EU Enlargement,Institutional Governance and Innovation Environment in the Baltic Countries

Abstract

This paper presents institutional framework to implement innovative and co-operative procedures of industrial reorganization and economic growth in the Baltic countries. By using the recent features of organization mode theories and institutional economics, we apply how institutional development helps the Baltic firms to survive in the integration of EU25 markets. We present this framework as a dynamic process in three stages. The first stage identifies the main foundations from the transition period: macroeconomic stabilization, privatization, and financial governance. The second stage considers how to build up the institutional structure of the governance in production. The third stage points out those topics that enhance innovation environment and benchmarks the Baltic countries to EU innovation capacity. These progressive stages in financial, production, and innovation systems of governance can be overlapped or happen in sequential order but the final purpose of these improvements is to enhance the managerial incentives for higher innovative activity in the EU-Baltic industrial integration. It is found that the Baltic innovation input capacity is competitive compared with the EU25 average but a gap in innovation output is still essential.     

Industrial Policy: A Dying Breed or A Re-emerging Phoenix

Real world industrial policy is often poorly designed and always heavily opposed. Good intentions are overshadowed by bad outcomes. However, no commonly accepted definition exists; concepts differ across nations, regions, stage of development and over time. After switching from the sectoral to the horizontal approach—and facing never ending problems with targeting, large projects and specific technologies—industrial policy seemed to phase out at the end of the last century. Recently, interest has re-emerged, due to globalisation, outsourcing, low growth and high unemployment (specifically in Europe). We present evidence on past strategies and the performances of various concepts. We describe the new “matrix approach to industrial policy” developed by the European Commission. Finally, we venture to define elements of a “Systemic Industrial Policy”. This new type of industrial policy differs decisively from policies of the past, and has been receiving an impetus from the EU “Lisbon Strategy”, as well as from the rise of China and the new EU member countries. It is the complementary policy to globalisation, increasing its benefits and empowering and retraining potential losers. Systemic Industrial Policy supports basic education, training and entrepreneurship in developing countries, promotes FDI and exports in catching-up economies and merges with innovation strategies, cluster policy and dynamic competitiveness in high income countries. It goes beyond combating market failures, as it builds on economic laws, comparative and competitive advantages and changing specialisation patterns. It acknowledges limited knowledge of policy makers, mutual learning and co-operation between firms, institutions and government.     

The White Paper on Growth,Competitiveness and Employment and Greek Small and Medium Sized Enterprises

This paper makes an assessment of the homo-genous approach and policy measures towards SMEs, adopted by the White Paper on Growth, Competitiveness and Employment and by national policies in Greece. It is demonstrated that there is a key distinction between the structure of competitive, high-tech, highly-specialized SMEs in advanced countries, whose size is determined by the size of the international niche market where they compete, on the one hand and on the other, SMEs in Greece or in other less developed member-states, whose (micro) size is determined by the local markets they serve, while in most cases they do not have the marketing skills/approach to address export markets. Copying successful instruments for SMEs in advanced countries can thus be most dangerous for the less developed countries, since the industrial organization of the typical SME is very different from those SMEs in Northern Europe. Therefore, the effects of policy measures, without further modifications, will be different from those envisioned by the EU policy-makers. Increasing the utilization of assistance by SMEs in less developed member-states is likely to be more effective if the assistance focuses on incentives and services, which support cooperative action in local and foreign markets, rather than on direct SME financing.     

Growth policies in developing countries

Long-term growth in most developing countries is driven by the adaptation of technology from developed countries. The question, however, of how to promote technology adaptation is a difficult one. The following article introduces a transaction cost perspective and applies it to the concrete and—against the background of the 4th Ministerial Conference of the WTO in November 2001—topical question: how do WTO rules impact on development in terms of technology adaptation? This issue is of utmost importance to the EU, which put forward the argument that the new Trade Round had to become a “Development Round”.     

The Economies of the Baltic Sea Region: Growth Patterns and Foreign Trade Now and in the Future

The article studies the economic growth patterns of the Baltic Sea Region countries, describes their gross domestic product trends, and predicts the future developments. As foreign trade is one characteristic of interrelationships between the countries, the geographical pattern of foreign trade is analyzed, especially emphasizing the linkages between the countries in the Baltic Sea Region. The article pays attention also to the perspectives in the 2025 time framework and ends with some comments regarding the conditions for future development.     

Health and Life Sciences as Drivers for Regional Development and Prosperity in the Baltic Sea Region

This article describes the role of health and life sciences as drivers for regional development and prosperity in the Baltic Sea Region. The rapid development of new technologies in combination with steadily increasing data mining capabilities revolutionizes prediction, prevention, and treatment of illnesses. Together with the demographic change, this will challenge the sustainability of regional and national health systems across the BSR. Furthermore, globalization potentially leads to major threats to the health of citizens by pandemic incidents. Due to their dimension and the fragmentation of health care systems and markets, these challenges can be met only with new, multidimensional, cross-sectoral, and innovative approaches involving a broad range of actors and stakeholders. Furthermore, there is a growing need to incorporate health concerns and innovation issues into all policy levels. For the Baltic Sea Region this is both a challenge and an economic opportunity.     

Latvia

Situated on a trading crossroads between Western Europe and Russia, Latvia has emerged as one of the most successful countries in Central Europe. This article provides a comprehensive review of Latvia's historical development, political structure, economy, investment, and foreign‐trade environment. It aims to be a useful source of information for foreign businessmen and investors interested in doing business in Latvia. In the fall of 1991, when the Baltic States separated from the Soviet system, no one predicted that these countries would make the transition to a market‐based economy as quickly and as effectively as they have. However, 11 years later, with notable growth and rising standards of living, such thinking is no longer considered overly optimistic. “It is the biggest, most complicated, and most promising piece of the new Europe,” wrote The Economist (1998) in reference to the Baltic region. Wherever there is new growth, there are many business opportunities to be found. Latvia's position in the center of this region is one indication of the business potential for those with the capacity to do business there. © 2003 Wiley Periodicals, Inc.     

欢盟外资并购国家安全审查制度对中国的启示

21世纪以来,欧盟主要国家纷纷修改外资并购立法,加大对外资并购国冢安全的审查,审查标准趋亍严格．审查范围愈发扩大。这种外资审查立法权扩张的冲动受到来自《欧共体条约》所确立的资本自由化原则的制约。在国际投资政策趋紧的背景下,中国公司近年来在欧美国家的外资并购不断受阻。深入理解欧盟外资并购立法的规定是当前中国企业制定国际化战略的基本要求。     

Migration in the Baltic Sea Region in the Context of Demographic Change

Due to increasing life expectancies and low birth rates, the population will shrink, and its average age will increase in most of the regions in the Baltic Sea area during the next decades. Especially in the Baltic states, population decline is intensified by emigration of people. There are plenty of factors stimulating emigration from the eastern part of the Baltic Sea Region to Western countries, especially wage disparities and differing opportunities for finding a job in knowledge-intensive sectors. However, it can be expected that in the course of economic convergence, wage gaps and structural disparities will shrink in the Baltic Sea area. Nevertheless, this will take a longer time, making it necessary for countries to think about policy options suitable for reducing emigration. Among these, reinforcing structural change and improving overall living conditions are at the top of the agenda.     

The new EU merger regulation: Implications for EU‐U.S. merger strategies

This article examines the implications of the new EU merger regulation (EU 139/2004) on international merger strategies. Important changes in the new regulation on both a substantive and procedural level are analyzed in the comparative context of EU and U.S. merger‐control policies. In particular, the article evaluates whether the “substantial impediment to effective competition” (SIEC) test in the new regulation implies convergence with the U.S. “substantial lessening of competition” (SLC) benchmark. In this context, the article develops scenarios for convergence between EU and U.S. merger‐control policies. The EU merger process has emerged against a background of significant political and institutional development in the European Union, and this is an important explanatory element in the development of competition policy in general and for the new merger regulation in particular. It also has implications for merger strategies examined at the end of the article. © 2006 Wiley Periodicals, Inc.     

Can Bonus Packs Mislead Consumers? A Demonstration of How Behavioural Consumer Research Can Inform Unfair Commercial Practices Law on the Example of the ECJ’s Mars Judgement

The use of psychological findings in EU internal market regulation has gained interest, particularly in the area of unfair commercial practices. This study investigates consumer perceptions of bonus packs containing an oversized indication of the “extra” volume in the package, such as in the Mars case. The Mars case serves as a standard reference in EU unfair commercial practices law which is used as a benchmark to determine the “average consumer.” Our study demonstrates how an experiment can be set up to provide empirically based insights on whether a practice is “deceptive.” Results of our experiment show that consumers overestimate the extra volume when confronted with an oversized indication compared to control conditions, which is first empirical evidence that this practice is potentially deceptive.     

Group Action in the Baltic States

The article is based on a study which aimed at examining the existence and use of group actions in consumer issues in the Baltic states. It was part of a larger research project in which the same questions were studied in all Central and Eastern European countries. Besides group actions in courts, administrative group actions were also studied.A starting point for the study was an overview of substantive consumer protection legislation in the Baltic states. In spite of the fact that there has been a rapid development in this field during recent years, the main finding was that many substantive law elements of consumers' collective interests, which in the EU Member States are often protected by different kinds of group actions, are as yet not regulated at all in the Baltic states or not regulated in a sufficiently detailed way in the Baltic states.The study showed that several kinds of group action exist in these countries. Firstly, there are administrative group actions for injunction. They are applied mainly in cases concerning product information, product safety, and unfair competition. Secondly, a group action by a consumer organisation for injunction in a court is, in principle, possible in Estonia and Lithuania, but not in Latvia. So far, no case law exists, however. A genuine group action for compensation is not possible in the Baltic countries, but a consumer organization may represent an individual consumer or a specified group of consumers in a court and may claim compensation on their behalf. The study showed that administrative group actions are a functioning part of the present consumer protection system in these countries, whereas court actions so far exist only on paper. It also showed that in the Baltic states, procedural means are in some matters better developed than substantive consumer law, whereas in many western countries, the exact opposite is the case. The article concludes with some recommendations as to how the Baltic states could develop their consumer protection legislation.     

How far away is Europe?

Institutional development in new and potential member countries determines the success of deepening European integration. This papers argues that the timing of future enlargement should depend on institutional convergence between the EU and potential accession candidates. It therefore looks at institutional quality in the EU, in the EU's neighbouring Balkan and Black Sea regions, and especially in Bulgaria, Romania, Croatia, and Turkey, i.e. the next countries in the queue for entry. Three dimensions of institutional quality—legislative, administrative and judicial institutions—are analysed on the basis of the World Bank Governance Indicators using institutional quality in EU member states as a benchmark in order to reveal institutional deficits.     

Managing the Dilemma of Discretion: The European Commission and the Development of EU State Aid Policy

This article examines the role played by the European Commission in the development of the European Union’s (EU) state aid policy. It does so through the prism of a “dilemma” that exists at the nexus of the Commission’s delegated authority to administer EU treaty state aid provisions, the discretion conferred on Commission authorities by the imprecise language in which those provisions are written, and the political and institutional control mechanisms EU member governments use to influence the exercise of that discretion. Examining Commission efforts to manage this dilemma over the history of the EU, we provide evidence to illustrate how the Commission’s approach adapted to shifting economic and political conditions.     

Does corruption boost or harm firms’ performance in developing and emerging economies? A firm-level study

In the last decade, a growing number of studies have addressed the ongoing debate about whether corruption “sands” or “greases” the wheels of business at the firm level. This study revisits this debate and proposes a comprehensive theoretical framework to test whether corruption harms or boosts firm performance, as well as the extent to which this relationship is mediated by the countries’ institutional settings, the size and strategic behaviour of the firms, and market competition. Based on a sample of 21,250 firms located in 117 emerging and developing countries, and resorting to instrumental variable (IV) estimations, three main results were found: (a) regardless of the proxy used for corruption and firm performance, the former clearly harms the latter; (b) corruption “greases the wheels” of business for African firms but it “sands the wheels” for firms in Latin America, the Caribbean, Eastern Europe, Central Asia, and Southern Asia; and (c) the negative impact of corruption on performance is mitigated for larger and exporting firms.     

EU Migration to and from the UK After Brexit

In the 2016 referendum over the UK’s membership of the EU, the question of how Brexit would impact migration to the UK was a major point of contention. Those leading the campaign to leave the EU promised lower levels of immigration and the introduction of an “Australian type points based system” to regulate future inflows of EU nationals to the country, while at the same time maintaining access to the EU single market. At the same time, the status of EU nationals already living in the UK was not a key topic in the debate. The leaders of the campaign to leave the EU suggested that EU nationals already residing in the UK would be granted some form of residence permit and would retain most of their current rights. Likewise, there was little concern about the legal status of UK nationals in other EU countries and the argument that the “EU would be obliged to grant permanent settlement rights to Britons living in Ireland and mainland Europe”.     

Industrial Policy: Past, Diversity, Future; Introduction to the Special Issue on the Future of Industrial Policy

Industrial policy is one of the most controversial policy fields. Its scope, instruments and rational vary across countries, changing over time; intentions and outcomes often differ. This volume brings together reports on countries, highlighting specific problems and concepts. Most papers explicitly state that there has recently been renewed interest in industrial policy, be it the new “matrix” approach in the EU, or other strategies in Japan, the US and France. Problems and solutions differ between frontier countries like Finland and the catching-up economies of the new EU member countries, or the policy strategies in developing countries designed to foster economic growth or complement globalisation. The upcoming new approach to industrial policy all hints at a more systemic industrial policy, forward looking and emphasizing the synergies with other policy areas, but also fine-tuning to specific needs, comparative advantages and future technologies.     

Green intentions under the blue flag: Exploring differences in EU consumers’ willingness to pay more for environmentally‐friendly products

Recent research on consumer social responsibility highlights the need to examine psychological drivers of environmentally‐friendly consumption choices in a global context. This article investigates consumers’ willingness to pay (WTP) more for environmentally‐friendly products across 28 European Union (EU) countries, using a sample of 21,514 consumers. A multigroup structural equation modeling analysis reveals significantly different patterns and relationships, in how (a) subjective knowledge about the product's environmental impact, (b) environmental product attitudes, and (c) the perceived importance of the products’ environmental impact influence consumers’ WTP more for environmentally‐friendly products across countries. The hypothesized model predicts WTP for 20 out of 28 countries and the findings show that a “one‐size‐fits‐all” approach is inadequate in capturing the heterogeneity of EU consumers. Hosfstede's cultural dimensions of uncertainty tolerance and individualism explain differences in WTP for environmentally‐friendly products across EU countries. Business, marketing communications, and policy making implications are discussed.     

Do “blacklists” enhance aviation safety?

For some time now, discussions have been under way in the EU on the possible publication of an official “blacklist” of unsafe airlines or countries where accident rates are above average. How effective is this instrument? What are the conceivable alternatives?     

Going for the Wallet? Rule-of-Law Conditionality in the Next EU Multiannual Financial Framework

EU funds that promote economic convergence will hardly reach their objective in countries sliding toward a system that lacks effective checks and balances.The idea of financially sanctioning EU Member States has been advocated for some time and took shape concretely in May 2018. The European Commission presented a draft regulation to sanction Member States with “generalised deficiencies” in the rule of law, which was presented together with a comprehensive proposal for the next MFF.