The triggers of competitiveness: the EFIGE cross-country report. Bruegel Blueprint 17, 17 July 2012

There is a pressing need for Europe to grow out of the crisis, meaning that Europe needs to become more competitive, enabling it to capture growth currently taking place mainly in emerging markets. But what are the triggers of competitiveness? The EFIGE project, led by Bruegel, takes a fresh look by inquiring into the determinants of firm-level international performance – focusing on external competitiveness. In the competitiveness debate, it is crucial to understand not only the macroeconomic challenge, but also to find the right micro-level triggers that will generate growth and exports. The authors identify firm-level total factor productivity as a major determinant of growth and exports. Human capital, research, equity finance and performance based incentives for employees also play their parts. Moreover, size matters and large firms typically are much better exporters than their smaller counterparts. This report builds on previous EFIGE research and studies in depth firm performance in seven countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom) to identify the triggers of competitiveness.

Intra-Euro rebalancing is inevitable, but insufficient. Bruegel Policy Contribution 2012/15, August 2012

Greece, Portugal and Spain face a serious risk of external solvency due to their close to minus 100 percent of GDP net negative international investment positions, which are largely composed of debt. The perceived inability of these countries to rebalance their external positions is a major root of the euro crisis. Intra-euro rebalancing through declines in unit labour costs (ULC) in southern Europe, and ULC increases in northern Europe should continue, but has limits because: The share of intra-euro trade has declined. Intra-euro trade balances have already adjusted to a great extent. The intra-euro real exchange rates of Greece, Portugal and Spain have also either already adjusted or do not indicate significant appreciations since 2000. There are only two main current account surplus countries, Germany and the Netherlands. A purely intra-euro adjustment strategy would require too-significant wage increases in northern countries and wage declines in southern countries, which do not seem to be feasible. Before the crisis, the euro was significantly overvalued despite the close-to balanced current account position. The euro has depreciated recently, but more is needed to support the extra-euro trade of southern euro-area members. A weaker euro would also boost exports, growth, inflation and wage increases in Germany, thereby helping further intra-euro adjustment and the survival of the euro.

A sovereign wealth fund to lift Germany's curse of excess savings. CEPS Policy Brief No. 280, 28 August 2012

As an alternative to the present system of intermediation of the German savings surplus, this paper suggests that the risk-adjusted rate of return could be improved by creating a sovereign wealth fund for Germany (designated DESWF), which could invest excess German savings globally. Such a DESWF would offer German savers a secure vehicle paying a guaranteed positive minimum real interest rate, with a top-up when real investment returns allowed. The vehicle would invest the funds in a portfolio that is highly diversified by geography and asset classes. Positive real returns can be expected in the long run based on positive real global growth. Since, in this case, a significant amount of funds would flow outside the euro area, the euro would depreciate, which would help crisis countries presently struggling to revive growth through exports and to close their external deficits so as to recoup their international credit-worthiness. Target imbalances would gradually disappear and German claims abroad would move from nominal claims on the ECB to diversified real and nominal claims on various private and public foreign entities in a variety of asset classes.

The EU-EFIGE/Bruegel-unicredit dataset. Bruegel Working Paper 2012/13, October 2012

This paper describes the EU-EFIGE/Bruegel-UniCredit dataset (in short the EFIGE dataset), a database recently collected within the EFIGE project (European Firms in a Global Economy: internal policies for external competitiveness) supported by the Directorate General Research of the European Commission through its 7th Framework Programme and coordinated by Bruegel. • The database, for the first time in Europe, combines measures of firms’ international activities (eg exports, outsourcing, FDI, imports) with quantitative and qualitative information on about 150 items ranging from R&D and innovation, labour organisation, financing and organisational activities, and pricing behaviour. Data consists of a representative sample (at the country level for the manufacturing industry) of almost 15,000 surveyed firms (above 10 employees) in seven European economies (Germany, France, Italy, Spain, United Kingdom, Austria, Hungary). Data was collected in 2010, covering the years from 2007 to 2009. Special questions related to the behaviour of firms during the crisis were also included in the survey. • We illustrate the construction and usage of the dataset, capitalising on the experience of researchers who have exploited the data within the EFIGE project. Importantly, the document also reports a comprehensive set of validation measures that have been used to assess the comparability of the survey data with official statistics. A set of descriptive statistics describing the EFIGE variables within (and across) countries and industries is also provided.

A review of growth for construction service companies in global markets

Throughout the developed world, professional services play an increasingly important part in an economy, with many countries showing a substantial positive trade balance for services. Yet, there has been relatively little research on construction services (CS) and, in particular, how well professional service companies (PSFs) perform in the international arena. The method for collecting services export information differs to the way in which goods and products exports data are gathered because of the intangible nature of services. Organisational growth of companies aims to share risks across different regions and sectors, however, the rapidly changing business environment challenges companies with the increasing foreign ownership and changes in procurement. The complexity of today’s international construction services organisations raises two questions: how the organisations can successfully manage growth and what are their motives for international trade. The research focuses on top UK consulting engineering companies to understand their organisational strategy, their export strategy, and drivers for overseas activities. The data will feed a model of professional services exports, which can help to inform the way services export data could be collected to better reflect the industry’s performance.

Use and abuse of mathematical models: an illustration from the 2001 foot and mouth disease epidemic in the United Kingdom

Foot and mouth disease (FMD) is a major threat, not only to countries whose economies rely on agricultural exports, but also to industrialised countries that maintain a healthy domestic livestock industry by eliminating major infectious diseases from their livestock populations. Traditional methods of controlling diseases such as FMD require the rapid detection and slaughter of infected animals, and any susceptible animals with which they may have been in contact, either directly or indirectly. During the 2001 epidemic of FMD in the United Kingdom (UK), this approach was supplemented by a culling policy driven by unvalidated predictive models. The epidemic and its control resulted in the death of approximately ten million animals, public disgust with the magnitude of the slaughter, and political resolve to adopt alternative options, notably including vaccination, to control any future epidemics. The UK experience provides a salutary warning of how models can be abused in the interests of scientific opportunism.

Comparative advantage in demand: Experimental evidence of preferences for genetically modified food in the United States and European Union

The United States (US) exports more than US$6 billion in agricultural commodities to the European Union (EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers' attitudes and preferences. This paper reports results from the first large-scale, cross-Atlantic study to analyse consumer demand for genetically modified food in a non-hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focusses on differences in specialization, comparative advantage and factor endowments across countries, and for on-going trade disputes at the World Trade Organization.

Developments in the Doha Round and WTO dispute settlement: some implications for EU agricultural policy

Progress in the Doha Round is assessed against the changes to the common agricultural policy (CAP) brought about by the Fischler reforms of 2003-2004, and that proposed for sugar. An elimination of export subsidies could place EU exports of processed foods at a competitive disadvantage because of high sugar and milk prices. Provided the single payment scheme falls within the green box, the likely new limits on domestic support should not be problematic for the post-Fischler CAP. However, an ambitious market access package could open up EU markets and bring pressure for further reform. If there is no Doha agreement, existing provisions will continue to apply, but without the protection of the Peace Clause; and increased litigation is likely. Further CAP reform is to be expected.

Link between DOC in near surface peat and stream water in an upland catchment

Hydrologic transport of dissolved organic carbon (DOC) from peat soils may differ to organo-mineral soils in how they responded to changes in flow, because of differences in soil profile and hydrology. In well-drained organo-mineral soils, low flow is through the lower mineral layer where DOC is absorbed and high flow is through the upper organic layer where DOC is produced. DOC concentrations in streams draining organo-mineral soils typically increase with flow. In saturated peat soils, both high and low flows are through an organic layer where DOC is produced. Therefore, DOC in stream water draining peat may not increase in response to changes in flow as there is no switch in flow path between a mineral and organic layer. To verify this, we conducted a high-resolution monitoring study of soil and stream water at an upland peat catchment in northern England. Our data showed a strong positive correlation between DOC concentrations at − 1 and − 5 cm depth and stream water, and weaker correlations between concentrations at − 20 to − 50 cm depth and stream water. Although near surface organic material appears to be the key source of stream water DOC in both peat and organo-mineral soils, we observed a negative correlation between stream flow and DOC concentrations instead of a positive correlation as DOC released from organic layers during low and high flow was diluted by rainfall. The differences in DOC transport processes between peat and organo-mineral soils have different implications for our understanding of long-term changes in DOC exports. While increased rainfall may cause an increase in DOC flux from peat due to an increase in water volume, it may cause a decrease in concentrations. This response is contrary to expected changes in DOC exports from organo-mineral soils, where increase rainfall is likely to result in an increase in flux and concentration.

A 'Kimberley protest': diamond mining, export sanctions, and poverty in Awatia, Ghana

The temporary suspension of diamond exports in Ghana in 2006 and 2007 is arguably the most significant move to address mounting criticisms of the Kimberley Process Certification Scheme (KPCS), an international initiative aimed at stemming the flow of rough diamonds used to finance wars. The ban, which took effect in November 2006, was much praised, particularly in civil society circles, where it continues to be seen as a genuine effort to prevent the smuggling of ‘conflict diamonds’. At the time, Ghana was accused of harbouring stones originating from rebel-held territories in neighbouring Côte d’Ivoire. No evidence was found in support of the case that it was a repository for ‘conflict diamonds’, however, and exports resumed early in March 2007. This article examines the context for the accusations of Ghana’s implication in the smuggling of illicit diamonds, and draws on recent fieldwork to explain how the suspension has affected Akwatia, the country’s main diamondiferous area. The actions taken raise important questions about how suspected violators – particularly smaller diamond-producing nations – of the KPCS should be handled, and underscore how global compacts can have a host of negative repercussions at the village level.

Untitled (Abstraction of Labour Time/ External Recurrence/Monad)

Commissioned print. Artist of the Month Club: February, 2010. January Curator: Mark Beasley. Invisible Exports Gallery, New York. Archival Inkjet Print on metallic silver polyester, 841 x 643mm. Edition of 50 + 10ap. Subsequently exhibited in the following exhibition: 'A Unicorn Basking in the Light of Three Glowing Suns' The Devos Art Museum School of Art & Design at Northern Michigan University October 8 – November 14, 2010 Curated by Anthony Elms and Philip von Zweck

Untitled (Abstraction of labour time eternal recurrence monad)

An AHRC funded project titled: Picturing ideas? Visualising and Synthesising Ideas as art (2009-10). Outputs including: 4 exhibitions; 4 publications; 3 papers; 2 largescale backlit digital prints; 1 commissioned print. (See Additional Information) ----ABSTRACT: Utilising the virtuality of digital imagery this practice-led project explored the possibility of the cross-articulation between text and image and the bridging or synthesising potential of the visual affect of ideas. A series of digital images were produced 'picturing' or 'visualising' philosophical ideas derived from the writings of the philosopher Giles Deleuze, as remodellings of pre-existing philosophical ideas; developed through dialogues and consultation with specialists in the fields from which the ideas were drawn (philosophy, psychology, film) as well as artists and theorists concerned with ideas of 'mental imagery' and visualisation. Final images were produced as a synthesis (or combination) of these visualisations and presented in the format of large scale, backlit digital prints at a series of prestigious international exhibitions (see details above). Evaluation took the form of a four page illustrated text in Frieze magazine (August 2009) and three papers delivered at University of Ulster, Goldsmiths College of Art and Loughborough University. The project also included the publication of a catalogue essay (EAST 09) and an illustrated poem (in the Dark Monarch publication). A print version of the image was commissioned by Invisible Exports Gallery, New York and subsequently exhibited in The Devos Art Museum, School of Art & Design at Northern Michigan University and in a publication edited by Cedar Lewisohn for Tate Publishing. The project was funded by an AHRC practice-led grant (17K) and Arts Council of England award (1.5K). The outputs, including high profile, publicly accessible exhibitions, prestigious publications and conference papers ensured the dissemination of the research to a wide range of audiences, including scholars/researchers across the arts and humanities engaged in practice-based and interdisciplinary theoretical work (in particular in the fields of contemporary art and art theory and those working on the integration of art and theory/philosophy/psychology) but also the wider audience for contemporary art.

Biofuel policies in the EU, US and Brazil

The development of biofuels has been one of the most visible and controversial manifestations of the use of biomass for energy. Biofuels policies in the EU, US and Brazil have been particularly important for the development of the industry in these three important markets. All three have used a variety of measures, including consumption or use mandates, tax incentives and import protection to promote the production and use of biofuels. Despite this, it is uncertain whether the EU will achieve its objective of a 10 per cent share for renewables in transport fuels by 2020. The US is also running into difficulties in meeting consumption mandates for biofuels. Questions are being raised about the continuation of tax credits and import protection. Brazil has liberalised its domestic ethanol market and adopted a more market-oriented approach to biofuels policy, but the management of domestic petroleum prices and the inter-relationship between the sugar market and ethanol production are important factors affecting domestic consumption and exports. In both the EU and the US an ongoing debate about the benefits of reliance on biofuels derived from food crops and concern about the efficacy of current biofuels policies may put their future in doubt.

The determination of total nitrogen and total phosphorus concentrations in freshwaters from land use, stock headage and population data: testing of a model for use in conservation and water quality management

1. Nutrient concentrations (particularly N and P) determine the extent to which water bodies are or may become eutrophic. Direct determination of nutrient content on a wide scale is labour intensive but the main sources of N and P are well known. This paper describes and tests an export coefficient model for prediction of total N and total P from: (i) land use, stock headage and human population; (ii) the export rates of N and P from these sources; and (iii) the river discharge. Such a model might be used to forecast the effects of changes in land use in the future and to hindcast past water quality to establish comparative or baseline states for the monitoring of change. 2. The model has been calibrated against observed data for 1988 and validated against sets of observed data for a sequence of earlier years in ten British catchments varying from uplands through rolling, fertile lowlands to the flat topography of East Anglia. 3. The model predicted total N and total P concentrations with high precision (95% of the variance in observed data explained). It has been used in two forms: the first on a specific catchment basis; the second for a larger natural region which contains the catchment with the assumption that all catchments within that region will be similar. Both models gave similar results with little loss of precision in the latter case. This implies that it will be possible to describe the overall pattern of nutrient export in the UK with only a fraction of the effort needed to carry out the calculations for each individual water body. 4. Comparison between land use, stock headage, population numbers and nutrient export for the ten catchments in the pre-war year of 1931, and for 1970 and 1988 show that there has been a substantial loss of rough grazing to fertilized temporary and permanent grasslands, an increase in the hectarage devoted to arable, consistent increases in the stocking of cattle and sheep and a marked movement of humans to these rural catchments. 5. All of these trends have increased the flows of nutrients with more than a doubling of both total N and total P loads during the period. On average in these rural catchments, stock wastes have been the greatest contributors to both N and P exports, with cultivation the next most important source of N and people of P. Ratios of N to P were high in 1931 and remain little changed so that, in these catchments, phosphorus continues to be the nutrient most likely to control algal crops in standing waters supplied by the rivers studied.

Steady state and dynamic modelling of nitrogen in the River Kennet: impacts of land use change since the 1930s

Steady state and dynamic models have been developed and applied to the River Kennet system. Annual nitrogen exports from the land surface to the river have been estimated based on land use from the 1930s and the 1990s. Long term modelled trends indicate that there has been a large increase in nitrogen transport into the river system driven by increased fertiliser application associated with increased cereal production, increased population and increased livestock levels. The dynamic model INCA Integrated Nitrogen in Catchments. has been applied to simulate the day-to-day transport of N from the terrestrial ecosystem to the riverine environment. This process-based model generates spatial and temporal data and reproduces the observed instream concentrations. Applying the model to current land use and 1930s land use indicates that there has been a major shift in the short term dynamics since the 1930s, with increased river and groundwater concentrations caused by both non-point source pollution from agriculture and point source discharges. �