Unleashing Competition in EU Business Services. CEPS Policy Brief No. 284, 24 September 2012

In most EU member states, the business services industry has booked no productivity growth during the last two decades. The industry’s performance in the other member states was weaker than that of its US counterparts. Exploring what may be causing this productivity stagnation, this policy brief reports that weak competition has contributed to the continuing malaise in European business services. The study analyzed the persistence (over time) of firm-level inefficiencies. The evidence further suggests that competition between small firms and large firms in business services is weak. Markets for business services work best in countries with flexible regulation on employment change and with low regulatory costs for firms that start up or close down a business. Countries that are more open to foreign competition perform better in terms of competitive selection and productivity. The policy simulations in this paper show that greater import openness strengthens competition in business services markets. The largest positive impact comes from lower regulatory barriers for growing and shrinking firms. More particularly, competitive selection would be fostered by a reduction of administrative and regulatory costs related to labour contracts, bankruptcy and start-up requirements. A key element of the European Commission’s Europe-2020 strategy is the Single European Market for Services. Business services form one of the largest industries in Europe – and given its productivity stagnation, it deserves to be a priority target of the Europe-2020 strategy. Improving the way the business services market functions may have large positive knock-on effects for the EU economy.

The Services Dimension of TTIP. Paper No. 6 in the CEPS-CTR project “TTIP in the Balance’’ and CEPS Special Report No. 106, 8 May 2015

This CEPS Special Report examines the main facets of the debate about TTIP and services. First, it looks at the political and economic context and the various alternatives in terms of political support, stressing that only a partnership that ensures substantial economic gains will attract the support of the top policy-makers. Second, the paper makes the point that large economic gains in services require deep discussions on regulatory issues, and third, such discussions cannot rely on the negotiating techniques normally used for goods. There is thus a need to adopt a new approach, based on the mutual recognition and equivalence of regulations enforced in the services concerned, preceded by a mutual evaluation to grant such equivalence – all measures to be carried out by the regulatory bodies concerned, not by trade negotiators. This new game is a complex one but it has huge side benefits: it induces each TTIP partner to review the quality of their own regulations; it is at ease with the notion of a ‘living’ (evolving) agreement; and it can easily be open to third countries. All these benefits should reassure a general public that is fearful of a hastily baked deal.

The Catholic Question in Contemporary Portuguese Civil Society: A Case of Muted Vibrancy? CES Papers - Open Forum #14, 2012

The ‘Catholic question’ in contemporary Portugal obliges us to consider whether Catholicism will remain a force in Portuguese associational life in the next century, or whether it faces a future of slow and steady decline. On the one hand, an overall statistical drop of church membership, and the lack of religious practice by almost half of self-identified Roman Catholics, suggests that the future of the Catholic Church in Portugal will probably be very different than the past. On the other hand, the church’s support for democratic processes, the important social services it provides, and its educational establishment, have certainly been a positive factor in Portuguese associational life, and helped the larger process of democratic-regime consolidation since the Carnation Revolution of 1974. This paper suggests that social scientists need to move beyond the lens normally applied to the question of Catholicism in contemporary Europe (i.e. it is a dying, anti-modern, anti-rational, conservative institution), and instead consider the complex interplay of its demographic challenges combined with the popular sources of its theological and spiritual strength, as well as its vital societal contributions, to assess whether or not it will remain a force in Portuguese associational life in the future.

Saving the Banks: The Political Economy of Bailouts. CES Papers - Open Forum #8, 2012

How much leeway did governments have in designing bank bailouts and deciding on the height of intervention during the 2007-2009 financial crisis? This paper analyzes comparatively what explains government responses to banking crises. Why does the type of intervention during financial crises vary to such a great extent across countries? By analyzing the variety of bailouts in Europe and North America, we will show that the strategies governments use to cope with the instability of financial markets does not depend on economic conditions alone. Rather, they take root in the institutional and political setting of each country and vary in particular according to the different types of business-government relations banks were able to entertain with public decision-makers. Still, “crony capitalism” accounts overstate the role of bank lobbying. With four case studies of the Irish, Danish, British and French bank bailout, we show that countries with close one-on-one relationships between policy-makers and bank management tended to develop unbalanced bailout packages, while countries where banks have strong interbank ties and collective negotiation capacity were able to develop solutions with a greater burden sharing from private institutions.