59

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Democratic institutions and prosperity: The benefits of an open society

04-02-2021

The ongoing structural transformation and the rapid spread of the technologies of the fourth industrial revolution are challenging current democratic institutions and their established forms of governance and regulation. At the same time, these changes offer vast opportunities to enhance, strengthen and expand the existing democratic framework to reflect a more complex and interdependent world. This process has already begun in many democratic societies but further progress is needed. Examining these ...

The ongoing structural transformation and the rapid spread of the technologies of the fourth industrial revolution are challenging current democratic institutions and their established forms of governance and regulation. At the same time, these changes offer vast opportunities to enhance, strengthen and expand the existing democratic framework to reflect a more complex and interdependent world. This process has already begun in many democratic societies but further progress is needed. Examining these issues involves looking at the impact of ongoing complex and simultaneous changes on the theoretical framework underpinning beneficial democratic regulation. More specifically, combining economic, legal and political perspectives, it is necessary to explore how some adaptations to existing democratic institutions could further improve the functioning of democracies while also delivering additional economic benefits to citizens and society as whole. The introduction of a series of promising new tools could offer a potential way to support democratic decision-makers in regulating complexity and tackling ongoing and future challenges. The first of these tools is to use strategic foresight to anticipate and control future events; the second is collective intelligence, following the idea that citizens are collectively capable of providing better solutions to regulatory problems than are public administrations; the third and fourth are concerned with design-thinking and algorithmic regulation respectively. Design-based approaches are credited with opening up innovative options for policy-makers, while algorithms hold the promise of enabling decision-making to handle complex issues while remaining participatory.

China's economic recovery and dual circulation model

11-12-2020

After a delayed response to the outbreak of the novel coronavirus in late 2019, China has expanded its sophisticated digital surveillance systems to the health sector, linking security and health. It has apparently successfully contained the virus, while most other countries still face an uphill battle with Covid-19. China emerged first from lockdown, and its economy rapidly entered a V-shaped recovery. As in 2008, China is driving the global recovery and will derive strategic gains from this role ...

After a delayed response to the outbreak of the novel coronavirus in late 2019, China has expanded its sophisticated digital surveillance systems to the health sector, linking security and health. It has apparently successfully contained the virus, while most other countries still face an uphill battle with Covid-19. China emerged first from lockdown, and its economy rapidly entered a V-shaped recovery. As in 2008, China is driving the global recovery and will derive strategic gains from this role. However, China's relations with advanced economies and some emerging markets have further deteriorated during the pandemic, as its aggressive foreign policy posture has triggered pushback. This has created a more hostile environment for China's economic development and has had a negative impact on China's hitherto almost unconstrained access to these economies. The need to make the Chinese economy more resilient against external shocks and the intention to tap into the unexploited potential of China's huge domestic market in order to realise the nation's ambitions of becoming a global leader in cutting-edge technologies have prompted the Chinese leadership to launch a new economic development paradigm for China. The 'dual circulation development model' still lacks specifics but is expected to be a key theme in China's 14th Five-Year Plan (2021-2025) to be officially approved in March 2021. The concept suggests that, in future, priority will be given to 'domestic circulation' over 'international circulation'. China's more inward-looking development strategy geared towards greater self-reliance in strategic sectors requires major domestic structural reform and investment to unleash the purchasing power of China's low-end consumers and the indigenous innovation efforts to achieve the technological breakthroughs needed. These innovation efforts are expected to be largely state-driven. For the EU the envisaged shifts create challenges and opportunities. On the one hand, competition with China will become fiercer and, on the other, the EU can pursue openings for supply chain diversification with like-minded countries and thus boost its open strategic autonomy.

Economic Dialogues with the President of the Eurogroup during 2014-2019

19-12-2019

This note provides an overview of the Economic Dialogues with the President of the Eurogroup held in the competent Committee of the European Parliament during the 8th legislative term. It provides a summary of the issues raised during the nine dialogues that took place between autumn 2014 and spring 2019, and presents the main topic discussed at each dialogue.

This note provides an overview of the Economic Dialogues with the President of the Eurogroup held in the competent Committee of the European Parliament during the 8th legislative term. It provides a summary of the issues raised during the nine dialogues that took place between autumn 2014 and spring 2019, and presents the main topic discussed at each dialogue.

Diversifying unity. How Eastern Partnership countries develop their economy, governance and identity in a geopolitical context

30-10-2019

This study analyses the Eastern Partnership (EaP) in the year of its 10th anniversary. The Eastern Partnership was set up in 2009 as a joint policy initiative aiming at deepening and strengthening relations between the European Union, its Member States and the six EaP countries of Belarus, Ukraine, Moldova, Georgia, Armenia and Azerbaijan. While each of these countries shares a past in the former Soviet Union, they have developed over time in different directions. Ukraine, Moldova and Georgia have ...

This study analyses the Eastern Partnership (EaP) in the year of its 10th anniversary. The Eastern Partnership was set up in 2009 as a joint policy initiative aiming at deepening and strengthening relations between the European Union, its Member States and the six EaP countries of Belarus, Ukraine, Moldova, Georgia, Armenia and Azerbaijan. While each of these countries shares a past in the former Soviet Union, they have developed over time in different directions. Ukraine, Moldova and Georgia have concluded Association Agreements with the EU, which include Deep and Comprehensive Free Trade Areas. They will have to fulfil conditions laid down in the Association Agreements to make progress on reforms of governance, the judiciary and fighting corruption. Moreover, Georgia and Ukraine are seeking to integrate more deeply into the Western world order, aspiring to membership of NATO and the EU. Armenia and Azerbaijan have different ways of cooperating with the EU. Belarus is furthest from the EU because of its poor record on democracy and human rights. All six countries are to a certain extent within Russia’s sphere of influence and have to deal with several geopolitical constraints, but they have increasingly developed economic relations and national identities of their own. It will be a challenge to maintain a common perspective for the next 10 years of the Eastern Partnership and a further divergence between the countries is likely. This will not only be between countries with an Association Agreement and the others, but along multiple vectors. While further developing statehood, the eastern partners will want to decide increasingly for themselves which forms of cooperation they want to pursue in the future. They may choose international partners according to their perceived needs, including Russia, the US, China or Turkey. The EU for its part should continue to pursue its strengths of assisting in achieving better governance and democracy and strengthening economic ties, while contributing to diminishing geopolitical tensions.

Prospects following South Africa's 2019 elections

02-07-2019

Regional economic and political leader, G20 member, and elected to a United Nations Security Council seat in 2019 for the third time since the end of apartheid, South Africa is a strategic EU partner. Recognised as one of only two full democracies on its continent in the 2018 Democracy Index, South Africa nevertheless faces considerable problems, affecting both the economy and a fragile social fabric still affected by its apartheid history. The governing party's election success comes as no surprise ...

Regional economic and political leader, G20 member, and elected to a United Nations Security Council seat in 2019 for the third time since the end of apartheid, South Africa is a strategic EU partner. Recognised as one of only two full democracies on its continent in the 2018 Democracy Index, South Africa nevertheless faces considerable problems, affecting both the economy and a fragile social fabric still affected by its apartheid history. The governing party's election success comes as no surprise, although its falling popularity increasingly puts its ability to address South Africa's challenges into question. In this context, a revived EU-South Africa strategic partnership could provide a framework for enhanced cooperation in sensitive policy areas.

Exctracto del estudio - El dividendo de dos billones EUR de Europa: Estimación del coste de la no Europa 2019-24

18-04-2019

El presente extracto procede de un estudio que recoge el trabajo en curso de un proyecto a largo plazo destinado a identificar y analizar el «coste de la no Europa» en determinados ámbitos de políticas. Este concepto, utilizado por primera vez por el Parlamento Europeo en la década de 1980, se emplea en este estudio para cuantificar las posibles mejoras de eficiencia que supondría para la economía europea actual el desarrollo de una serie de iniciativas políticas defendidas recientemente por el Parlamento ...

El presente extracto procede de un estudio que recoge el trabajo en curso de un proyecto a largo plazo destinado a identificar y analizar el «coste de la no Europa» en determinados ámbitos de políticas. Este concepto, utilizado por primera vez por el Parlamento Europeo en la década de 1980, se emplea en este estudio para cuantificar las posibles mejoras de eficiencia que supondría para la economía europea actual el desarrollo de una serie de iniciativas políticas defendidas recientemente por el Parlamento (desde un mercado único digital más amplio y profundo hasta una coordinación más sistemática de políticas nacionales y europeas de defensa o una mayor cooperación para luchar contra la elusión fiscal por parte de las empresas). Los beneficios se miden principalmente en función del PIB adicional generado o de un empleo más lógico de los recursos públicos. El último análisis señala que existen posibles ganancias para la economía europea (EU-28) de más de 2 200 000 millones EUR que podrían lograrse si las políticas preconizadas por el Parlamento en una serie de áreas específicas fuesen adoptadas por las instituciones de la Unión y más tarde aplicadas por completo en un período de diez años desde 2019 a 2029. Se trataría, en efecto, de un «dividendo de dos billones de euros», lo que representaría un aumento de aproximadamente el 14 % del PIB total de la Unión (15,3 billones EUR en 2017). La finalidad del presente estudio es servir como contribución al debate en curso sobre las prioridades políticas de la Unión para el próximo ciclo quinquenal institucional comprendido entre 2019 y 2024.

Interlinks between migration and development

23-01-2019

The EU and its Member States have reshaped their external policies, including development cooperation, to place more focus on migration-related issues. Widely used in this context, political rhetoric on 'addressing root causes of migration' has been questioned by academics as creating unrealistic expectations. Indeed, a positive correlation between migration and narrowly understood economic development persists until countries reach middle-income country level. However, several key drivers of migration ...

The EU and its Member States have reshaped their external policies, including development cooperation, to place more focus on migration-related issues. Widely used in this context, political rhetoric on 'addressing root causes of migration' has been questioned by academics as creating unrealistic expectations. Indeed, a positive correlation between migration and narrowly understood economic development persists until countries reach middle-income country level. However, several key drivers of migration are related to discrepancies in levels of human development. Demographic pressures, youth unemployment, job opportunities in the country of destination, the growth of migrant networks and the desire to reunite families, all play roles in migration. A complex interaction between aid and migration also exists, which is far from a simple one-way causality. In general, poverty alleviation, the primary objective of development aid, tends to enhance rather than deter the realisation of the aspiration to migrate, in the short- and medium-term, by increasing household incomes. A more global approach to cooperation with third countries, such as the EU's already well-established assistance focusing on good governance, infrastructure, rural development and strengthening resilience, as well as going beyond development assistance to include trade and investment, appears promising in terms of deterring migration. On the other hand, studies confirm that international migration is an important path for development: remittances constitute a tool for poverty reduction, while diaspora skills and networks provide resources for economic and social progress. Nevertheless, EU policy integrating development aid as an instrument for curbing irregular migration is criticised by development stakeholders as undermining aid effectiveness, principles, and risks diverting aid from the most needy and indirectly prompting human rights violations. To avoid such outcomes, a contextual analysis must be the basis for identifying genuine synergies to be reinforced between development and migration management.

Research for REGI Committee - Externalities of Cohesion Policy

15-10-2018

The study investigates the effects of Cohesion Policy (CP) which occur in a country other than the one in which CP resources were actually spent. The study estimates that macroeconomic spillovers significantly contribute to the impact of CP. Spillovers directed to EU countries represent around 9% of the total annual CP expenditure. Other spillovers to Non-EU countries are around 8% of the CP expenditure. Macro and micro spillovers together arrive at the 21% of the annual CP expenditure 67% of which ...

The study investigates the effects of Cohesion Policy (CP) which occur in a country other than the one in which CP resources were actually spent. The study estimates that macroeconomic spillovers significantly contribute to the impact of CP. Spillovers directed to EU countries represent around 9% of the total annual CP expenditure. Other spillovers to Non-EU countries are around 8% of the CP expenditure. Macro and micro spillovers together arrive at the 21% of the annual CP expenditure 67% of which is distributed among EU countries. Around 20% of the CP expenditure can trigger sectoral spillover effects in the environment, transport and higher education sectors. The analysis demonstrates that externalities reinforce EU growth and competitiveness without CP deserting its convergence objective.

Autor externo

Andrea Naldini, Alessandro Daraio, Gessica Vella and Enrico Wolleb, Roman Römisch

How could the Stability and Growth Pact be simplified?

23-04-2018

Past reforms of the Stability and Growth Pact (SGP) have improved its economic rationale, but this progress has come at the expense of simplicity, transparency and, possibly, enforceability. This study surveys and evaluates reform models that could reduce complexity without compromising the SGP’s indispensable flexibility. From a holistic perspective, the greatest potential for simplification will result from a shift of discretionary power to an independent fiscal institution. Independence is a substitute ...

Past reforms of the Stability and Growth Pact (SGP) have improved its economic rationale, but this progress has come at the expense of simplicity, transparency and, possibly, enforceability. This study surveys and evaluates reform models that could reduce complexity without compromising the SGP’s indispensable flexibility. From a holistic perspective, the greatest potential for simplification will result from a shift of discretionary power to an independent fiscal institution. Independence is a substitute for complexity. With a narrower focus on the potential streamlining of the SGP and a reduction of excess complexity, first, the preventive and corrective arms could be integrated into one procedure. Second, this integrated procedure should be centred on a net expenditure rule that is combined with a debt feedback mechanism and a memory for expenditure overruns. Third, further fiscal indicators that are currently treated as parallel targets (headline deficit rule and structural balance) could be downgraded to non-binding reference values. And fourth, the planned transposition of the Fiscal Compact into European law should follow SGP reforms in order to promote consistency between European and national fiscal rules.

Autor externo

Friedrich Heinemann

How could the Stability and Growth Pact be simplified?

23-04-2018

An assessment of the present SGP fiscal rules reveals a significant deterioration in simplicity, undermining their effectiveness. In fact, in both design and process, they have become the most complex worldwide. Three options for future reform are offered to correct this deficiency. Under the first, the structural balance and the debt convergence targets are replaced with a debt-stabilizing or -reducing primary surplus target, while retaining the expenditure benchmark. The second consolidates all ...

An assessment of the present SGP fiscal rules reveals a significant deterioration in simplicity, undermining their effectiveness. In fact, in both design and process, they have become the most complex worldwide. Three options for future reform are offered to correct this deficiency. Under the first, the structural balance and the debt convergence targets are replaced with a debt-stabilizing or -reducing primary surplus target, while retaining the expenditure benchmark. The second consolidates all current rules into a single operational debt rule by setting a limit on the discretionary budget deficit, derived from the debt reduction target. The third option consists of a market-based approach, inspired by the oldest and most successful subnational fiscal frameworks.

Autor externo

George Kopits

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