Austerity measures in crisis countries — results and impact on mid-term development

Since the onset of the sovereign debt crisis, the crisis-stricken countries in Europe have been pushed to take drastic steps to consolidate their finances and reduce their budget deficits. Despite strong public opposition and largely damaging short-run effects, the countries have undertaken many of the internationally recommended/mandated reforms and spending cuts. In this Forum, authors from Greece, Ireland, Italy, Spain and Portugal report on the fiscal consolidation achieved in their respective countries — and the sacrifices that have made it possible. Furthermore, the authors detail what remains to be done to resolve the crisis.     

Editorial

This paper provides an international economic lawyer's perspective of the issues economists need to consider in analysing the trade-environment interface. Despite their historical polarity, proponents of both trade and environment regulation, principally seek to reduce negative externalities that are caused by trade under certain conditions. Therefore the real issue is the form and level of intervention. The paper further argues that effective economic policy must take into account the impact of problems in enforcement and justiciability. The WTO's potential as a forum for the development of comprehensive environmental agreements is examined and ultimately rejected. Non-discrimination, necessity and national treatment are forwarded as essential to prevent de facto protectionism. More problematically, the paper discusses the conflict between prevention of disguised trade barriers with the need to prevent irreparable damage that underlies the precautionary principle. It is pointed out that the polluter pays principle is one fraught with problems, particularly the accurate determination of liability.     

Origin of FDI and Intra‐Industry Domestic Spillovers: The Case of Greek and European FDI in Bulgaria

This paper uses firm‐level data to assess the horizontal impact of foreign firm ownership on domestic productivity in Bulgaria. We identify a theoretical tradeoff between technological distance (of domestic versus foreign firms) and internalization capacity (of spillovers) and examine the extent to which this is reflected in the impact on the domestic economy of different types and origins of FDI. Emphasis is placed upon the effects of Greek FDI, which is known to be of a distinctively “regional” character. We find that Greek FDI produces significantly larger positive spillovers, which appear more suitable for the Bulgarian context of transition and economic restructuring. We also unveil some notable “hysteresis” and “technology bias” effects for FDI spillovers of all origins, as well as some country‐specific ownership‐structure and threshold effects.     

Human capital and economic growth revisited: A dynamic panel data study

This paper examines the role of human capital on economic growth by using a large panel of data including 93 countries. Given the cross-sectional character in most of the relevant studies, there is a possibility that when the long-run dynamics are considered, education might not be a significant determinant of growth. Following a dynamic panel data approach, the analysis indicates that education has, indeed, a significant and positive long-run effect on economic growth. Moreover, the size of this effect is stronger as the level of education (primary, secondary, and tertiary) increases. This has a straightforward policy implication that governments taking actions towards an expansion of their higher education may well expect larger gains in terms of higher economic growth in their countries. This is a revised version of a paper presented at the Fifty-first International Atlantic Economic Conference, Athens, Greece, March 13–20, 2001, and also at the conference on Post-Euro Era at the University of Ioannina, Greece, January 27–28, 2000. The authors would like to thank participants in both conferences and, in particular, Nick Apergis for his comments and useful suggestions on earlier drafts. The authors remain responsible for any shortcomings of the paper.     

Virtual special issue on urban development

This virtual special issue of Spatial Economic Analysis marks the keynote lecture at the 47th Annual Conference of the Regional Science Association International – British and Irish Section in Harrogate by Professor Bob Stimson of the University of Queensland, Australia. With over half the world’s population now living in urban areas, which according to the United Nations is expected rise to 66% by 2050, the theme of Professor Stimson’s lecture – urban development – is of critical importance. Cities provide significant opportunities for economic growth and development as long as urban design models are not only effective but also sustainable, inclusive and equitable. This virtual special issue draws together 10 articles from earlier issues of the journal, which inform a successful urban design agenda.     

Examining the consistency of spatial association patterns across socio-economic indicators: an application to the Greek regions

This paper addresses an important empirical question for spatial economics that has so far attracted little attention in the literature, namely, how patterns of spatial association differ across socio-economic indicators. This issue is examined here with a large socio-economic dataset from the Greek prefectures. We start by identifying spatial patterns of association in the data through an exploratory spatial data analysis and then explore the persistence of spatial clustering across socio-economic indicators through the application of a number of simple statistical tests. Greece presents an interesting case for examination, given its complex nature of geographical disparities and spatial heterogeneity. The derived results are important for Greek regional policy, as they help highlight yet another dimension of the challenges it faces for regional development, but they are also of particular relevance for applied spatial analysis, as they offer new insights in the analysis of spatial processes. Earlier versions of this paper have been presented in the 2005 RSAI (British and Irish Section) conference in Stratford-upon-Avon and the 2006 International Workshop on Spatial Econometrics and Statistics in Rome. I am thankful to participants in these two conferences for useful comments and suggestions. I have also benefited from comments by Andreas Antoniadis, Giuseppe Arbia, Badi Baltagi, Eckhard Bode, Yiannis Chorianopoulos, Bernard Fingelton, Ian Gordon, Stamatis Kalogirou, Yiannis Kaplanis, Yiannis Psycharis and two anonymous referees. All errors and omissions remain with the author.     

The Sustainability of External Imbalances in the European Periphery

Open Economies Review - The issue of external imbalances has become a key concern in the global economy, gaining particular prominence also inside Europe, following the Eurozone crisis....     

The Greek Public Sector Wage Premium before the Crisis: Size,Selection and Relative Valuation of Characteristics

We examine the Greek public–private wage differential before the debt crisis to evaluate the prospective impact of the recent public sector pay cuts. We find a large public premium which persists after controlling for individual and job characteristics. For men, much of this is accounted for by self‐selection into the sector that rewards better their characteristics, while for women it is largely driven by sectoral differences in returns. We attribute these effects to more egalitarian pay structures in the public sector and to demand problems in the private sector. The recent policy measures only partially change this situation, as wage deflation extends to the private sector, preserving public premia for the low paid.     

Regional Growth and National Development: Transition in Central and Eastern Europe and the Regional Kuznets Curve in the East and the West

Abstract

Regional disparities in Central and Eastern Europe rose substantially since 1990. Still, prima facie evidence of beta-convergence is often found in the CEE data. To reconcile this seeming paradox, we sketch out and test empirically a hybrid model of regional growth that draws on the regional Kuznets curve and incorporates aspects of cumulative causation and neoclassical convergence. In both CEE and the ‘old’ EU15, regional convergence is strongly linked to the level of national development, non-linearly. But while in the EU15 convergence speeds-up at intermediate/high levels of development, in CEE we find divergence at intermediate levels of national development and no significant return to convergence thereafter. Although this may show that overall development levels are not sufficient yet to mobilise regional convergence, it is also possible that non-convergence is attributable to centripetal forces instigated by the process of transition.