Authors:Ewa Cieślik, Jadwiga Biegańska, and Stefania Środa-Murawska
This article presents the transformation of foreign trade in 10 post-socialist countries, current members of the EU. Special focus is given to the more significant role these countries began to play in global value chains (GVCs) as a result of liberalisation processes and integration within the EU. In addition, the article evaluates their place in global vertical specialisation. To locate each country on a global value chain and to compare them with selected countries, more complex methods of measuring the level of participation of European post-socialist countries in GVCs were employed. These methods allow the position of a country downstream or upstream in GVCs to be established. We concluded that (a) post-socialist countries differ in the levels of their participation in GVCs. Countries that have stronger links with Western European countries, especially with Germany, are more integrated; (b) a large share of post-socialist countries’ exports pass through Western European GVCs; (c) most exporters in Central and Eastern Europe are positioned in downstream segments of production rather than upstream markets.
Business cycle synchronisation and the similarity in the sectoral structure of exports are key conditions for the successful implementation of common monetary policy, as shown by the theory of Optimum Currency Areas. This paper examines the degree of correlation between the aggregate euro area and 12 member states’ business cycles and the role of their exports specialisation dynamics vis-à-vis the euro area over the period 1981–2012, focusing in particular on Southern European countries. Overall, we find that since the inception of the European Monetary Union, the business cycles of euro area member states have been increasingly synchronised with the aggregate euro area cycle, with the exception of Greece. We also document that changes in the Greek, Portuguese, and Spanish export structures brought these countries closer to the euro area structure as a whole. Furthermore, we find a positive and significant relationship between the similarity of export structures and GDP cyclical correlations.
This paper investigates the relationship between industrial restructuring and regional unemployment in Poland. Poland’s regional unemployment broke out of nothing at the beginning of the 1990s decade. Since then, it has remained remarkably unchanged over the decade for a variety of factors, such as the gradual restructuring process, labour supply rigidities and technological differences. The role of each of these factors is assessed within the framework of hazard functions applied to the inflow to unemployment from a job, computed using Polish Labour Force Survey data. When voivodships are grouped according to their unemployment rate it can be seen that low unemployment voivodships form a heterogeneous group, including both rural and urban areas. Applying a new method of analysis of the labour market effects of trade integration, the paper reveals circumstantial evidence on how Poland’s international comparative advantages in labour-intensive manufacturing combine with the economic advantages of urbanised regions to play a significant role in shaping the regional distribution of Poland’s unemployment.
It is argued that increased freedom to run economic activities combined with the growing impotence of national governments (i.e., globalization) have contributed to the secular growth slowdown at the global level. Fast globalisation-driven growth of international trade has unleashed the global race for economic surpluses. The process involves the suppression of wages and widening income inequalities – restricting aggregate demand globally. A “beggar-thy-neighbor” tactics of keeping large trade surpluses by countries successfully suppressing wages and domestic demand is likely to be unproductive. Overcoming the secular stagnation may not be possible without safeguarding equilibrium (or balance) in international transactions between major industrial countries – even if this may necessitate that in most (or all) of them the public sectors run large fiscal deficits permanently.
The series of adverse shocks of both economic and political character that Europe has suffered since 2008, the last of them coming from the Brexit referendum, revealed numerous institutional gaps and asymmetries in the EU integration architecture. They originate from the voluntary nature of the EU project and the necessity to obtain unanimous approval of all member states to take new integration steps. To increase the resilience of the EU project against current and future shocks, its major institutional gaps and asymmetries should be addressed as quickly as possible. In this paper, we use the theory of fiscal federalism and subsidiarity principle to set the agenda of the EU reform. This includes the identification of areas such as completing the EMU and Schengen projects, foreign, security, and defence policies, environmental and climate change policies where further integration can offer substantial returns to scale and better provisions of global and pan-European public goods. On the other hand, there are also areas such as agriculture policy, products, services and labour standards, and fiscal surveillance rules, where deregulation in favour of market forces could ease business environment and make EU regulations less bureaucratic. Developing integration beyond the traditional economic sphere will also have an impact on the size of the EU budget, balance of power between the EU governing bodies (a bigger role of the European Parliament) and the democratic legitimacy of the EU project.
This paper reviews the deeper societal and economic reasons behind the British choice of leaving the European Union. We address the detailed results of the referendum and the long-standing sceptical British attitude towards European integration; next, we analyse the net budgetary contribution that changed enormously after the Eastern Enlargement. It is argued that the rise in the immigrantnative ratio had a significant impact on employee’s pay level in certain areas, therefore pro-Brexit campaigners highlighted migration as one of the major problems arising from EU membership. Increasing income and wealth inequalities and a growing anti-elite sentiment in British society, coupled with the negative image of Brussels bureaucrats and a British approach to the rule of law that is fundamentally different from the continental one, also contributed to the final result of the referendum. Our analysis ends with a glimpse into the close future, emphasising that the future of British-EU relations depends wholly on the pragmatism and wisdom of the negotiating parties.
It is argued that European integration has not fulfilled its chief economic promises. Output growth has been increasingly weak and unstable. Productivity growth has been following a decreasing trend. Income inequalities, both within and between the EU member states, have been rising. This sorry state of affairs is likely to continue — and likely to precipitate further exits, or eventually, the dissolution of the Union. However, this outcome is not unavoidable. A better integration in the EU is possible, at least in theory. Also, the negative consequences implicit in the existence of the common currency could be neutralised. However, the basic paradigms of the economic policies to be followed in the EU would have to be radically changed. First, the unconditional fiscal consolidation provisions still in force would have to be repelled. Second, “beggar-thy-neighbour” (or mercantilist) wage policies would have to be “outlawed”.
The Central and Eastern European new Member States of the European Union (CEECs) went through the transition process following the commandments of the Washington Consensus, which gradually evolved into the “integrative growth model”. External liberalisation exposed the CEECs to recurring problems over external imbalances, bubbles driven by capital inflows, and resulting growth instabilities. Large foreign direct investment inflows attracted by repressed wages and low taxes do not accelerate growth. Arguably, real convergence would be much faster under a system with built-in limitations to free trade, free capital movements – and with more scope for traditional industrial, trade, incomes, and fiscal policies.
This paper examines the impact of EU enlargement and the global economic crisis on the relative development of the EU countries. This effect is assessed by applying multivariate analysis to the whole set of 28 European countries at three representative points in time. The cluster analysis for the years 2002, 2007, and 2012 grouped the countries according to the range of economic development indicators showing within-EU cohesion before the EU enlargement, after the enlargement wave, and after the crisis. The findings show that a decrease in the development differences after the enlargement was replaced with an increase in these differences after the crisis, thus contributing to the existing debate about the success of cohesion and future of European integration. These results are somewhat worrying for the new member states of the EU as well as for EU membership candidates and their prospective development within the integration.
Ferenc Jánossy was the most important Hungarian pioneer of surveys on long time series. In the 1960s he devised the famous theory of trendlines, which allowed him to forecast the great world economic recession of the 1970s a decade in advance. The best-known international authority on compiling historical time series is Angus Maddison, who prepared time series of the main demographic and macroeconomic indicators for 56 countries, from 1820 to the present day. Both scientists, whose survey method showed both a historical and a quantitative approach, reached the conclusion that human capital is the most important of production factors for securing long-term economic growth. The main purpose of this paper is to compare their results with the latest development, which is known as the “new growth theory”.