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21. Europe Cannot Wait for Unity

Author:
Ties Dams, Giulia Cretti, and Louise Van Schaik
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
The EU is not always united and visible in foreign policy. This policy brief argues it could make more use of leading groups of member states under the coordination of the High Representative and European External Action Service (EEAS), the type of strategic thinking that guided the development of the Strategic Compass, and a Team Europe approach to a wider range of international activities, going beyond development cooperation. One idea would be to formulate a European Council Forum on Economic Security and Sanction policy. The Netherlands could contribute proactively, for instance by advocating for a strategic conversation on the topic of economic power at the level of the European Council.
Topic:
Foreign Policy, Development, Regional Cooperation, and European Union
Political Geography:
Europe and Netherlands

22. China's Development Assistance to the Western Balkans and Its Impact on Democratic Governance and Decision-Making

Author:
Ana Krstinovska
Publication Date:
02-2022
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
China’s development assistance to the Western Balkans has been little researched and aid-funded projects are often mistermed as Chinese investments. This article aimed to shed light on specific ‘China Aid’ disbursement and management procedures by examining the signed agreements and contracted projects in five countries - Albania, Bosnia and Herzegovina, Montenegro, N. Macedonia, and Serbia during the period 2000-2020. The objective was to determine the impact of China’s development assistance on democratic governance and decision-making. Attride-Stirling’s thematic networks tool was used to analyze the procedures in each project cycle phase and their compliance with the principles of good governance and aid effectiveness. The findings suggest that the assistance, shaped by Chinese rules in combination with Western Balkans domestic agency, is marked by the opacity of the procedures, lack of accountability, disregard for rules in public finance management, and public procurement. Moreover, China could use its grant and loan agreements to influence sovereign decision-making on issues that affect China’s interests. To conclude, although China’s development assistance to the Western Balkans could benefit the recipients’ economic development, it also constrains their democratic governance and decision-making and serves China’s foreign policy interests.
Topic:
Development, Diplomacy, International Cooperation, and Hegemony
Political Geography:
China, Europe, Asia, and Balkans

23. Switching from Cash to Cashless Payments: Consumer Behavior Evidence From Kosovo

Author:
Faruk Ahmeti and Nazmi Zeqiri
Publication Date:
06-2022
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
This paper investigates the readiness of customers to shift toward cashless payment by identifying the main factors that impact that shift. The sample consisted of randomly selected individuals identified as potential users of cashless payment and are considered more likely to continue using the new technology. Five hundred eighty-six questionaries were returned and considered complete for the research. The outcomes were assessed employing CFA for validity and determined using Cronbach’s alpha for the reliability of the research, which was stratified by seven regions throughout the country was applied, by covering all levels of the society. The findings show that the perceived risk is connected to the level of correct and believable information offered to customers. It has been confirmed that the respondents trust cashless payment technology, and at the same time, self-efficacy had a lower impact on usage continuance intention. Consequently, the growth of self-efficacy would strengthen the intention to use cashless technologies. Several segments in the financial market may benefit from the results and develop more appropriate and reliable systems and the proper approach toward customers with needed information and insurance related to the security and benefits they may have by adopting the cashless technology.
Topic:
Development, Finance, Consumerism, Cash, and Consumer Behavior
Political Geography:
Europe and Kosovo

24. The United nations and Sustainable Development: UNDP in the Fight Against Poverty in Montenegro

Author:
Danilo Djikanovic
Publication Date:
06-2022
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
The paper analyzed the challenges of poverty in Montenegro. It provided an overview of the structure and scope of UN action in Montenegro and general sustainable development policies and their national implementation. The objective was to research the contributions of the UN system to the sustainable development of Montenegro while focusing on the role of the UNDP in eradicating poverty. The methodology consisted of the literature overview and the case scenario analysis of integrated social protection and employment policies. In addition, secondary data analysis has been employed to complement the research findings. The paper has identified the national socio-economic situation and the contributions of the UNDP in eradicating poverty through the design and implementation of integrative policies. The research proved the importance of the UNDP in fighting poverty in Montenegro and the effective role of the UN in achieving sustainable development.
Topic:
Development, International Cooperation, Poverty, United Nations, and Sustainability
Political Geography:
Europe and Montenegro

25. The European strategy for a 'New Deal' with Africa

Author:
Ramona Bloj
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
On 17 and 18 February will take place in Brussels the 6th Summit between the European Union and the African Union - a vital meeting for Afro-European relations. The heads of state and government (twenty-seven Europeans and fifty-five Africans) are invited to discuss issues such as financing growth, the future of health systems, vaccine production, agriculture, education, vocational training, culture, immigration, mobility, support for the private sector and economic integration, governance, peace, security, climate change and the energy transition.
Topic:
Foreign Policy, Development, European Union, and COVID-19
Political Geography:
Africa and Europe

26. The Winding Road to Marrakech: Lessons from the European Negotiations of the Global Compact for Migration

Author:
Lena Kainz and Camille Le Coz
Publication Date:
01-2022
Content Type:
Special Report
Institution:
Migration Policy Institute (MPI)
Abstract:
In the summer of 2018, negotiations of the Global Compact for Safe, Orderly, and Regular Migration suddenly became front-page news, drawing far more attention than nonbinding UN agreements before it. The compact’s proponents argued it would help address transnational issues related to migration, while its opponents alleged it posed a threat to state sovereignty and would lead to an increase in migration to Western countries. Although the European Union was initially one of the driving forces behind the pact, as public demonstrations multiplied, these divisions culminated in the fall of the Belgian government and nine EU Member States voting against the compact or abstaining. This report from MPI's Transatlantic Council on Migration explores how the compact negotiations triggered a multilayered institutional and political crisis in the European Union. It charts how the pact became a proxy for broader debates about how external migration policy is decided within the European Union, especially when doing so touches on multiple policy areas, and about democratic accountability in handling nonbinding international agreements. This analysis, which draws in part on interviews with policymakers from EU institutions and Member States, offers lessons learned for public communications about migration policy and assesses the implications of these events for the European Union’s external migration policy, including its implementation of the compact and role in multilateral migration matters.
Topic:
Development, International Cooperation, International Organization, Migration, Governance, European Union, and Immigration Policy
Political Geography:
Europe and Global Focus

27. Germany and the UK: Perspectives for Deepening the Bilateral Dialogue on Development Policy

Author:
Niels Keijzer and Ina Friesen
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Germany and the United Kingdom of Great Britain and Northern Ireland (UK) are the second- and fourth-largest providers of official development assistance (ODA) worldwide and are key actors in driving international policy discussions on global development in the Organisation for Economic Co-operation and Development (OECD), the G7, the G20 and other key groupings and platforms. The development policies of both countries witnessed important convergence and detailed cooperation during the first decade of this millennium – a period when Western countries understood development cooperation as a source of considerable soft power, which was demonstrated in rising budgets and like-minded policy directions. The austerity policies that followed the global economic and financial crisis, and the UK’s decision to leave the European Union (EU) in 2016, have challenged the bilateral relationship in the development policy area between Germany and the UK. The UK’s departure from the EU has reduced the number of joint interactions and corresponding opportunities for identifying cooperation initiatives. Halfway through the period envisaged for the completion of the 2030 Agenda, both countries are adjusting their development policies, seeking to determine their future European roles and global development ambitions, but they remain key partners in global development. Both the UK and Germany have recently revised or are in the process of preparing development policy strategies as part of their integrated foreign policies – a reflection process which in recent months has been challenged to adjust to the implications of the war in Ukraine. The case remains strong for regular exchanges and cooperation on development policy between both countries, including by intensifying dialogues and resuming formal secondments between the FCDO and the German Federal Ministry for Economic Cooperation and Development (BMZ). Two areas in particular offer good prospects. First of all, the UK and Germany should closely work together to deliver on the current G7 Presidency agenda – including the key focus on infrastructure investment, as initiated during last year’s UK Presidency. Other key opportunities for cooperation include gender and climate action, as well as the provision of global public goods. Secondly, Germany and the UK should seek to engage in and harness the role of the OECD as a provider of key standards for international development policy and as an important forum for peer learning. As key providers of global development finance, the legitimacy of its reporting system is essential to both countries’ influence and contribution to global development.
Topic:
Development, Bilateral Relations, European Union, Development Assistance, and Dialogue
Political Geography:
United Kingdom, Europe, and Germany

28. Europe’s Global Gateway: A New Geostrategic Framework for Development Policy?

Author:
Mark Furness and Niels Keijzer
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The proposal by the European Union (EU) to build a “Global Gateway” to the world is potentially an important juncture in EU foreign relations. Since its official launch in December 2021, most attention has been put on the initiative’s geo­strategic implications and whether the EU can compete with China. Less attention has been paid to the Global Gateway’s implications for EU development policy in terms of strategic objectives, decision-making, thematic focus and financing. Two aspects are important in this regard. The first is whether the Global Gateway is a serious proposal that can deliver on its headline promises to massively increase European infrastructure financing in developing countries, provide partners with an alternative economic and political model to that being offered by China, and make a meaningful contribution to their efforts to realise the 2030 Agenda. The EU’s announcement that the Global Gateway will generate up to EUR 300 billion in investment by 2027 grabbed headlines, many of them sceptical. There is, however, no reason to doubt that the initiative will be adequately financed. Although the planning for the EU’s international aid budget for 2021-2027 has mostly been completed, a significant proportion remains flexible and could be spent on Global Gateway projects. As for the EU’s implementing capacity, the Gateway’s financial toolbox draws on the EU’s recent experiences with the Juncker Investment Plan and the External Investment Plan, which have both been utilised by development banks and private investors. The second aspect is whether the Global Gateway heralds a change in the EU’s motivations, objectives and modalities for cooperation with developing countries and regions. On the surface, the Global Gateway does not seem to change much. There are many thematic overlaps with existing strategic frameworks for engaging with Africa and the EU’s Neighbourhood. There is even a sense that the Global Gateway turns back the clock to the days when the EU focussed aid spending on infrastructure and emphasised its “political neutrality”. The geopolitical context in which the EU finds itself is, however, being transformed by pandemic, wars and multipolarity. The impacts of epochal events such as the Covid-19 pandemic and Russia’s invasion of Ukraine are still playing out. The Global Gateway signals a major adjustment in the EU’s response to these transformations, particularly regarding its engagement with the “Global South”. This will create a new paradigm for EU development policy, defined by strategic interests. It is likely that the new geostrategic framework will weaken the EU’s commitment to, and observance of, core develop­ment policy principles, especially the focus on poverty, partner country ownership, open governance and the “do no harm” principle. The Global Gateway’s use of aid to cata­lyse commercial investment risks further instrumentalising EU development policy. Specific measures are therefore needed to safeguard and promote the principles that the EU and its member states have committed themselves to.
Topic:
Foreign Policy, Development, European Union, Development Aid, and Competition
Political Geography:
Europe

29. Ten Recommendations for Germany’s Feminist Development Policy

Author:
Ina Friesen and Alma Wisskirchen
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
In early 2022, Germany’s development minister Svenja Schulze announced the adoption of a feminist development policy. With this announcement, Germany joins a growing group of governments that have adopted or declared the adoption of an explicitly feminist perspective in their external policies. Drawing on these governments’ policies and the observations and recommendations by civil society and researchers, this Discussion Paper outlines ten key recommendations for Germany’s first feminist development policy. The first three recommendations focus on the conceptual foundation of the policy and lay out the importance of 1) an inclusive definition of gender, 2) a clarification of the feminist approach and the policy’s overall goal as well as 3) the need for an intersectional approach. The second set of recommendations concerns the implementation of the policy and stresses the importance of 4) a permanent cooperation with gender-focused and feminist organisations and 5) the necessity to increase funding for gender-related objectives in general and 6) for feminist organisations in particular. Further recommendations include 7) widening the range of sectors that target gender equality through a transformative approach and context-sensitive programming and by providing mechanisms to monitor and evaluate the implementation of the strategy’s goals, objectives and activities. The last three recommendations emphasise institutional aspects and the importance of 8) creating an institutional environment that best supports gender equality within the development ministry and its main implementing organisations, 9) the necessity of a coherent feminist approach between the different ministries, and 10) the importance of addressing possible challenges the ministry might face in the implementation of its feminist development policy.
Topic:
Development, Inequality, Feminism, and Gender
Political Geography:
Europe and Germany

30. The EU-CEAP Impacts on Developing Countries: An Analysis of the Plastic Packaging, Electric Vehicles and Batteries Sectors

Author:
Jenny To
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The European Union Circular Economy Action Plan (EU-CEAP) is key to transitioning to a circular economy and climate neutrality under the EU Green Deal – and developing and emerging countries (DECs) play important roles. They are essential for primary material chains, for example, for electric vehicle batteries. DECs are also part of secondary material chains, and Europe relies on them to recycle its plastic packaging. Despite the crucial roles that DECs play in Europe’s transition to a circular economy, literature and policy discourses have not yet examined the EU-CEAP’s impact. This discussion paper fills this gap by outlining the EU-CEAP’s challenges and opportunities for DECs and presents recommendations for development cooperation.
Topic:
Climate Change, Development, European Union, Batteries, Electric Vehicles, and Plastic
Political Geography:
Europe

31. Just Transitions: A Review of How to Decarbonise Energy Systems While Addressing Poverty and Inequality Reduction

Author:
Daniele Malerba
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Germany promotes “just transition” as a guiding principle for the global transition to a socially and environmentally sustainable economy that incorporates the necessary climate, environmental and energy policy measures. This includes the urgent transformation of economies to become emission neutral while ensuring a process whereby poverty and inequality are reduced, and no one is left behind. The German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), the World Bank and the German Federal Ministry for Economic Cooperation and Development (BMZ) worked together to explore ways to implement the concept of just transition in German development cooperation. The two papers that have resulted from this process outline approaches to a “just transition for all” and highlight its potential to reduce poverty and inequality (SDG 1 and SDG 10). In recent decades, the interdependencies between social and ecological development have become clear: negative effects of climate change particularly affect vulnerable and marginalised groups living in poverty. At the same time, social inequalities contribute to an exacerbation of climate change. A just transition must effectively address the consequences at the international, national, regional and local levels. Both papers provide an overview of existing approaches and challenges to foster a “just transition for all”. They offer different but complementary perspectives on an increasingly important complex of topics. This first paper, by DIE, takes a broad perspective by considering the decarbonisation of the energy sector as a whole, outlining the connections between just transition, poverty and inequality, and exploring how to ensure a just transition (for both workers and consumers) through the use of different social protection mechanisms. It argues that it is possible to make energy transitions just, but that properly designed combinations of socio-economic and climate policies are needed. A second paper, by the World Bank, zooms in on the transition away from coal. It lays out key social and community impacts resulting from the decommissioning of coal assets, based on experience gained from World Bank operations and from industrialised countries, and articulates an enhanced approach to supporting the coal transition. Both provide practical recommendations for international development cooperation in general, and for German development cooperation in particular.
Topic:
Development, Poverty, Inequality, Economy, and Decarbonization
Political Geography:
Europe and Germany

32. Destination-Country Policies to Foster Diaspora Engagement in Development

Author:
Kathleen Newland
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Migration Policy Institute (MPI)
Abstract:
It is now widely recognized that emigrants and their descendants contribute greatly to the development of their countries of origin or ancestry, not only with remittances but also by starting businesses, through exchanges of knowledge, and more. And many migrant-origin countries have invested in connecting with their diaspora and leveraging its contributions. Far less attention has gone, though, to how countries of destination with substantial official development assistance programs are supporting—or could support—their resident diasporas’ engagement in the development of countries of origin. This report explores the diaspora engagement actions and policies of Western donor governments—including France, Germany, the Netherlands, Norway, and the United States—highlighting distinctive features. It considers a variety of modes of engagement, such as assistance with forming or strengthening diaspora organizations, grants for diaspora-led development projects, consultations, skills circulation initiatives, and support for entrepreneurship. The report also explores why more destination countries have not (consistently) operated diaspora-for-development programs, and offers lessons about effectiveness and sustainability.
Topic:
Development, International Cooperation, International Organization, Migration, Diaspora, Immigration, Governance, and Integration
Political Geography:
Europe and United States of America

33. Istanbul Journal of Economics: Volume 72 Issue 1

Author:
Gökhan Karabulut
Publication Date:
01-2022
Content Type:
Journal Article
Journal:
Istanbul Journal of Economics
Institution:
Istanbul University Faculty of Economics
Abstract:
Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:
Debt, Development, Economics, Budget, Finance, Investment, Trade, Unemployment, and COVID-19
Political Geography:
Europe, Turkey, and Asia

34. The Business Case for the Sustainable Development Goals: An Empirical Analysis of 21 Danish Companies' Engagement with the SDGs

Author:
Michael W. Hansen, Henrik Gundelach, and Erik Johnson
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
This paper explores why business engage with the SDG agenda, with a view to understanding the business case for the SDGs. Building on and extending the responsibility literature’s discussion of the business case for responsibility, the paper develops a conceptual framework for analyzing why business engage with the SDGs. This framework is employed to analyze why a sample of 21 Danish companies decided to engage with the SDG agenda. The analysis finds that most companies view the SDGs as a platform for achieving rather conventional business goals such as mitigating risk, saving costs, and differentiating products and services. However, in a few cases, companies use the SDGs as a lever for carving out uncontested positions in future markets. The paper concludes that companies overwhelmingly view the SDGs as a business opportunity rather than as a business responsibility, something that fundamentally may distinguish the SDG agenda from previous responsibility agendas. The paper fills a gap in the extant literature on business responsibility by developing and validating a classification of the business case for the SDGs based on economic value drivers, and by deepening the empirical understanding of, what precisely this business case may be.
Topic:
Development, Economics, Sustainable Development Goals, Business, and Social Responsibility
Political Geography:
Europe and Denmark

35. Space Technologies Key to the EU's Fight Against Climate Change

Author:
Aleksandra Kozioł
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Launched in March 2022, the Destination Earth initiative to create a digital model of the Earth confirms the importance of space technologies in the EU’s green and digital transformations. The consequences of climate change, such as droughts, fires, and floods, reduce the security of citizens and cause economic losses. The dissemination of applications using satellite data will increase the effectiveness of climate action and sustainable development in the EU.
Topic:
Climate Change, Development, Science and Technology, and European Union
Political Geography:
Europe

36. The Future of Xi’s China. Scenarios and Implications for Europe

Author:
Alessia Amighini
Publication Date:
09-2022
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
At the upcoming 20th Party Congress, which opens Sunday in China, Xi Jinping is expected to be confirmed as the country's Secretary General for an unprecedented third term. At a time of international instability caused by the Covid pandemic and the war in Ukraine, as well as rising competition between international superpowers, the Chinese leadership is called to increase the country's international standing, while ensuring economic growth at the domestic level. However, achieving these goals will not be without challenges. This Report analyses China’s hard road to international prestige and development. Which prospects for China's economic growth? Which obstacles to its rise at the global level? To which extent can the Party steer the country’s direction?
Topic:
Foreign Policy, Development, Economy, Xi Jinping, and Instability
Political Geography:
China, Europe, and Asia

37. The Lynchpin of the Middle Corridor

Author:
Anthony Kim
Publication Date:
10-2022
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
Particularly in today’s evolving geopolitical and economic reality triggered by Russia’s invasion of Ukraine, the Caspian region has gained greater relevance whilst acquiring renewed significance. More specifically, one of the geostrategic consequences of Putin’s ongoing assault against Ukraine and its broader implications for the global economy has been the enhanced impetus for ensuring the pragmatic and strategic utility of the “Middle Corridor” (also more formally known as the Trans‑Caspian International Transport Route, or TITR) for the Caspian region and beyond as a viable commercial transport route alternative to the long‑established northern pathway through Russia. China, which has been eager to expand its economic networks, had hoped to dominate economically the utilization of the Middle Corridor as part of an expanding BRI. But at least some of the countries in the region (and beyond) have grown increasingly uneasy about participating in it. They have viewed China as leaving many of its BRI promises unfulfilled. And they have also become more concerned that Beijing’s BRI engagement comes with too many geopolitical strings attached and can lead to debt traps. By and large, China has invested in a number of infrastructure projects in Central Asia within the framework of BRI. Most of China’s activity has taken place on the eastern shore of the Caspian. Major port, pipeline, and infrastructure projects on the Caspian’s western shore have been done without much, if any, direct Chinese involvement. Making the Middle Corridor work properly is not an easy task: it will take considerable degrees of time, financial means, and political commitment. With many economic and political challenges lingering around, by no means, the cross‑country transportation route could become the cheapest option any time soon. Nonetheless, in an increasingly raucous world where diversifying supply chains reduce risk and has become more desirable, the route could become not only fully viable but, more importantly, truly cost‑effective.
Topic:
Security, Development, Geopolitics, and Strategic Interests
Political Geography:
Europe and Asia

38. Characterisation of Danish agricultural investments in Tanzania and Uganda

Author:
Rikke Broegaard, Helle Monk Ravnborg, Evelyne Lazaro, Teddy Nakanwagi, and David Tumusiime
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
This DIIS Working Paper presents key characteristics of each of the six cases including main crop focus, size and business model, as well as types of investors, their investment approach and the factors that motivate them. It also presents the different objectives that the investors have expressed wanting to achieve. As most of the investments involve private funds, it is reasonable to expect that one important goal is to ensure a viable economy in the investment. However, in addition to an economically sound investment, all of the investors behind these six cases have ambitions regarding ways in which they see themselves - through the investment - as contributors towards a positive societal development in the area of the investment. Thus, the paper presents the different ways the investors see their investments contributing to development in the area. The paper is based on interviews with the investors and field work in the areas of investments.
Topic:
Agriculture, Development, Environment, Poverty, Natural Resources, Food, Inequality, Investment, and Land Rights
Political Geography:
Europe, Denmark, Tanzania, and Africa

39. How to support a rights-based approach to nature-based solutions

Author:
Mikkel Funder and Marie Ladekjær Gravesen
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
While NbS offer many promises, it is critically important to ensure that such approaches safeguard and strengthen the rights of indigenous peoples and local communities in the use and governance of natural resources. The recent adoption of a Global Standard for NbS is an important step forward but the Standard needs support and additional actions if a rights-based approach is to be realized in practice. This policy brief provides recommendations for how Denmark can help ensure this.
Topic:
Climate Change, Development, Environment, Natural Resources, and Cooperation
Political Geography:
Europe and Denmark

40. Economic and Social Impacts of FDI in Central, East and Southeast Europe

Author:
Doris Hanzl-Weiss and Branimir Jovanovic
Publication Date:
11-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study assesses the economic and social impacts of foreign direct investment (FDI) in 17 economies in Central, East and Southeast Europe (CESEE). More precisely, we investigate how different FDI inflows have affected various economic and social indicators, such as GDP growth, labour market outcomes, and poverty and inequality, for the period since the fall of communism until 2020. We pay particular attention to FDI that originates from the EU, as well as FDI from Germany and Austria, in order to evaluate whether their effects are different from the effects of FDI from other places of origin. We also examine whether there are differences in the impacts of different types of FDI – equity capital, reinvested earnings and intra-company debt, as well as of FDI that goes to different sectors of the economy – the primary, secondary and tertiary sectors. We find that FDI inflows have had, in general, a positive effect on economic growth in CESEE, and that this effect has been particularly strong for German and Austrian FDI. For total FDI, higher inflows of 1 percentage point (pp) of GDP are associated with 0.19 pp higher GDP growth. For FDI from Germany and Austria, this effect is five times higher – FDI inflows of 1 pp of GDP have led to 0.9 pp higher GDP growth. The positive GDP effects have come from the higher consumption and exports that the FDI has induced. FDI inflows have also reduced unemployment and increased wages, but have had no effects on labour productivity. Total FDI has had only limited effects on inequality and poverty, but FDI from Germany and Austria has been found to reduce both inequality and poverty, likely because they have benefitted mainly lower-income persons. There are differences in the effects of the different types of FDI, with reinvested earnings and equity capital having in general more beneficial effects than intra-company loans. Also, FDI in different sectors of the economy has had different effects, with inflows to the secondary and tertiary sectors having greater effects than inflows to the primary sector. The policy implications of these results are that CESEE economies should not give up on their efforts to attract more FDI, but also that their endeavours should be more targeted, focusing on investments that have greater economic and social impacts. Moreover, foreign investment should not be criticised for the perhaps unsatisfactory economic and social performances of the economies from this region. Instead, the reasons for this should be sought in domestic factors and in the modest growth of the European Union during the past two decades.
Topic:
Development, International Trade and Finance, Poverty, Foreign Direct Investment, Inequality, Economic Growth, and Unemployment
Political Geography:
Europe, Eastern Europe, Germany, and Austria