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561. Strengthening Local Administration of Social Assistance in Russia

Author:
Raymond J. Struyk and L. Jerome Gallagher
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Urban Institute
Abstract:
A hallmark of the administration of social assistance under the socialist regimes in Eastern Europe and the USSR was the universal nature of eligibility for benefits, either to all citizens or to categories of deserving citizens, e.g., the physically handicapped. During the transition period since the collapse of the Soviet Union, the Russian Federation has taken limited steps to improve the targeting of benefits. The challenge to improvement is acute because the administration of the great majority of programs rests with agencies of local government. The question addressed here is how amenable local program administration is to improved targeting and more progressive program administration in general. Presented is an analysis of the results of assessments of two pilot programs implemented in two Russian cities in 2000–2001. The “school lunch pilot” introduced means testing in the school lunch program on a citywide basis; eligible families receive cash payments and all children pay the same price for their lunches in cash. The “jobs pilot” is a new, local means-tested program that provides cash support to families while unemployed workers search for work; continued receipt of funds is conditional on a minimum job search effort. We find that both programs were successfully implemented and that there was little resistance to the sharper targeting. On the other hand, a variety of problems with program administration were identified—problems that need to be addressed if program integrity and credibility are to be maintained.
Topic:
Economics, Government, and Human Welfare
Political Geography:
Russia, Europe, and Asia

562. Russian Nonprofits as Contracted Providers of Municipal Social Services: Initial Experience

Author:
Raymond J. Struyk and Kirill Chagin
Publication Date:
08-2001
Content Type:
Working Paper
Institution:
Urban Institute
Abstract:
In the Russian Federation the delivery of social services to deserving population groups is mostly the responsibility of municipalities and other local governments. Services are delivered by municipal agencies. One way to inject competition into the delivery system is for local government to hold competitions to contract for social service delivery. The competitions can be open to nonprofit organizations (NPOs), some of which have been providing assistance in recent years to needy individuals and families similar to those that would be contracted.
Topic:
Economics, Human Welfare, and Non-Governmental Organization
Political Geography:
Russia, Europe, and Asia

563. Do Affluent Countries Face an Incomes-Jobs Tradeoff?

Author:
Lane Kenworthy
Publication Date:
10-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
A commonly-held view suggests that affluent nations face a tradeoff between incomes and jobs. According to this view, in the United States pay for workers at the bottom of the earnings distribution (relative to those in the middle) is very low and government unemployment-related benefits (the “replacement rate”) are stingy, but this facilitates the creation of lots of new jobs and encourages such individuals to take those jobs. The result is a high rate of employment and low unemployment. In much of Western Europe relative pay levels are higher for those at the bottom and benefits are more generous, but this is said to discourage job creation and to reduce the willingness of the unemployed to accept low-wage jobs. The consequence is low employment and high unemployment. I undertake a comparative assessment of this tradeoff view, based on pooled cross-section time-series analyses of 14 OECD countries in the 1980s and 1990s. The findings suggest that greater pay equality and a higher replacement rate do reduce employment growth in low-productivity private-sector service industries and in the economy as a whole. However, these effects are relatively weak. The results point to a variety of viable options for countries wishing to maintain or move toward a desirable combination of jobs and equality.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

564. The Effects of Convergence: Internationalisation and the Changing Distribution of Net Value Added in Large German Firms

Author:
Anke Hassel and Jürgen Beyer
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper examines whether and how the increasing internationalisation of firms impacts on the operation of a co-ordinated market economy. Following the tenets of agency theory it assumes that an emerging market for corporate control changes the monitoring mechanisms that oversee management. Since Anglo- American forms of monitoring are usually associated with a higher return for investors compared with Continental European firms, a change in the distribution of the net value added of firms is expected. Using financial data on 59 large German companies, the paper shows that the emerging convergence of German corporate governance practices to Anglo-American standards has had a weak, but significant, impact on the distribution of net value added. This is in contrast to the impact of the internationalisation of firms on product markets, which does not have an effect. Since the market for corporate control is, however, still underdeveloped in Germany, the main effects remain to be seen.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
America, Europe, and Germany

565. What Have We Learned?[1] Problem-Solving Capacity of the Multilevel European Polity.

Author:
Fritz W. Scharpf
Publication Date:
07-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This Working Paper is an attempt, occasioned by the evaluation of the Max Planck Institute for the Study of Societies, to provide a conceptual framework within which institute research on multi-level European problem solving could be discussed in the context of a more comprehensive overview of the literature. The framework combines an institutional dimension (distinguishing between supranational, joint-decision and intergovernmental modes of EU policy making) and a policy dimension (distinguishing between market-creating, market-enabling, market-correcting and redistributive policies). As institutional modes differ in their capacity for conflict resolution, and as policy types differ in the likelihood of severe policy conflict, greater or lesser problem-solving capacity can be explained by the location of a particular policy area on both of these dimensions.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Europe

566. Minority Governments and Party Politics: The Political and Institutional Background to the "Danish Miracle"

Author:
Christoffer Green-Pedersen
Publication Date:
01-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The performance of the Danish economy in the 1990s has been successful to the extent that scholars are talking about a "Danish miracle". The importance of government policies to Denmark's economic success is taken as a point of departure in investigating why Danish governments have been able to govern the economy successfully in the 1990s. The paper argues that two factors have been important. First, the functioning of Danish parliamentarianism has been reshaped to strengthen the bargaining position of minority governments, which became the rule in Danish politics after the landslide election in 1973. Today, Danish minority governments can enter agreements with changing coalitions in the Danish parliament. The paper thus challenges the conventional wisdom about minority governments as weak in terms of governing capacity. Second, the changed socioeconomic strategy of the Social Democrats after returning to power in 1993 has been important because it has created a political consensus around a number of controversial reforms.
Topic:
Economics, Government, Political Economy, and Politics
Political Geography:
Europe and Denmark

567. Breaking with Tradition: Service Trade Liberalization in the EU and Germany

Author:
Jette Steen Knudsen
Publication Date:
06-2001
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
This chapter asks why and how services that were not previously thought of as tradable have increasingly been opened up to international competition in EU member states including even in Germany. The chapter contrasts an explanation that focuses on the impact of economic interests with an explanation that focuses on the impact of EU membership. The chapter argues that lobbying by producers or users of services cannot fully explain reform nor does EU membership simply constrain reluctant member state governments to adopt new legislation. Instead the chapter argues that in important service sectors the German government has promoted trade reform even sometimes in the face of strong opposition from providers, consumers, and unions. The chapter maintains that a crucial key to liberalisation is the emergence of a break in government opposition. In particular, the ability of the government to re-interpret services as regular tradable products combined with new regulation to "shelter" exposed groups such as consumers and workers against potential harm. Implications of this claim for future service sector liberalisation are subsequently discussed.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe and Germany

568. Adaptation of the Legal Systems of Candidate Countries - the Case of the Baltic States

Author:
Christen Boye Jacobsen
Publication Date:
08-2001
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
In all the countries of Eastern Europe, the collapse of the socialism presented the legal system and the lawyers and administrators with an immense conceptional and practical challenge. In a couple of years, and in a constantly changing economic and political climate, they were required To introduce the rule of law and democracy (der demokratisch-freiheitliche Rechtsstaat), To introduce and implement the rules and institutions of a market economy, To modernise the normative acts and the public institutions of virtually all aspects of a modern society, and To implement the EU-acquis.
Topic:
Democratization, Economics, and Government
Political Geography:
Europe

569. Greenland's geopolitical reality and its political-economic consequences

Author:
Jens Kaalhauge Nielsen
Publication Date:
06-2001
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
Geopolitics is an old concept, which received its classic modern form in the work of Friedrich Ratzel, Rudolf Kjéllen, Harold J. Mackinder, Alfred T. Mahan, and Karl Haushofer. It can be regarded as an intellectual approach that aims at establishing a political grammar of world politics, through a scientific discipline based on the objective reality of geography. Thus, geopolitics is often seen as a “realistic” attempt to establish world policy as an objective science based on some kind of "physico-spatial reference". The implicit assumption is a discreet claim that it is possible to study international politics and the allocation of power as one studies the weather: as a system based on objective, natural laws with a fixed and firmly established pattern of forces and indispensable reference points. Hence, Halford J. Mackinder believed that he could identify "the Geographical Pivot of History." In this way, somewhere behind the concept of geopolitics as a scientific concept lies a compelling idea: a theory of the international system based on sheer objective forces, which can be reduced to the invariable necessities of an ultimate "physical" matrix that was merely given expression by the vocabulary of "national interests." We find the same notion in the concept of "realpolitik," the idea that it is possible to conduct a policy grounded on a realm of crucial necessities, as in Bismarck's policies framed in the image of Iron and Blood.
Topic:
Foreign Policy, Economics, and Politics
Political Geography:
Europe

570. In Tempestuous Waters: Denmark and the WTO Regime

Author:
Erik Beukel
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
International trade negotiations and the World Trade Organisation (WTO) have come into the public limelight. Until a few years ago, the governance of the world trading system, encapsulated in General Agreement on Tariffs and Trade (GATT), was considered a mundane and dull subject to which only a few people with a special economic interest payed attention. Today, however, the problems dealt with in the WTO affect much broader economic interests and attract attention from different political persuasions and social movements, as illustrated by the battle in Seattle, in December 1999, when the Third Ministerial conference of the WTO was met by massive demonstrations organised by multifarious NGOs. Generally, multilateral economic institutions, such as the World Bank, the International Monetary Fund (IMF), and the WTO, have become tempestuous waters, because among other things these institutions are contested by a medley of non-governmental organisations (NGOs) and grass roots movements (O'Brien et al. 2000). The conflict centres on “globalisation”, a controversial and ambiguous notion (Hirst and Thompson 2000), and the WTO is a focal point of the globalisation storm (Hart 1997).
Topic:
Economics, International Trade and Finance, and Politics
Political Geography:
Europe

571. The Declining Use of Unskilled Labour in Italian Manufacturing: Is Trade to Blame?

Author:
Paul Brenton and Anna Maria Pinna
Publication Date:
12-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
As in other industrialised countries, the manufacturing sector in Italy has recently experienced a substantial increase in the use of skilled relative to unskilled workers — skill upgrading. In this paper we estimate a model, based upon the notion of outsourcing, of the relative demand for skilled labour which allows identification of the roles of technological change and trade, the two main culprits, in skill upgrading. Compared to previous studies of Italy the model is applied to highly disaggregated industrial data and in addition the impact of trade is more precisely measured through the separate identification of import flows from low-wage labour abundant countries and those from OECD partners. Furthermore we also introduce a measure of trade variability. Our results show firstly that economic variables played little or no role in determining the relative demand for unskilled workers in the 1970s in Italy, reflecting the nature of Italian labour market institutions in the period. Subsequently, in the 1980s and 1990s, following some labour market reforms, we find that international competition, in terms of import penetration and the variability of trade prices, had a significant effect on the relative demand for blue-collar workers in Italy in skilled intensive sectors. In unskilled intensive sectors, such as textiles and clothing, where the impact of imports from low-wage countries might be expected to be more pronounced, we do not find a significant effect from imports but rather that the most important role has been played by technological change. The result is consistent with previous studies that indicate that Italian textile and clothing firms have remained internationally competitive by increasingly switching to high quality segments of the industry.
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe and Italy

572. Shaping Europe's Migration Policy

Author:
Joanna Apap
Publication Date:
12-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
During the 1990s, Justice and Home Affairs moved, in an unexpected way, to centre stage in the European debate. Concern had been growing about immigration policy since the Maastricht Treaty institutionalised the third pillar of the European Union. This concern had been stimulated by several factors – the persistence of irregular migration and tragic incidents, such as the one in Dover in July 2000 in which 58 Chinese nationals lost their lives trying to enter illegally into the United Kingdom, the need for immigrant workers in some sectors, and the spectre of an ageing European population. More generally, the Treaty of Amsterdam, since its entry into force in 1999, represents a major development in overall Justice and Home Affairs policy, and the implementation of the treaty provisions in Justice and Home Affairs was described as the next major EU initiative after the single currency.
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe

573. What Are the Limits to Economic Integration?

Author:
Paul Brenton
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper discusses the continuing importance of borders, even within the EU, for the volume of international trade and global capital flows. It suggests that a range of factors, including the nature of the commercial, social and legal fabric of a country and the structure of consumers' preferences, act to constrain cross-border exchanges relative to internal transactions. Hence, whilst the process of globalisation may continue, there are likely to be distinct limits to the extent of economic integration. This entails that the traditional roles of governments in OECD countries in providing social welfare and regulating the market economy within national boundaries will not be seriously undermined. However, the situation may differ in developing countries where existing social and legal institutions may be compromised by globalisation rather than acting to dampen its impact.
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe

574. Fiscal Policy Spillovers in the Euro Area: Where Are They?

Author:
Daniel Gros and Alexandr Hobza
Publication Date:
11-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
What impact would a fiscal expansion in Germany have on the rest of the euro area? It has been generally suggested that it could go in either of two opposite directions, depending on the relative strength of two effects: the direct trade linkage and the financial market repercussions. A review of the results from four major macroeconomic models shows that the cross-country spillover effects of fiscal policy are indeed of uncertain sign and magnitude. Different models give quite different results if used in standardised simulations in terms of the sign, magnitude and time profile of the impact of a fiscal expansion in one member country (e.g. Germany) on other euro area countries. Fewer results are available concerning the potential spillover effects of structural policies, but they are similar to the ones concerning a budgetary stimulus: the magnitude of the spillover is small and varies across countries and over time.
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe and Germany

575. Seigniorage: An Argument for a National Currency?

Author:
Fransizka Schobert
Publication Date:
10-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Seigniorage has often been mentioned as one of the most important and most readily quantifiable arguments for a government not to give up its monopoly in base money. The analysis shows that the measurement of seigniorage may lead to very different results and that it eventually depends on the monetary environment, in which central banks issue and manage base money. For less advanced countries in Central and Eastern Europe seigniorage has only been fiscally significant in high inflationary economies and even then the success in exploiting seigniorage has been limited. Widespread currency substitution has contributed to the results. Governments in these countries which are willing to stabilise prices but which lack crediblity to do so, may be increasingly interested in euroisation. More advanced EU-accession countries have received low revenues from having a national currency over the recent years. Seigniorage has arisen as a by-product of other central bank's objectives such as price and exchange rate stability. This caused high sterilisation costs and valuation gains of the central bank's asset portfolio have often been the main reason for positive results of seigniorage. In search for a viable monetary regime and in face of further liberalisations of capital markets these countries may look at euroisation as a choice to achieve price stability without exchange rate volatility.
Topic:
Economics and Political Economy
Political Geography:
Europe

576. Extending Citizenship Rights to Third Country Nationals

Author:
Joanna Apap
Publication Date:
10-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Various issues arise in the European context with respect to the boundaries of citizenship; one of the main questions is to what extent the division between the European Union citizens and third country nationals will increase, especially if “deepening” of the Union leads to more tightening of its external borders. This paper addresses the question of how far citizenship rights can be extended to third country migrants in the EU?
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe

577. What Drove Relative Wages in France? Structural Decomposition Analysis in a General Equilibrium Framework, 1970-92

Author:
Sébastien Jean and Olivier Bontout
Publication Date:
09-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper confronts a CGE model to observed evolutions in France, between 1970 and 1992, through a structural decomposition analysis. The choice of the model and the assumption of constant elasticities over time enable the structural change of the economy between two equilibria to be summarised through a set of four types of state variables, reflecting the effect of technical change, changes in factor supplies, shifts in consumption patterns, and international trade. Simulations then allow the contribution of each of these shocks to be assessed. We find that technical change had a strong positive impact on the relative wage of skilled to unskilled workers, while the impact of changes in factor supplies is strongly negative. The effect of international trade is far less important. However, if we take into account a trade-induced effect on productivity, then we find that trade substantially increased wage inequalities.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
China, Europe, and France

578. Is the ECB Sufficiently Accountable and Transparent?

Author:
Daniel Gros and Lorenzo Bini-Smaghi
Publication Date:
09-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
More than two years after its inception, the ECB is still perceived as lacking transparency by many academics and market participants. Our analysis, based on a series of indicators, suggests instead that the ECB is, at least on paper, one of the most transparent and accountable central banks. The discrepancy between theory and public perception suggests that much remains to be done within the given institutional framework to improve the transparency of the ECB. What is the best way to achieve this goal? Several suggestions have been put forward, such as publishing the detailed minutes of the ECB Governing Council meetings. This would result in shifting the true debate to informal meetings of the Governing Council, while formal meetings would only record pre-packaged consensus with no or little discussion. In our view, the best way to make the ECB more accountable is to engage it in substantive discussions about its policy. The ECB should provide more information about the background analysis that leads to policy decisions. For example, the ECB should transform its 'staff projections' into true inflation forecasts and it should be more open about the arguments that shape the internal debates, which precedes decisions. Accountability cannot be ensured by the ECB alone. An important role has to be played by its counterparts, such as the European Parliament, the Council of EU Finance Ministers and the public at large.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Europe

579. Maastricht the Choice of Exchange Rate Regime in Transition Countires During the Run-Up to EMU

Author:
György Szapáry
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper raises some specific issues concerning the choice of exchange rate regime in transition countries during the run-up to EU/EMU membership. It argues that there is no "one-size-fits-all" exchange rate regime that accession countries should uniformly adopt. It also argues that the Maastricht criterion on inflation is inconsistent with the catching-up process because of the Balassa-Samuelson effect and that this inconsistency will encourage a "weighing-in" syndrome: like the boxer who refrains from eating for hours prior to the weigh-in only to consume a big meal once the weigh-in is over, the candidate country will maintain very tight monetary policy and resort to all sorts of techniques (freezing of administered prices, lowering of consumption taxes, etc.) to squeeze down inflation prior to accession only to shift back gears after it has joined the EMU. Indeed, the convergence of short-term interest rates to EMU levels that will come with accession will automatically mean a loosening of monetary policy after the country has become a member of the monetary union. That loosening will be reinforced if the country had previously allowed its exchange rate to appreciate against the euro. The result of this stop-go cycle is that the efficiency of economic management will suffer. It would be better to recognize the principle of the Balassa-Samuelson effect explicitly in the Maastricht criteria by giving more room for maneuver than the one provided by the present rule. The paper makes suggestions on how the Maastricht criterion on inflation could be adjusted and discusses their merits. It concludes that a reasonable compromise would be to define the permissible inflation deviation in reference to the average inflation rate of the euro zone, not the three EU members with the lowest inflation rate.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Europe

580. Foreign Direct Investment and Company Taxation in Europe

Author:
Agnès Bénassy-Quéré, Lionel Fontagné, and Amina Lahrèche-Révil
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The growing globalisation of OECD economies, associated to the progresses in European integration, tends to increase the mobility of capital and to deepen the pressure on tax policies. On the one hand, tax policies are tied by the Stability Pact criteria: the limit imposed on budget deficits leaves little scope for tax rates to decrease. On the other hand, the growing mobility of capital tends to increase the elasticity of tax bases to tax rates, hence reducing the autonomy of governments in increasing taxes.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Europe