What are the drivers of business demography and employment in the countries of the European Union?

ABSTRACT

The aim of this contribution is to establish a typology of European entrepreneurship countries with respect to variables related to entrepreneurial activity and economic development. Using a combination of multidimensional data analyses allows us to extend the concept of ‘entrepreneurial regimes’ and leads to the distinction of five such entrepreneurial regimes. Moreover, in order to better characterize these classes, a wide set of illustrative variables representative of national economic development, labour market functioning, and formal and informal institutional environments, as well as variables specific to the entrepreneurial population, are considered. Finally, discriminant analyses show that the five explanatory themes considered (Innovation, Employment, Formal Institutions, Entrepreneurship and Governance) differentiate the classes, and significantly explain the diversity of entrepreneurial regimes. These findings have important implications for the implementation of public policy, in order to promote entrepreneurial activity and reduce unemployment.     

Quality of governance and varieties of capitalism in the European Union: core and periphery division?

A growing body of literature suggests that the quality of governance has a significant effect on economic development. Investigations highlight that the quality of government institutions varies substantially in the European Union. These differences raise the question of whether they comply with the various models of capitalism. However, the various approaches of institutional analyses either neglect the role of the state or consider only the welfare function and the extent of state intervention. This article uses the databases of the World Bank and the World Economic Forum to classify the members of the European Union into clusters based on the quality of governance. Cluster analyses find notably clear-cut clusters in both cases. These clusters do not coincide with the usual varieties of capitalism; instead, they indicate a gap between the northern and western vs. the southern and eastern European countries, which is a core vs. periphery division. This gap indicates a long-lasting challenge in the deepening of European integration.     

What are the drivers of total factor productivity in the European Union?

This paper examines the evolution of total factor productivity (TFP) over time, as well as across countries and sectors, and investigates its determinants. To this end, a panel data set of 17 European Union (EU) countries and 13 sectors over the period 1995–2007 is used as part of a twofold approach. First, we estimate aggregate and sectoral TFP for 17 EU countries by means of the augmented mean group estimator to control for endogeneity, cross-section dependence and heterogeneous production technologies. Second, we investigate the relative importance of the drivers of predicted TFP using a dynamic ordinary least-squares estimator. The results indicate that rationalization, human capital and information and communication technologies are the main drivers of TFP.     

Regional analysis and sustainable development： Application of a synthetic sustainability indicator to Galicia and the European Union

In general, investigations carried out to date regarding/measuring systems/systems of measurement of sustainable development present two peculiarities： Either they are of a limited practical nature or they do not allow for comparisons between different areas or economies. Global synthetic indicators are an exception to the above; however they have been scarcely developed. This article designs an index of said characteristics, which is subsequently applied to all the countries within the European Union and to the region of Galicia.     

Institutions and the route to reform of the European Union’s budget revenue, 1970–2017

Using process tracing, this paper charts the history of the changes in the EU’s revenue since 1970, including package deals and the unforeseen consequences of change, comparing the positions of the Council to those of the European Commission and European Parliament. Those revenue decisions allowed European integration to proceed though without a fully autonomous budget as Member States became more careful to calculate their net benefits or costs in relation to the budget. In December 2013, the European Union’s institutions established a High Level Group to recommend changes to the revenue base of the EU’s budget. This reported in January 2017, proposing to resolve the effect of sub-optimal revenue and budget decisions made by the European Union over many years, to reduce direct national contributions, to minimise the risk of unforeseen consequences, and to combine revenue flows with steering effects to discourage certain forms of economic behaviour in line with the wider policy agenda of the European Union.     

Turkish trade unionists and Turkey’s membership of the European Union

In all the discussions regarding Turkey’s accession to the EU, little attention has been paid to the views of workers. This paper provides a statistical analysis of the views of over 6000 Turkish trade union members on Turkey’s EU membership. Parameters are estimated using multilevel probit models where the nested structures of workers into trade unions and federations were taken into account since they shared some joint characteristics because of belonging to these organisations. It confirms the extensive disillusion with the EU found elsewhere in Turkish society but more interestingly it disconfirms an idea that those inside the EU may too easily assume to be the case: that it is those with what might be considered modernist characteristics among the Turkish population who are most likely to be in favour of EU entry. The idea seems to chime well with assumptions that the EU is a progressive, modern force. But whatever the validity of such a view, EU entry is not in fact found to be the favoured goal of the young and the best educated: it is older workers who are the most likely to support entry and those who are educated to the highest level the most likely to oppose it. Amongst the main three trade union federations there is also a greater propensity of members of trade unions affiliated to Hak Is (the Islamic federation) to support entry than those in Turk Is (centre right) or DISK (historically the most militant).     

No risk and some fun? Trade and wages in the enlarged European Union

This paper analyses the relationship between openness to trade and wages at the industry level (15 manufacturing and 6 service industries) in 25 EU countries over the period from 1995 to 2005. By applying a cross-country and industry-specific approach, it is possible to control for unobserved heterogeneity at both country and industry levels. We also differentiate between intra and inter-industry trade and we try to assess the relative importance of foreign wages versus domestic productivity developments in an open environment. We find that trade is not an important driver of wages, since the wage response to trade is small. Moreover, in line with the Stolper-Samuelson reasoning, the overall wage impact is always positive if significant in central and eastern Europe, while in western Europe we often observe a negative response, particularly in resource-based industries. Nevertheless, increased trade reinforces the productivity-wage link and weakens the co-movement of wages in eastern Europe, while there is less evidence of a similar wage-disciplining effect of trade in the west.     

Environmental policy in the European Union: Fostering the development of pollution havens?

A pollution haven occurs when dirty industries from developed nations relocate to developing nations in order to avoid strict environmental standards or developed nations imports of dirty industries expand replacing domestic production. The purpose of this study is to determine whether the European Union (EU) has increased its imports of “dirty” goods from poorer, less democratic countries during a period of more stringent environmental standards. Previous empirical studies such as those by Levinson and Taylor [Levinson, A., and Taylor, M.S., in press. Unmasking the Pollution Haven Effect. International Economic Review.], Ederington, Levinson and Minier [Ederington, J., Levinson, A., and Minier, J., 2005. Footloose and Pollution-Free. Review of Economics and Statistics., 87: 92-99.], Kahn and Yoshino (2004), and Ederington and Minier [Ederington, J., and Minier. J., 2003. Is Environmental Policy a Secondary Trade Barrier? An Empirical Analysis. Canadian Journal of Economics., 36: 137-54.] find evidence that United States imports are responsive to changes in environmental stringency, but the effects of EU policy have not been examined as thoroughly. Our study follows Kahn [Kahn, M.E., 2003. The Geography of Us Pollution Intensive Trade: Evidence from 1958 to 1994. Regional Science and Urban Economics., 33: 383-400.] and examines the impact of industry energy intensity and toxicity, measured by an energy index and a Toxic Release Inventory (TRI) index, on imports into the EU, at the 2-digit industry level from 1970 to 1999. We use the signing of the Maastricht Treaty to signify a period of more uniform and stringent community wide environmental standards (1993-1999), and identify the level of per capita GDP within an EU trading partner. We find an increased amount of EU energy intensive trade with poorer countries during the period with more stringent EU environmental standards. This result is not robust, however, when poorer countries are defined by OECD membership and geographic region. We do not find an increased amount of EU toxic intensive trade with poorer countries although there is some evidence of increased EU imports of toxic goods from poorer OECD and non-EU European countries. For our full sample of trading partners in all regions, the evidence supports the PHH for EU energy intensive trade, but not for toxic intensive trade. Results for regional trade analysis are less clear.     

Introduction: Is the European Union Capable of Integrating Diverse Models of Capitalism?

ABSTRACT

The causes and consequences of the Euro crisis have led comparative political economy scholars to question whether European integration can accommodate diverse models of capitalism. This special issue addresses two important questions about the compatibility of diverse growth models within the European Union (EU): Are some growth regimes better suited to European integration than others? and does the EU favour a particular constellation of domestic institutions? Contributions within this special issue provide a qualified yes to these questions, concluding that the EU favours export-led growth models whilst it penalises and discourages domestic consumption-oriented growth paths, particularly those that are financed by debt accumulation. While recent comparative capitalism literature highlights that European monetary integration has favoured export-led growth regimes, contributions in this special issue outline that the EU’s prioritisation of export-led growth over domestic demand-led growth is present in other facets of integration, including EU accession, financial integration, the free movement of people, fiscal governance and the Europe 2020 growth strategy. Findings here provide important insights for both the European integration and comparative capitalism literature, highlighting that the unique economic ties being forged within the European project may be problematic for those countries outside northwestern Europe and for workers in low-wage domestic sectors.     

A Return to ‘Civilisational Geopolitics’ in the Mediterranean? Changing Geopolitical Images of the European Union and Turkey in the Post-Cold War Era

The prevalence of the discourse of ideological geopolitics during the Cold War meant that both Turkey and the EU belonged to the West by virtue of their ideological orientation. In the absence of this prevalent geopolitical discourse, both the EU and Turkey have spent the 1990s trying to locate themselves geographically. Drawing on the literature on critical approaches to political geography and international relations, this article seeks to answer the question of whether the EU's post-Cold War security discourse on the Mediterranean in general and on relations with Turkey in particular point to a return to the earlier discourse of civilisational geopolitics. The article also presents a reading of Turkish policy makers’ attempts to resist EU's representation of Turkey in ‘non-Europe’ (as with the ‘Middle East’ or the ‘Mediterranean’) as boundary-producing practices which have served to underline the boundaries between the ‘West’ and the ‘non-West’.     

Does mutual recognition of qualifications stimulate services trade? The case of the European Union

This article analyses the services trade impact of recognition of professional qualifications using a unique database compiled by the European Commission. It observes that there is large variation in the number of regulated professions across the EU. The number of recognitions is small relative to total employment in regulated professions. Nevertheless, a robust positive relationship between services trade and recognition of qualifications is found. Recognition stimulates two-way trade between the source and the host country, suggesting that arms-length exports as well as cross-border outsourcing take place. Recognitions in health and education professions are most strongly related to services trade.     

Back to Engel? Some evidence for the hierarchy of needs

Using UK household expenditure data spanning over four decades (1960–2000), this paper employs Engel’s needs-based approach to analyzing household expenditure patterns and finds evidence for the existence of a stable hierarchy of expenditure patterns at low levels of household income. Second, we investigate how rising household income influences the manner in which total expenditure is distributed across Engel’s expenditure categories. Our results suggest that i) total household expenditure is distributed across Engel’s expenditure categories in an increasingly even manner as household income increases and ii) over time, there has been an acceleration in the rate at which household expenditure patterns become diversified as household income rises. Finally, we consider how the shape of Engel Curves may help shed light on the relationship between goods and the underlying needs they serve.     

Financialisation and Real Investment in the European Union: Beneficial or Prejudicial Effects?

This article presents an empirical analysis of the relationship between financialisation and real investment for non-financial corporations using panel data composed of 27 European Union countries over 19 years (1995 to 2013). On the one hand, financialisation leads to a rise in financial investments, diverting funds from real investments (‘crowding out’ effect); on the other, pressures from shareholders to intensify financial payments restrict the funds available for new real investments. We estimate an aggregate investment equation with the traditional variables (lagged investment, profitability, debt, cost of capital, corporate savings and output growth) and two further measures of financialisation (financial receipts and financial payments). The findings demonstrate that financialisation has damaged real investment in European Union countries, mainly through the channel of financial payments, either by interest or dividend payments. It is also found that the prejudicial effects of financialisation on investment were more severe in the pre-2007 crisis period. It is concluded that financialisation contributed to a slowdown of real investment by 1 to 8 per cent in the full and pre-crisis period, respectively. During the pre-crisis period, financialisation was the main driver of the slowdown of investment in the European Union.     

Enlargement and Institutional Reform in the European Union: Separate or Connected Issues?

In this paper, I analyze how the enlargement process is connected to the currently proposed institutional reforms in the European Union. Although the official claim is that enlargement requires reform, the relationship between both processes needs clarification. The use of unanimity voting for policy issues leads to substantial deadlock in the current Union, a problem that could be solved by the introduction of (qualified) majority voting. Moreover, in view of its current inflexibility enlargement would only marginally decrease the Union's capacity to make decisions. Under qualified majority rule, enlargement is likely to have little or no effect on flexibility given the distribution of preferences of the member-states. Also, if qualified majority voting is used, enlargement would decrease the power of the current member-states in a future Union, especially the larger ones. This, and the possibility for current member-states to link enlargement with specific policy demands, could be the crucial factors in the timing and shaping of the enlargement process.     

Price convergence in the European Union – What has changed?

This paper investigates price convergence in European Union countries using disaggregated price level indices in the period 1999–2016. Our results show that prices of both tradable and nontradable goods had a significantly lower dispersion in 2016 than in 1999. The convergence was faster in the case of countries with price level below the average, which can be interpreted as catching-up. However, further analysis shows that most prices converged only up to 2008. While prices of transport equipment continue to converge across the European Union, several durable consumption categories show price divergence after 2008. We attribute this to the drop in international trade of durable products due to increasing inflation and exchange rates volatility following the global financial crisis. From the monetary policy perspective, the existing price-level gaps, shown in our study, may pose a risk of higher inflation, especially in catching-up economies.     

Labour migration as a way to escape from employment vulnerability? Evidence from the European Union

Free Movement of people is a fundamental principle of the European Union (EU). In a context of strong divergence in employment and working conditions among EU member states, migration can be seen as a way to increase employment opportunities but also to escape from poor working conditions at home. In this article, we focus on the possible influence of employment vulnerability by comparing its individual level among migrants and native workers in EU countries. We implement propensity score matching methods using data from the European Social Survey (2008) and indexes of employment vulnerability proposed by Bazillier et al. (2014). Overall, we show that migrants face the same level of employment vulnerability than natives, all other things being equal. But there are strong differences by skill-level. Low-skilled migrants have a lower level of vulnerability mainly because of a lower level of employer vulnerability while high-skilled migrants face a higher level of vulnerability, because of a higher level of job vulnerability.     

The Euro-Mediterranean Partnership and the CommonMediterranean Strategy? European Union Policy from a Discursive Perspective

This article assesses the European Union's Mediterranean policy from a discursive perspective and focuses specifically on the actual, identifiable impact of the Union's security discourse. In doing so it seeks to demonstrate how the Union's Mediterranean security policy has impacted on issues of identity. The implicit reference to sub-regional cooperation in the Union's Common Mediterranean Strategy may be read as a way to facilitate the lack of a clear definition of exactly what type of security or rather insecurity the European Union as a whole is trying to address when dealing with its ‘Mediterranean’.