BESTUFS policy and research recommendations IV: environmental zones in European cities, accommodating the needs of passenger and freight transport in cities, and BESTUFS Project recommendations

Recommendations report produced as part of the EC-funded BESTUFS project on urban freight transport.

Reforms, incentives, welfare and productivity growth in Chinese wheat production

Following the 1978 rural reform, a series of agricultural reforms were introduced in China with an aim to create incentives for the farmers to produce more. However, the nineties’ reforms towards liberalization eventually resulted in a huge drop in agricultural production, which apparently motivated the grain self-sufficiency program in 1998. For a dataset that covers wheat production during these reforms, we examine how and to what extent these reforms affected the Total Factor Productivity (TFP) and the welfare of wheat farmers in China, both at the national and at the regional level. We find that although the nineties' price reforms led to a relatively faster growth of the incentivized TFP of wheat production, they failed to improve profits vis a vis welfare for the farmers. A series of weather shocks in the early nineties resulted in a scarcity of cultivable land and a shortage of agricultural labour, which eventually led to a sharp increase in their relative prices. The introduction of grain self-sufficiency program stabilized these agricultural prices but destroyed the growth in TFP for most regions. However, this reform resulted in some improvement in farmers’ welfare. Wheat farmers in China therefore experienced a trade off between productivity and welfare; competition boosted their productivity and regulation improved their welfare. Not only these findings add a completely new set of results to the existing literature, they can also form a strong basis for future agricultural reforms in China.

Financial depth, stock markets and economic growth in the EU-15 countries

The aim of this paper is to assess the impact of financial depth on economic growth in the EU-15 countries from 1970 until 2012, using the two-step System GMM estimator. Even though it might be expected a positive impact, the results show it is negative and sometimes even negative and statistically significant. Among the reasons presented for this, the existence of banking crises seems to better explain these results. In tranquil periods, financial deepening appears to have a positive impact, whereas in banking crises it is persistently negative and statistically significant. Also, after an assessment of the impact of stock markets on economic growth, it appears that more developed countries in the EU-15 have an economy more reliant on this segment of the financial system rather than in bank intermediation.

Overcoming the “European Paradox”: The role of Regional Innovation Systems (RIS) in translating R&D investments into economic and employment growth

The emergence of the so-called “European Paradox” shows that R&D investment is not maximally effective and that increasing the scale of public R&D expenditures is not sufficient to generate employment and sustained economic growth. Increasing Governmental R&D Investment is far from being a “panacea” for stagnant growth. It is worth noting that Government R&D Investment does not have a statistically significant impact on employment, indicating the need to assess the trade-offs of policies that could lead to significant increases in government expenditure. Surprisingly, Governmental R&D Employment does not contribute to “mass-market” employment, despite its quite important role in reducing Youth-Unemployment. Despite the negative side-effects of Governmental R&D Employment on both GVA and GDP, University R&D Employment appears to have a quite important role in reducing Unemployment, especially Youth-Unemployment, while it also does not have a downside in terms of economic growth. Technological Capacity enhancement is the most effective instrument for reducing Unemployment and is a policy without any downside regarding sustainable economical development. In terms of wider policy implications, the results reinforce the idea that European Commission Research and Innovation policies must be restructured, shifting from a transnational framework to a more localised, measurable and operational approach.