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152. EU-South Korea Extend Cooperation Beyond the Economy
- Author:
- Oskar Pietrewicz
- Publication Date:
- 06-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- The 10th EU-Republic of Korea Summit, held on 22 May in Seoul, reaffirmed the importance of South Korea as a critical Asian partner of the Union. The meeting also signalled the growing importance of security issues in bilateral relations. South Korea shares the EU’s assessment of Russian aggression against Ukraine and intends to continue to support the invaded country, but not with supplies of military equipment for now. The announcement of a “green” partnership indicates both sides’ willingness to engage in other areas of cooperation, which also will benefit the development of Polish-South Korean relations.
- Topic:
- Security, International Cooperation, Bilateral Relations, and European Union
- Political Geography:
- Europe, South Korea, and Poland
153. Examining Changes in Regional Cooperation in Central Europe from a Polish Perspective
- Author:
- Tomasz Żornaczuk
- Publication Date:
- 06-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- The Visegrad Group (V4), until recently the most active and multidimensional cooperation platform in Central Europe, does not serve currently to strengthen the voice of the region on the most essential issues concerning its security. This is because Hungary’s stance on Russia’s attack on Ukraine is different than that of its partners. That is why Poland is tightening relations with the other Visegrad countries—Czechia and Slovakia. At the same time, Poland is also intensifying cooperation with the Baltic states, which has its source in joint actions on security and eastern affairs in the years preceding the war.
- Topic:
- Security, Foreign Policy, Regional Cooperation, Visegrad Group, and Russia-Ukraine War
- Political Geography:
- Russia, Ukraine, Poland, Hungary, Central Europe, Slovakia, and Czechia
154. What is the Significance of Prigozhin's Revolt for Russian Security Policy?
- Author:
- Anna Maria Dyner
- Publication Date:
- 06-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- On the night of 23-24 June, Yevgeny Prigozhin, the head of the Wagner Group private military company, which has been fighting in Ukraine and operating elsewhere, stood up to the Russian Ministry of Defence and began an armed march on Moscow. However, in the end he and his forces did not storm the capital, officially as a result of negotiations led by Belarusian leader Alexander Lukashenka. Prigozhin’s actions will worsen the morale of Russian soldiers and mercenaries fighting in Ukraine but will not change Russia’s hostile actions towards NATO countries.
- Topic:
- NATO, Wagner Group, Russia-Ukraine War, Private Military Companies (PMCs), and Yevgeny Prigozhin
- Political Geography:
- Russia, Europe, and Ukraine
155. EU Development Cooperation Policy Shifts from Charity to Self-interest
- Author:
- Patryk Kugiel
- Publication Date:
- 06-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- In recent years, the EU’s development cooperation policy has evolved, moving away from an approach based on poverty eradication and the needs of partner countries to focusing more on its own interests. This change is supported by the majority of EU members. This gives the EU the opportunity to exert strategic influence in the world but risks the loss of its unique identity as an altruistic donor and attractive partner in development cooperation. The change in the Union’s approach is consistent with the position of Poland, which can use it to reform and strengthen its development aid system.
- Topic:
- Development, Regional Cooperation, European Union, and Development Aid
- Political Geography:
- Europe and Poland
156. Syria returns to the Arab League
- Author:
- Sara Nowacka
- Publication Date:
- 05-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- The decision to restore Syria’s membership in the Arab League (AL) is aimed at Arab states gaining greater control over the situation in the region and reducing external influence, including that of the West. Although the AL imposed a number of obligations on Syrian leader Bashar al-Assad, such as holding elections, it is doubtful whether the League can enforce them. The organisation’s decision to normalise relations with Syria will be used to undermine the effectiveness of the sanctions in counteracting violations of international law, also in the context of the Russian aggression against Ukraine.
- Topic:
- International Law, Sanctions, Syrian War, Normalization, Bashar al-Assad, Arab League, and Russia-Ukraine War
- Political Geography:
- Arab Countries and Syria
157. Using Frozen Russian Assets to Rebuild Ukraine: Possibilities for the EU
- Author:
- Elzbieta Kaca
- Publication Date:
- 05-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- The EU wants to finance the reconstruction of Ukraine, using for this purpose frozen Russian assets, among others. The European Commission proposes to improve the system of confiscation of private assets of sanctioned persons in case of criminal activity and to obtain income from the active management of immobilised Russian public assets. These solutions may yield limited results. To be more effective, the EU would have to reach an international agreement to confiscate the reserves of the Central Bank of the Russian Federation.
- Topic:
- Sanctions, Reconstruction, European Union, Assets, and Russia-Ukraine War
- Political Geography:
- Russia, Europe, and Ukraine
158. Ending the War in Sudan will be Difficult
- Author:
- Jędrzej Czerep
- Publication Date:
- 05-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- Fighting in Sudan between the regular army and the paramilitary Rapid Support Forces (RSF) has been ongoing since 15 April. The clashes are mainly taking place in the capital, Khartoum, and in the Darfur region, causing the destruction of infrastructure, a humanitarian disaster, and the displacement of the population. Although neither side has achieved military superiority or the support of the population, they are determined to continue fighting until the opponent is eliminated, which makes efforts to achieve a permanent ceasefire difficult. In the longer term, international support for a political solution to the crisis should aim to restore civilian control of the state.
- Topic:
- Conflict Resolution, War, Armed Forces, and Humanitarian Crisis
- Political Geography:
- Africa and Sudan
159. West and China Compete for Tech Influence in Arab Persian Gulf States
- Author:
- Sara Nowacka
- Publication Date:
- 05-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- New technologies are an increasingly important element of the Sino-American rivalry in the Persian Gulf. China has become the preferred partner in this area due to, for example, the dominant role of government (vs. private) investment in the technology sector in both China and the Gulf states. The intensification of cooperation between the Gulf Cooperation Council (GCC) and China in the field of new technologies may increase the influence of authoritarian states in setting technological standards.
- Topic:
- Science and Technology, Authoritarianism, Investment, Rivalry, and Gulf Cooperation Council
- Political Geography:
- China, Middle East, United States of America, and Gulf Nations
160. China Becoming Globally More Active in the Security Sphere
- Author:
- Marcin Przychodniak
- Publication Date:
- 05-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- China is expanding its potential to project power abroad. It includes legal changes, expansion of military infrastructure in other countries, and cooperation with partners in the Pacific. An example of their activity in the field of security is the operations of Chinese security companies, mainly in the Middle East and Africa. This should encourage NATO to further deepen cooperation with its members and partners, including with Pacific countries, as well as to strengthen the coordination of EU and U.S. policy towards developing countries.
- Topic:
- Security, NATO, Infrastructure, and Partnerships
- Political Geography:
- Africa, China, Middle East, Asia, and Asia-Pacific
161. 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
162. Building a Coalition - the U.S. Faces Down Competition with China in the Chip Sector
- Author:
- Damian Wnukowski
- Publication Date:
- 04-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- In recent months, the U.S. has intensified its international efforts to limit China’s ability to produce the most advanced chips. The result includes the introduction by Japan and the Netherlands of restrictions on the export of modern machines for chip production. In response, China is trying to attract foreign investment and develop its own potential in this sector. The U.S. actions may significantly slow the pace of China’s technological development and economic growth and limit its potential to further strengthen its military capabilities. This may make it difficult for China to support Russia with dual-use products and render possible offensive actions against Taiwan harder.
- Topic:
- Economy, Production, Semiconductors, and Competition
- Political Geography:
- China, Asia, North America, and United States of America
163. South Africa-Russia Maintain Special Relations
- Author:
- Jędrzej Czerep
- Publication Date:
- 04-2023
- Content Type:
- Working Paper
- Institution:
- The Polish Institute of International Affairs
- Abstract:
- Although South Africa declares it is neutral regarding the war in Ukraine and offers mediation, it remains a de facto ally of Russia. This is due to the strong sentiment among the ruling elites for the period of cooperation with the USSR, its successor Russia and its activity and influence in this country, and the perception that BRICS will help elevate South Africa’s international importance. If Vladimir Putin visits Johannesburg as scheduled in August, the authorities of the state, which is party to the Rome Statute, will not be willing to fulfil their obligation to arrest him or may even leave the International Criminal Court.
- Topic:
- International Relations, Foreign Policy, BRICS, and Russia-Ukraine War
- Political Geography:
- Africa, Russia, Europe, Ukraine, and South Africa
164. 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
165. 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
166. 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
167. 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
168. 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
169. 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
170. 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
171. 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
172. 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
173. 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
174. 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
175. 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
176. 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
177. 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
178. 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
179. 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
180. 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
181. 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
182. 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
183. 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
184. 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
185. 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
186. 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
187. 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
188. 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
189. 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
190. 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
191. 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
192. 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
193. 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
194. 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
195. 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
196. 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
197. 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
198. 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
199. 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
200. 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