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9721. Cross-Country Evidence on the Determinants of Preferences for Redistribution

Author:
Gianluca Grimalda and David Pipke
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Redistribution differs widely across countries, but our understanding of why this is the case is limited. In democracies, the extent of redistribution should ultimately reflect citizens’ preferences. We measure preferences for redistribution in six developed countries through internationally standardized questions in which respondents are faced with realistic budgetary constraints on their choice. We also measure a broad array of demographic, attitudinal, and ideological characteristics and examine their correlations with the preferred pattern of redistribution. As expected, individual income is associated with lower demand for redistribution, but this relationship loses significance once other factors are controlled for. Beliefs on social mobility have, in the aggregate, the largest effect in reducing demand for redistribution, the effect being largest in the US but insignificant in Italy and Slovenia. Trust in government has a negative effect on demand for redistribution across all countries. In line with other studies, we interpret this result as evidence that people believing that the political élite is corrupt demand more redistribution. Financial security, a proxy for the Prospect of Upward Mobility hypothesis, is also a significant correlate of preferences for redistribution, the effect being largest in Japan but small in the UK and Slovenia. Finally, discrimination of racial minorities is associated with lower demand for redistribution, but the effect is only significant in the US and Germany. Overall, the main theories that have been proposed to account for preferences for redistribution are confirmed to be valid, but with significant variation across countries.
Topic:
Minorities, Democracy, Economic Mobility, Social Order, and Redistribution
Political Geography:
Global Focus

9722. Trade Liberalization along the Firm Size Distribution: The Case of the EU-South Korea FTA

Author:
Sonali Chowdhry and Gabriel Felbermayr
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
How do firms of different sizes react to trade liberalization? Leading theories suggest that, amongst continuing exporters, lower trade costs should boost exports of smaller firms by the same or a greater rate than those of larger firms. However, studying the entry into force of the ambitious EU-South Korea Free Trade Agreement (EUKFTA) with French customs data, we find robust evidence to the contrary. Applying a triple-difference framework, we report that the FTA increased sales in the top quartile of continuous exporters by 71 percentage points more than in the bottom quartile. More than 90 percent of that growth premium is driven by a stronger effective reduction in broadly defined non-tariff barriers (NTBs); the remainder by a higher sensitivity to trade costs. These findings have implications for both heterogeneous firm trade models and for the capacity of FTAs to magnify inequality. In contrast, on the entry margins, our results are in line with the literature with the FTA selecting intermediate-sized firms into exporting to South Korea.
Topic:
International Cooperation, European Union, Trade Liberalization, and Trade
Political Geography:
Europe, Asia, and South Korea

9723. Capitalism Recoupled

Author:
Dennis J. Snower and Colm Kelly
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper examines major forces that have decoupled economic and business prosperity from social prosperity and explores how recoupling can be promoted. Economists have specified well-known conditions under which free market enterprise with shareholder value maximization is efficient. These conditions are systematically violated by three forces – globalization, technological advance and financialization (GTF) – that have weakened the connections between economies and societies over the past four decades. Consequently, the recoupling process requires abandoning the default premise of economic decision making that social progress follows financial performance. For business, it calls for a move from shareholder to stakeholder value. For government, it calls for setting legal obligations, targets and incentives to ensure that stakeholder value is compatible with a rigorously defined concept of “societal and planetary value.”
Topic:
Economics, Globalization, Science and Technology, Capitalism, and Economic Theory
Political Geography:
Global Focus

9724. Public Attitudes on US Intelligence 2020: Final Trump-Era Survey Confirms Broad Popular Support, Reveals Opportunities for Greater Transparency

Author:
Stephen Slick and Joshua W. Busby
Publication Date:
05-2021
Content Type:
Commentary and Analysis
Institution:
Chicago Council on Global Affairs
Abstract:
A final Trump-Era survey confirms broad popular support for the intelligence community and reveals opportunities for greater transparency. The University of Texas-Austin’s 2020 survey reaffirmed Americans’ broad-based belief that our intelligence agencies are vital to protecting the nation and effective in accomplishing their core missions. Our fourth annual poll was the last conducted during Donald Trump’s presidency. The high levels of public support for the intelligence community (IC) recorded over the life of this project have proven stable and remarkably resilient to the persistent public criticism by the former president and his political allies. Close examination of the survey data may help inform a strategy aimed at further enhancing the IC’s democratic legitimacy through increased openness and renewed public engagement. Indeed, a majority of the participants in our 2020 survey agreed that the IC could share more information with the American people without compromising its effectiveness.
Topic:
Intelligence, Politics, Public Opinion, and Survey
Political Geography:
North America and United States of America

9725. Serving the Citizens—Not the Bureaucracy

Author:
Sascha Haselmayer
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Chicago Council on Global Affairs
Abstract:
In a volatile and changing world, one government function is in a position to address challenges ranging from climate change to equity to local development: procurement. Too long confined to a mission of cost savings and compliance, procurement—particularly at the local level, where decisions have a real and immediate impact on citizens—has the potential to become a significant catalyst of change. In 2021 alone, cities around the globe will spend an estimated $6.4 trillion, or 8 percent of GDP, on procurement.1 Despite this vast buying power, city procurement faces several challenges, including resistance to the idea that procurement can be creative, strategic, economically formidable—and even an affirming experience for professional staff, citizens, civil society organizations, and other stakeholders. Unfortunately, city procurement is far from ready to overcome these hurdles. Interviews with city leaders and procurement experts point to a common failing: city procurement today is structured to serve bureaucracies—not citizens. City procurement is in a state of creative tension. Leaders want it to be a creative engine for change, but they underfund procurement teams and foster a compliance culture that leaves no room for much-needed creative and critical thinking. In short: procurement needs a mission. In this report, we propose cities reimagine procurement as a public service, which can unlock a world of ideas for change and improvement. The vision presented in this report is based on six strategic measures that can help cities get started. The path forward involves not only taking concrete actions, such as reducing barriers to participation of diverse suppliers, but also adopting a new mindset about the purpose and potential of procurement. By doing so, cities can reduce costs and develop creative, engaging solutions to citywide problems. We also offer detailed insights, ideas, and best practices for how practitioners can realize this new vision. Better city procurement offers the promise of a vast return on investment. Cost savings stand to exceed 15 percent across the board, and local development may benefit by multiplying the participation of small and disadvantaged businesses. Clarity of mission and the required professional skills can lead to new, pioneering innovations. Technology and the right data can lead to sustained performance and better outcomes. A healthy supplier ecosystem can deliver new supplier talent that is aligned with the goals of the city to reduce carbon emissions, serve complex needs, and diversify the supply chain. All of this not in service of the bureaucracy but of the citizen.
Topic:
Government, Citizenship, Bureaucracy, Cities, Inclusion, and Equity
Political Geography:
Global Focus

9726. Cooperating, Competing, Confronting: US-Japan-South Korea Trilateral Cooperation as China Rises

Author:
Ichiro Fujisaki, Han Sung-Joo, and Karl Friedhoff
Publication Date:
07-2021
Content Type:
Special Report
Institution:
Chicago Council on Global Affairs
Abstract:
The US-China relationship will be one of the most important in defining the international order in the 21st century. As the two countries enter an increasingly competitive phase in relations, both must manage the policy mix of confrontation, competition, and cooperation. If mismanaged, competition could quickly tilt toward miscalculation and armed conflict. For the United States, a poor mix of these policy elements could also lead to a hastened US decline, rapidly ceding the Asia-Pacific to China’s leadership, leaving regional allies at risk of coercion under the threat of China’s military and economic power. The nature of the challenge posed by China, the economic interdependence in the region, and serious questions about US leadership necessitate a fundamental reevaluation of trilateral cooperation. Effective US policy in the region hinges on getting policy right with the two most important US allies in the region—Japan and South Korea. While alliances are among the most important advantages the United States holds in its competition with China, South Korea and Japan hold particular importance given the values they share with the United States, as well as their dynamic economies, growing military capabilities, influence in the region, and geostrategic location. But the inherent advantages of these allies can only be drawn upon if the United States recommits itself to the region and to investing in and upholding these long-standing relationships. The persistent doubts about US commitment to and leadership in the region involve not only political will and competence but growing questions of economic feasibility as well. Doubts about the United States are leading Japan and South Korea to consider all options in terms of their security. Unlike the Cold War with the Soviet Union, the United States will not be able to draw a line in the sand, demand that its allies and partners toe that line, and still expect to compete effectively. Such an approach will further erode US credibility and confidence in US leadership. This reality will necessitate a deep mutual trust between the trilateral partners and greater tolerance for the distinct needs and interests of all three countries. A better understanding of how each country views its role in the region, its relationship with China, areas of cooperation, and the limits for each country in dealing with China is vital.
Topic:
Security, Foreign Policy, Defense Policy, and Public Opinion
Political Geography:
China, East Asia, Asia, and Southeast Asia

9727. Populism and COVID19: How Populist Governments (Mis)Handle the Pandemic

Author:
Michael Bayerlein, Vanessa A. Boese, Scott Gates, Katrin Kamin, and S. Mansoob Murshed
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Populist parties and actors now govern various countries around the world. Often elected by the public in times of crises and over the perceived failure of ‘the elites’, the question stands as to how populist governments actually perform once elected, especially in times of crisis. Using the pandemic shock in the form of the COVID-19 crises, our paper answers the question of how populist governments handle the pandemic. We answer this question by introducing a theoretical framework according to which populist governments (1) enact less far-reaching policy measures to counter the pandemic and (2) lower the effort of citizens to counter the pandemic, so that populist governed countries are (3) hit worse by the pandemic. We test these propositions in a sample of 42 countries with weekly data from 2020. Employing econometric models, we find empirical support for our propositions and ultimately conclude that excess mortality in populist governed countries exceeds the excess mortality of conventional countries by 10 percentage points (i.e., 100%). Our findings have important implications for the assessment of populist government performance in general, as well as counter-pandemic measures in particular, by providing evidence that opportunistic and inadequate policy responses, spreading misinformation and downplaying the pandemic are strongly related to increases in COVID-19 mortality.
Topic:
Governance, Populism, Public Health, Pandemic, and COVID-19
Political Geography:
Global Focus

9728. 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

9729. Fog in Channel? The Impact of Brexit on EU and UK Foreign Affairs

Author:
Amelia Hadfield and Nicholas Wright
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
European Union Institute for Security Studies
Abstract:
The UK’s rejection of any institutionalised relationship with the EU in foreign, security and defence policy (FSDP) is arguably the most noteworthy feature of the post-Brexit dispensation. In a stark reversal in early 2020, the British government abandoned pledges made in the 2019 Political Declaration to ‘establish structured consultation and regular thematic dialogues [that] could contribute to the attainment of common objectives’, including on the Common Foreign and Security Policy (CFSP) and the Common Security and Defence Policy (CSDP) (1). This gap was intensified by the absence of any reference to foreign affairs in the EU-UK Trade and Cooperation Agreement (TCA) or the Integrated Review of Security, Defence, Development and Foreign Policy (IR) (2). Indeed, the IR essentially ignores the EU, referring only to British ambitions to remain a lead European defence actor, with a focus on multilateral venues (notably the UN and NATO), bilateral relations and ad hoc groupings. In short, an EU-sized hole now exists in British foreign policy thinking. This matters in London and across Europe. While in the EU, the UK exercised significant influence and leadership in FSDP, its EU membership magnifying its global capacities. In leaving, Sir Simon Fraser, formerly permanent under-secretary in the Foreign and Commonwealth Office (FCO), warned that Brexit represented ‘the biggest shock to [the UK’s] method of international influencing and the biggest structural change to our place in the world since the end of World War Two’ (3). From the EU’s perspective, as observed by High Representative Josep Borrell, ‘with Brexit, nothing gets easier and a lot gets more complicated. How much more complicated depends on the choices that both sides will make’ (4). The choices thus far indicate a rejection of ‘old obligations’ (5) and an essentially transactional relationship that will be ‘structurally adversarial for the foreseeable future’ (6). Nonetheless, Brexit also gives both the UK and the EU a once-in-a-generation opportunity to rethink and reconfigure their approaches to foreign affairs and how they navigate a profoundly changed regional context. To understand the scale of this undertaking, we offer an innovative thematic analysis focused on four ‘Rs’: reputation, responsibility, resources and relevance. Each ‘R’ represents a core element of both sides’ respective foreign policies, offering insights into possible international roles and goals. The four ‘Rs’ also help us identify the main risks and opportunities Brexit encompasses, providing a conceptual symmetry as to how the choices of both the EU and UK might align and impact each other.
Topic:
Foreign Policy, European Union, and Brexit
Political Geography:
United Kingdom and Europe

9730. The Future Africans Want: When Optimism Is Power

Author:
E. Gyimah-Boadi and Joseph Asunka
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
European Union Institute for Security Studies
Abstract:
The middle of a pandemic that has stopped the world in its tracks may seem like a surprising time to focus our attention on Africa’s future. Covid-19 has triggered lockdowns and school closures, caused job losses, postponed elections (1) and forced us to fix our gaze on the here and now: on staying healthy today, on putting food on the table today, on protecting people’s rights and dignity today. However, a shock like this pandemic also creates an imperative for strategic foresight. As Africa prepares for a post-Covid world, we must take stock of people’s lived experiences and expectations if we are to build back better. What are Africans’ aspirations for their lives and those of their children? How are they thinking about the future and what can they do to shape it? What assets are citizens willing to invest to further their collective ambitions, and how can governments and development actors best harness them? This policy Brief taps into Afrobarometer (2) survey data to map people’s aspirations for the next decade and their willingness to take action to achieve their goals (detailed information on Afrobarometer surveys and methods can be found in endnote 2). Rather than using abstract scenarios or models to build a vision of the future, we asked people directly where they want to go and how they think they can get there (3). Our analysis is grounded in the perspectives of ordinary citizens, their views on the interactions they have with their governments and their reports of the actions they take to participate in policy processes and influence their governments, defined as ‘citizen engagement’. The responses to the surveys show that Africans’ aspirations go well beyond economic and social security: they evince a desire for self-sufficiency and autonomy as well as democratic, accountable and responsive governance. Citizens are largely ready and willing to take action and even to put their own financial resources into the pot in order to realise their ambitions. Examples abound of citizens joining together to do everything: from fighting corruption in the management of local natural resources in Ghana (4), to initiating local awareness-raising and relief campaigns in response to Covid-19 in Cameroon, Kenya, South Africa and South Sudan. (5) Yet too often, governments resist and fail to listen to citizen voices, respond to popular expectations and build the governance systems their people demand. This leaves an enormous resource— the energy and will of millions of citizens — untapped, a luxury that African governments cannot afford as they look to the future and consider how to achieve the ambitious targets of the United Nations’ Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063. If they are to make effective use of their people’s assets, decision-makers will need to increasingly engage with their publics by opening doors to information sharing and real collaboration. By expanding the space for African voice and agency in all arenas, from problem-solving to policymaking, the power of citizen actions can be unleashed across the continent. In this opening Brief of the Imagine Africa series, we consider what Africans want their future to look like 10 years down the road and then review current trends in what they say they are getting. The growing gap between ambition and reality discussed in the second and third sections highlights the need for changes in how governments and citizens interact. The fourth section showcases what African citizens can bring to the table in terms of resources, energy, activism and engagement, but also reveals that African governments are not always receptive to these inputs. We conclude with a discussion of what African decision-makers and international supporters can do to more effectively leverage the power of citizen action and engagement.
Topic:
Development, Domestic Policy, COVID-19, and Future
Political Geography:
Africa, Sahel, Horn of Africa, and Sub-Saharan Africa