Growth,Convergence, and Social Cohesion in the European Union

The aim of this paper is to analyze the economic and social cohesion in the European Union. There are different factors to explain the convergence process and besides, empirical findings are not conclusive. To the European Union, GDP per head interregional differences have decreased for certain periods but it has remained unchanged or even increased for others periods. The second report on the economic and social cohesion indicates that some decades are necessary to eliminate regional differences. These differences in regional GDP are mainly explained by differences in their productive structures, degree of innovate activity, communications structures, which depend on the relative level of transport infrastructures, and manpower qualifications. This analysis allows us to obtain some conclusions to the economic policies and the social cohesion. A preliminary version of this paper was presented in the 57th International Atlantic Conference, held in Lisbon, Portugal, March 10–14, 2004.     

推进科技创新 促进地区发展——欧盟地区政策简析

经过6次扩大,欧盟目前已经拥有27个成员国,其各个成员国的不同的发展状态和经济发展水平,加剧了整个欧盟层面上区域发展的不平衡状况。为了缩小其成员国以及地区间的经济差距,增强其社会凝聚力,进一步推进经济、政治一体化,欧盟制定并推行了一系列的旨在缩小地区差距以确保各成员国经济社会能够相对均衡、协调发展的地区政策。多年的实践使得欧盟在地区发展领域积累了丰富的经验,也在促进其成员国,特别是经济较为落后的成员国经济和社会发展方面取得了相当的成绩。本文试图对欧盟的地区政策,特别是其通过科技创新为地区发展所作的努力作一剖析,希望读者有所收益。     

Social capital and social economics

The “discovery” of social capital in the early 1990s led to an upsurge of research into the economic impact of social cohesion and governmental effectiveness. This paper outlines key developments in the social capital literature over the past 13 years. It then examines theory and evidence of the links between social cohesion, quality of governance, economic performance and human welfare. The literature indicates that social capital makes a measurable contribution to economic development and overall wellbeing, particularly in developing countries. Partly in response to this emerging body of evidence, there has been increased interest in the application of community development principles to economic development initiatives. This paper argues that the advent of social capital theory represents a partial convergence between social economics and mainstream economics, and signifies an increased acceptance that economic activity cannot be meaningfully “disembedded” from social and political context.     

Growth and Transition: Why Has China''s Performance Been So Different?

This paper explains the differences in performance between the Central and Eastern European countries (CEECs) since 1989 and China since its 1978–1979 reforms by the differing goals of economic reformers in China and in the CEECs. In China reforms were intended to promote growth rather than to create a market-based economy. Eastern European reformers’ main goal has been the creation of a market-oriented economy. The paper focuses on policies toward foreign trade, foreign investment, and foreign exchange since these highlight the differences in goals.J. Comp. Econom.,December 1997,25(3), pp. 422–440. University of Adelaide, Adelaide, South Australia 5005, Australia.     

简析欧盟推动科技创新及促进地区发展的政策

经过6次扩大,欧盟目前已经拥有27个成员国,其各个成员国的不同的发展状态和经济发展水平,加剧了整个欧盟层面上区域发展的不平衡状况。为了缩小其成员国以及地区间的经济差距、增强其社会凝聚力、进一步推进经济、政治一体化,欧盟制定并推行了一系列的旨在缩小地区差距以确保各成员国经济社会能够相对均衡、协调发展的地区政策。多年的实践使得欧盟在地区发展领域积累了丰富的经验,也在促进其成员国,特别是经济较为落后的成员国经济和社会发展方面取得了相当的成绩。本文试图对欧盟的地区政策,特别是其通过科技创新为地区发展所作的努力作一剖析,希望读者有所收益。     

Designing tax policy in federalist economies: An overview

The emerging economic federations of the European Union, Russia, and South Africa, along with the established federations in Australia, Canada, and the United States, confront the task of designing the institutions for federal fiscal policy. This paper reviews the literature on the design of tax policy in federalist economies. We conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities. The usual ‘assignment’ view of federalis recommends central government policies — for example, resident-based taxation or grants-in-aid — to correct these failures. These recommendations assume that the central government will act as a benevolent social planner. The ‘political economy’ view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered. Alternative legislative structures and constitutional rules are considered.     

Natural persons,corporate actors,and constitutions

Extending the concept of efficiency beyond economic markets to social transactions generally, this paper asks the question whether social efficiency might not be better realized by removing the barriers to transactions between political and economic resources. With political rights (i.e. resources) held by natural persons, and economic resources held by corporate actors, such transactions could in principle replace taxation for redistribution, as a more efficient method of redistribution, intrinsic to the socio-political system. Such politico-economic transactions would supplement the primary means of distribution of the social product in an economic system, that is wages for productive labor. In the paper it is argued that this primary means of distribution is increasingly ineffective as the economy becomes increasingly interdependent. This change places an increasing burden on the “second round” of distribution through taxation, and forces consideration of a less defective and more theoretically sound means of supplementary income distribution. Paper was presented at the Organizations, Constitutions, and Liberty conference sponsored by the Liberty Fund, June 21–24, 1990 at the Sheraton Hotel in Crystal City, Virginia.     

The Stability of Monetary Unions: Lessons from the Breakup of Czechoslovakia

In 1993, Czechoslovakia experienced a two-step breakup. On January 1, the country disintegrated as a political union, while preserving an economic and monetary union. Then, the Czech–Slovak monetary union collapsed on February 8. This paper analyzes the economic background of the two breakups from the perspective of the optimum currency area literature. The main finding is that the Czech and Slovak economies were vulnerable to asymmetric economic shocks, such as those induced by the economic transition. In particular, the stability of Czechoslovakia was undermined by the low correlation of permanent output shocks, low labor mobility, and higher concentration of heavy and military industries in Slovakia. J. Comp. Econom., December 1999, 27(4), pp. 753–781. Center for European Integration Studies (ZEI), University of Bonn, Walter-Flex-Strasse 3, 53113 Bonn, Germany, and Center for Economic Research, Tilburg University, Netherlands; Academia Istropolitana Nova, Bratislava, Slovakia, Central European University, Nador u. 9, 1051 Budapest, Hungary, and Center for European Integration Studies (ZEI), University of Bonn, Bonn, Germany; Institute for Advanced Studies (IHS), Stumpergasse 56, 1060 Vienna, Austria.     

Globalisation, capital mobility and tax competition: theory and evidence for OECD countries

Are the predictions of tax competition theory wrong? While the tax competition literature predicts that taxes on income from capital decrease with increasing globalisation, past empirical studies on various data find contradicting evidence. By using different data and additional elements of economic theory, this paper aims to challenge the empirical contributions. For a panel of 14 OECD countries and for the period 1967–1996, we find that globalisation has indeed a negative and significant impact on corporate taxes. Furthermore, globalisation tends to raise labour taxes and social expenditures. As a consequence, the so-called “efficiency” and “compensation” hypotheses of globalisation are not competing, but rather, both appear to apply at the same time. Efficiency has an impact on the tax-mix, whereas compensation is provided through increased social expenditures.     

Happiness, freedom and control

How do people value freedom of choice? Drawing on economics and psychology the paper provides an hypothesis and empirical evidence on how individuals may value freedom of choice and derive utility from it. It is argued that the degree of perceived control that individuals have over choice – a construct known as the locus of control in psychology – regulates how we value freedom of choice. People who believe that the outcome of their actions depends on internal factors such as effort and skills (the ‘internals’) have a greater appreciation of freedom of choice than people who believe that the outcome of their actions depends on external factors such as fate or destiny (the ‘externals’). We find some evidence in support of this hypothesis using a combination of all rounds of the World and European Values Surveys. A variable that measures freedom of choice and the locus of control is found to predict life satisfaction better than any other known factor such as health, employment, income, marriage or religion, across countries and within countries. We show that this variable is not a proxy of happiness and measures well both freedom of choice and the locus of control. ‘Internals’ are found to appreciate freedom of choice more than ‘externals’ and to be happier. These findings have important implications for individual utility, social welfare and public policies.     

Social capital and social economics

The “discovery” of social capital in the early 1990s led to an upsurge of research into the economic impact of social cohesion and governmental effectiveness. This paper outlines key developments in the social capital literature over the past 13 years. It then examines theory and evidence of the links between social cohesion, quality of governance, economic performance and human welfare. The literature indicates that social capital makes a measurable contribution to economic development and overall wellbeing, particularly in developing countries. Partly in response to this emerging body of evidence, there has been increased interest in the application of community development principles to economic development initiatives. This paper argues that the advent of social capital theory represents a partial convergence between social economics and mainstream economics, and signifies an increased acceptance that economic activity cannot be meaningfully “disembedded” from social and political context.     

Driving forces of chemical risks for the European biodiversity

In the framework of the EU-funded research project ALARM (Assessing LArge-scale environmental Risks with tested Methods), an original method combining the DPSIR (driving forces–pressures–state–impacts–responses) framework and an analysis based on the distinction between the four spheres of sustainability (environmental, economic, social and political) has been developed. This paper presents the application of this method, called “the tetrahedral DPSIR” for the identification and analysis of driving forces of environmental chemicals risks for biodiversity, in Europe. The purpose of this methodology is to help reduce the pressures on biodiversity through modifying the driving forces behind them by offering scientific advice to policy makers. We frame our analysis in the context of the current policy, namely the implementation of REACH (Regulation on the Registration, Evaluation, and Authorization of CHemicals).     

Convergence Analysis of the Structure of Social Protection Financing

Expenditure on social protection in the European Union (EU) member states has been increasing rapidly over the last decade. To cover the increasing expenses, the countries need to find ways to increase revenues. Social protection financing systems and structure of financing vary across countries, but all of them use mainly two sources for financing: general government contributions and social tax revenue. The aim of this paper is to study the development of the structure of social protection financing at the main contributor level over the last decade, defining the trends that characterize the changes. We concentrate on convergence analysis of the structure of social protection financing, which is an important but, so far, insufficiently studied issue.This paper was presented at the 57th IAES Conference in Lisbon, March 10–14, 2004. The authors would like to thank the discussants in that session for their helpful suggestions. This paper was prepared with the support of the Estonian Science Foundation research grant. We wish to thank Reet Maldre for the assistance     

Multiple Wage Bargaining Systems in the Single European Currency Area

Little attention in the EMU literature has been paid to the interaction between centralbank monetary rules and systems of collective wage bargaining. Analytically andempirically, coordinated wage bargaining systems respond with real wage restraintto non-accommodating monetary policy. Since wage determination is dominated bycollective bargaining in all the EMU member states and wage coordination within themember states has grown since 1980, this is a topic of potential importance. In particular, the replacement of the Bundesbank, directly targeting German inflation, by an ECB targeting European inflation has removed a major institutional support of wage restraint in Germany. The consequences of this for EMU are worked out under two scenarios, that inflation expectations will be generated by ECB monetary policy and that they will reflect German inflation outcomes. Possible institutional developments are discussed including government-union bargains. The Bundesbank has also played a major role in maintaining fiscal rectitude by targeting excess fiscal deficits in Germany: again its replacement by the ECB – targeting (if at all) European rather than German fiscal policy – loosens fiscal constraints. For underlying structural reasons therefore, it is possible that Germany and other EMU countries will move to a period of fiscal activism with wage restraint and low inflation purchased through social contract negotiations.     

Spanish Imports of Manufactures and the European Union: An Empirical Assessment of the Entry

This paper investigates the consequences of Spain's accession to the European Union on its imports of manufactures. To that end the realised shares of GDP and the supplies of Spain's main trading partners in the transition period 1986–1992 are compared with the shares that are predicted by means of a model that is estimated using data that relate to the pre-integration period.     

A model-based analysis of the impact of Cohesion Policy expenditure 2000–06: Simulations with the QUEST III endogenous R&D model

More than a third of the EU budget is devoted to Cohesion Policy with the objective to foster economic and social cohesion in the European Union. Large-scale fiscal transfers are used to support investment in infrastructure, R&D and human capital. This paper provides a model-based assessment of the potential macroeconomic impact of these fiscal transfers using a DSGE model with semi-endogenous growth (Jones, 1995) and endogenous human capital accumulation. The simulations show the potential benefits of Structural Funds with significant output gains in the long run due to sizeable productivity improvements.     

Convergence of Income Distributions: Another Measurement Problem

According to EU-policy, the cohesion of the Communitydepends crucially on the convergence of per-capita incomes acrossEU member-states. By employing various indicators which are supposedto compare distributions on EU income-data, the paper shows thatthe EU-notion of cohesion faces a substantial measurement problem.Instead of arriving at a unique order, the indicators frequentlyyield conflicting results about the convergence of a particulardistribution. The paper examines the reasons and their consequencesfor institutional choice in the European Union; thus approachingthe cohesion versus conflict issue from an economic perspective.