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1. Businesses, EU Strengthening International Supply Chains

Author:
Piotr Dzierżanowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Over the past three years, global supply chains have experienced problems on an unprecedented scale. Given the rising political tensions and changes in the perception of the role of the economy in international rivalries, a return to international economic relations based on globalisation and trade liberalisation is highly unlikely. Instead, we will witness a necessary strengthening of supply chains, both at the individual business and national levels. For Western economies, the main challenge will be the reduction of related costs.
Topic:
Globalization, European Union, Economy, Business, and Supply Chains
Political Geography:
Europe and Global Focus

2. Blowback: The Effect of Sanctions on Democratic Elections

Author:
Matthieu Crozet and Julian Hinz
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Sanctions are meant to coerce political adversaries through economic measures. However, evidence for their effectiveness is scarce. In this paper we assess the impact of sanctions on a democracy — France — by studying the electoral consequences of the sanctions and countersanctions imposed between Russia and Western countries. Contrary to most of the existing literature we find clear evidence for exposure to the sanctions to cause an increase in the vote share for pro-Russian (and far-right) candidates during the French 2017 presidential election. Locally, the impact on voting is substantial. Back-of-the-envelope calculations indicate that about 16,300 votes for the main far-right candidate can be directly attributed to the sanctions’ impact. This is the total number of votes cast in a medium-sized French city. It is however not nearly enough to have affected the outcome of the election at the national level.
Topic:
Globalization, International Trade and Finance, Sanctions, and Elections
Political Geography:
Russia, Europe, and France

3. Who is to suffer? Quantifying the impact of sanctions on German firms

Author:
Holger Görg, Anna Jacobs, and Saskia Meuchelbock
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In this paper, we use a novel firm level dataset for Germany to investigate the effect of sanctions on export behaviour and performance of German firms. More specifically, we study the sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea and Russia's countermeasures. We find a substantial negative effect on both the extensive and intensive margin of German exports. While the negative effects are strongest for firms exporting products subject to trade restrictions, we provide further evidence on the indirect effects of sanctions. Analysing the impact on broader measures of firm performance, we document that the cost of sanctions is heterogeneous across firms but overall modest. Our results reveal that the negative impact of the shock was concentrated primarily among a small number of firms that were highly dependent on Russia as an export market and those directly affected by the sanctions.
Topic:
Foreign Policy, Globalization, International Trade and Finance, Sanctions, Russia-Ukraine War, and Firm Dynamics
Political Geography:
Russia, Europe, and Germany

4. Prosperity and Resilience: Diverse Production and Comparative Advantage in Modern Economies

Author:
David Henig and Anna Guildea
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
A common version of trade theory suggests that countries will specialise in a limited number of products. Using the example of David Ricardo from 1817, England specialises in cloth and Portugal in producing wine – and then they trade with each other to mutual benefit. However, this is a crude version of comparative advantage that routinely leads to political concerns about trade. Today the prime concern is that Europe and other developed countries have become too dependent on China by allowing the logic of comparative advantage to work. In short, trade has made us vulnerable. The observed reality is different. Most advanced economies produce and export a broad range of goods and services. Their governments have similar aspirations to develop and support diverse manufacturing and services, including in the most traded global sectors such as pharmaceuticals, automotive, business services, and food and drink. Modern specialisation comes in countries producing various, but not all, products within global supply chains. Patterns of trade suggest such specialisation has allowed countries to both grow and become resilient to individual shocks. Knowledge and ownership of the whole supply chain is more important than producing everything.
Topic:
Globalization, Economy, Services, Resilience, WTO, and Production
Political Geography:
Europe and Global Focus

5. Regional Deprivation and Populism - Evidence from Germany and the U.S.

Author:
Michael Bayerlein
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
A widely held view is that increasing globalisation and inequality are fostering support for populist actors. Surprisingly, when focusing on Germany and the U.S., populist voting is highest in less globalised regions with rather equal income distributions. Addressing this puzzle, I ask how the regional variance in populist voting can be explained. In my answer, I introduce the concept of spatial inequality, which describes the regional inequality within countries, and construct a measure of public goods scarcity. I argue that the spatial inequality induced feeling of being left behind is positively correlated with populist voting and that this effect is mitigated by public goods provision. Using county level data to develop spatial inequality and public good scarcity indices, I can provide empirical support for these arguments. The findings have important implications for understanding the sub-national variance in populist voting and the role of relative economic deprivation as well as public goods provision.
Topic:
Globalization, Inequality, Populism, Voting, Regional Economy, and Public Goods
Political Geography:
Europe, Germany, North America, and United States of America

6. Brothers in arms: The value of coalitions in sanctions regimes

Author:
Sonali Chowdhry, Julian Hinz, Katrin Kamin, and Joschka Wanner
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition set-ups, we (i) dissect welfare losses for sanction-senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential — the maximum welfare change attainable — when sanctions are scaled vertically, i.e. across sectors up to an embargo, or horizontally, i.e. across countries up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. We find that the implemented measures against Iran and Russia inflicted considerable economic harm, yielding 32 – 37% of the vertical sanctions potential. Our key finding is that coalitions lower the average welfare loss incurred from sanctions relative to unilateral implementation. They also increase the welfare loss imposed on Iran and Russia. Adding China to the coalition further amplifies the welfare loss by 79% for Iran and 22% for Russia. Finally, we quantify transfers that would equalize losses across coalition members. These hypothetical transfers can be seen as a sanctions-equivalent of NATO spending goals and provide a measure of the relative burden borne by coalition countries.
Topic:
Globalization, International Trade and Finance, Markets, Sanctions, Alliance, and Embargo
Political Geography:
Russia, China, Europe, Asia, North America, and United States of America

7. The Power to Engage: Giving Punch to a new EU Global Strategy 2020

Author:
Sven Biscop
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
I like being a policy-oriented academic: you meet lots of interesting people and you are invited to interesting meetings, so you can really contribute to the debate. Some actors may from time to time think you have an appealing idea, and they may even seek some academic legitimacy for their decisions. But you are of course not present when the actual decisions are being taken. It’s my job and I love it – but this is not the role that the EU itself should play. Europe does not aspire to be the world’s policeman, but it cannot just be the world’s professor either. As the new EU leadership is coming in, we must give punch to our strategy, and make sure we have the power to make our ideas work in the real world. Power, not to confront, but to engage the world.
Topic:
Globalization, Regional Cooperation, European Union, Leadership, and Police
Political Geography:
Europe

8. Fostering Europe’s Strategic Autonomy - A question of purpose and action

Author:
Giovanni Grevi
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
Strategic autonomy is about empowering Europe, not disengaging from partnerships, globalisation or multilateralism. The core of strategic autonomy is not that Europeans should act alone, but that they should have a purpose of their own, and a stronger power base to fulfil that purpose through cooperation with others whenever possible, or on their own, if needed. As such, strategic autonomy is not a condition to be achieved once and for all, but a mindset and a process, guiding initiatives across multiple areas. By advancing its strategic autonomy, Europe should acquire a stronger position to manage interdependence amidst geopolitical competition – arguably the defining challenge of our times. The concept has become central to a number of statements by EU and national leaders, and to important EU policy documents. Although the level of ambition and requirements for progress differ across policy areas – from trade and investment to innovation, the single market or security and defence – and are the subject of ongoing debate, an EU strategic narrative is emerging alongside current or envisaged policy measures and initiatives. These policy developments point to three main tracks of action, or dimensions of Europe’s strategic autonomy, namely bracing against threats and challenges, empowering Europe by joining forces and engaging others to strengthen a rules-based international order. Bracing. Europe needs to strengthen its resilience and political cohesion in the face of multi-dimensional competition. It needs to counter trade-distorting practices and unfair competition, while better enforcing the rules and obligations of EU trade agreements. Europe should also reduce its current overdependence on foreign technologies and companies, such as for 5G and data infrastructure, and Europeans should do more to secure their critical infrastructure against malicious practices or cyberattacks. Empowering. Europe is much more than the sum of its parts, even though it often performs as less than that because of disagreements among EU member states, or their reluctance to pool their resources. Completing and strengthening the Single Market is crucial to sustaining both Europe’s growth and the EU’s regulatory power. Eliminating current barriers within the Digital Single Market will be critical to spur innovation and scale-up European technology companies while creating a regime for data sharing and access that benefits all market actors and citizens. To both deliver the capabilities that Europeans need and acquire a real operational capacity, EU member states should make full use of the arrangements for defence cooperation established in the last few years, on the basis of a better-defined set of shared goals. Engaging. The purpose of shaping and supporting a rules-based international order should continue to drive Europe’s foreign policy, even though Europeans will need to take a pragmatic approach in a context of geopolitical competition. The election of Joe Biden paves the way to dialogue and cooperation with the US, and to reinforcing the transatlantic partnership and multilateralism.
Topic:
Globalization, Geopolitics, Multilateralism, and Strategic Autonomy
Political Geography:
Europe

9. Immigration and Offshoring: Two Forces of Globalisation and Their Impact on Employment and the Bargaining Power of Occupational Groups

Author:
Michael Landesmann and Sandra Leitner
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper estimates conditional demand models and, using a joint approach for the period 2008-2017, examines the impact of immigration and different measures of offshoring on the labour demand and demand elasticities of native workers in four different types of occupational groups: managers/professionals, clerical workers, craft (skilled) workers and manual workers. The analysis is conducted using data for four EU economies: Austria, Belgium, France and Spain. Our results point to important and occupation-specific direct and indirect effects of immigration and offshoring. Both offshoring – particularly services offshoring – and immigration have negative direct employment effects on all occupations, but native clerks and manual workers are affected the most, and native managers/professionals the least. Generally, offshoring exerts a stronger direct negative employment effect than does immigration. Our results also identify an important (labour demand) elasticity-channel of immigration and offshoring and show that some groups of native workers can also actually gain from globalisation through an improvement in their wage-bargaining position. Overall, our results indicate a deterioration in the bargaining power of native manual workers arising from both immigration and offshoring; an improvement in the bargaining position of native craft workers in the case of both immigration and offshoring; and an improvement in the bargaining position of native clerical workers and managers/professionals in the case of offshoring only. Finally, our analysis of the cross-effects of immigration highlights the important role of migrant managers/professionals for the labour demand and demand elasticities (bargaining power) of native clerical workers, craft and manual workers.
Topic:
Globalization, Labor Issues, Immigration, Employment, and Work Culture
Political Geography:
Europe, France, Belgium, Spain, and Austria

10. Resisting deglobalisation: the case of Europe

Author:
Zsolt Darvas
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Global trade and finance data indicates that the pre-2008 pace of economic globalisation has stalled or even reversed. The European Union has defied this trend, with trade flows and financial claims continuing to grow after the recovery from the 2008 global economic and financial crisis. Immigration, including intra-EU mobility, has also continued to increase.
Topic:
Globalization, Immigration, European Union, Finance, Economic Growth, Global Financial Crisis, and Trade
Political Geography:
Europe