Economic integration and specialization in production in the EU27: does FDI influence countries’ specialization?

The objective of this article is twofold. Firstly, we proceed to an analysis of the evolution of specialization in production in the enlarged EU, taking into account all its 27 member countries. Given their decomposability properties, we use the entropy-based indices to measure countries’ relative specialization and then, given our rather short period of analysis, we use the bootstrap method to analyze the evolution of the specialization index. We first analyze all economic sectors and then, our analysis is more detailed focusing on manufacturing industries. Globally, we find that specialization is decreasing across all economic sectors, while it is increasing across manufacturing industries. Secondly, we study specialization determinants, with a special interest in the impact of foreign direct investment (FDI). For homogeneity reasons, we analyze two separate samples, one including old EU members plus Cyprus and Malta and the other, the CEECs. In order to take into account the endogeneity of most of our independent variables, we use the vector autoregression (VAR) technique and analyse the impulse response functions. Globally, FDIs seem to positively influence countries’ relative specialization, for our both samples and for both economic sectors and manufacturing industries. However, their impact appears weaker than most of the other independent variables, such as the market potential or the relative endowments.     

Securing Japan in the ‘West’: The US-Japan Alliance and Identity Politics in the Asian Century

Why has the military dimension of the US-Japan relationship remained the central point of reference for Japanese foreign relations, despite the demise of the Soviet Union? Why has Japan, deepening economic interdependence notwithstanding, remained politically distant from East Asia? Based on analysis of statements by Japanese and US political elites and academics regarding the US-Japan alliance, this article argues that the rise of China, coterminous with the rise of ‘Asia’, challenges the notion of the ‘West’ as, according to standards of industrial modernity, a superior social and political order. These moving ideational boundaries question Japan’s position as the most advanced Asian nation and member of the (Western) international society of states. Therefore, the US-Japan alliance has since the mid-1990s become increasingly important for securing Japan in the ‘West’ and the ‘West’s boundaries in East Asia.     

Sand in the wheels or spanner in the works? The Tobin tax and global finance

This paper presents a radical critique of the Tobin tax—atax on currency transactions—by undercutting certain assumptionsabout the size and character of the world's foreign exchangemarkets which furnish the tax with its basic rationale. Whileit is acknowledged that only a fraction of the massive volumesof FX transactions relate directly to trade in goods and servicesor to cross border investments, it is denied that all the residualtransactions are motivated purely by exchange rate considerations(speculative or hedging activities). Rather, the argument isthat a significant proportion of FX trades have money marketcharacteristics and that these trades, together with domesticmoney market transactions, play an important role in the dayto day operation of the global financial system. This perspectiveis used to show that the imposition of a Tobin tax would causeextensive material damage to the system, with consequences thatmay run counter to the expectations of supporters of the tax.     

‘Thirlwall's Law’ and balance of payments constrained growth: more on the debate

The various criticisms that have levelled against Thirlwall's Law by McGregor and Swales are examined. It is shown that their arguments are untenable. The relationship between the necolassical law of one price and Thirlwall's Law is clarified. Thirlwall's Law is not overwhelmingly rejected by the evidence as McGregor and Swales assert. Their suppression of the influence of the price term on the estimates used in the test proposed by McCombie is inappropriate. Their regression analyis is also mid-specified and a preferable specification provides no support for their conclusions. They repeatedly argue that Thirlwall's modele cannot account for changes in market shares and the that the estimated income elasticities of demand for exports and imports cannot capture the effects of non-price competition. This was shown to be erroneous by McCombie and the reasons advanced are further elaborated. McGregor and Swales provide another interpretation of the relationship between Thirlwll's Law and the Harrod foreign trade multiplier, But their criticism of McCombie is unwarranted. The methodology of McGregor and Swales seems to be one of ‘naive falsificationism’.     

The End of ‘Central Europe’? The Rise of the Radical Right and the Contestation of Identities in Slovakia and the Visegrad Four

ABSTRACT

The article analyses the effects of the migration crisis and the parallel rise of right wing parties on national and regional identities in Slovakia and the broader subregion of the Visegrad Four. It argues that the recent right wing political discourse around migration has been reshaping the meaning of ‘Central Europe’ as a normative project and an identity shared by the V4 countries. The post-Cold War narrative of Central Europe was a story of ‘returning to the West’, which in practice meant that normative conformity with the West was a precondition of membership in key Western institution. The situation has changed visibly after the migrant crisis, as the V4 political elites have now been constructing new identities, in partial juxtaposition with Western European liberalism. These new identities favour a culturalist, conservative interpretation of the nation and reject humanitarian universalism, epitomized by the European Union’s decision to welcome the refugees. This arguably devaluates the previous notion of ‘Central Europe’ as a region that seeks to identify itself firmly with the West. Slovakia is chosen as a case study because of the recent success of the radical right in the 2016 parliamentary elections. The article concludes that although the situation of being structurally locked into the EU does not allow the V4 countries to openly challenge its main principles, the V4 political elites pursue a counter-hegemonic strategy, subverting and resignifying some of its key political notions. One should, therefore, speak not of an end of ‘Central Europe’ but rather of its evolution into a new, hybrid stage, where normative conformity and identification with the West will only be partial. The article makes use of Laclau and Mouffe’s theory of discourse and related concepts as well as insights from constructivist geopolitics literature to track articulatory practices of the regional establishments. The study relies on evidence from recent political campaigning in Slovakia as well as official Visegrad Group documents from 2015 to 2016.     

The life cycle of scholars and papers in economics – the ‘citation death tax’

The information content of academic citations is a subject to debate. This article views premature death as a tragic ‘natural experiment’, outlining a methodology identifying the ‘citation death tax’ – the impact of the death of productive economists on the patterns of their citations. We rely on a sample of 428 papers written by 16 well-known economists who died well before retirement, during the period 1975 to 1997. The news is mixed: for half of the sample, we identify a large and significant ‘citation death tax’ for the average paper written by these scholars. For these authors, the estimated average missing citations per paper attributed to premature death ranges from 40% to 140% (the overall average is about 90%), and the annual costs of lost citations per paper are in the range 3–14%. Hence, a paper written 10 years before the author's death avoids a citation cost that varies between 30% and 140%. For the other half of the sample, there is no citation death tax; and for two Nobel Prize-calibre scholars in this second group, Black and Tversky, citations took off over time, reflecting the growing recognitions of their seminal works.     

The ‘Global Food Crisis’ and the Geopolitics of Food Security

Growing anxieties over food security have recently brought sharp geopolitical overtones to debates about the agro-food sector. Contending that this ‘geopolitical moment’ highlights the mutually constitutive nature of geopolitics and political economies of food, we examine how dominant geopolitical framings of food security extend and deepen neoliberal models of agro-food provisioning, and highlight the need for further attention to these dynamics from political geographers. We develop a preliminary research agenda for further work in the field, focusing on the recent spate of global farmland acquisitions, questions of agro-food governance, the securitisation of hunger and obesity, and the environmental impacts of dominant agro-food systems. Throughout, we highlight the value of a counter-geopolitics of food security for re-situating agro-food politics outside hegemonic policies and institutions, and of the alter-geopolitics of food pursued by communities embodying concrete alternative food production and consumption systems.     

Institutions and ‘Science’: The Contest about Pluralism in Economics in France

ABSTRACT

For a long time, France was a country in which various approaches to economics coexisted. This pluralism began to dwindle in the mid-1990s. Since then, France has witnessed the increasing and now overwhelming domination of mainstream economics. This article, drawing on a study of the evolution of the recruitment of professors of economics in France, documents the situation and links the observed trends to the changing institutions governing the discipline (a centralized system evolving under the influence of international norms and instruments). It is demonstrated that far from being fair and neutral devices, the rules and instruments governing economics—notably the ranking lists of economic journals—incorporate specific worldviews strongly biasing the assessment of research toward the mainstream. This article documents the tentative use of ‘voice and exit’ by the French Association of Political Economy to reform the economics discipline. Furthermore, it discusses the arguments proclaimed by Jean Tirole to prevent the French Ministry of Higher Education from creating a new university section called ‘Economy and Society’ to reinstate pluralism: they fall back on a monistic view of science that is questioned notably by developments—both factual and conceptual—in science studies and epistemology.     

Reproduction and scarcity: the population mechanism in classicism in the ‘Jevonian revolution’

We argue that the shift from classicism to neoclassicism in nineteenth-century Britain can be seen as a change from a reproductive environment with internal scarcity, as in Malthus's population mechanism, towards a non-reproductive environment with external scarcity, as in Jevon's theoretical and applied economic work. We reconsider Jevon's use of seemingly classical concepts as well as the role of the population mechanism in Jevons's works.     

Marginal WTP and Distance Decay: The Role of ‘Protest’ and ‘True Zero’ Responses in the Economic Valuation of Recreational Water Quality

We evaluate the sensitivity of distance decay in individuals’ stated willingness to pay (WTP) for water quality improvements in eutrophied lakes. We extend the standard model of contingent valuation (CV) by allowing individuals to adopt a sequential evaluation process consisting of two decision stages. In the first stage respondents decide whether they are ‘protesters’, have a WTP   \(=\)   ‘true zero’ or a \(\hbox {WTP}>0\) . Conditioned on a strictly positive WTP, we use Lee’s selectivity-corrected model to determine the magnitude of their WTP in the second stage. Using CV survey data from Norway we find significant distance decay in the first stage classification of respondents as ‘protesters’, ‘true zero’ WTP, or positive WTP. In the second stage model for positive WTP responses, we find little or no significant relationships when correcting for selection. Results suggest that previous findings of significant distance decay in contingent valuation of lake and river water in Europe may be driven by the definition of ‘protest’ and ‘true zero’ respondents. We find that WTP for water quality may be more useful as a qualitative indicator of political support for user financed water quality measures, than as a cardinal measure of marginal utility of water quality improvements.     

The inventor’s role: was Schumpeter right?

According to Schumpeter, the creative process of economic development can be divided into the stages of invention, innovation (commercialization) and imitation. Each stage is associated with specific skills. This paper examines whether Schumpeter’s assertion was correct, i.e. whether the invention and innovation stages should be undertaken by different agents. In addition, we examine whether there is a rationale for the Schumpeterian entrepreneur to include the inventor in the commercialization process. Combining the abilities of the entrepreneur and the inventor may serve to facilitate customer adaptation, strengthen knowledge transfers and reduce uncertainty, thereby expanding market opportunities. Based on a unique database covering Swedish patents granted to individuals and small firms, the empirical analysis shows that profitability increases by 22 percentage points when inventions are commercialized by the entrepreneur instead of by inventors. However, active involvement of the inventor is shown to have a significantly positive impact on profitability, irrespective of commercialization mode.     

A coming ‘Magnesian’ age? Small states,the global system,and the international community

Since Plato, we have considered that the ideal polis, or political community, is the small state, akin to the idyllic ‘Magnesia’ of the Laws. The Platonic ideal, however, generally has been considered unrealistic. Even in the ancient world, the Alexandrine model ‐ an expanding, pluralistic network of large trading cities under a single aegis ‐ came to contradict it. Subsequent history, especially the imperialism of the nineteenth century which swallowed up many small polities around the world, seemed to prove that only large and powerful entities were ‘fit’ to survive. Why, then, are there still so many small‐sized countries in the world today? Why is their number actually increasing? Decolonisation, the end of bipolarity, democratisation, trade liberalisation and the digital revolution are five factors that have given small states more freedom. Yet many are vulnerable, and the economics of their situations are precarious. The workings of the global system, particularly the globalisation of business, may harm them even while promoting their freedom. The international community, a large part of which is now in fact made up of small states, should be prepared to act, for the global public good as well as out of sheer political and also environmental self‐interest, to help safeguard the livelihood of the world's many and varied small states, whose ‘Magnesian’ venues and values can be of both functional and normative importance for mankind as a whole.     

The ‘West’ against the ‘Rest’: Geopolitics after the end of the cold war

With the end of the Cold War, it seemed that we had reached the ‘end of geopolitics’. Since the mid‐1990s, however, the term ‘geopolitics’ has experienced a revival, and even regional groupings which have so far abstained from any kind of power politics, such as the European Union, have started to claim geopolitical interests for themselves. But it is not clear what constitutes this kind of power politics in the 1990s and what drives ‘the West’ to pursue geopolitics, directed against what Huntington has labelled so plainly and provocatively the ‘Rest’. The article addresses this question by analysing Western capital's need for access to markets in the South and the EU's and US’ growing dependence on oil imports. The article will argue that a Western geostrategy based on Huntington's civilisational model would be counterproductive in the long run, manoeuvring the Western states into a situation where these geopolitical goals would have to be enforced by military means instead of being pursued through a strategy of political and economic support.     

Deficits and Divided Governments: The Case of the German ‘Bundesrat’

The hypothesis of divided government is applied to the development of deficits in Germany. Since the party system is relatively stable, divided governments emerge not from coalitional governments, but rather from the bicameral structure of the country. Different majorities in the two chambers promote deficits, especially in the case of central government deficits. The results suggest that under different majorities in the two chambers deficits are more than 0.5%-Point higher. Further, it is indicated, that only ideological polarization, but not unstable majorities per se induces higher deficits.

The Russian budgetary process and defence: finding the ‘golden mean’

Abstract

In Russia the budgetary process for defence is broadly similar to that for other sectors but is characterised by a considerable degree of secrecy, limiting the role of parliament and any form of effective social control. The article examines the main actors and features of the defence budgetary process, the system of state secrecy, and explores the issue that generates the most conflict between the ministries of finance and defence, namely the long-term state armament programme.     

The ‘Value’ of Europe: The Political Economy of Culture in the European Community

During the 1970s and 1980s the “cultural sector” became one of the primary motors for wealth creation in the European Community. At the European and national scales, a group of actors helped transform Europe's vast array of practices and services (tourism, heritage, books, audio-visual products, etc.) into “cultural industries” and pushed the EC to develop a common cultural policy to support these industries. Documenting these changes at the European scale, I argue that the perceived impact of cultural policy for particular national economic competitiveness was also significant. Italian MEPs and members of Italy's national government were especially important, as they fought to protect the country's historical heritage and promote tourism. France pushed the strongest and I show how that country's efforts were primarily intended to protect its audio-visual and publishing industries from the EC internal market's liberalisation policies, which were vocally supported by Britain because they would have served that county's national economic interests.     

The ‘real’ explanation of the PPP puzzle

This article shows that global financial markets cannot, by themselves, achieve net transfers of financial capital and real interest rate equalization across countries and that the integration of both global financial markets and global goods markets is needed to achieve net transfers of capital and real interest rate equalization across countries. Thus, frictions (barriers to mobility) in one or both of these markets can impede the net transfer of capital between countries, produce the Feldstein and Horioka (1980) finding of high-saving-investment correlations and prevent real interest rates from being equalized across countries. Moreover, frictions in global goods markets can explain why real exchange rates deviate from purchasing power parity (PPP) for extended periods of time and can therefore also explain the PPP puzzle. Consequently, we are able to resolve two of Obstfeld and Rogoff’s (2000) ‘6 major puzzles in macroeconomics’ with essentially the same explanation.