criminal activity are directly laundered into the formal financial system. Thus, informal diversification constitutes the process of moving illegal flows into the informal economy. It is estimated that 30% of the money to be laundered is used to pay the operating expenses of illicit economies. Cash transactions, divided into small amounts and deposited by “money mules,” are used to finance the hiring of precarious labor, accommodations, food, security, transportation, health services, leisure, and machinery, for example. The remaining 70% of illicit proceeds are formally inserted into the financial system. The study also recalls that the World Bank estimated in 2019 that governments lose between 6 and 9 billion dollars in tax revenue each year due to illegal logging. Similarly, other environmental crimes such as illegal mining, especially of gold and diamonds, generate between 12 and 48 billion dollars in revenue. In 2018, Interpol’s Global Illicit Flows Atlas found that illegal logging accounted for a percentage between 15% and 30% of the global timber trade, calculated between 51 billion and 152 billion dollars per year. The illegal logging industry is responsible for up to 90% of deforestation of tropical forests in African countries such as the Democratic Republic of Congo. Combating illicit financial flows is a powerful tool for dismantling illegal economies. It becomes even more relevant when it is identified that illicit financial flows fuel an ecosystem of environmental crime composed of a convergence of environmental and non-environmental crimes, such as corruption, fraud, tax evasion, and others.
Topic:
Security, Environment, Financial Crimes, Money Laundering, and Illicit Financial Flows
Political Geography:
Brazil, South America, and Amazon Basin

1980. Harnessing Public Employment Programmes' Potential: An Intervention Brief Focusing on Youth Inclusion in South Africa's Community Work Programme

Author:
M. Langa
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Centre for the Study of Violence and Reconciliation (CSVR)
Abstract:
Youth continue to be worst affected by social and economic issues such as unemployment, substance abuse and violence (ILO, 2021; United Nations, 2011). South African youth are no exception to this claim, experiencing the world’s highest rate of unemployment as well as some of the highest rates of homicide and gender-based violence (Clifford, 2020; Rebello, 2021). These challenges have gained increased recognition from stakeholders, such as the South African government, with the Presidential Youth Employment Initiative representing one of many recent initiatives. This intervention brief aims to contribute to conversations around how to better address the challenges faced by South African youth. It builds on research conducted by the Centre for the Study of Violence and Reconciliation (CSVR), which focused on how public employment programmes, specifically the Community Work Programme (CWP), may contribute to youth social and economic inclusion, which may further assist in reducing the vulnerability of South African youth. This brief highlights how some youth have negative perceptions of the CWP, which primarily stem from the nature of the activities carried out by the CWP and a lack of accurate knowledge about the programme. Examples from four CWP sites highlight how youthoriented activities may attract greater interest in the programme among youth. It also highlights how youth have benefitted and can continue to benefit from the programme.
Topic:
Government, Employment, Youth, Unemployment, and Inclusion
Political Geography:
Africa and South Africa

1981. Trade Shocks and Social Mobility: The Intergenerational Effect of Import Competition in Brazil

Author:
Andrés César, Matias Ciaschi, Guillermo Falcone, and Guido Neidhöfer
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper investigates whether the impact of trade shocks on employment and wages persists across generations. Using an instrumental variable strategy on survey data with retrospective information on parental employment, we study the consequences of increased Chinese import competition in Brazilian industries on individuals with differently exposed fathers. Results show that several years after the shock, children of more exposed fathers have lower education and earnings, lower chances of formal jobs, and are more likely to rely on social assistance. These effects are substantial for children from disadvantaged background, indicating that the shock had a negative impact on intergenerational mobility.
Topic:
Trade, Imports, Economic Competition, and Social Mobility
Political Geography:
Brazil and South America

1982. The Effects of Differential Exposure to COVID-19 on Educational Outcomes in Guatemala

Author:
Andres Ham, Emmanuel Vazquez, and Monica Yanez-Pagans
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper studies the effects of differential exposure to COVID-19 on educational outcomes in Guatemala. The government adopted a warning index (ranging from 0 to 10) to classify municipalities by infection rates in 2020, which was then used by the Ministry of Education in 2021 to establish a “stoplight” system for in-person instruction. Using administrative panel data for all students in Guatemala, the study employs a difference-in-differences strategy that leverages municipal differences over time in the warning index to estimate the effects of the pandemic on dropout, promotion, and school switching. The results show that municipalities with a higher warning index had significantly larger dropout, lower promotion rates, and a greater share of students switching from private to public schools. These effects were more pronounced during the first year of the pandemic. The findings show differential effects by the level of instruction, with greater losses for younger children in initial and primary education. The results are robust to specification choice, multiple hypothesis adjustments, and placebo experiments, suggesting that the pandemic has had heterogeneous consequences.
Topic:
Education, Government, COVID-19, and Schools
Political Geography:
Central America and Guatemala

1983. The Impact of Robots in Latin America: Evidence from Local Labor Markets

Author:
Irene Brambilla, Andrés César, Guillermo Falcone, and Leonardo Gasparini
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We study the effect of robots on labor markets in Argentina, Brazil, and Mexico, the major robot users in Latin America, during the period 2004{2016. We exploit spatial and time variations in exposure to robots arising from initial differences in industry specialization across geographic locations and the evolution of robot adoption across industries, to estimate a causal effect of robots on local labor market outcomes. We find that district’s exposure to robots causes a relative deterioration in labor market indicators such us unemployment and labor informality. We document that robots mainly replace formal salaried jobs, affecting young and semi-skilled workers to a greater extent, and that informal employment acts as a buffer that prevents a larger increase in unemployment.
Topic:
Unemployment, Robotics, Labor Market, and Informal Economy
Political Geography:
Brazil, Argentina, Latin America, and Mexico

1984. Inequality of Opportunity and Income Redistribution

Author:
Marcel Preuss, Germán Reyes, Jason Somerville, and Joy Wu
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We examine how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We elicit redistribution decisions from a U.S.- representative sample who observe worker outcomes and whether luck magnified workers’ effort (“lucky opportunities”) or determined workers’ income directly (“lucky outcomes”). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. Our findings have implications for models that seek to understand and predict redistribution attitudes, and help to explain the gap between lab evidence on support for redistribution and U.S. inequality trends.
Topic:
Inequality, Redistribution, and Income
Political Geography:
North America and United States of America

1985. Do Minimum Wage Hikes Lead to Employment Destruction? Evidence from a Regression Discontinuity Design in Argentina

Author:
Nicolás Abbate and Carlos García Jiménez
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
In this study, we examine the impact of eight minimum wage increases in Argentina during the early 21st century by analyzing administrative records of registered employment. Utilizing a regression discontinuity design, we compare job separation rates between a group affected by the minimum wage hikes and a control group slightly out of their legal scope. We show that this method improves upon previous methods by reducing the likelihood of Type-I error. Overall, we find that the minimum wage hikes had no significant effect on job separation rates. However, the increases implemented in 2008 resulted in a decrease of 4.8 percentage points (19%) in separations, indicating that the employment effects of minimum wages may not necessarily lead to job loss.
Topic:
Employment, Economy, and Minimum Wage
Political Geography:
South Asia and Argentina

1986. Inequality of Opportunity and Income Redistribution

Author:
Marcel Preuss, Germán Reyes, Jason Somerville, and Joy Wu
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We examine how people redistribute income when there is uncertainty about the role luck plays in determining opportunities and outcomes. We elicit redistribution decisions from a U.S.- representative sample who observe worker outcomes and whether luck magnified workers’ effort (“lucky opportunities”) or determined workers’ income directly (“lucky outcomes”). We find that participants redistribute less and are less reactive to changes in the importance of luck in environments with lucky opportunities. Our findings have implications for models that seek to understand and predict redistribution attitudes, and help to explain the gap between lab evidence on support for redistribution and U.S. inequality trends.
Topic:
Inequality, Economy, Redistribution, and Income
Political Geography:
North America and United States of America

1987. Redressing environmental harm? A 'corporate sovereignty' problem

Author:
Stefano Porfido
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
The transition towards a low-carbon economy is an epoch-defining goal. However, this transition develops following traditional patterns of business that are intrinsically environmentally harmful as they rest upon profit-oriented strategies of commodifying natural resources. By taking the anthropological notion of "corporate sovereignty", this contribution discusses the unsustainability of private corporates' property a-like structures of power over natural resources and frames them within forms of economic governmentality. The paper concludes by stressing the need for a cultural change to occur to back the transition towards a novel model of sustainable business, i.e. of "business within the Heart's limits".
Topic:
Environment, Sovereignty, Natural Resources, Carbon Emissions, and Corporations
Political Geography:
Global Focus

1988. The Functionality of Uganda’s Single Spine Agricultural Extension System

Author:
Elijah Dickens Mushemeza
Publication Date:
01-2023
Content Type:
Research Paper
Institution:
Advocates Coalition for Development and Environment (ACODE)
Abstract:
This report presents the findings and discussions on the functionality of the single-spine agricultural extension system in Uganda. The recommendations from the research process will potentially inform the implementation of the new national agricultural extension strategy aligned to the NDP III, the Parish Model and the national agenda of socio-economic transformation. The single spine extension system was conceptualized as a well-coordinated, harmonized, public sectorled pluralistic extension system. The aim was to eliminate the parallel institutional arrangements that emerged during the NAADS program implementation. It aims at enhancing agricultural production and productivity, value addition, food security, household income and export. In addition, it focuses on building the capacity of individual farmers and farmer institutions to have greater access to and control over structures and processes that transform their resources and assets into the outcomes that they desire to achieve their goals. The study sought to address four objectives: (i) assessing the effectiveness of coordination among key actors (including clarity of mandates) in the delivery of agricultural extension; (ii) assessing the functionality of transparency and accountability mechanisms in the single spine agricultural extension system; (iii) assessing the performance of the system in the attainment of key agricultural extension outcomes; and (iii) assessing the effects of COVID-19 on the delivery of agricultural extension services. The report gives a background to the reform and an overview of the strategy that has been used to implement it. The report gives the methodology utilised in the research process, the limitations of the study and how methodological challenges were addressed. The report brings out the findings in relation to the objectives set and in particular; on coordination dilemmas, transparency and accountability mechanisms, and performance of the system and the effects of COVID-19 on the delivery of agricultural extension service.
Topic:
Agriculture, Governance, Reform, and Policy Implementation
Political Geography:
Uganda and Africa

1989. Compliance Assessment of the FY 2023/24 Budget to Climate Change Interventions in the Third National Development Plan (NDPIII)

Author:
Advocates Coalition for Development and Environment (ACODE)
Publication Date:
01-2023
Content Type:
Research Paper
Institution:
Advocates Coalition for Development and Environment (ACODE)
Abstract:
The Intergovernmental Panel on Climate Change (IPCC) affirms that climate change is occurring in the world today. Climate change is a global development challenge with adverse effects manifested in different ways at national and local levels especially in the vulnerable least prepared countries like Uganda. It is associated with negative severe effects on human well-being and ecosystems which equally hinders the achievement of sustainable development and social equity goals hence becoming one of the drivers of exclusion. This makes it an urgent problem that requires global, regional and national efforts towards effective mitigation and adaptation responses. Swift effective response to climate change could significantly contribute to the attainment of the 17 Sustainable Development Goals (SDGs) while delayed action is predicted to have severe and irreversible consequences for natural and human systems. Uganda’s frameworks to sustainable development (Uganda’s Vision 2040, the NDP III, sectoral policies and plans) highlight climate change as an outstanding development challenge. This implies that the attainment of the country’s long-term development goals and the building of resilient communities that will mitigate and adapt to climate change largely depends on the significant allocation of financial resources to climate change interventions specified in the development frameworks. The NDPIII 2020/21-2024/25) not only integrates climate change across all its twenty (20) programmes but also provides for their strategic interventions and targets. This integration trickles down to the NDPIII Results Framework and Programme Implementation Action Plans (PEAPs) and is also supposed to fully cascade down to the national budget. This report presents the compliance assessment of the FY 2023/24 budget to climate change interventions in the third National Development Plan (NDPIII) based on ten (10) priority programmes selected due to their real or potential contribution to climate change and their strategic importance to the development process. Overall, the analysis revealed that the FY2023/24 Annual Budget (AB) to climate change interventions in NDP III is unsatisfactory at 55.35 percent which is slightly lower than last year’s compliance level of 64.7 percent. However, there were variations in the compliance levels of the different programmes. The programmes on Sustainable Development of Petroleum Resources programme (83.3%), and Sustainable Minerals Development programme (80%) had a satisfactory level of compliance. On the other hand, the programmes of Human Capital Development (62.5%), Integrated transport infrastructure and services (61.1%), and Tourism development (66.7%) had a moderately satisfactory level of compliance. Lastly, the programmes of Sustainable Urbanisation and housing (56.7%), Natural Resources, Environment, Climate Change, Water and Land Management (56.3%), Agro-industrialization programme (28%), Digital transformation (40%), Private Sector Development (0%) had a far below an unsatisfactory level of compliance (below 60%).
Topic:
Climate Change, Budget, and Sustainable Development Goals
Political Geography:
Uganda and Africa

1990. Emergent Agency in a Time of COVID-19: Research report

Author:
Flippo Artuso, Katrina Barnes, Duncan Green, and Irene Guijt
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
The outbreak of the COVID-19 pandemic was an unprecedented event in the modern era. Earlier studies demonstrated how ‘critical junctures’, which comprise major historical events and emergencies, often play an essential role in social change. This paper seeks to explore whether the COVID-19 pandemic would prove to be a similar pivotal moment, and what lessons and insights we could gather for positive social change. The research set out to find key insights on how individuals, communities, and organizations in civil society were responding to the pandemic in low-income populations at the intersection of multiple inequalities. These lessons could inform how donors, governments and NGOs might reshape their efforts to reduce emerging or deepening inequalities, and how civil society organisations and community-based organisations could amplify their positive impacts. Over 18 months, from September 2020 to March 2022, the ‘Emergent Agency’ research convened a global conversation between activists, development practitioners, researchers, and academics to better understand the phenomena that were taking place in response to the pandemic. The research collected more than 200 case studies and held a series of webinars and conversations in thematic clusters to uncover what these responses could teach us. The research project was enabled with funding from The Atlantic Fellows for Social and Economic Equity programme (AFSEE) of the London School of Economics.
Topic:
Civil Society, Governance, Pandemic, and COVID-19
Political Geography:
Global Focus

1991. Russia: Briefing sheet

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, Outlook, and Briefing sheet
Political Geography:
Russian Federation

1992. Venezuela: Briefing sheet

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, Outlook, and Briefing sheet
Political Geography:
Venezuela and Bolivarian Republic of

1993. Slovakia: Political and institutional effectiveness

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Background, Forecast, and Political and institutional effectiveness
Political Geography:
Slovakia

1994. Slovakia: Political forces at a glance

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, Background, and Political forces at a glance
Political Geography:
Slovakia

1995. Canada: Political and institutional effectiveness

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Background, Forecast, and Political and institutional effectiveness
Political Geography:
Canada

1996. Canada: Political forces at a glance

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, Background, and Political forces at a glance
Political Geography:
Canada

1997. Vietnam: Briefing sheet

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, Outlook, and Briefing sheet
Political Geography:
Viet Nam

1998. Tanzania: Briefing sheet

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, Outlook, and Briefing sheet
Political Geography:
Tanzania and United Republic of

1999. Virgin Islands (British): Basic data

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Summary, Basic Data, Economy, and Background
Political Geography:
Virgin Islands and British

2000. Virgin Islands (British): Political structure

Publication Date:
03-2023
Content Type:
Country Data and Maps
Institution:
Economist Intelligence Unit
Abstract:
No abstract is available.
Topic:
Politics, Summary, and Political structure
Political Geography:
Virgin Islands and British