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81. Volume 71 Issue 2

Author:
Gökhan Karabulut
Publication Date:
01-2021
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:
Economics, Globalization, International Trade and Finance, Oil, Political Economy, Natural Resources, Exchange Rate Policy, and Industry
Political Geography:
Europe, Turkey, and Asia

82. An Overview of Agricultural Support Policies in Turkey: A Comparative Regional Analysis

Author:
Hakan Uslu
Publication Date:
12-2021
Content Type:
Journal Article
Journal:
The Rest: Journal of Politics and Development
Institution:
Centre for Strategic Research and Analysis (CESRAN)
Abstract:
The agricultural sector is seriously affected by changes in many economic, social, or environmental factors. Hence, the necessity of supporting the sector by governments in various ways has become an indisputable reality. However, regional characteristics must be taken into account in order for these supports to reach their goals. Using a dataset spanning from 2002 to 2020, the current study comparatively analyses the changes in the agricultural support and agricultural production, income, and the value of products in two agricultural regions of Turkey, Central Anatolia and Southeast Anatolia regions. The results highlight that the increase in agricultural income is very low in both regions compared to the substantial changes in agricultural support policies. Additionally, the increase in the values of agricultural products in both regions is much higher than the increase in agricultural income, suggesting that the costs in agricultural activities are too high in the analysed regions.
Topic:
Agriculture, Economics, Environment, Governance, and Rural
Political Geography:
Europe, Turkey, and Asia

83. Energy price hikes: which European solutions?

Author:
Ramona Bloj
Publication Date:
10-2021
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
As energy prices rise around the world, against the backdrop of the post-Covid economic recovery, the 27 EU leaders discussed what Europe could do to ease the pressure on consumers at the European Council on 21-22 October. The increase in prices is due to a particular international context and is affecting all countries: China is facing electricity shortages in many provinces due to insufficient coal supply, and in the United States the price of natural gas has risen by more than 150% since the beginning of the year. However, this increase raises questions about Europe's energy strategy and its impact on climate objectives, just a few days before the opening of COP26 in Glasgow.
Topic:
Climate Change, Economics, Energy Policy, and COVID-19
Political Geography:
Europe

84. The Automotive Industry: The Achilles’ Heel of German Economy?

Author:
Marie Krpata
Publication Date:
03-2021
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The global car market has been shrinking since 2018. This is a key economic sector for Germany whose producers belong to the Top 15 carmakers worldwide. Yet they are running the risk of being outclassed and eventually replaced, given emerging actors in the USA and China. These new competitors benefit from the growing digitization of the mobility sector, disruptive economic models and the obsolescence of vehicles with an internal combustion engine. This form of propulsion is progressively being replaced by less-polluting alternatives, which are being endorsed by public authorities. The Chinese-American rivalry is also impacting German carmakers, whose strategy greatly relies on the globalization of production chains. This has led to major successes in the past, but the threat of a technological decoupling between the USA and China limits German carmakers’ activities in terms of production and exports. Access to the Chinese market, which accounts for nearly 20% of the global population, is indispensable for the German brands that intend to benefit from China’s catch-up effects. European industrial and political actors plan to invest in promising sectors whilst seeking to respect environmental and social objectives. Also, the European Union (EU), led by a German powerhouse, intends to prevent market distortions such as hurdles to market access, while supporting the emergence of technologies and the compliance with production standards. However, developments in the automotive sector are challenging the EU’s capacity to act in a unified fashion, even if the EU is not seeking to impose its vision on the industry’s private sector, in a top-down manner.
Topic:
Climate Change, Economics, Energy Policy, Industrial Policy, European Union, Social Policy, Mobility, Industrialization, Green Deal, and Automotive Industry
Political Geography:
Europe and Germany

85. Biden and Belarus: A strategy for the new administration

Author:
Anders Åslund, Melinda Haring, John Herbst, and Alexander Vershbow
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
United States President Joseph R. Biden Jr. has an historic opportunity to bring Europe together and reverse the tide of dictatorship by building an international coalition to support democracy in Belarus. In 2020, Belarusians unexpectedly called Alyaksandr Lukashenka’s legitimacy into question in the country’s August presidential election. Lukashenka brazenly rigged the results, claiming that he took 80 percent of the vote, but neither the United States nor the European Union (EU) recognizes his victory. A months-long protest movement has coalesced that demands new elections under the supervision of the international community. Recent years have seen no better chance for US leadership to facilitate lasting positive change in Europe than the crisis in Belarus. But how to secure democratic change in Belarus is not simple given internal resistance and Moscow’s determination to prevent another “color revolution.” Lukashenka is likely finished, unable to restore any authority or legitimacy. But he is seeking to hang on despite Moscow’s efforts to arrange a pliable replacement who would preserve Minsk’s pro-Russian orientation. Managing Moscow’s efforts to prevent an aroused citizenry from choosing their own leader is no easy task. Russia remains the key geopolitical player in Belarus, often plays the long game, and may be willing to countenance military options that the United States cannot. Perhaps the key fact is that Belarusians have made it amply clear that they want accountable leaders that they can choose and dismiss for themselves. More than thirty thousand peaceful protesters have been detained since August, more than three hundred and fifty police officers have defected, and ordinary Belarusians are no longer afraid to voice their opposition to the regime. Kremlin support for the ongoing repression risks turning the Belarusian people—historically friendly toward Russia—in a pro-European direction. These changes in Belarus are something that Moscow cannot ignore, and the United States and its allies must nourish and strengthen them in consistent ways that avoid and deter a Kremlin overreaction. Biden, with his long experience promoting US values and interests and his determination to strengthen transatlantic relations, is ideally situated to promote clear support for the people of Belarus that does not directly challenge Moscow’s security interests.
Topic:
Economics, Human Rights, Sanctions, and Democracy
Political Geography:
Europe, Belarus, and United States of America

86. Georgia After the Second Karabakh War

Author:
Mamuka Tsereteli
Publication Date:
08-2021
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
The outcome of the Second Karabakh War between Azerbaijan and Armenia significantly trans­formed the geopolitical reality in the South Caucasus, with im­plications for the wider Black Sea‑Caspian region. The unsettled political geography of the South Caucasus and the ethno‑political separatism fueled by external actors since the early 1990s left bleeding wounds on the bodies of the newly re‑emerged sovereign states of Armenia, Azerbaijan, and Georgia. These conflicts have determined the trajectory of the geopolitical developments of the region for the last 30 years, including on the for­eign policy orientations of these new states. The conflicts in the South Caucasus were the primary challenge for transforming the strategic assets of this region into greater political and economic success. Three major conflict areas in the South Caucasus were former autonomous regions, created in the early Soviet period: Nagorno‑Karabakh, Abkhazia, and the Tskhinvali region, what was called South Ossetia. (Briefly: the latter term was introduced by the Soviets in the 1920s as a name for the newly created autonomous area in Georgia, popu­lated by Ossetians alongside ethnic Georgians. The historic homeland of Ossetians is located to the north of the Greater Caucasus mountains. Following the Soviet tradition of planting ethno‑political time bombs, Ossetia proper—located in the Russian Federation—was named North Ossetia, while the Tskhinvali region of Georgia—with the Ossetian population at the time concentrated in the border areas with Russia—was named South Ossetia.) As of today, all three of these areas are self‑proclaimed indepen­dent states, are formally ruled by de facto governments, and saw fierce military confrontation in the early 1990s. In 2008, the Tskhinvali region became the battleground between Russian and Georgian forces. In 2020, Azerbaijan regained through a combination of military action and diplomatic brinksmanship all seven regions outside of Nagorno‑ Karabakh that had been occupied by Armenia, as well as one‑third of the former Nagorno‑Karabakh region. In the case of Abkhazia and the Tskhinvali region/South Ossetia, as of mid‑2021, these ter­ritories remain, in reality, governed by Russian occupational forces. The Russian military influence was in­serted into Karabakh after the war that ended on November 10th, 2020, with Russian peacekeepers playing an increasing role in the governance of the region. In terms of geopolitical orienta­tion, Armenia willingly allowed Russian troops onto its territory, seeing them as a security guar­antee and deterrent against Azer­baijan. Georgia aligned itself with the Western powers, determined to join NATO and the EU. The conflicts on Georgian territory are seen as punishment from Russia for Georgia’s pro‑Western focus. As a result, there has been a heavy Russian military presence in the separatist areas of Georgia since the Russian invasion to Georgia in 2008.
Topic:
Security, Economics, Military Strategy, Conflict, and Peace
Political Geography:
Europe, Asia, Armenia, Azerbaijan, and Georgia

87. Transatlantic Paralysis: The US-EU Trade Policy Stalemate and the European Union’s Democratic Deficit

Author:
Thomas J. Duesterberg
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
What is often labeled the democratic deficit in governance of the European Union (EU) is not a a flaw or bug in its architecture, it is a design feature. From its earliest days in the Second World War’s chaotic aftermath, European integration “was essentially an elite project, pursued at a distance from the daily concerns of the national populations in Western Europe.” Also formed as a response to the economic disintegration following the Depression and World War Two, the General Agreement on Tariffs and Trade (GATT) was similarly removed from national or populist politics. It too was an elite, top-down initiative designed to embed nations in a system of international rules largely articulated by technical experts, enforced by a form of international courts, and far removed from national and populist politics. Many of the intellectual proponents of both supranational institutions, from the Austrian School of economics, the ordoliberals emerging in early-20th century Germany, to the London School of Economics indeed shared a distrust of American-style democracy, let alone the various parliamentary democracies whose failure led to the disasters of the 1930s and 1940s. Over the last fifty years, the institutions put in place after World War II have been perfected and have, to a certain extent, ossified. Many of the difficulties in achieving greater US-EU economic coordination in the 21st century have their origins in the institutional design and the subsequent early implementation of early European Community rules during the post-war period. A brief overview of the history of European integration, and the political thinking behind it, helps explain the current paralysis in contemporary transatlantic cooperation, including in a joint approach to the challenge of Chinese mercantilism and its growing international reach.
Topic:
Economics, Governance, Democracy, Trade, and Transatlantic Relations
Political Geography:
Europe, North America, and United States of America

88. Nudging for Recovery: Behavioral Economics and the implementation of the National Recovery and Resilience Plan

Author:
Demosthenes Kollias
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
With the National Recovery and Resilience Plan, Greece is presented with yet another opportunity to catch up with global trends. At the same time, behavioral economics are being established worldwide as a valuable asset in the policy maker’s toolkit. The paper -mainly focusing on taxation, labor market policy, and climate change- aims to examine the behavioral conundrum that creates frictions and inefficiency in the domains outlined above and to offer concrete and quantifiable policy proposals, in accordance with the goals of Greece 2.0. Regarding tax evasion, for example, one can estimate at least €1 billion in additional tax revenue if the proposals are implemented.
Topic:
Climate Change, Economics, Tax Systems, Labor Market, and Economic Recovery
Political Geography:
Europe and Greece

89. EU-Turkey Economic Relations and the Customs Union: a rules-based approach

Author:
Dimitris Tsarouhas
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Trade and economic relations remain the cornerstone of EU-Turkey relations. The Customs Union (CU) is the sole institutionalized instrument that remains important for both sides. Launching negotiations on how to update its content offers a set of fresh opportunities for the EU to reintroduce political as well as economic conditionality in its relations with Turkey. A step-by-step approach based on monitoring and benchmarking can enhance EU leverage vis á vis Turkey and allow the EU to escape a cycle of ineffective policy interventions on Turkey’s political trajectory. The CU can also become a vehicle to assist the democratic segments of Turkey’s civil society as well as those EU member states who have found themselves searching for an alternative to Turkey’s failed Europeanization.
Topic:
Foreign Policy, Economics, Migration, and European Union
Political Geography:
Europe and Turkey

90. Snakes, rats and drug addicts used to dwell here – analysis of the narrative utilised to capture the state

Author:
Luka Steric
Publication Date:
03-2021
Content Type:
Commentary and Analysis
Institution:
Belgrade Centre for Security Policy
Abstract:
Foreign direct investments are the cornerstone of the current government’s economic policy. In their statements, the officials call them drivers of development, saying that they have enabled the revival of the economy and turned Serbia into the “economic tiger of Southeast Europe.”1 The fact that the value of the investments Serbia has managed to attract is greater “than what was achieved by all the countries of the Western Balkans put together” 2 is often mentioned as the key measure of success. However, the story of brilliant success quickly loses its lustre when one considers the long-term effects and all-encompassing consequences of this policy. Due to the way they are contracted and implemented, foreign direct investments represent one of the key mechanisms for capturing the state. Hiding behind the stories of a better future and new jobs, the government is breaking down the system of legal regulations and statutory procedures, promoting private interest to the detriment of the public one, and using foreign investments as propaganda ammunition to legitimise unlimited power. The results of such policy are a number of negative consequences for the state and the citizens, such as the increase of public debt, dramatic violation of workers’ rights and alarming problems with environmental pollution. In order to mask the negative consequences and legitimise the policy of attracting foreign investors based on the above described pattern, a complex narrative has been developed presenting foreign investments as a successful, and the only possible, model for state development. This meta-narrative about progress, which media are building up every day, is based on four basic component narratives: on the economic revival, on the efficiency of personal rule, on transparent contracts and on the opponents of Serbia’s development who ‘unfoundedly’ criticise the government’s economic success. In the analysis of the narrative we will focus on the statements of officials made since 2012, which is when the regime led by the Serbian Progressive Party came to power. Many of the described mechanisms, such as non-transparent, harmful contracts and unjustifiably high subsidies, also existed during the previous government.3 However, the capture of the state, carried out - among other things - with the help of foreign direct investments, has reached completely new dimensions under the current regime, while the narratives that accompany it have been significantly ‘improved’.
Topic:
Development, Economics, Foreign Direct Investment, and Drugs
Political Geography:
Europe and Serbia

91. The EU–China Comprehensive Agreement on Investment: Lessons Learnt for Indonesia

Author:
Yan Lili Ing and Junianto James Losarili
Publication Date:
08-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The European Union (EU) and China have recently reached an agreement: the EU–China Comprehensive Agreement on Investment (CAI). As one of the most recent investment agreements concluded by the EU, the paper aims to assess specific concessions made in the agreement, and provides lessons learnt for Indonesia on the ongoing negotiations of the Indonesia–EU free trade agreement, the Comprehensive Economic Partnership Agreement (IEU CEPA). The paper will present an overview of the main areas covered under the CAI, assess the potential impacts of the CAI on EU investment into Indonesia, and set out lessons that can be learnt from the CAI.
Topic:
Economics, International Cooperation, International Trade and Finance, European Union, and Investment
Political Geography:
China, Europe, Indonesia, and Asia

92. UK Economic Diplomacy in the 21st Century: The LSE Economic Diplomacy Commission Final Report

Author:
LSE Economic Diplomacy Commission
Publication Date:
02-2021
Content Type:
Special Report
Institution:
LSE IDEAS
Abstract:
The LSE Economic Diplomacy Commission was convened in 2019 to establish a strategic direction for a new age of foreign economic policy, to understand the domestic ramifications of changes to the UK’s trade agenda, and to present recommendations that may best advance the UK’s priorities at home and abroad. The aim of the Report is to position the UK optimally in a changed 21st century global economy while maintaining the UK’s support for an open, multilateral trade and rules-based international system. The Report proposes a refined economic diplomacy framework that seeks to balance commercial openness with strategic domestic and foreign policy aims, broadly defined.
Topic:
Foreign Policy, Diplomacy, Economics, and Trade
Political Geography:
United Kingdom and Europe

93. A Generation of Italian Economists

Author:
Enrico Nano, Ugo Panizza, and Martina Viarengo
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We examine the role of financial aid in shaping the formation of human capital in economics. Specifically, we study the impact of a large merit-based scholarship for graduate studies in affecting individuals’ occupational choices, career trajectories, and labor market outcomes of a generation of Italian economists with special focus on gender gaps and the role of social mobility. We construct a unique dataset that combines archival sources and includes microdata for the universe of applicants to the scholarship program and follow these individuals over their professional life. Our unique sample that focuses on the high end of the talent and ability distribution also allows us to analyze the characteristics of top graduates, a group which tends to be under-sampled in most surveys. We discuss five main results. First, women are less likely to be shortlisted for a scholarship as they tend to receive lower scores in the most subjective criteria used in the initial screening of candidates. Second, scholarship winners are much more likely to choose a research career and this effect is larger for women. Third, women who work in Italian universities tend to have less citations than men who work in Italy. However, the citation gender gap is smaller for candidates who received a scholarship. Fourth, women take longer to be promoted to the rank of full professor, even after controlling for academic productivity. Fifth, it is easier to become a high achiever for individuals from households with a lower socio-economic status if they reside in high social mobility provinces. However, high-achievers from lower socio-economic status households face an up-hill battle even in high social mobility provinces.
Topic:
Economics, Education, Gender Issues, Human Capital, Career, and Financial Aid
Political Geography:
Europe and Italy

94. The Importance of Financial Education for the Bank CLient's Protection in Kosovo

Author:
Fitim Gashi and Bedri Peci
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
Technological developments are not easily understood even by people who have advanced education and this leaves much to be expected for other groups. Financial services and banking products are also ‘complicated’ for professionals, not to mention the ordinary client. As a result of the features of financial products and services, especially banking, information is required as an initial form of knowledge of these services and products, and this information is intensified through a constant process such as education. Hence, this article argues how financial education is performed in Southeast Europe and even in the EU. This article also elaborates on the financial education in Kosovo concerning the protection of banking clients’ rights, taking into account the financial education practices from which the Kosovo system can benefit.
Topic:
Economics, European Union, Finance, and Banking
Political Geography:
Europe and Kosovo

95. Challenges and Difficulties for Micro-Business in Adapting IFRS for SMES Requirements: Kosovo Evidence

Author:
Esat A. Durguti and Ereza A. Arifi
Publication Date:
09-2021
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
Small and medium-sized enterprises (SMEs) have a vital position in the international economy. The study aims to examine the compulsory financial reporting requirements set by the Kosovo Council for Financial Reporting (KCFR) as well as SMEs requirements for reviewing the current classification in the Kosovo context. This study, like most relevant studies, employs ordinal probit regression to examine the relationships among the requirements defined as dependent variables and other control variables such as necessary reclassification review under KCFR, preferred reclassification review under KCFR, experience knowledge of accountants and auditors, continuously education concerning financial reporting, and assessments of business owners. According to the reported conclusions, the application of these requirements in the Kosovo context does not create any opportunities for SMEs. On the contrary, the findings point to a thorough review of the reporting requirements for micro-businesses, as the current classification appears to be a burden for these businesses.
Topic:
Economics, Finance, Business, and State-Owned Enterprises
Political Geography:
Europe and Kosovo

96. China's Belt and Road Initiative and Georgia: A Short Overview

Author:
Ekaterine Lomia
Publication Date:
09-2021
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
Since the beginning of the 2000s, China has embarked on an unprecedented path of economic development, as evidence of which is the largest economic project of the XXI century initiated by the People's Republic of China. The global Belt and Road Initiative announced by the first person of the country, Xi Jinping, is a shortened name of the ‘Silk Road Economic Belt’ and ‘XXI Century Maritime Silk Road’. It covers the Asia-Pacific, Europe, Central Asia, Southeast Asia, West Asia, and Africa and involves more than a hundred countries, international organizations, and leading economic actors. The main participants in the project are China, Mongolia, Russia, Azerbaijan, Belarus, Poland, Germany, the Netherlands, Kazakhstan, Kyrgyzstan, Pakistan, Bangladesh, Iran, and India. The article reviews the role of the Chinese project in a global context. The paper focuses on the role and purpose of Georgia in the Belt and Road Initiative. This study will try to reveal the results for the benefit of Georgia, which is one of the participating countries, and the role of China through research to be made from documents and academic studies on the subject. Georgia tries to conduct its relations with China, as a partner in the project, with a policy of balance without disturbing its relations with the West.
Topic:
Economics, Bilateral Relations, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
Political Geography:
China, Europe, Asia, and Georgia

97. Economic Assessment of the Euro Area: Winter 2020/2021

Author:
Klaus-Jurgen Gern
Publication Date:
02-2021
Content Type:
Commentary and Analysis
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This EUROFRAME Report presents an assess- ment of the economic outlook for 2021 focuses on the euro area based on a synopsis of the fore- casts of EUROFRAME institutes. Perspectives for UK and CEEs countries are described in Boxes A and B, respectively. In the Focus section, we discuss a special topic, based on work done in the EUROFRAME insti- tutes. This time, we discuss the impact that the COVID-19 crisis had on labour markets in Eu- rope and policy responses to this challenge, based on the experience in the countries hosting EUROFRAME institutes.
Topic:
Economics, Regional Cooperation, European Union, Regionalism, Pandemic, and COVID-19
Political Geography:
Europe

98. German Economy Summer 2021

Author:
Kiel Institute
Publication Date:
06-2021
Content Type:
Commentary and Analysis
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The German economy is picking up speed again. After the resurgence of the Covid-19 pandemic had interrupted the economic recovery in the winter half-year, GDP will expand at a fast pace in the further course of the year and exceed its pre-crisis level again. With the removal of the pandemic-related restrictions, activity will rebound, especially in those areas that were previously particularly burdened. Retail trade and contact-intensive services in particular are likely to benefit from the rebound in private household consumption. For the time being, however, the recovery will be delayed in the manufacturing industry. The strong global recovery has brought with it multi-layered supply bottlenecks that are noticeably hampering production in many firms. Despite the very good order situation, production in the manufacturing industry will therefore probably only gradually return to its recovery path in the second half of the year, provided that the supply bottlenecks then gradually ease. With the supply bottlenecks, price pressures have also increased, especially as economic momentum is high worldwide. Thus, prices for raw materials, intermediate goods and transport services have recently been on a broad upward trend. All in all, GDP is expected to grow by 3.9 percent this year and by 4.8 percent in 2022. Consumer prices will rise at a much faster rate of probably 2.6 percent this year and by around 2 percent in 2022.
Topic:
Economics, GDP, Economic Growth, Pandemic, Industry, and COVID-19
Political Geography:
Europe and Germany

99. Decoupling Europe

Author:
Gabriel Felbermayr, Steffen Gans, Hendrik Mahlkow, and Alexander Sandkamp
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The COVID-19 pandemic revealed the vulnerability of international value chains in the face of global shocks. This has triggered a political discussion regarding a possible reshoring of vulnerable supply chains back home. The aim is to reduce dependencies on foreign suppliers and thus improve crisis resilience of the domestic economy. The debate is also rooted in the growing dependence on Asian suppliers and the colliding political and ideological systems between China and the West. Unilateral decoupling of the EU from China (a doubling of trade costs) would reduce real income in the EU on average by 0.8 percent. In terms of GDP in 2019, this equals a permanent loss in real income of 131.4 bn EUR. Should China retaliate, real income would fall by 1.0 percent (170.3 bn EUR). With its extremely interconnected economy, real income in Germany would even decline by 1.4 percent (48.4 bn EUR). China would also lose from such a trade war, with real income declining by 1.3 percent. Should the EU increase its trade barriers against all its non-European trading partners, real income in the Union would fall by 3.5 percent or 584.3 bn EUR in case of a unilateral increase and by 5.3 percent or 873.1 bn EUR in case the rest of the world responds by also raising trade barriers.
Topic:
Economics, Regional Cooperation, European Union, Economic Cooperation, Pandemic, and COVID-19
Political Geography:
China and Europe

100. Automotive Global Value Chains in Europe

Author:
Matteo Gaddi and Nadia Garbellini
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper we examine the main transformations that are affecting European automotive industry and which challenges, in particular due to the transition to new forms of propulsion, the industry is going to face. The automotive industry is central to the European economy and the nature of the Global Value Chains are rapidly shifting. While individual countries have developed economic plans to address this, a broader EU wide plan is critically important to addressing the employment and environmental effects of these shifts.
Topic:
Economics, Industrial Policy, European Union, Manufacturing, and Global Value Chains
Political Geography:
Europe