Will income inequality cause a middle-income trap in Asia? Bruegel Working Paper 2013/06, 10 October 2013

The Asian economy is expected to realise favourable growth during the first half of this century, but there is no guarantee. There is a discussion about a ‘middle-income trap’, which refers to a country that has realised rapid growth to become a middle-income country but is unable to grow further. A middle-income trap could occur not only if there is a delay in shifting the economy toward a productivity-driven structure, but also if there is a worsening of income distribution.We consider this in line with the theories of development economics and through a quantitative analysis. The relationship between income inequality and the trap can be explained by the Kuznets hypothesis and the basic-needs approach. Our quantitative analysis supports the Kuznets hypothesis, and indicates that,although a low-income country can accelerate its economic growth with the worsening of income distribution as an engine, a middle income country would experience a decreasing growth rate if it fails to narrow the income gap between the top and bottom income groups. The results also show that the basic-needs approach is also applicable in practice, and imply that the improvement of access to secondary education is important. A sensitivity analysis for three Asian upper-middle-income countries(China, Malaysia and Thailand) also shows that the situation related to a middle-income trap is worse than average in China and Malaysia. These two countries, according to the result of the sensitivity analysis, should urgently improve access to secondary education and should implement income redistribution measures to develop high-tech industries, before their demographic dividends expire. Income redistribution includes the narrowing of rural urban income disparities, benefits to low-income individuals, direct income transfers, vouchers or free provision of education and health-care, and so on, but none of these are simple to implement.

Who will monitor the spies? CEPS Commentary, 8 January 2014

A majority of national governments across the EU have long tried to cordon off their practices of mass interception of communications data and cyber-hacking of foreign companies and diplomats from supranational scrutiny by the EU institutions and courts, arguing that they remain within the remit of their ‘exclusive competence’ on grounds of national security. In light of the revelations that some EU member states (namely the UK, France, Germany and Sweden) are running their own secret interception programmes, however, the question of whether the EU can and should intervene becomes more pressing. This commentary, by a team of JHA specialists at CEPS, offers four important legal reasons why the covert surveillance programmes of member states should not be regarded as falling outside the scope of EU intervention.

Will the Transatlantic Trade and Investment Partnership be a game-changer? EU Centre Singapore Policy Brief No. 5, April 2013

In February 2013, US President Barrack Obama, European Council President Herman Van Rompuy and President of the European Commission José Manuel Barroso announced the decision to go for an ambitious and comprehensive trade and investment agreement between the US and the EU. To be called the Transatlantic Trade and Investment Partnership (TTIP), this agreement would lead to a new stage in the transatlantic relationship and be a much needed boost to the lacklustre economic recovery so far. Some analysts have even argued that TTIP would be a “game changer” – besides the economic gains, it would serve a bigger strategic purpose of promoting EU-US common objective to set higher standards of trade liberalisation, and thereby level the playing field in China and other key emerging markets. This policy brief examines the reasons behind the current push towards TTIP and the possible contents of such an agreement. It also discusses the possible obstacles to the realisation of TTIP, and at the same time, looks into what a successful conclusion of TTIP would mean for Asia and beyond.

Will the readmission agreement bring the EU and Turkey together or pull them apart? CEPS Commentary, 4 February 2014

Following a period when EU-Turkish relations have not been particularly close, the readmission agreement signed in December 2013 by the Home Affairs Commissioner Cecilia Malmstrom and the Turkish Minister of Foreign Affairs Ahmet Davutoglu could help inject some sorely needed goodwill and trust into the relationship. Yet, as pointed out in this commentary, there is always the risk that the challenges faced in the actual implementation of the agreement will aggravate the relationship.

Will Crimea herald a new post-Cold War era world? EPC Commentary, 7 April 2014

The end of the Cold War twenty-five years ago brought about a difficult but manageable world in which Russia, the US, and European countries cooperated to manage common problems. There have been difficult times, with the break up of former Yugoslavia, the NATO intervention for Kosovo, and in 2008 when Russia’s intervention in Georgia’s breakaway regions of South Ossetia and Abkahzia nearly led to a head to head with the West. On the whole, the cooperation between old foes which framed the end of the Cold War, resisted these tests. The Helsinki Final Act of 1975 and the agreement not to redraw the map of Europe was never so evidently ignored as today.

Better use of resources is the means to growth, prosperity and welfare - but will the EU jump on the opportunity? EPC Commentary, 25 September 2014

As the new European Commission steps in and looks for ways to promote growth and competitiveness, its success will depend on what emphasis will be given to creating a more sustainable European economy. What will determine the EU’s competitiveness and comparative advantage on a global scene is how well we will respond to the ongoing economic and ecological crises – which are intertwined and reinforce each other. The big question is what emphasis will the new Commission and the EU as a whole give to promoting sustainable and greener growth, based on good management of natural resources and biodiversity, smarter use of resources and mitigating climate change?

EU enlargement to the Balkans: will the leopard change its spots? EPC Commentary, 29 September 2014

As the leadership of the European Union hands over the baton to a new management this autumn, will the winds of change blow also through the cobwebs of the EU’s enlargement agenda? Jean-Claude Juncker – the incoming President of the European Commission – has already promised to put the gearbox of further EU widening in neutral for the next five years of his mandate, and has designated the Austrian Johannes Hahn as Commissioner for the re-baptised portfolio of now European Neighbourhood Policy and Enlargement Negotiations, instructing him to focus on the Union’s political and economic ties with Southern and Eastern Europe, and in particular with the Balkans. Such an approach in the field of enlargement – once crowned the jewel of EU foreign policy – has all the appeal of a damp rag but does not necessarily depart from the festina lente strategy of the recent past. Inside the Union, political appetite and public support for expansion have been fizzling since Bulgaria and Romania joined in 2007, and were then severely curbed in the context of the on-going crisis by growing fears of importing organised crime and migrants from the Balkans. Juncker’s logic of consolidation sounds depressingly similar to what it supposedly replaces and incidentally, it also fits neatly with the unambitious and inward-looking mantra favoured at present in discussions at all levels on the future of European integration, more generally. With the 28-member block determined to catch its breath in the immediate time period, and given that even the forerunner countries in the Balkans – that is, Montenegro and Serbia – will realistically need more than five years to complete their accession talks, what priorities should guide Commissioner Hahn, soon to be Directorate-General for Neighbourhood and Enlargement Negotiations – when they get down to business on 1 November?

The ECB AQR and the EBA Stress Test: What will the numbers tell? CEPS Commentary, 23 October 2014

From the Introduction. With the results of its asset quality review (AQR), to be published on 26 October 2014, the European Central Bank intends to provide clarity on the shape of the 120 banks it will supervise in the eurozone, and it may request a series of follow-up actions before assuming its new set of tasks under the Single Supervisory Mechanism (SSM) Regulation in November. On the same day, the European Banking Authority (EBA) will also be publishing the results of its stress test, covering 123 banks across 22 European Economic Area (EEA) countries. For the ECB, it will be a matter of setting the standard for its future task, whereas EBA, seeks to restore the confidence it lost in the 2011 stress test and 2012 capital exercise. Both institutions will need to indicate how they will cooperate in the future in these tasks, and through enhanced disclosure, strengthen the confidence in the European banking system.