Life after Bali: renewing the world trade negotiating agenda. Bruegel Policy Contribution 2013/17, December 2013

The crisis has contributed to a slowdown in global trade volumes, with trade virtually stagnant in the twelve months to July 2013. In this context, fruitful negotiations in the World Trade Organisation’s 9th Ministerial Conference in Bali are crucial to sustain the institution’s credibility and prove that multilateral negotiations can still deliver success. WTO trade talks are the only ongoing trade liberalisation process that has development at its core. The Doha mini-package under consideration at Bali is a collection of watered-down but deliverable elements of a deal comprising agriculture, trade facilitation and special and differential treatment/less developed country concessions. Post-Bali, the WTO should aim to reverse the current disenchantment with multilateral trade negotiations. This means formulating a relevant trade negotiating agenda with an understanding of global value chains at its core. However, the transition to the new agenda requires a closure of the ongoing Round. The easiest way to conclude the Doha Round would be to select another discrete set of deliverables that fulfills the development commitment of the Doha Development Agenda, thus paving the way for a new Round.

Cyclical dimensions of labour mobility after EU enlargement. Bruegel Working Paper 2009/03, May 2009

At a time of symmetric global slowdown, migration cannot contribute as much to absorbing economic shocks as it could if the shock were asymmetric. • Early evidence suggests that the crisis has led to a drop in immigration and even net return migration from some countries. This has helped the adjustment of former EU15 host countries and has exacerbated adjustment in former source countries in the new member states. In the short run, the stock of new member-state migrants in the EU15 will fall owing to diminished job opportunities for migrants. • Changes in the unemployment rate in the host country are found to impact migration more than that of changes in the unemployment rate in the source country. In part, this can be explained by the disproportionate risk of migrants losing their jobs in the downturn. • In the longer run, the crisis is set to increase migration from the new member states compared to what would have been the case without the crisis. This is because the crisis has undermined the economic growth model of those new member states that relied heavily on external financing to fuel their growth.

Investment as the key to recovery in the euro area? CEPS Policy Brief No. 326, 18 November 2014

Investment has declined in the euro area since the start of the economic and financial crisis, but this does not mean that there is necessarily an ‘investment gap’, explains Daniel Gros in this CEPS Policy Brief. Investment was probably above a sustainable level due to the credit boom before 2007. Moreover, the fall in the euro area’s potential growth − due to a combination of a sharp demographic slowdown and lower total factor productivity (TFP) growth − should also lead to a permanently lower investment rate. Increasing the investment rate might thus be the wrong target for economic policy. The author advises that the aim of economic policy should be to increase consumption, rather than investment overall. Increasing infrastructure investment might be justified in some member countries, but it is not a ‘free lunch’ when efficiency levels are low, which seems to be the case in some of the financially stressed euro area countries.

Chasing globalisation: Germany's economic relations with the BRIC countries. OSW Report, November 2013

The Eurozone crisis has forced German exporters to speed up their expansion onto the emerging markets, in particular Brazil, Russia, India and China. The development observed in those countries has become an important substitute for the consequences of the economic slowdown in Europe.To illustrate the scale of cooperation between Germany and the BRIC countries, it is enough to quote figures concerning Germany’s trade. Between 2000-2011 the share of trade with the BRIC states in the entire German trade exchange rose from 5.5% to 13.3%. In the same period opposite tendencies were observed in the figures relating to trade with the USA, whose share in German trade fell from 9.6% to 6.2%. The report discusses the major tendencies present in Germany’s cooperation with the BRIC countries, and examines how the German state supports German companies in their business activities on these markets. The main method used to investigate these processes is the economic analysis of trade and capital flows between Germany and the BRIC countries, supplemented by conclusions drawn from discussions with German experts. The main issue discussed in the text is the role of the state in stimulating the expansion of German companies onto the BRIC markets. In the context of these activities, political relations and the proper use of export and investment guarantees and development aid are of major importance.

The Western Balkans: deadlock in the EU enlargement process. OSW Commentary No. 43, 2010-11-24

On 9 November the European Commission presented the annual reports assessing the progress of the Balkans states in their preparations for EU membership, the enlargement strategy up to autumn 2011, and the assessment of the EU membership applications submitted by Albania and Macedonia. All these documents show that the reform process in the Balkan states has slowed down in comparison to previous years. The main reason for this slowdown is the negative consequences of the global economic crisis for these countries. Nonetheless, the transformation process is continuing, despite these difficulties. Another increasingly serious challenge for integrating the Balkan states is the EU's growing reluctance to enlarge any further. Among other measures, the EU states have blocked the formal acknowledgement of the integration progress (objections have been raised to the submission of membership applications by Albania, Serbia and Montenegro, and to granting Albania candidate status), which has significantly prolonged the accession process. In fact, this illustrates the lack of political will to accept new members. The European Commission is aware that the integration process may be blocked, and so in the coming year it is planning to focus on fostering the idea of enlargement among the EU member states. It will also focus on persuading the Balkan states to move on with reforms, especially those designed to strengthen state institutions (administration, the judiciary), even if their progress will not be formally considered during the integration process. The Commission assumes that by the end of next year, the reforms implemented by the Balkan states will be comprehensive enough to persuade the EU states to step up the integration process in subsequent years. However, if the EU member states' standpoint on the enlargement process does not change, the Commission's efforts will not bring about the expected results. Considering that their prospects for EU membership are receding, the Balkan states may not have sufficient motivation to go on with long-term reform efforts. As a result, the transformation process may become impeded, and in the longer perspective, the situation in the entire region may be destabilised.

Tourism in the Mediterranean: Scenarios up to 2030. MEDPRO Report No. 1/July 2011- (updated May 2013)

From 1990 to 2010, the 11 countries of the south-eastern Mediterranean region (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Occupied Palestinian Territory, Syria, Tunisia and Turkey, hereafter SMCs) recorded the highest growth rates in inbound world tourism. In the same period, domestic tourism in these countries also increased rapidly, which is astonishing given the security risks, natural disasters, oil prices rises and economic uncertainties in the region. Even the 2008 financial crisis had no severe impact on this growth, confirming the resilience of tourism and the huge potential of the SMCs in this sector. The Arab Spring brought this trend to an abrupt halt in early 2011, but it may resume after 2014 with the gradual democratisation process, despite the economic slowdown of the European Union – its main market. This paper looks at whether this trend will continue up to 2030, and provides four different possible scenarios for the development of the tourism sector in SMCs for 2030: i) reference scenario, ii) common (cooperation) sustainable development scenario, iii) polarised (regional) development scenario and iv) failed development – decline and conflict – scenario. In all cases, international and domestic tourist arrivals will increase. However, three main factors will strongly influence the development of the tourism sector in the SMCs: security, competitiveness linked to the efficient use of ICT, and adjustment to climate change.

The Russian economy under Putin: Growth factors and impediments to economic development. OSW Study 20/2005

After a dramatic economic decline after the collapse of the Soviet Union and the financial breakdown of 1998, the Russian economy has begun to emerge from its deep crisis. The years 1999-2004 were a period of dynamic development in all sectors of Russian economy, and saw a rapid growth in GDP of over 7 per cent per year. Russia owed the excellent macroeconomic results of that period to a combination of favourable factors. The key factors were: high hydrocarbon prices on the global markets; an increase in Russia's international competitiveness thanks to the "rouble devaluation effect" (following the 1998 financial crash); and the market reforms carried out within that period. In 2004, despite very high oil and gas prices on world markets, a slowdown of the GDP growth took place. Even though the economy is still developing fairly rapidly, we are able to say that Russia is exhausting those traditional mechanisms (apart from oil and gas prices) which have hitherto stimulated GDP growth. Moreover, there are no new mechanisms which could replace the old ones. In the longer term, these unsolved structural problems may seriously impede Russia's economic growth.

Monetary policy and the over-investment cycle: China as an extreme case. CEPS Commentary, 27 August 2015

Against the background of the severe turbulence that is hitting global stock markets, Daniel Gros examines the looming slowdown in the Chinese economy in this CEPS Commentary, which he attributes to an underlying ‘real’ domestic investment/savings imbalance. Given the magnitude of this imbalance, Gros thinks it is unlikely to be solved by monetary policy and that the best that can be hoped for is that the central banks will manage to ‘paper over’ some of the unavoidable symptoms in credit markets.

Internationalising the currency while leveraging massively: the case of China. Bruegel Working Paper 2015/12, October 2015

This paper reviews the steps that China has taken towards financial reform with a particular focus on capital account liberalisation and internationalisation of the use of the renminbi. • After a slowdown in reform momentum during the global financial crisis, there is a clear push towards reform, especially in terms of RMB internationalisation. • During the same period, though, China’s debt has doubled, reaching levels that are clearly above those of most emerging markets. This increases the risks embedded in financial reform and, in particular, capital account liberalisation. • At this juncture, however, China has no option but to press for reform since the current growth model is no longer working and China urgently needs to better allocate its savings.

Tambora 1815 as a test case for high impact volcanic eruptions: Earth system effects

The eruption of Tambora (Indonesia) in April 1815 had substantial effects on global climate and led to the ‘Year Without a Summer’ of 1816 in Europe and North America. Although a tragic event — tens of thousands of people lost their lives — the eruption also was an ‘experiment of nature’ from which science has learned until today. The aim of this study is to summarize our current understanding of the Tambora eruption and its effects on climate as expressed in early instrumental observations, climate proxies and geological evidence, climate reconstructions, and model simulations. Progress has been made with respect to our understanding of the eruption process and estimated amount of SO2 injected into the atmosphere, although large uncertainties still exist with respect to altitude and hemispheric distribution of Tambora aerosols. With respect to climate effects, the global and Northern Hemispheric cooling are well constrained by proxies whereas there is no strong signal in Southern Hemisphere proxies. Newly recovered early instrumental information for Western Europe and parts of North America, regions with particularly strong climate effects, allow Tambora’s effect on the weather systems to be addressed. Climate models respond to prescribed Tambora-like forcing with a strengthening of the wintertime stratospheric polar vortex, global cooling and a slowdown of the water cycle, weakening of the summer monsoon circulations, a strengthening of the Atlantic Meridional Overturning Circulation, and a decrease of atmospheric CO₂. Combining observations, climate proxies, and model simulations for the case of Tambora, a better understanding of climate processes has emerged.

Sea-surface temperature reconstruction for sediment core GeoB1023-5

Sediment core GeoB 1023-5 from the eastern South Atlantic was investigated at high temporal resolution for variations of sea-surface temperature (SST) during the past 22 kyr, using the alkenone (UK'37) method. SSTs increased by 3.5°C from about 18°C during the Last Ice Age (21±2 cal kyr BP) to about 21.5°C at 14.5 cal kyr BP. This warming trend associated with the deglaciation phase was followed by a cooling event with lowest SSTs near 20°C, persisting for about 1000 years between 13 and 12 cal kyr BP. The SSTs then continued to increase to about 22.5°C at the Holocene climatic optimum at 7 cal kyr BP, and decreased again during the Late Holocene to a core-top value of 19.8°C that is comparable to modern annual mean SST values. When compared with alkenone SST records from the eastern North Atlantic, our SST record indicates continuous warming throughout the deglaciation phase in the Benguela Current, while its northern counterpart, the Canary Current, experienced prominent cooling during 'Heinrich Event 1' (H1). On the other hand, for the time period corresponding to the 'Younger Dryas' (YD) cooling event, the Benguela SST record exhibits a cold-temperature interval that corresponds to that observed in the eastern North Atlantic SST records. This observation suggests that interhemispheric climate response in Atlantic eastern boundary current systems was different with respect to the two abrupt climate events associated with Termination I. For the H1, the eastern South Atlantic SST record strongly supports the hypothesis that an 'anti-phase' thermal behavior in South Atlantic surface waters was forced by the slowdown of the North Atlantic Deep Water formation during cold spells in the North Atlantic. In contrast, the abrupt cooling in the eastern South Atlantic coincident with the YD period was probably induced by more vigorous global atmospheric circulation, enhancing the upwelling intensity in both eastern boundary current systems. This atmospheric control may have overridden any effect caused by changes in thermohaline circulation on the South Atlantic SSTs during the YD, which leads to the assumption that the thermohaline circulation was already much closer to its interglacial mode during the YD than during the H1.

Sea surface temperature reconstruction based on alkenones of sediment core M35003-4

Evidence for abrupt climate changes on millennial and shorter timescales is widespread in marine and terrestrial climate records (Dansgard et al., 1993, doi:10.1038/364218a0; Bond et al., 1993, doi:10.1038/365143a0; Charles et al., 1996, doi:10.1016/0012-821X(96)00083-0, Bard et al., 1997, doi:10.1038/385707a0). Rapid reorganization of ocean circulation is considered to exert some control over these changes (Broecker et al., 1985, doi:10.1038/315021a0), as are shifts in the concentrations of atmospheric greenhouse gases (Broecker, 1994, doi:10.1038/372421a0). The response of the climate system to these two influences is fundamentally different: slowing of thermohaline overturn in the North Atlantic Ocean is expected to decrease northward heat transport by the ocean and to induce warming of the tropical Atlantic (Crowley, 1992, doi:10.1029/92PA01058; Manabe and Stouffer, 1997, doi:10.1029/96PA03932), whereas atmospheric greenhouse forcing should cause roughly synchronous global temperature changes (Manabe et al., 1991, doi:10.1175/1520-0442(1991)004<0785:TROACO>2.0.CO;2). So these two mechanisms of climate change should be distinguishable by the timing of surface-water temperature variations relative to changes in deep-water circulation. Here we present a high-temporal-resolution record of sea surface temperatures from the western tropical North Atlantic Ocean which spans the past 29,000 years, derived from measurements of temperature-sensitive alkenone unsaturation in sedimentary organic matter. We find significant warming is documented for Heinrich event H1 (16,900-15,400 calendar years bp) and the Younger Dryas event (12,900-11,600 cal. yr bp), which were periods of intense cooling in the northern North Atlantic. Temperature changes in the tropical and high-latitude North Atlantic are out of phase, suggesting that the thermohaline circulation was the important trigger for these rapid climate changes.

Results of Heinrich event 1 simulation from the University of Victoria Earth System-Climate Model (UVic ESCM) and the Community Climate System Model (CCSM3)

We investigated changes in tropical climate and vegetation cover associated with abrupt climate change during Heinrich Event 1 (HE1, ca. 17.5 ka BP) using two different global climate models: the University of Victoria Earth System-Climate Model (UVic ESCM) and the Community Climate System Model version 3 (CCSM3). Tropical South American and African pollen records suggest that the cooling of the North Atlantic Ocean during HE1 influenced the tropics through a southward shift of the rain belt. In this study, we simulated the HE1 by applying a freshwater perturbation to the North Atlantic Ocean. The resulting slowdown of the Atlantic Meridional Overturning Circulation was followed by a temperature seesaw between the Northern and Southern Hemispheres, as well as a southward shift of the tropical rain belt. The shift and the response pattern of the tropical vegetation around the Atlantic Ocean were more pronounced in the CCSM3 than in the UVic ESCM simulation. For tropical South America, opposite changes in tree and grass cover were modeled around 10° S in the CCSM3 but not in the UVic ESCM. In tropical Africa, the grass cover increased and the tree cover decreased around 15° N in the UVic ESCM and around 10° N in the CCSM3. In the CCSM3 model, the tree and grass cover in tropical Southeast Asia responded to the abrupt climate change during the HE1, which could not be found in the UVic ESCM. The biome distributions derived from both models corroborate findings from pollen records in southwestern and equatorial western Africa as well as northeastern Brazil.

Stable oxygen isotope and Mg/Ca data of Globigerinoides ruber white, water stable oxygen isotope data, SST and MAT records of sediment core GeoB6211-2

During Termination 1, millennial-scale weakening events of the Atlantic meridional overturning circulation (AMOC) supposedly produced major changes in sea surface temperatures (SSTs) of the western South Atlantic, and in mean air temperatures (MATs) over southeastern South America. It has been suggested, for instance, that the Brazil Current (BC) would strengthen (weaken) and the North Brazil Current (NBC) would weaken (strengthen) during slowdown (speed-up) events of the AMOC. This anti-phase pattern was claimed to be a necessary response to the decreased North Atlantic heat piracy during periods of weak AMOC. However, the thermal evolution of the western South Atlantic and the adjacent continent is so far largely unknown. Here we address this issue, presenting high-temporal-resolution SST and MAT records from the BC and southeastern South America, respectively. We identify a warming in the western South Atlantic during Heinrich Stadial 1 (HS1), which is followed first by a drop and then by increasing temperatures during the Bølling-Allerød, in phase with an existing SST record from the NBC. Additionally, a similar SST evolution is shown by a southernmost eastern South Atlantic record, suggesting a South Atlantic-wide pattern in SST evolution during most of Termination 1. Over southeastern South America, our MAT record shows a two-step increase during Termination 1, synchronous with atmospheric CO2 rise (i.e., during the second half of HS1 and during the Younger Dryas), and lagging abrupt SST changes by several thousand years. This delay corroborates the notion that the long duration of HS1 was fundamental in driving the Earth out of the last glacial.