Economic Rights, Human Development Effort and Institutions

This paper focuses on the link between economic rights and institutions. Simple analysis of data is used to demonstrate countries' human development effort in advancing economics rights of the citizens. A country's human development effort is evaluated on the basis of the well-being of the poorest members of the society. An analysis of data reveals that there is a wide variation in countries' pro-poor stance. While it is accepted that positive rights are pro-poor, this paper argues that so too are negative economic rights and in fact the two are complements rather than substitutes. Classifying countries into human development income deficit and human development effort deficit, it is demonstrated that a large number of countries could achieve higher welfare levels for the poor if they improved on bother positive and negative economic rights. The paper attempts to explain variations in the observed commitment to economic rights by focusing on pro-poor institutions. The basic thesis advanced in the paper is that pro-poor policies are more likely to be implemented and sustained in those institutions where power is sufficiently diffused such that even the poor have leverage over policy outcomes. The paper focuses on how institutions impact on power diffusion and therefore the adoption of pro-poor growth and policies. The failure of countries to adopt pro-poor growth and policies is attributed to institutional failures manifested in concentration of power. The policy recommendations emanating from the analysis focus on institutional reforms to enhance power diffusion. These policies include enlarging the political space through democratization, strengthening institutions and capacity to fight corruption and improve transparency, and bringing the government closer to the people through appropriate design and implementation of decentralization schemes. Some recent examples of improvements in economic rights following power diffusion are provided.

Institutional Infrastructure to Support 'Super Growth' in Kenya: Governance Thresholds, Reversion Rates and Economic Development

Kenya Growth Vision 2030 proposes policy and institutional reforms that make it possible for the country to achieve development status of a middle income country by 2030. This paper outlines the institutional framework necessary to achieve ÈSuper Growth,É which describes the character of growth required to meet targets stipulated in the Vision. The paper provides evidence confirming the importance of improving the quality of governance to the achievement of the Vision. The paper also demonstrates that the country is characterized by a high probability of reverting to poor governance. It is argued that, to achieve super growth, the country must attain an institutional tipping point which associates with low reversion rates to weaker institutions. The paper provides suggestions for institutional reforms that result in the achievement of an institutional tipping point and super growth.

Chapter 6 Economic integration and changes in industrial location in Vietnam

Vietnam has been praised for its achievements in economic growth and success in poverty reduction over the last two decades. The incidence of poverty reportedly fell from 58.1% in 1993 to 19.5% in 2004 (VASS [2006, 13]). The country is also considered to have only a moderate level of aggregate economic inequality by international comparisons. As of the early 2000s, Vietnam’s consumption-based Gini coefficient is found to be comparable to that of other countries with similar levels of per capita GDP. The Gini index did increase between 1993 and 2004, but rather slowly, from 0.34 to 0.37 (VASS [2006, 13]). Yet, as the country moves on with its market oriented reforms, the question of inequality has been highlighted in policy and academic discourses. In particular, it is pointed out that socio-economic inequalities between regions (or provinces) are significant and have been widening behind aggregate figures (NCSSH [2001], Mekong Economics [2005], VASS [2006]). Between 1993 and 2004, while real per capita expenditure increased in all regions, it grew fastest in those regions with the highest per capita expenditures and vice versa, resulting in greater regional disparities (VASS [2006, 37]). A major contributing factor to such regional inequalities is the uneven distribution of industry within the country. According to the Statistical Yearbook of Vietnam, of the country's gross industrial output in 2007, over 50% belongs to the South East region, close to 25% to the Red River Delta, and about 10% to the Mekong River Delta. All remaining regions share some 10% of the country's gross industrial output. At a quick glance, the South East increased its share of the total industrial gross output in the 1990s, while the Red River Delta started to gain ground in more recent years. How can the government deal with regional disparities is a valid question. In order to offer an answer, it is necessary in the first place to grasp the trend of disparities as well as its background. To that end, this paper is a preparatory endeavor. Regional disparities in industrial activities can essentially be seen as a result of the location decisions of enterprises. While the General Statistics Office (GSO) of Vietnam has conducted one enterprise census (followed by annual enterprise surveys) and two stages of establishment censuses since 2000, sectorally and geographically disaggregated data are not readily available. Therefore, for the moment, we will draw on earlier studies of industrial location and the determinants of enterprises’ location decisions in Vietnam. The remainder of this paper is structured as follows. The following two sections deal with the country context. Section 2 will outline some major developments in Vietnam’s international economic relations that may affect sub-national location of industry. According to the theory of spatial economics, economic integration is seen as a major driver of changes in industrial location, both between and within countries (Nishikimi [2008]). Section 3, on the other hand, will consider some possible factors affecting geographic distribution of industry in the domestic sphere. In Section 4, existing literature on industrial and firm location will be examined, and Section 5 will briefly summarize the findings and suggest some areas for future research.

Student's cross-perception of the economic crises in the European Union and in Southeast Asia. EU Centre in Singapore Working Paper No. 11, December 2012

The financial crisis of 1997-1998 in Southeast Asia and the European Union’s financial crisis of 2008 followed by the sovereign debt crisis represented major policy events in the regions and beyond. The crises triggered policy adjustments with implications on economic and other policies. This paper aims at evaluating the perception of university students in the European Union (EU) and Southeast Asia on the management of these crises. It strives to confirm several ex ante assumptions about the relationship between students’ background, their policy orientation and their knowledge of the European Union and ASEAN policies. It also provides an analysis of the students’ evaluation of the geopolitical importance of the global regions and the EU and ASEAN policies. The paper is based on opinion surveys conducted during the first part of 2012 at four universities, two in the EU and two in ASEAN countries. In the eyes of EU and ASEAN students, the EU crisis is not being managed appropriately. The citizens of the EU surveyed were even significantly more critical of the EU’s anti-crisis measures than any other surveyed group. Their ASEAN counterparts were generally more positive in their evaluations.

National Parliaments and their Role in European Integration: The EU’s Democratic Deficit in Times of Economic Hardship and Political Insecurity. Bruges Political Research Paper 28/2013

The article describes and assesses the role of national parliaments in EU legislation considering the reforms introduced by the Lisbon Treaty. This is closely connected with the understanding and (political) application of the principle of subsidiarity. After an analysis of the possibilities and limitations of the relevant legal regulations in the post-Lisbon age, alternative ways for participation of national legislators on the European level are being scrutinized and proposed. The issue of democratic legitimization is also interconnected with the current political reforms being discussed in order to overcome the Euro Crisis. Finally, the authors argue that it does not make sense to include national parliaments in the existing legislative triangle of the EU, but instead to promote the creation of a new kind of supervisory body.

Money for structural reforms in the eurozone: making sense of contractual arrangements. Egmont Paper 57, May 2013

Executive Summary. Both the Commission’s proposal for a ‘Competitiveness and Convergence Instrument’ and the ‘contractual arrangement’ presented by President Van Rompuy share a common concept: associating EU money with national structural reforms under a binding arrangement. The targeted ‘structural reforms’ are the labour market reforms and product and services market reforms in eurozone ‘peripheral’ countries facing the most severe external imbalances. Their implementation would speed up and facilitate the ‘internal devaluation’ process of these countries. In the worst case scenario, failure to adopt the necessary reforms and to adjust wages and prices downwards may lead the most vulnerable countries to leave the eurozone under social and political pressure. Contracts seek to reduce this risk by increasing compliance with the country-specific recommendations for structural reforms issued by the EU institutions within the European Semester, and in particular with the Macroeconomic Imbalance Procedure (MIP). As for the financial support, it follows two different, albeit overlapping rationales. First, the perspective of obtaining EU funding would incentivize the governments of vulnerable countries to adopt reforms that would bear a high political and social cost in the short term. That is, without some form of incentive, it is unlikely that the necessary reforms would be undertaken and this could have significant negative consequences for the EMU as a whole. The second rationale amounts to outright solidarity: EU support is needed to cushion the inevitable socio-economic costs implied not only by the structural reform, but also by the internal devaluation taking place. To make sense of contractual arrangements, some points should be considered in future discussions: 1. Contracts on a voluntary basis only: Contracts cannot be mandatory unlike initially suggested in the Van Rompuy report. This stems not only from the inherent definition of a ‘contract’ – where mutual consent is key – but also from the non-binding nature of the preventive arm of the MIP. Making the country-specific recommendations issued by the EU institutions systematically binding would imply transfers of sovereignty from the national to the EU level that go well beyond the present discussion. Instead, contracts would introduce the possibility of making the preventive arm binding for some countries where corrections are most needed and urgent for the EMU as a whole.

The European Economic Community's Third Enlargement. Jean Monnet/Robert Schuman Paper Series Vol. 12 No. 6, June 2012

The European Economic Community's third enlargement round brought up a series of tensions between member states, which would require a great amount of time and effort to be solved. Bigger issues, such as the British contribution, the community budget and the Common Agriculture Policy reforms, are going to be at the centre of EEC's agenda in the 1970-80's, and ultimately, British and French national interests on these matters will prevail. The basic argument of this article is that member states used the prospect of enlargement to achieve particular policy goals, such as improvements in decisionmaking procedures and budget reform, and only after those accomplishments, member states agreed on concluding the third enlargement.

Le contrôle européen des concentrations et les leçons à tirer de la crise financière et économique = European merger control and the lessons of the financial and economic crisis. Research Papers in Law, 06/2013

No abstract.

Europe's social problem and its implications for economic growth. Bruegel Policy Brief 2014/03, 1 April 2014

The European Union faces major social problems. More than six million jobs were lost from 2008-13 and poverty has increased. Fiscal consolidation has generally attempted to spare social protection from spending cuts, but the distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young. The efficiency of the social security systems of EU countries varies widely. Countries with greater inequality tended to have higher household borrowing prior to the crisis resulting in more subdued consumption growth during the crisis. The resulting high private debt, high unemployment, poverty and more limited access to education undermine long-term growth and social and political stability. Policymakers face three main challenges. First, addressing unemployment and poverty should remain a high priority not only for its own sake, but because these problems undermine public debt sustainability and growth. Second, bold policies in various areas are required. Most labour, social and fiscal policies are the responsibility of member states, requiring national reforms. But better coordination of demand management at European level is also necessary in order to create jobs. Third, tax/benefit systems should be reviewed for improved efficiency, inter- generational equity and fair burden sharing between the wealthy and poor.

The Impact of Spain’s Economic and Political Crisis on the European Elections. EPIN Commentaries No. 17, 2 April 2014

Despite the emergence of a critical debate against the EU-imposed austerity measures both at the level of the political elites and on the street, this EPIN Commentary by two Spanish political scientists based in Barcelona finds no sign that the upcoming European elections will have a more European focus than any of the previous ones. While there is no anti-European discourse among the Spanish mainstream political parties, they report that public trust in the European institutions is plummeting and Spanish turnout in European elections has been dropping in the last few years. In the authors’ view, the main reason for this is the low level of awareness of the functioning of the European Parliament but some responsibility also lies with the Spanish political parties and the way they deal with the electoral campaign to mobilise the discontented voters, who consider unemployment and the economic situation as the two most important issues that the country is facing at the moment.

The OTC derivatives markets after financial reforms. CEPS ECMI Commentary No. 36, May 2014

Over the past five years, over-the-counter (OTC) derivatives markets have received heightened regulatory attention, due to their opaqueness, size and interconnectedness, with a view to improving the robustness, safety and resilience of this market segment. There has been continued progress in the follow-up to the G-20 commitments, with the EU (EMIR, MIFID II, CRD/CRR IV, MAD) and the US (Swap Execution Facility or SEF, Title VII of Dodd-Frank Act, Basel III) leading in the implementation timelines and capturing approximately 80-90% of the overall market. Based on the data compiled for the yearly ECMI Statistical Package, this commentary provides a snapshot of the current status of the global OTC derivatives markets by: i) identifying general trends over the past decade, ii) looking at the changes in the market structure (instruments and participants), iii) estimating the uncollateralised derivatives exposure and iv) examining the relationship between OTC derivatives and exchange-traded derivatives (ETD).

Labour Market Reforms and Current Account Imbalances: Beggar-thy-neighbour policies in a currency union? CEPS Working Document No. 399/September 2014

Member countries of the Economic and Monetary Union (EMU) initiated wide-ranging labour market reforms in the last decade. This process is ongoing as countries that are faced with serious labour market imbalances perceive reforms as the fastest way to restore competitiveness within a currency union. This fosters fears among observers about a beggar-thy-neighbour policy that leaves non-reforming countries with a loss in competitiveness and an increase in foreign debt. Using a two-country, two-sector search and matching DSGE model, we analyse the impact of labour market reforms on the transmission of macroeconomic shocks in both non-reforming and reforming countries. By analysing the impact of reforms on foreign debt, we contribute to the debate on whether labour market reforms increase or reduce current account imbalances.

A Monetary Union Requires a Banking Union. Bruges European Economic Policy (BEEP) Briefing 33/2014

This paper argues that a monetary union requires a banking union. While the USA developed both during a time span of two centuries, the EMU was created in the course of two decades and remains unfinished as the economic pillar is largely missing. The financial crisis and the Eurocrisis have shown that a genuine banking union is even more needed for the Eurozone than a budget or a fiscal union to let the euro survive.

Review of the Economic Development in the Western Balkan States. OSW STUDIES No. 19, 2005-08-10

Foreword. Ten years after the end of the armed conflict, the Western Balkans1 are still being considered as the “land of the unsuccessful policies”. Enormous financial and technical assistance transferred by the International Community has not managed to meet the goals of integrating the region within itself as well as within the European markets. Explanation for this can be found in the consequences of the war and the remnants of the socialist state. The complexity of current institutional/ political arrangements combined with the limited willingness of the regional actors to introduce and implement much of the needed reforms have additionally contributed to the current state of affairs. The economy and politics in the region intertwine to an extent as probably in none of the other post-communist states. Therefore, the paper presents the recent economic performance of the Western Balkan countries in the light of their limited institutional development and lack of efficient regional cooperation. The paper discusses the importance of foreign direct investments’ inflow for the economic growth of the “latecomer” states and presents major drawbacks which limit the influx of the foreign capital to the region. It presents private sector activity and regional cooperation programmes. It discusses the role of the International Community with the main focus on the activities of the European Union. The EU is examined not only as the main aid donor but more importantly as a foreign trade partner. Furthermore, it analyses the impact of the presence of the International Community and their strategies towards the region with the special attention to the EU. Finally, it presents recommendations for the improvement of the economic performance in light of the enhanced political cooperation between the EU and the region.

An economy with unrealistic indicators: an evaluation of the economic situation in Belarus and a forecast for 2013. OSW Commentary No. 103, 2013-02-20

The macroeconomic results achieved by Belarus in 2012 laid bare the weakness and the inefficiency of its economy. Belarus’s GDP and positive trade balance were growing in the first half of last year. However, this trend was reversed when Russia blocked the scheme of extremely lucrative manipulations in the re-export of Russian petroleum products by Belarus and when the demand for potassium fertilisers fell on the global market. It became clear once again that the outdated Belarusian model of a centrally planned economy is unable to generate sustainable growth, and the Belarusian economy needs thorough structural reforms. Nevertheless, President Alyaksandr Lukashenka consistently continues to block any changes in the system and at the same time expects that the economic indicators this year will reach levels far beyond the possibilities of the Belarusian economy. Therefore, there is a risk that the Belarusian government may employ – as they used to do – instruments aimed at artificially stimulating domestic demand, including money creation. This may upset the relative stability of state finances, which the regime managed to achieve last year. The worst case scenario would see a repeat of what happened in 2011, when a serious financial crisis occurred, forcing Minsk to make concessions (including selling the national network of gas pipelines) to Moscow, its only real source of loans. It thus cannot be ruled out that also this time the only way to recover from the slump will be to receive additional loan support and energy subsidies from Russia at the expense of selling further strategic companies to Russian investors.