Russia's development assistance. OSW Commentary No. 62, 2011-10-10

In its attempts to catch up with the global trend, Russia began granting development assistance in 2004. From the onset of Russia’s commitment, the aid delivered has increased fivefold and reached approximately US$ 500 million in 2010. Russian aid, albeit distributed nearly exclusively via international organisations, has been granted above all to members of the Commonwealth of Independent States (CIS). In recent months work on the establishment of the Russian development assistance system has been accelerated (a national strategy is being prepared and a specialised agency is to be established). This move proves that the Kremlin attaches weight to activity in this area which is an element of soft power politics, the foundations of which Moscow is currently attempting to lay. In its commitment to development co-operation Russia has sought on the one hand to increase its prestige on the international stage and on the other hand to gain another instrument of exerting its ascendancy in the CIS. The scale of aid and the way of delivering it have not made Russia an important global actor. Over the last five years Russia increased the funding allocated to development assistance several times, however, compared to other donors its aid does not appear impressive. The resources dedicated to this end stand at a mere 0.035% of Russian GDP. Unlike other non-Western superpowers such as China or India, Russia is not a competitor for Western countries in this area on the global scale. Nevertheless, within the CIS, Russia’s aid is building the country’s position as a donor. The long-term results of this aid are however being counteracted by the fact that Russia is expecting measurable and direct political and economic benefits in return. Although this policy helps Moscow achieve its objectives in the CIS, it does not develop Russian potential in the sphere of soft power or create a positive image of the country.

Measuring Returns to Education and Human Capital in the Southern Mediterranean. MEDPRO Technical Report No. 17/September 2012

Measuring human capital has been a significant challenge for economists because the main variable of interest is intangible and not directly observable. In the Middle Eastern and Northern African region the task is further complicated by the general scarcity of comparable and reliable data. This study overcomes these challenges by relying on a unique international survey that covers most of the region and by deriving a market-based measure that uses returns to education and various labour market factors as guidance. The results show that private returns to schooling are relatively low in most southern Mediterranean countries (SMC). Israel and Turkey are clear outliers, surpassing even the EU-MED averages. In Algeria and Jordan, the returns are almost flat, implying that earnings do not respond significantly to education levels. Despite high attainment levels, Greece, Spain and Portugal also perform badly; only marginally surpassing some of the bottom-ranked SMC, providing evidence of problems in absorption capacity. The baseline scenarios for 2030 show substantial sensitivity to current estimates on returns to education. In particular, improving attainment levels can produce measurable gains in the future only when the returns to education are already high. Such is the case for Egypt, Morocco and Turkey, which substantially improve their human capital stocks under the baseline scenarios, surpassing several EU-MED countries with little or no room for improvement.

Light and shadows in Europe’s new Action Plan for Capital Markets Union. ECMI Commentary No. 40/5 October 2015

The European Commission’s Action Plan consists, in a nutshell, of a short list of technical proposals and a longer one of (rather general) potential actions. Overall, the plan indeed proposes to achieve some short-term objectives, such as a reduction of listing costs for SMEs, but it lacks long-term vision. The plan bundles actions under rather generic objectives of long-term finance or cross-border investing. Improving the informational infrastructure (e.g. accounting standards, company data) and cross-border enforcement of rules is left to vaguely defined future actions, but these constitute the core of the capital markets infrastructure. Without a well-defined set of measurable objectives, the whole plan may lose political momentum and become an opportunity for interested parties to cherry pick their pet provisions. Building a single market, i.e. removing cross-border obstacles to capital circulation, is too challenging a task to simply appear as one of many items on a long list of general objectives, which incidentally do not include institutional reform. The ultimate risk is that the Commission may just miss a unique opportunity to revamp and improve the financial integration process in Europe after almost a decade of harmful financial retrenchment.

Measuring the Modern Social Market Economy. Future Social Market Economy Policy Brief #2012/04

The “Index of Modern Social Market Economies” (MSME Index) defines and measures the features of a modern social market economy in international comparison. In contrast to other indices that measure economic performance, the MSME Index takes an institutional approach, outlining a system of essential institutions and measurable indicators for the construction and assessment of modern social market economies. Among other insights, the index could guide the European Union toward achieving the “highly competitive social market economy” that it defines in the Lisbon Treaty as its desired economic order.