Costs and benefits of EU enlargement

While the political benefits of the coming EU enlargement are relatively easy to identify, its economic and financial consequences are less unequivocal. The following article examines the likely costs and benefits of enlargement to both existing and future Members, and in particular how it will affect Germany, one of the few present EU Member States which has direct borders with acceding states. The article expresses the personal opinions of the author.     

Oil prices decline as concerns about supplies lessen

Expectations of shorter oil supplies in the case of a war in the Middle East pushed crude oil prices upwards for many months, but in March prices started to fall significantly even before the war against Iraq had started. Does the price peak lie behind us, and can oil consumers even hope — after the war — for a prolonged period of low oil prices?     

How efficient is joint decision-making in the EU?

This paper looks at how the joint decision-making mode of governance enhances policy effectiveness in the field of European environmental policy. This is mainly due to the as yet neglected phenomenon of the interaction between representative institutions at different levels in the European Union that characterises joint decision-making. Broader versions of this paper have been presented at the ECPR meetings in Bordeaux at the Johns Hopkins University, SAIS, in Bologna, at the IEE of Universidade Católica and the IEEI-Gulbenkian Foundation conference in Lisbon and at the max-Planck Institute in Cologne. The author is indebted to seminar participants for comments and discussions, particularly to Annette Bongardt, Erik Jones, Jonathon Moses, Suzanne Schüttemeyer and Amy Verdun.     

The New Economy is dead,long live the information economy

The arrival of the 2001–2003 recession caused many to suppose that the so-called “New Economy” was now defunct. This article addresses a number of related issues, including the question of the durability and viability of business cycles in the face of the technological developments of the information age. It asks what went wrong with the New Economy and examines its characteristics as well as its remaining possibilities and prospects for the future. Finally, it considers the spread of the Information Economy to Europe, especially to Germany, the country that one might expect to be the leading European player, but which is not at present actually a strong competitor for that role.     

Asia's ‘little divergence’ in the twentieth century: evidence from PPP-based direct estimates of GDP per capita, 1913–69

This article uses expenditure-based purchasing power parities (PPPs) to estimate GDP per capita in comparable prices for 12 Asian countries for six benchmark years during the period 1913–69. The article finds that in 1913 levels of real GDP per capita in several countries were comparable to those in Japan. GDP per capita in Japan and other Asian countries diverged during and after the First World War. The article questions whether Asia's ‘little divergence’ between Japan and other Asian countries dates back to the late eighteenth century. It draws attention to the different resource endowments of Japan, China, and India compared to other Asian countries, and their implications for the development trajectories of Asian countries. The article demonstrates that using historical PPP estimates yields estimates of GDP per capita that diverge from those based on retropolations of the single 1990 PPP-converted benchmark year. It concludes that historical estimates of PPPs are needed to confirm analyses of comparative economic performance based on available GDP per capita data.     

Marked recovery in the world economy

With expansion accelerating strongly since last summer, the world economy has overcome an extended period of weakness. The USA, driven by highly expansive fiscal policies, is once again proving to be an important locomotive for global economic development. The strong fiscal stimulus will diminish sharply this year, however. Can the recovery continue nonetheless? This is of importance for the euro area in particular, where exports have so far been the primary foundation of economic resurgence. Is the substantial appreciation of the euro jeopardising prospects of catching up with the rest of the world?     

A minimum corporate tax rate would be harmful for both high and low tax countries

Conclusion  The corporate tax policy of the new EU member states does create pressures for some of the old member states to reduce their corporate taxes, in particular statutory corporate tax rates. But reacting to this pressure by enforcing mimimum tax rates in the EU would be counterproductive. It would slow down the economic catching up process in eastern Europe and question the competitiveness of the entire EU as a location for investment compared to other countries and regions in the world economy. There are potential benefits from more coordination in the field of corporate taxation, but this coordination should aim at removing tax obstacles to border-crossing investment and at reducing the compliance costs of the tax system. This requires targeted measures in the area of tax base coordination. Introducing minimum corporate tax rates, in contrast, would be harmful for both high and low tax countries in the EU.     

New ways of achieving debt sustainability beyond the enhanced HIPC Initiative

In 1996 the Heavily Indebted Poor Countries (HIPC) Initiative was launched by the Bretton Woods institutions to reduce the external debt burden of low-income countries (LICs) to sustainable levels in a reasonably short period of time because debt constitutes an obstacle to sustainable economic growth and poverty reduction. In some HIPCs, however, debt sustainability has been in danger despite debt relief under the HIPC Initiative. Debt relief is a necessary but not a sufficient condition for development. It can do no more than play a catalytic role. The question, then, is how to achieve debt sustainability beyond the HIPC Initiative.