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.

Economic Development, Trade and Investment in Southern and Eastern Mediterranean Countries: An Agenda towards a Sustainable Transition. MEDPRO Policy Paper No. 4, February 2013

This policy paper spells out the policy recommendations that emerge from a series of detailed studies undertaken for MEDPRO Work Package 5 on “Economic development, trade and investment” and presents detailed recommendations for the SEMCs and the EU in the areas of macroeconomic management, trade, investment, private sector development and privatisation, and sectoral policies.

Sustainable Development and Collective Learning: Theory and a European Case Study. Bruges European Economic Policy (BEEP) Briefing 7/2004

Network governance of collective learning processes is an essential approach to sustainable development. The first section of the article briefly refers to recent theories about both market and government failures that express scepticism about the way framework conditions for market actors are set. For this reason, the development of networks for collective learning processes seems advantageous if new solutions are to be developed in policy areas concerned with long-term changes and a stepwise internalisation of externalities. With regard to corporate actors’ interests, the article shows recent insights from theories about the knowledge-based firm, where the creation of new knowledge is based on the absorption of societal views. This concept shifts the focus towards knowledge generation as an essential element in the evolution of sustainable markets. This involves at the same time the development of new policies. In this context innovation-inducing regulation is suggested and discussed. The evolution of the Swedish, German and Dutch wind turbine industries are analysed based on the approach of governance put forward in this article. We conclude that these coevolutionary mechanisms may take for granted some of the stabilising and orientating functions previously exercised by basic regulatory activities of the state. In this context, the main function of the governments is to facilitate learning processes that depart from the government functions suggested by welfare economics.

The 2005 Reform of the Stability and Growth Pact: Too Little, Too Late? Bruges European Economic Research (BEER) Papers 6/November 2006

This paper analyses the main critiques addressed by the literature and the policymakers to the 1997 Stability and Growth Pact. It further indicates to what extent the 2005 reform of the Pact meets those critics. It finally argues that the 2005 reform may be too little and arrive too late to restore the Pact credibility, ensure its enforceability and correctly set the derogations to the excessive deficit procedure on the nature of the shocks which cause the output gap rather than its size: a 3% of GDP limit on deficit spending may be a too binding constraint in front of a strongly negative demand shock, while it is irrationally large in front of a supply shock. Some empirical evidence is provided to identify in the last years strongly negative demand shocks from other shocks in the 25 EU Member States. Had this identifying method been adopted in November 2003, the European Commission and the Council would have both agreed to stop the excessive deficit procedure against Germany, but they would have both proceeded against France which apparently was not at the time hit by a strongly negative demand shock.