The fifth enlargement of the EU has now brought together twenty five countries, a massive success. But success has its price: twenty-five countries do not cooperate as six used to. The result is a general impression that the undertaking is being diluted and that national interests prevail over the common good, which means less willingness to take the next integrative step. This paper argues that this perception is largely misguided. The EU-25 group is considerably more integrated than the EU-6 ever was. Dilution is not a necessary consequence of enlargement, rather enlargement is bringing to the fore a number of institutional failures that were present all along.
This paper takes a politico-economic view of the link between enlargement and deepening. After a broad review of the task allocation principles, it concludes that enlargement and deepening are not substitutes but complements. It produces evidence that enlargement is not increasing preference heterogeneities within the union, but that it leads national governments to preserve more forcefully their own powers, often against the wishes of their own citizens. The result is an inability to reform the decisionmaking process that has become unwieldy as the result of enlargement.
The issue, then, is how to restore the EU's ability to run its affairs. The European Constitutional Convention has made little headway. Other solutions that go beyond current debates are examined. "Pioneer clubs" raise many unresolved issues. More promising, maybe, is the idea that the acquis communautaires should be once and for all decisions. By lowering the stakes of both sovereignty transfers and qualified majority voting, allowing changes in both directions between shared and national competencies could encourage governments to accept more daring reforms. Strengthening the legitimacy of union-specific institutions (the European Parliament or the Commission Presidency) would create a counter-power to deal with national governments' natural tendency to defend their own prerogatives.
Authored by: Charles Wyplosz
Published in 2005
The European debt crisis triggered a debate on the lacking components of the EU and EMU integration architecture. Many believe that a common currency requires closer fiscal and political integration as a condition for its survival. This opinion is not necessarily supported by the experience of other monetary unions, especially those created by sovereign states. On the other hand, the current EU integration architecture already contains several elements of fiscal union. Furthermore, in several important policy areas such as financial supervision, defense, security, border protection, foreign policy, environmental protection, and climate change, the centralization of tasks and resources at the Union level could offer increasing returns to scale and a better chance to address pan-European externalities. This applies to the entire EU, not only to the Eurozone.
Each variant of fiscal integration must be based on sound foundations of fiscal discipline. Market discipline, i.e., the danger of sovereign default, supplemented by clear and consistently enforced fiscal rules is the best solution to this problem. Unfortunately, since 2010, the ‘no bail out’ principle has been replaced by a policy of conditional bailout of governments in fiscal trouble. Some proposals, such as Eurobonds or the lender of last resort to governments, go even further in this direction, and threaten to build a dysfunctional fiscal union.
Authored by: Marek Dąbrowski
Published in 2013
Statement delivered by Oleksandr Tytarchuk at the International Conference “Autocratical challenge for the European project – what to do and not to do,” held by the Charter’97 Foundation with support of the International Visegrad Fund, in Warsaw, on May 25, 2016.
The current fiscal imbalances and fragilities in the Southern and Eastern Mediterranean countries (SEMC) are the result of decades of instability, but have become more visible since 2008, when a combination of adverse economic and political shocks (the global and European financial crises, Arab Spring) hit the region. In an environment of slower growth and higher public expenditure pressures, fiscal deficits and public debts have increased rapidly. This has led to the deterioration of current accounts, a depletion of official reserves, the depreciation of some currencies and higher inflationary pressure.
To avoid the danger of public debt and a balance-of-payment crisis, comprehensive economic reforms, including fiscal adjustment, are urgently needed. These reforms should involve eliminating energy and food subsidies and replacing them with targeted social assistance, reducing the oversized public administration and privatizing public sector enterprises, improving the business climate, increasing trade and investment openness, and sector diversification. The SEMC may also benefit from a peace dividend if the numerous internal and regional conflicts are resolved.
However, the success of economic reforms will depend on the results of the political transition, i.e., the ability to build stable democratic regimes which can resist populist temptations and rally political support for more rational economic policies.
Authored by: Marek Dąbrowski
Published in 2014
The European debt crisis triggered a debate on the lacking components of the EU and EMU integration architecture. Many believe that a common currency requires closer fiscal and political integration as a condition for its survival. This opinion is not necessarily supported by the experience of other monetary unions, especially those created by sovereign states. On the other hand, the current EU integration architecture already contains several elements of fiscal union. Furthermore, in several important policy areas such as financial supervision, defense, security, border protection, foreign policy, environmental protection, and climate change, the centralization of tasks and resources at the Union level could offer increasing returns to scale and a better chance to address pan-European externalities. This applies to the entire EU, not only to the Eurozone.
Each variant of fiscal integration must be based on sound foundations of fiscal discipline. Market discipline, i.e., the danger of sovereign default, supplemented by clear and consistently enforced fiscal rules is the best solution to this problem. Unfortunately, since 2010, the ‘no bail out’ principle has been replaced by a policy of conditional bailout of governments in fiscal trouble. Some proposals, such as Eurobonds or the lender of last resort to governments, go even further in this direction, and threaten to build a dysfunctional fiscal union.
Authored by: Marek Dąbrowski
Published in 2013
Statement delivered by Oleksandr Tytarchuk at the International Conference “Autocratical challenge for the European project – what to do and not to do,” held by the Charter’97 Foundation with support of the International Visegrad Fund, in Warsaw, on May 25, 2016.
The current fiscal imbalances and fragilities in the Southern and Eastern Mediterranean countries (SEMC) are the result of decades of instability, but have become more visible since 2008, when a combination of adverse economic and political shocks (the global and European financial crises, Arab Spring) hit the region. In an environment of slower growth and higher public expenditure pressures, fiscal deficits and public debts have increased rapidly. This has led to the deterioration of current accounts, a depletion of official reserves, the depreciation of some currencies and higher inflationary pressure.
To avoid the danger of public debt and a balance-of-payment crisis, comprehensive economic reforms, including fiscal adjustment, are urgently needed. These reforms should involve eliminating energy and food subsidies and replacing them with targeted social assistance, reducing the oversized public administration and privatizing public sector enterprises, improving the business climate, increasing trade and investment openness, and sector diversification. The SEMC may also benefit from a peace dividend if the numerous internal and regional conflicts are resolved.
However, the success of economic reforms will depend on the results of the political transition, i.e., the ability to build stable democratic regimes which can resist populist temptations and rally political support for more rational economic policies.
Authored by: Marek Dąbrowski
Published in 2014
A report prepared for the
Department for international development (DFID)
Project: “the role of fisheries in poverty alleviation and growth: past, present and future” 2005
A report prepared for the
Department for International Development (DFID)
Project: ‘The Role of Fisheries in Poverty Alleviation
and Growth: Past, Present and Future’
This presentation gives a quick account of the activities of the Fisheries department in inland fisheries and aquaculture in Tamil Nadu. It also talks about the development of fish culture in community ponds& tanks and the need for reforms in community tank management.
a Presentation by Department of Trade and Industry (DTI) at the BSP Regional Financial Literacy Campaign for OFWs in Bacolod City, Philippines on June 28, 2007
The paper discusses the role of regional public goods vs. global goods in influencing postcommunist transition in Central and Eastern Europe and former USSR with special attention given to three particular factors: (i) external anchoring of national reform process; (ii) international trade arrangements and (iii) international financial stability.
Authored by: Marek Dabrowski, Artur Radziwill
Published in 2007
This paper evaluates achievements and shortcomings of the Lisbon Strategy launched by the European Union in the spring of 2000 aiming to increase the competitiveness of the European economy within ten years. A careful examination of the Strategy’s pros and cons shows that its general rationale was sound and helpful despite an incorrect and naive political call to economically outperform the rest of the world in such period. The main priorities of the Strategy: promoting growth through creating more and better jobs and developing the knowledge base of the economy, remain valid for today and for the future. However, it has to be underlined that implementing desired changes requires time. At the moment, it is crucial to accomplish structural reforms, which have significant impact on job creation, business performance and growth. Among them, it is essential to complete the Single Market, still limited by many administrative barriers.
The paper shows main areas of necessary improvements to be undertaken by the Community and the member states. To strengthen real ownership of the Lisbon process, politicians must change their thinking from short-term and national to long-term and beneficial for the entire Community. Only such committed leadership can persuade the citizens to support the reforms, aiming to build a common European public good. Exploring these ideas would be a desirable return to the basic concept of the European Community, shaped by its founding fathers short after the World War II.
Authored by: Barbara Blaszczyk
Published in 2005
This paper describes the general framework of the EU’s emerging relationship with its new neighbours and investigates the potential economic impact of the European Neighbourhood Policy (ENP), both for the EU itself and for its neighbours. In particular, it seeks to develop an answer to the question of whether the ENP is sufficiently attractive so as to induce the governments in neighbourhood countries to adopt (or accelerate the adoption of) the types of economic and governance reforms that were implemented in the new member states during their accession processes. Although the specifics of the ENP are still being developed, the lack of incentives as regards to unclear accession to the EU is identified as the main weakness of the ENP.
Economically, the ENP seeks to ease trade restrictions through the implementation of legislative approximation and convergence with EU standards, before accessing the EU’s single market can become a reality. Positively though, is that the access to the single market could improve significantly under the ENP. As experienced by the Central European states, FDI is instrumental to transform the economies of the Western CIS and the Caucasus. The ENP can be a supportive framework for improving investor confidence. Likewise, the new European Neighbourhood Instrument can add more coherence in technical assistance, and provide more financial support for creating capacities for trade infrastructures and institutional and private sector development. Finally, measures to promote increased labour migration between the new neighbours and the enlarged EU may be worth to put on the agenda for the future development and impact of the ENP.
Authored by: Susanne Milcher, Ben Slay
Published in 2005
Implementation of the European internal market and East-West integration has been accompanied by dramatic change in the spatial distribution of economic activity, with higher growth west and east of a longitude degree through Germany and Italy. In the east, income growth has been accompanied by increasing regional disparities within countries. We examine theoretically and empirically whether European integration as such can explain these developments. Using a numerical simulation model with 9 countries and 90 regions, theoretical predictions are derived about how various patterns of integration may affect the income distribution. Comparing with reality, we find that a reduction in distance-related trade costs combined with east-west integration is best able to explain the actual changes in Europe's economic geography. This suggests that the implementation of the European internal market or the Euro has "made Europe smaller". In Central Europe, capital regions grow faster and there are few east-west growth differences inside countries. There is no convincing support for the hypothesis that European integration had adverse effects on non-members.
Authored by: Arne Melchior
Published in 2009
The Lisbon Strategy launched by the European Union in 2000 was designed to increase the growth and modernize Europe, while caring for sustainable development and social cohesion. The Strategy represented an innovative approach to development because economic objectives were not juxtaposed with social ones. Instead, the Strategy endeavoured to demonstrate that economic and social objectives are intertwined and the implementation the economic objectives might feed-back support and strength to the social objectives, and vice versa.
Authored by: Urlik Butzow Mogensen, Patrick Lenain, Vicente Royuela-Mora
The paper shows that the question that is relevant for the debate on the efficacy of development assistance is not so much as an issue of how much, but rather for what. In view of the growing awareness of ODA’s inefficiency in achieving intended aims, this paper proposes an alternative approach to development assistance policies – economic integration and subsidiarity provides the conditions necessary for ODA to produce higher rates of economic growth on a sustainable basis. Europe is an excellent case in point, in this context. Europe has in the last decades experienced a number of success stories in moving out of poverty and onto sustainable economic growth. The secret of success has been the push towards economic integration, and the adoption of economic reforms at the local, national, and regional level conducive to economic growth. The recipient countries of development assistance have much to learn from the European experience.
Since May 1, 2004 the European Union's new member states (NMS) have been subject to the same fiscal rules established in the Treaty on the European Union and Stability and Growth Pact (SGP) as the old member states (OMS). The NMS entered the EU running structural fiscal deficits. More than half of them (including the biggest ones) breach the Treaty's actual deficit limits and are already the subject of the excessive deficit procedure. A high rate of economic growth makes the fiscal situation of most NMS reasonably manageable in the short- to medium-term, but the long term fiscal outlook, mostly connected with the consequences of an aging population, is dramatic. The NMS should therefore prepare themselves now to be able to meet this challenge over the next decades (the same goes for the OMS). In addition, the perspective of EMU entry should provide the NMS with a strong incentive to reduce their deficits now because waiting (and postponing both fiscal adjustment and the adoption of the Euro) will only result in higher cumulative fiscal costs. The additional financial burden connected with EU accession cannot serve as excuse in delaying fiscal consolidation.
In spite of the growing debate on the relevance of the EU's fiscal surveillance rules and not excluding the possibility of their limited modification, they should not be relaxed. Frequent breaching of these rules cannot serve as an argument that they are irrelevant from the point of view of safeguarding fiscal prudence and avoiding fiscal 'free riding' under the umbrella of monetary union. Any version of fiscal surveillance rules (either current or modified) must be solidly anchored in an effective enforcement mechanism (including automatic sanctions) at the EU and national levels.
Authored by: Malgorzata Antczak, Marek Dabrowski, Michal Gorzelak
Published in 2005
Does European economic integration create more inequality between domestic regions, or is the opposite true? We show that a general answer to this question does not exist, and that the outcome depends on the liberalisation scenario. In order to examine the impact of European and international integration on the regions, the paper develops a numerical simulation model with nine countries and 90 regions. Eastward extension of European integration is beneficial for old as well as new member countries, but within countries the impact varies across regions. Reduction in distance-related trade costs is particularly good for the European peripheries. Each liberalisation scenario has a distinct impact on the spatial income distribution, and there is no general rule telling that integration causes more or less agglomeration.
Authored by Arne Melchior
Published in 2009
A report prepared for the
Department for international development (DFID)
Project: “the role of fisheries in poverty alleviation and growth: past, present and future” 2005
A report prepared for the
Department for International Development (DFID)
Project: ‘The Role of Fisheries in Poverty Alleviation
and Growth: Past, Present and Future’
This presentation gives a quick account of the activities of the Fisheries department in inland fisheries and aquaculture in Tamil Nadu. It also talks about the development of fish culture in community ponds& tanks and the need for reforms in community tank management.
a Presentation by Department of Trade and Industry (DTI) at the BSP Regional Financial Literacy Campaign for OFWs in Bacolod City, Philippines on June 28, 2007
The paper discusses the role of regional public goods vs. global goods in influencing postcommunist transition in Central and Eastern Europe and former USSR with special attention given to three particular factors: (i) external anchoring of national reform process; (ii) international trade arrangements and (iii) international financial stability.
Authored by: Marek Dabrowski, Artur Radziwill
Published in 2007
This paper evaluates achievements and shortcomings of the Lisbon Strategy launched by the European Union in the spring of 2000 aiming to increase the competitiveness of the European economy within ten years. A careful examination of the Strategy’s pros and cons shows that its general rationale was sound and helpful despite an incorrect and naive political call to economically outperform the rest of the world in such period. The main priorities of the Strategy: promoting growth through creating more and better jobs and developing the knowledge base of the economy, remain valid for today and for the future. However, it has to be underlined that implementing desired changes requires time. At the moment, it is crucial to accomplish structural reforms, which have significant impact on job creation, business performance and growth. Among them, it is essential to complete the Single Market, still limited by many administrative barriers.
The paper shows main areas of necessary improvements to be undertaken by the Community and the member states. To strengthen real ownership of the Lisbon process, politicians must change their thinking from short-term and national to long-term and beneficial for the entire Community. Only such committed leadership can persuade the citizens to support the reforms, aiming to build a common European public good. Exploring these ideas would be a desirable return to the basic concept of the European Community, shaped by its founding fathers short after the World War II.
Authored by: Barbara Blaszczyk
Published in 2005
This paper describes the general framework of the EU’s emerging relationship with its new neighbours and investigates the potential economic impact of the European Neighbourhood Policy (ENP), both for the EU itself and for its neighbours. In particular, it seeks to develop an answer to the question of whether the ENP is sufficiently attractive so as to induce the governments in neighbourhood countries to adopt (or accelerate the adoption of) the types of economic and governance reforms that were implemented in the new member states during their accession processes. Although the specifics of the ENP are still being developed, the lack of incentives as regards to unclear accession to the EU is identified as the main weakness of the ENP.
Economically, the ENP seeks to ease trade restrictions through the implementation of legislative approximation and convergence with EU standards, before accessing the EU’s single market can become a reality. Positively though, is that the access to the single market could improve significantly under the ENP. As experienced by the Central European states, FDI is instrumental to transform the economies of the Western CIS and the Caucasus. The ENP can be a supportive framework for improving investor confidence. Likewise, the new European Neighbourhood Instrument can add more coherence in technical assistance, and provide more financial support for creating capacities for trade infrastructures and institutional and private sector development. Finally, measures to promote increased labour migration between the new neighbours and the enlarged EU may be worth to put on the agenda for the future development and impact of the ENP.
Authored by: Susanne Milcher, Ben Slay
Published in 2005
Implementation of the European internal market and East-West integration has been accompanied by dramatic change in the spatial distribution of economic activity, with higher growth west and east of a longitude degree through Germany and Italy. In the east, income growth has been accompanied by increasing regional disparities within countries. We examine theoretically and empirically whether European integration as such can explain these developments. Using a numerical simulation model with 9 countries and 90 regions, theoretical predictions are derived about how various patterns of integration may affect the income distribution. Comparing with reality, we find that a reduction in distance-related trade costs combined with east-west integration is best able to explain the actual changes in Europe's economic geography. This suggests that the implementation of the European internal market or the Euro has "made Europe smaller". In Central Europe, capital regions grow faster and there are few east-west growth differences inside countries. There is no convincing support for the hypothesis that European integration had adverse effects on non-members.
Authored by: Arne Melchior
Published in 2009
The Lisbon Strategy launched by the European Union in 2000 was designed to increase the growth and modernize Europe, while caring for sustainable development and social cohesion. The Strategy represented an innovative approach to development because economic objectives were not juxtaposed with social ones. Instead, the Strategy endeavoured to demonstrate that economic and social objectives are intertwined and the implementation the economic objectives might feed-back support and strength to the social objectives, and vice versa.
Authored by: Urlik Butzow Mogensen, Patrick Lenain, Vicente Royuela-Mora
The paper shows that the question that is relevant for the debate on the efficacy of development assistance is not so much as an issue of how much, but rather for what. In view of the growing awareness of ODA’s inefficiency in achieving intended aims, this paper proposes an alternative approach to development assistance policies – economic integration and subsidiarity provides the conditions necessary for ODA to produce higher rates of economic growth on a sustainable basis. Europe is an excellent case in point, in this context. Europe has in the last decades experienced a number of success stories in moving out of poverty and onto sustainable economic growth. The secret of success has been the push towards economic integration, and the adoption of economic reforms at the local, national, and regional level conducive to economic growth. The recipient countries of development assistance have much to learn from the European experience.
Since May 1, 2004 the European Union's new member states (NMS) have been subject to the same fiscal rules established in the Treaty on the European Union and Stability and Growth Pact (SGP) as the old member states (OMS). The NMS entered the EU running structural fiscal deficits. More than half of them (including the biggest ones) breach the Treaty's actual deficit limits and are already the subject of the excessive deficit procedure. A high rate of economic growth makes the fiscal situation of most NMS reasonably manageable in the short- to medium-term, but the long term fiscal outlook, mostly connected with the consequences of an aging population, is dramatic. The NMS should therefore prepare themselves now to be able to meet this challenge over the next decades (the same goes for the OMS). In addition, the perspective of EMU entry should provide the NMS with a strong incentive to reduce their deficits now because waiting (and postponing both fiscal adjustment and the adoption of the Euro) will only result in higher cumulative fiscal costs. The additional financial burden connected with EU accession cannot serve as excuse in delaying fiscal consolidation.
In spite of the growing debate on the relevance of the EU's fiscal surveillance rules and not excluding the possibility of their limited modification, they should not be relaxed. Frequent breaching of these rules cannot serve as an argument that they are irrelevant from the point of view of safeguarding fiscal prudence and avoiding fiscal 'free riding' under the umbrella of monetary union. Any version of fiscal surveillance rules (either current or modified) must be solidly anchored in an effective enforcement mechanism (including automatic sanctions) at the EU and national levels.
Authored by: Malgorzata Antczak, Marek Dabrowski, Michal Gorzelak
Published in 2005
Does European economic integration create more inequality between domestic regions, or is the opposite true? We show that a general answer to this question does not exist, and that the outcome depends on the liberalisation scenario. In order to examine the impact of European and international integration on the regions, the paper develops a numerical simulation model with nine countries and 90 regions. Eastward extension of European integration is beneficial for old as well as new member countries, but within countries the impact varies across regions. Reduction in distance-related trade costs is particularly good for the European peripheries. Each liberalisation scenario has a distinct impact on the spatial income distribution, and there is no general rule telling that integration causes more or less agglomeration.
Authored by Arne Melchior
Published in 2009
Piotr Kozarzewski and Maciej Bałtowski analyse the causes and manifestations of this trend in economic policy in Poland. They use privatization policy as an example. The authors examine the effects of the privatization policy and point to a large unfinished agenda in ownership transformation that has had an adverse impact on the institutional setup of the Polish state, creating grounds for rent seeking and cronyism, which, in turn, impede the pace of privatization. They find out that it is the increasing capture of the state by rent-seeking groups, and not, contrary to popular opinion, the global financial crisis, that most contributes to the growing statist trends of Poland’s economic policy.
This authors of this volume investigate the actual evolution of ownership structure in firms privatized through "wholesale schemes" – voucher privatization in the Czech Republic and the National Investment Fund program in Poland – using original databases. They attempt to answer questions concerning the factors influencing this evolution and analyze the interconnections between property rights reallocation, ownership concentration, and the corporate governance of companies.
Authored by: Irena Grosfeld and Iraj Hashi
Report - Social enterprises and the social economy going forwardESADE
This report provides a synthesis of the work of the independent Expert Group of the European Commission on Social Entrepreneurship and its main findings in a context where social enterprises have gained in importance in European and national policies in recent years. We need more of these enterprises with a social “DNA”, to ensure that we build a fair, inclusive and sustainable social market. By focusing on people as much as profit, they foster a sense of social cohesion and promote the common good.
In this study the author analyzes the experience of the European Union in cooperation with non-member neighboring countries, to which the EU’s integration process and institutions are both available. On the one hand, several non-member countries are interested in close cooperation or integration with the organization because of their future membership aspirations or simply because they consider the EU an important economic and political partner. On the other hand, the EU itself is also interested in building such close relations, for economic but often also for geopolitical and security reasons.
Written by Marek Dąbrowski. Published in September 2014.
PDF available on our website at: http://www.case-research.eu/en/node/58671
The enlargement of the EU to include the ten new member states in Central and Eastern Europe and the two Mediterranean islands on 1 May 2004 and Bulgaria and Romania on 1 January 2007 was the result of a tremendous effort to reconfigure not only the frontiers of Europe, but also the concept of what Europe is. Enlargements in 2004 and 2007 did not end the debate about where Europe begins and ends, however. Rather it fuelled the discussion, as neighbouring countries continue to express interest in joining the EU. At the moment it seems that enlargement will continue in the short term to include the remaining Balkan states and Turkey. This process is expected to continue well into the second decade of this millennium. But what then? The borders of the EU have been highly unstable since its inception. The possibility, desirability or inevitability of enlargement has become part of the discourse of the EU. Certain practical and institutional problems, however, are increasingly apparent. Physically can the EU institutions cope with endless enlargement? Psychologically can we cope with a ‘Europe’ that is not constrained by any physically finite framework? Theoretically, is it possible to incorporate the inherently unstable into a constitutional framework?
Authored by: Elspeth Guild, Viktoriya Khasson, Miriam Mir
Published in 2007
The report examines the social and economic drivers and impact of circular migration between Belarus and Poland, Slovakia, and the Czech Republic. The core question the authors sought to address was how managing circular migration could, in the long term, help to optimise labour resources in both the country of origin and the destination countries. In the pages that follow, the authors of the report present the current and forecasted labour market and demographic situation in their respective countries as well as the dynamics and characteristics of short-term labour migration flows between Belarus and Poland, Slovakia, and the Czech Republic, concentrating on the period since 2010. They also outline and discuss related policy responses and evaluate prospects for cooperation on circular migration.
Podręcznik został opracowany w celu przekazania trenerom i nauczycielom podstawowej wiedzy, która może być przydatna w prowadzeniu szkoleń promujących pracę rejestrowaną. Prezentuje on z jednej strony korzyści z pracy rejestrowanej, z drugiej – potencjalne koszty związane z pracą nierejestrowaną. W pierwszej kolejności informacje te przedstawiono w odniesieniu do pracowników najemnych (rozdział 2), podkreślając w sposób szczególny to, że negatywne konsekwencje pracy nierejestrowanej są ponoszone przez całe życie. Ze względu na specyficzną sytuację cudzoziemców pracujących w Polsce konsekwencje ponoszone przez tę grupę opisano oddzielnie (rozdział 3). Ponadto zaprezentowano skutki dotyczące pracodawców z szarej strefy z wyodrębnieniem tych, którzy zatrudniają cudzoziemców (rozdział 4). Uzupełnieniem przedstawionych informacji jest opis działań podejmowanych przez państwo w celu ograniczenia zjawiska pracy nierejestrowanej w Polsce (rozdział 5) oraz prowadzonych w Wielkiej Brytanii, czyli w kraju będącym liderem w walce z szarą strefą (rozdział 6).
European countries face a challenge related to the economic and social consequences of their societies’ aging. Specifically, pension systems must adjust to the coming changes, maintaining both financial stability, connected with equalizing inflows from premiums and spending on pensions, and simultaneously the sufficiency of benefits, protecting retirees against poverty and smoothing consumption over their lives, i.e. ensuring the ability to pay for consumption needs at each stage of life, regardless of income from labor.
One of the key instruments applied toward these goals is the retirement age. Formally it is a legally established boundary: once people have crossed it – on average – they significantly lose their ability to perform work (the so-called old-age risk). But since the 1970s, in many developed countries the retirement age has become an instrument of social and labor-market policy. Specifically, in the 1970s and ‘80s, an early retirement age was perceived as a solution allowing a reduction in the supply of labor, particularly among people with relatively low competencies who were approaching retirement age, which is called the lump of labor fallacy. It was often believed that people taking early retirement freed up jobs for the young. But a range of economic evidence shows that the number of jobs is not fixed, and those who retire don’t in fact free up jobs. On the contrary, because of higher spending by pension systems, labor costs rise, which limits the supply of jobs. In general, a good situation on the labor market supports employment of both the youngest and the oldest labor force participants. Additionally, a lower retirement age for women was maintained, which resulted to a high degree from cultural conditions and norms that are typical for traditional societies.
Until now, the banking sector has been one of the strong points of Poland’s economy. In contrast to banks in the U.S. and leading Western European economies, lenders in Poland came through the 2008 global financial crisis without a scratch, without needing state financial support. But in recent years the industry’s problems have been growing, creating a threat to economic growth and gains in living standards.
For an economy’s productivity to increase, funds can’t go to all companies evenly, and definitely shouldn’t go to those that are most lacking in funds, but to those that will use them most efficiently. This is true of total external financing, and thus funding both from the banking sector and from parabanks, the capital market and funds from public institutions. In Poland, in light of the relatively modest scale of the capital market, banks play a clearly dominant role in external financing of companies. This is why the author of this text focuses on the bank credit allocation efficiency.
The author points out that in the very near future, conditions will emerge in Poland which – as the experience of other countries shows – create a risk of reduced efficiency of credit allocation to business. Additionally, in Poland today, bank lending to companies is to a high degree being replaced by funds from state aid, which reduces the efficiency of allocation of external funds to companies (both loans and subsidies), as allocation of government subsidies is not usually based on efficiency. This decline in external financing allocation efficiency may slow, halt or even reverse the process, that has been uninterrupted for 28 years, of Poland’s convergence, i.e. the narrowing of the gap in living standards between Poland and the West.
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance.
This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland.
Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey (LFS) for the period 2009–2017 to estimate the wage gap between informal and formal workers, both at the means and along the wage distribution. I use two definitions of informal employment: a) employment without a written agreement and b) employment while officially registered as unemployed at a labour office. In order to reduce the bias resulting from the non-random selection of
individuals into informal employment, I use a rich set of control variables representing several individual characteristics.
Findings: After controlling for observed heterogeneity, I find that on average informal workers earn less than formal workers, both in terms of monthly earnings and hourly wage. This result is not sensitive to the definition of informal employment used and is
stable over the analysed time period (2009–2017). However, the wage penalty to informal employment is substantially higher for individuals at the bottom of the wage distribution, which supports the hypothesis of the two-tier structure of the informal labour market in Poland.
Originality/value: The main contribution of this study is that it identifies the two-tier structure of the informal labour market in Poland: informal workers in the first quartile of the wage distribution and those above the first quartile appear to be in two partially different segments of the labour market.
The rule of law, by securing civil and economic rights, directly contributes to social prosperity and is one of our societies’ greatest achievements. In the European Union (EU), the rule of law is enshrined in the Treaties of its founding and is recognised not just as a necessary condition of a liberal democratic society, but also as an important requirement for a stable, effective, and sustainable market economy. In fact, it was the stability and equality of opportunity provided by the rule of law that enabled the post-war Wirtschaftswunder in Germany and the post-Communist resuscitation of the economy in Poland.
But the rule of law is a living concept that is constantly evolving – both in its formal, de jure dimension, embodied in legislation, and its de facto dimension, or its reception by society. In Poland, in particular, according to the EU, the rule of law has been heavily challenged by government since 2015 and has evolved amid continued pressure exerted on the institutions which execute laws. More recently, the outbreak of the COVID-19 pandemic transformed the perception of the rule of law and its boundaries throughout the EU and beyond (Marzocchi, 2020).
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported.
In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019.
Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion).
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic.
A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
"Many brilliant prophecies have appeared for the future of the EU and our entire planet. I believe that Europe, in its own style, will draw pragmatic conclusions from the crisis, not revolutionary ones; conclusions that will allow us to continue enjoying a Europe without borders. Brussels will demonstrate its usefulness; it will react ably and flexibly. First of all, contrary to the deceitful statements of members of the Polish government, the EU warned of the threats already in 2021. Secondly, already in mid-March EU assistance programs were ready, i.e. earlier than the PiS government’s “shield” program. The conclusion from the crisis will be a strengthening of all the preventive mechanisms that allow us to recognize threats and react in time of need. Research programs will be more strongly directed toward diagnosing and treating infectious diseases. Europe will gain greater self-sufficiency in the area of medical equipment and drugs, and the EU – greater competencies in the area of the health service, thus far entrusted to the member states. The 2021-27 budget must be reconstructed, to supplement the priority of the Green Deal with economic stimulus programs. In this way structural funds, which have the greatest multiplier effect for investment and the labor market, may return to favor. So once again: an addition, as a conclusion from the crisis, and not a reinvention of the EU," writes Dr. Janusz Lewandowski the author of the 162nd mBank-CASE seminar Proceeding.
Dla wielu rodaków europejskość Polski jest oczywista, trudno jest im nawet wyobrazić sobie, jak kształtowałyby się losy naszego kraju bez uczestnictwa w integracji europejskiej. Szczególnie młode pokolenie traktuje osiągnięty przez nas dzięki uczestnictwie w Unii ogromny postęp cywilizacyjny jako coś danego i naturalnego. Jednak świadomość tego, jaki był nasz punkt wyjścia, jaką przeszliśmy drogę i jak przyczyniły się do tego unijne działania oraz jakie wynikały z tego korzyści powinna nam stale towarzyszyć. Bez tej świadomości, starannego weryfikowania faktów i docenienia naszych osiągnięć grozi nam uleganie niesprawdzonym argumentom przeciwników integracji europejskiej i popełnienie nieodwracalnych błędów. Dla tych, którzy chcą poznać te fakty, przygotowany został raport "Nasza Europa. 15 lat Polski w Unii Europejskiej". Podjęto w nim ocenę 15 lat członkostwa Polski z perspektywy doświadczeń procesu integracji, z jego barierami i sukcesami, a także wyzwaniami przyszłości.
Raport jest wynikiem pracy zbiorowej licznych ekspertów z różnych dziedzin, od wielu lat analizujących wielowymiarowe efekty działania instytucji UE oraz współpracy z krajami członkowskimi na podstawie europejskich wartości i mechanizmów. Autorzy podsumowują korzyści członkostwa Polski w Unii Europejskiej na podstawie faktów, nie stroniąc jednakże od własnych ocen i refleksji.
This report is the result of the joint work of a number of experts from various fields who have been - for many years – analysing the multidimensional effects of EU institutions and cooperation with Member States pursuant to European values and mechanisms. The authors summarise the benefits of Poland’s membership in the EU based on facts; however, they do not hide their own views and reflections. They also demonstrate the barriers and challenges to further European integration.
This report was prepared by CASE, one of the oldest independent think tanks in Central and Eastern Europe, utilising its nearly 30 years of experience in providing objective analyses and recommendations with respect to socioeconomic topics. It is both an expression of concern about Poland’s future in the EU, as well as the authors’ contribution to the debate on further European integration.
Poland’s new Employee Capital Plans (PPK) scheme, which is mandatory for employers, started to be implemented in July 2019. The article looks at the systemic solutions applied in the programme from the perspective of the concept of the simultaneous reconstruction of the retirement pension system. The aim is to present arguments for and against the project from the point of view of various actors, and to assess the chances of success for the new system. The article offers a detailed study of legal solutions, an analysis of the literature on the subject, and reports of institutions that supervise pension funds. The results of this analysis point to the lack of cohesion between certain solutions of the 1999 pension reform and expose a lack of consistency in how the reform was carried out, which led to the eventual removal of the capital part of the pension system. The study shows that additional saving for old age is advisable in the country’s current demographic situation and necessary for both economic and social reasons. However, the systemic solutions offered by the government appear to be chiefly designated to serve short-term state interests and do not create sufficient incentives for pension plan participants to join the programme.
Belarus was among the few post-communist countries to resign from comprehensive market reforms and attempt to improve the efficiency of the economy through administrative means, leaving market mechanisms only an auxiliary role. Since its inception, the ‘Belarusian economic model’ has undergone several revisions of a de-statisation and de-regulation kind, but still the Belarusian economy remains dominated by the state. This paper analyses the characteristic features of the Belarusian economic system – especially those related to the public sector – as well as its evolution over time during the period following its independence. The paper concludes that during the post-Soviet period, the Belarusian economy evolved from a quasi-Soviet system based on state property, state planning, support to inefficient enterprises and the massive redistribution of funds to a more flexible hybrid model where the public sector still remains the core of the economy. The case of Belarus shows that presently there is no appropriate theoretical perspective which, in an unmodified form, could be applied to study this type of economic system. Therefore, a new perspective based on an already existing but updated approach or a multidisciplinary approach that incorporates the duality of the Belarusian economy is required.
Belarusian economy has been stagnating in 2011-2015 after 15 years of a high annual average growth rate. In 2015, after four years of stagnation, the Belarusian economy slid into a recession, its first since 1996, and experienced both cyclical and structural recessions. Since 2015, the Belarusian government and the National Bank of Belarus have been giving economic reforms a good chance thanks to gradual but consistent actions aimed at maintaining macroeconomic stability and economic liberalization. It seems that the economic authorities have sustained more transformation efforts during 2015-2018 than in the previous 24 years since 1991.
As the relative welfare level in Belarus is currently 64% compared to the Central and Eastern Europe (CEE) countries average, Belarus needs to build stronger fundaments of sustainable growth by continuing and accelerating the implementation of institutional transformation, primarily by fostering elimination of existing administrative mechanisms of inefficient resource allocation. Based on the experience of the CEE countries’ economic transformation, we highlight five lessons for the purpose of the economic reforms that Belarus still faces today: keeping macroeconomic stability, restructuring and improving the governance of state-owned enterprises, developing the financial market, increasing taxation efficiency, and deepening fiscal decentralization.
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they should revise the inflation target downwards and publicly explain the rationale for such a move. Risks to the independence of central banks come from their additional mandates (beyond price stability) and populist politics.
Estonia has Europe’s most transparent tax system (while Poland is second-to-last, in 35th place), and is also known for its pioneering approach to taxation of legal persons’ income. Since 2000, payers of Estonian corporate tax don’t pay tax on their profits as long as they don’t realize them. In principle, this approach should make access to capital easier, spark investment by companies and contribute to faster economic growth. Are these and other positive effects really noticeable in Estonia? Have other countries followed in this country’s footsteps? Would deferment of income tax be possible and beneficial for Poland? How would this affect revenue from tax on corporate profits? Would investors come to see Poland as a tax haven? Does the Estonian system limit tax avoidance and evasion, or actually the opposite? Is such a system fair? Are intermediate solutions possible, which would combine the strengths or limit the weaknesses of the classical and Estonian models of profit tax? These questions are discussed in the mBank-CASE seminar Proceeding no. 163, written by Dmitri Jegorov, deputy general secretary of the Estonian Finance Ministry, who directs the country’s tax and customs policy, Dr. Anna Leszczyłowska of the Poznań University of Economics and Business and Aleksander Łożykowski of the Warsaw School of Economics.
The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit.
Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
This Report has been prepared for the European Commission, DG TAXUD under contract TAXUD/2017/DE/329, “Study and Reports on the VAT Gap in the EU-28 Member States” and serves as a follow-up to the six reports published between 2013 and 2018.
This Study contains new estimates of the Value Added Tax (VAT) Gap for 2017, as well as updated estimates for 2013-2016. As a novelty in this series of reports, so called “fast VAT Gap estimates” are also presented the year immediately preceding the analysis, namely for 2018. In addition, the study reports the results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). It also scrutinises the Policy Gap in 2017 as well as the contribution that reduced rates and exemptions made to the theoretical VAT revenue losses.
More from CASE Center for Social and Economic Research (20)
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
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how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
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US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
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how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
4. Charles Wyplosz
Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Charles Wyplosz is Professor of International Economics at the Graduate Institute of International Studies in
Geneva where he is Director of the International Centre for Money and Banking Studies. An expert in monetary
affairs, currency crises and the international monetary system, Charles Wyplosz has been Associate Dean for
Research and Development at INSEAD and Director of the PhD program in Economics at the Ecole des Hauts
Etudes en Science Sociales in Paris. He also served as Director of the International Macroeconomics Program
of CEPR, the leading European network of economists. His main research areas include financial crises,
European monetary integration, economic transition and current regional integration in various parts of the
world. He is the co-author of a leading textbook on Macroeconomics and of a textbook on European economic
integrazion. He is a regular columnist is such newspapers as the Financial Time, Le Monde, Libération, Le
Temps, Finanz und Wirtschaft, and Handelsblatt.
Charles Wyplosz holds degrees in Engineering and Statistics from Paris and a PhD in Economics from Harvard
University.
4
5. Abstract
Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
The fifth enlargement of the EU has now brought together twenty five countries, a massive success.
But success has its price: twenty-five countries do not cooperate as six used to. The result is a general
impression that the undertaking is being diluted and that national interests prevail over the common good,
which means less willingness to take the next integrative step. This paper argues that this perception is
largely misguided. The EU-25 group is considerably more integrated than the EU-6 ever was. Dilution is
not a necessary consequence of enlargement, rather enlargement is bringing to the fore a number of
institutional failures that were present all along.
This paper takes a politico-economic view of the link between enlargement and deepening. After a
broad review of the task allocation principles, it concludes that enlargement and deepening are not
substitutes but complements. It produces evidence that enlargement is not increasing preference
heterogeneities within the union, but that it leads national governments to preserve more forcefully their
own powers, often against the wishes of their own citizens. The result is an inability to reform the decision-making
process that has become unwieldy as the result of enlargement.
The issue, then, is how to restore the EU's ability to run its affairs. The European Constitutional
Convention has made little headway. Other solutions that go beyond current debates are examined.
"Pioneer clubs" raise many unresolved issues. More promising, maybe, is the idea that the acquis
communautaires should be once and for all decisions. By lowering the stakes of both sovereignty transfers
and qualified majority voting, allowing changes in both directions between shared and national
competencies could encourage governments to accept more daring reforms. Strengthening the legitimacy
of union-specific institutions (the European Parliament or the Commission Presidency) would create a
counter-power to deal with national governments' natural tendency to defend their own prerogatives.
5
6. 1. Introduction
Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Once upon a time Europe was a small group of like-minded countries determined to integrate
themselves politically and economically tightly enough to eliminate forever the specter of war. After
centuries of recurrent devastation, this was a hugely ambitious project built on Jean Monnet’s prudent step
by step strategy, now called functionalism. Integration always progressed in fits and starts, but recurrent
crises did not prevent achieving amazing results. Not only is war all but ruled out, but economic and
political integration has deepened to a degree that the most Euro-enthusiasts never dreamt of. More
amazing even is how the project has spread. Nearly the entire continent is now part of the Union, and
Turkey might even join by the end of the decade. Two hundred million people share the same currency and
enjoy borderless travel.
But success has had its price. Twenty-five countries do not cooperate as six used to. Each enlargement
inevitably gives the impression that the undertaking is being diluted, and perceived dilution means more
weight to national interests and less willingness to take the next integrative step. Or so it seems. This paper
argues that this perception is misguided. The EU-25 group is considerably more integrated than the EU-6
ever was. Dilution is not a necessary consequence of enlargement, rather enlargement is bringing to the
fore a number of institutional failures that were present all along.
What is needed now is a clean-up of European institutions and practices. Fifty years of negotiations have
lead to good and less good agreements, which warrants re-examination. Anyway, times have changed and
old agreements, including old acquis communautaires are outdated. The European Constitutional
Convention, a consequence of the failure of the Nice summit in December 2000, offered a unique
opportunity of sorting out this legacy. This opportunity has not been well-exploited. By refusing to open
the Pandora box that a clean-up requires, and by adopting wholesale all the acquis communautaires, good
and bad alike, today’s leaders have failed their duty. The Constitution is not bad per se, it is just too small
a step to justify its grand name.
This paper reviews a number of politico-economic issues. The next section sets the scene by offering
a broad review of the task allocation principles. Section 3 examines the links between widening and
deepening, to conclude that the two are not substitutes, but possibly complements. Some solutions that
go beyond current debates are presented in Section 4. The last section concludes.
2. Task Allocation in the EU
2.1. Principles from Fiscal Federalism
As summarized in Berglöf et al. (2003), the starting point for discussing which tasks – or provision of
public goods – should be allocated to the EU level – or “centralized” – is the theory of fiscal federalism.
Simplifying quite a bit, the theory develops two criteria in favor of centralization and two criteria against.
The two criteria in favor of centralization rest essentially on economic effectiveness. The first one is the
existence of increasing returns to scale or scope in the provision of public goods. The second one is the
presence of externalities. The two criteria against centralization concern cases when the hoped-for
6
7. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
effectiveness results are unlikely to be achieved. The first reason can be broadly defined as
“heterogeneity”. Obviously, if national preferences differ, any “one size for all” policy will be disliked by
some countries and it will not, in general, please everyone. The second reason is that the center typically
knows less well about local needs than national or sub-national levels of government; in the presence of
information asymmetries, centralized decisions, which may include implementation procedures, may
therefore rest on faulty appraisal of end-user needs.
2.2. Real-Life Governments
The previous reasoning assumes that national governments are benevolent, that they only strive to
maximize their citizens’ welfare. Serious difficulties start when we allow for citizens to hold different
opinion on the relevant issues. The simple answer is that democracy provides an elegant solution to this
problem: elections determine how collective preferences emerge from individual disagreements.
Unfortunately, the recent literature shows that this answer is too short.1 This is not the place to review
this literature, but a few points can be recalled.
To start with, elections are not one-dimensional. As has become very clear, European issues loom very
low in domestic political debates, the more so the larger is the country. As a result, governments are not
really accountable of every decision made and, in particular, of the positions that they take in “Brussels”.2
Then comes special-interest politics. In this view, governments are not benevolent but captured by special
interest groups, at least on some issues.
What is the implication of such political failures? Does centralization mitigate or enhance these political
distortions? There does not seem to exist any general answer. Under decentralized policymaking, national
policy is distorted only (or mainly) by the influence of the domestic lobby. With centralization, policy is also
influenced by foreign lobbies. As argued by Bordignon at al. (2003), centralization may reduce the cost of,
and therefore encourage political lobbying by organized interests because of scale economies. This can be
either counter-productive or welfare improving, depending on whether domestic and foreign lobbies have
the same or opposite interests. If the foreign and domestic lobbies have the same interests, then they pull
in the same direction, and the policy is doubly distorted. If instead the two lobbies have opposite interests,
then they offset each other and the distortion is mitigated.
As soon as political failures are recognized, a new consideration steps in. The public choice literature
has emphasized that one of the best responses to political capture is political competition.3 Competition
may concern the political sphere, in which case the solution involves checks and balances between
different levels of government and different branches governments. Competition may also concern the
economic sphere, with a view to raising the economic costs of political capture. Each government acting
in isolation faces a cost in pursuing politically expedient but inefficient policies, and this cost is lower if
everyone agrees to remain inefficient. A well known example is tax policy. When acting in isolation, national
governments have an incentive to set low tax rates, so as to attract mobile tax bases from abroad.
1 For a general survey, see Persson and Tabellini (2000).
2 Direct democracy, in particular single purpose referenda, deal with this problem. Unsurprisingly perhaps, Switzerland, the country that has
the most extensive direct democracy system, has not joined the EU. Similarly, Sweden, which has an open-government practice, is not too
pleased with collective decision making in Europe.
3 The classic reference is Buchanan and Tullock (1962). The other response from the Public Choice school is to keep government small.
Openness is yet another recommendation.
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A clear implication of the preceding arguments is that the decision to allocate a particular task is rarely
black and white. Not only all four benevolent-government criteria may send different signals, but political
distortions must be factored in as well. In the end, any decision will necessarily involve complex and hard
to evaluate trade-offs; different people are likely to reach different conclusions not because they
fundamentally disagree, but because they may weigh differently the various relevant considerations.
Whether by design or by luck, European integration has proceeded in steps. It has first centralized those
tasks for which the fiscal federalism criteria were the least ambiguous and where capture by interest group
was more limited or likely to be reduced through economic competition. The Common Market is the
relevant example. Economies of scale and scope characterize modern industry, so developing a large
internal market was a natural step. In this area, preference heterogeneities are minimal and there are few
information asymmetries, if any, at least in the long run.4 Political capture is a serious issue, but the
presumption is that economic competition is the right antidote. As the recent debates on state aids and
industrial policies show, these aspects linger but it is fair to say that the burden of the proof has now been
reversed. Nowadays, special interests have to make a case for exemptions from the Single Market
principles; since they are rarely aligned across EU member countries, their power has massively declined.
The creation of a monetary union also illustrates these principles and further shows that integration has
a dynamics of its own. Increasing trade integration has made EU member countries more similar, including
in the timing of business cycles. It has also reduced the ability of firms to affect their relative prices and,
therefore to use the exchange rate as an industrial policy tool. By reducing national heterogeneities and
alleviating information asymmetries, trade integration has made it desirable to exploit the economies of
scale and scope that a single monetary policy provide and to eliminate the tradition beggar-thy-neighbor
externalities created by exchange rate policies. At the same time, the emergence of independent central
banks – partly related to the superior performance of the Bundesbank – has made it desirable to undercut
special interest influences on monetary policy. The adoption of a single currency had become natural.
Europe’s pragmatic way has left out of centralization the other tasks for which the balance of arguments
in favor of centralization is less clear cut. These are the issues that are now being debated and it should
not come as a surprise that the debates are becoming more contentious. It is not that Europe has lost its
heart, but that it has done the obvious things first. Further integration will be more difficult, because it is
less obviously justified. In addition, with a few important exceptions, economic integration is nearly
complete. The next steps must either tackle the hard economic core (agriculture, services, labor mobility,
environment, taxation) or concern other areas (education, diplomacy, internal security, defense, culture)
where heterogeneities loom large.
3. Widening vs. Deepening
A frequently heard view is that the difficulties that Europe now faces are associated with the
enlargement process. Decision making has become more difficult, it is argued, because of the sheer
4 Transitions are different, though, since they involve deep restructuring. While transition costs are likely to be small in relation to long term
gains, the existence of losers and winners implies redistributive politics that play out very differently at the local level.
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number of voices that have to be heard and because the EU has become more heterogeneous. In this view,
the response is the creation of “clubs of pioneers” that may decide to deepen integration among
themselves, leaving the door open to currently reluctant countries. This response would mimic the
previous evolution, when a core of “pioneer countries” created the European Community and were
gradually joined by nearly the entire continent.
Another view is based on the observation that economic integration is now nearly complete.
Accordingly, it is asserted, the EU should focus on eliminating the last barriers to the four freedoms
(mobility of goods, services, capital and people) and consider that its aims have been achieved. This view,
which clashes with the “common house” views of the founding fathers, aims at the establishment of a
perfect common market unencumbered with wider political objectives seen as orthogonal.
Both views seem to fit the principles developed in the previous section. Yet, both can be criticized by
appealing to the very same principles. While their implications may have some merit, they should not be
evaluated as stated.
3.1. Costs of Enlargement
Decision making does not have to become more difficult as the number of countries expand. The EU
voting rules have always been arcane for the usual reason that federal systems magnify the weights of the
smaller entity, reflecting the concern that small units lose decision power. The advantage of arcane rules –
in contrast with the one country-one vote rule, for instance – is that they can be adapted to meet
recognized criteria. The general principle, though, is that a decision-making rule is effective when there
exist few blocking minorities. Baldwin and Widgrén (2003) show how EU voting rules can be adapted to
enlargement. The current stalemate is not, therefore, a mere consequence of enlargement. It reflects a
number of concerns, most of which are not explicitly recognized. One concern is prestige, which led to
the disastrous decision in the Nice Treaty, and which has also played a role in undoing Nice in the
framework of the Draft Constitution.5 Another concern is that many countries fear losing a veto right, even
indirectly as member of a sufficient large number of blocking coalitions. Their natural inclination instead is
to increase the number of blocking coalitions, which makes decision making unwieldy indeed. A better
solution is to carefully manage the issues that become shared competences and to retain veto rights on the
other issues, a topic to which I return below.
Another red herring is the view that heterogeneity increases with the number of member countries. As
stated, the view is that peoples differ in their views of issues that could otherwise be the subject of
centralization. As far as the more contentious non-economic issues are concerned, there is no evidence as
Figures 1 to 3 show. Figure 1 shows that the new EU members have not increased the dispersion of views
about the willingness to have a common defense policy. Figure 2 shows that the same applies to a common
foreign policy. The most crucial test, nationalism, is examined in Figure 3 which shows the percent of
respondents who feel “national” as opposed to feeling European. Here again, dispersion has not increased
with enlargement.
So where does this perception of increased heterogeneity come from? One hypothesis is that
governments are keen to retain their powers in domains that have traditionally been considered as
constitutive of sovereignty, even though their own citizens realize the importance of increasing returns and
are not as heterogeneous as their own governments claim. This hypothesis would also reflect capture by local
5 The Nice culprit was France, which insisted on the same number of votes as the more populous and economically larger Germany. The next
culprit was Poland, that long resisted any reduction in the number of its own votes.
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10. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
interests (diplomacy and defense establishments). As special interest incentives are unlikely to be aligned,
centralization would seem to be, ceteris paribus, the proper response to the hypothesized political failure.6
On economic grounds, enlargement should heighten all the usual benefits from trade integration, the
more so the more diverse are the countries initially. This is a statement about the long run, though, which
ignores the adjustment costs and the fact that trade integration creates losers and winners. However, if trade
integration is Pareto improving, as seems to be overwhelmingly the case, the way to deal with transition costs
is to organize Pareto transfers, not to oppose enlargement. Much of the grassroot opposition to enlargement
come from groups that correctly perceive that they will be among the losers and that do not trust their own
governments to deliver the Pareto transfers to which they should be entitled. Here again, we face a political
failure. One solution would be to centralize the Pareto transfers. Information asymmetries, however, caution
us that centralization might be inefficient. This fear is confirmed by the experience with regional and structural
funds, which also seem to be partly at least captured by special interests. Then, if Pareto transfers are unlikely
to be offered, should we still advocate enlargement (past and future)? On economic terms, yes, since
permanent gains always outweigh transitory costs. On political terms, one would have to weigh the risks of
increasing opposition to and disenfranchising from European integration.
3.2. Europe as a Common Market
The view that economic integration is nearly complete and that we should stop there is superficially
convincing. To start with, it ignores the primary goal, that of establishing peace on the continent; the
undertaking has always been wider than trade. The strategy of making each citizen a stakeholder in peace
through economic interests has worked beautifully. Whether economic interests suffice is an open question.
More importantly, perhaps, is the fact that integration generates its own dynamics. We cannot operate
a common market without common institutions. The well-publicized democratic deficit of European
institutions reminds us that common decisions cannot be just left to bureaucracies. The inter-governmental
method is the current response, but the existence of political failures at this level – discussed above –
indicates that it is not sufficient.
More generally, economic integration is not limited to the movements of goods and services. For
instance, labor mobility is a crucial element, as made clear by the Optimum Currency Area literature.7 This
then means that Europe de facto has a common border, which is a source of an important externality as
terrorism and large-scale immigration amply illustrate. A common internal security policy becomes the
natural byproduct of labor mobility.
In addition, economic integration spills over into different policy domains. This is certainly the case of
education and research. There is increasing recognition that Europe’s failure to catch up with the US is
related to its inferior education and research institutions. This is a complicated issue that goes beyond the
present paper, but two observations illustrate the issues at stake. First, research is subject to returns to
scale. Second, higher education cannot reach top-level quality without robust competition. In both cases,
the question is what the proper scale for the relevant policies is, and there is little doubt that Europe is the
answer. There cannot be 25 world-level universities in Europe.8
6 Initially, most central bankers were lukewarm, at best, towards the monetary union.
7 Trade theory, in its basic version, establishes that trade and labor mobility are substitutes. This assumes away market failures, for example the
existence of involuntary unemployment.
8 These remarks concern higher education. Primary and secondary education involves considerable preference heterogeneities and is better
organized at the national – or sub-national – level.
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11. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Finally, many policy domains that lie outside the realm of economic integration have important
economic aspects. For instance, defense absorbs a sizeable share of public spending. Defense is subject to
rising returns, and spillovers are very large in a geographically compact area. A European army is certain
to be more efficient than the medley that we now have. Efficiency-conscious governments need to balance
this consideration with other non-economic issues and the rational answer might well be a common
defense policy. Indeed, this has been a perennial issue, going as far back as 1952, with a still-born European
Defense Community. Much the same can be said about foreign policy. To be sure, true preference
heterogeneities exist, but one may suspect that the critical opposition originates with powerful vested
interests. As shown in Figures 1 and 2, 67 per cent of citizens favor a common foreign policy while 78 per
cent favor a common defense and security policy. It is true that the results significantly differ across
countries, but the lack of a lively debate on these issues is inconsistent with citizens’ perceptions.
3.3. Dilution?
Is enlargement diluting the Union? The most visible difficulty relates to decision-making. As noted
above, it is entirely possible to adapt voting procedures in a way that avoids an inefficiently large number
of blocking coalitions. The evidence in Figure 4, which shows passage probabilities under existing voting
rules, confirms that the reforms have not prevented a sharp decline in decision-making effectiveness.9 The
cost, of course, is that individual member countries, especially but not only the smaller ones, may end up
unlikely to be able to form or join blocking coalitions. Less formally, when there are few countries, quid pro
quo deals, concessions in some domains that are compensated in other domains, can be more easily
arranged than when more countries make the number of such deals so large that any one of them is
unlikely to be agreed upon.
The second source of concern is growing heterogeneity. This is not a necessary consequence of
enlargement, simply a possibility that can be explored empirically but does not seem to have been
systematically done. The evidence presented here is therefore sketchy. It exploits the bi-yearly survey
carried out by the Commission and published in Eurobarometer since 1973. Unfortunately, the coverage has
changed over the years, even the way questions are formulated, which prevents long time series. Figure 5
shows the evolution of perceived benefits from EU membership, a series that can be traced back to polls
conducted between April-May 1983, i.e. after the first and second enlargements, and October 2004,
shortly after the fifth enlargement. The answers can be interpreted as a measure of satisfaction of EU
membership. Available data cover three enlargements, listed under the figure and indicated by vertical
lines. The thicker curve shows the unweighted EU average, the thinner curve displays the standard
deviation across countries and can be interpreted as a measure of heterogeneity of preferences.10 There
is no evidence that the three latest enlargements have significantly changed the average response, nor that
the standard deviation has changed much. Much the same conclusion applies to Figure 6, which displays
the percentage of respondents who feel that foreign policy should remain in national hand, as opposed to
being centralized at the EU level; it is the complement – leaving aside the “don’t know” answers – to the
snapshot shown in Figure 2. This question deals with the willingness to centralize a key attribute of
sovereignty. The period for which this series is available is shorter and only covers the last two
enlargements, indicated by the vertical lines. Here again, heterogeneity does not increase, in fact it has
9 Passage probabilities are computed using the normalized Banzhaf index: it measures the probability that a proposal will be accepted in the basis
of random voting by member countries. For details, see Baldwin and Widgrén (2003).
10 Using unweighted average is desirable as we examine national preferences. Obviously, the number of countries included in the polls increases
following each enlargement.
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12. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
decreased after the latest enlargement. Both figures indicate a slight increase in standard deviations,
possibly reflecting more heterogeneity, a trend maybe briefly reversed after the latest enlargement.
Finally, dilution would occur if enlargement is accompanied by less cohesion in existing common policy
domains. By construction, this is not the case. New member countries must take on board all the “acquis
communautaires”, which have been become considerably more extensive over the years. In this respect,
the EU-25 is considerably more homogeneous than the original EU-6 as far as actual policies are concerned.
On the basis of this limited information, dilution does not appear to be an automatic implication of
enlargement, but the result of a political failure. Governments seem less willing to reduce their individual
influence in order to preserve the effectiveness of collective decision-making. This is not a surprising
conclusion, of course; governments are known to pursue their own agenda and to be keen to preserve
their powers. On the other hand, governments respond to incentives. The next section examines what
could encourage them to be more willing to trade off some autonomy in the pursuit of collectively more
efficient decision-making.
4. Making a Large Union Work
A recurrent theme so far is that enlargement need not occur at the expense of deepening. It has also been
argued that limiting the integration process to economic issues – i.e. to completing the Single Market – is both
unrealistic and unlikely to match citizens’ preferences. A frequently heard view is that citizens are exhibiting
integration fatigue and would be content with a pause. This view is not consistent with the information
presented in Figure 7. This figure, which compares perceptions of the actual speed of integration with
desirable speed, strongly suggests that European citizens would rather move faster, which most likely means
deeper. This section examines a few ways of correcting what seems to be a significant political failure.
4.1. Pioneers and Followers
One controversial idea is to allow countries more willing to deepen integration than others to proceed
at their own speed. Indeed, the draft constitution allows for a sub-group of EU member countries to
undertake “enhanced cooperation” in particular policy domains, with special provisions concerning defense
and foreign affairs. Subject to the condition that they are open to all EU members, such clubs are meant
to allow some countries to share competencies in an area in which other countries wish to retain full
sovereignty. Clubs are not new; both the Schengen agreements and the monetary unions are instances
where a subgroup of countries has proceeded on their own.
This possibility can be seen as an antidote to rising heterogeneities as a consequence of enlargement. As
previously observed, there is little evidence that heterogeneity has increased as the result of enlargement
(Figures 5 and 6) but Figure 7 shows that, on average, citizens want faster integration. Heterogeneity predicts
that averages conceal important national differences, which is confirmed in Figure 8. This figure plots national
averages of perceived and desired speed of integration.11 The line represents the diagonal, along which actual
and desired speeds are equal. In the few countries below the diagonal – chiefly the Nordic countries and
11 Note that those who want to see acceleration also tend to perceive actual speed as low, i.e. there is a negative correlation between perceived
and desired speed.
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Austria – citizens would rather see integration slow down. Most of the new EU members are far above the
diagonal and are therefore likely to join those countries that want to speed up integration.
The logic of establishing pioneers’ clubs is related to the previous discussion. In the presence of
significant heterogeneity regarding the desirability of deeper integration, we need to have an effective
decision-making process. The deterioration of effectiveness, documented in Figure 4, makes clubs appear
as an alternative to decision-making reform. This is the limited sense in which clubs can be seen as an
appropriate response to enlargement.
The creation of pioneer clubs meets serious opposition, especially in countries that are not willing to
proceed faster. The argument of opponents is often couched as a rejection of an EU with two classes of
member countries, but what does this really mean? A possible interpretation is that those who join the
club enjoy welfare gains at the expense of those that stay out. This issue has been debated in the context
of the creation of the monetary union. Neither trade theory, when applied to intra-industry trade, nor
empirical evidence support the view that monetary unions necessarily create trade diversion (Alesina and
Barro, 2002; Frankel and Rose, 2002). There is no reason that the same results would apply to clubs, but
there is no presumption either that clubs would hurt those that choose to remain outside. The case has
simply not been made. Another argument may be related to political economy considerations: it could be
that “cohesion” among a sub-group of countries is achieved at the expense of cohesion among the whole
set. 12 Here again, we don’t know the answer. Even assuming the existence of a trade-off between partial
and total cohesion, it remains unclear what is the proper policy response. Clubs may have merits, but
they are likely to be the second-best response to the policy failures that prevent better decision-making
procedures.
4.2. Safer Centralization: Towards a Two-Way Street for the Acquis
EU decision-making is characterized by polarization: qualified majority voting (QMV) applies to domains
of shared competency, unanimity to all other domains. QMV was meant to combine effectiveness and
national representation in areas where national sovereignty had been transferred to the EU, while
unanimity fully preserved each country’s sovereignty. The gradual loss of effectiveness of QMV when
enlargements have not been accompanied by adequate reforms (Figure 4) has somewhat blurred the
distinction between the two decision processes.
Indeed, if the probability of making decisions under QMV declines too far, QMV increasingly involves the
kind of veto power that characterizes unanimity rules. In that sense, the lack of reform of QMV decision-making
constitutes a growing risk of paralysis where the EU is competent; this is bound to undermine the
whole construction. If, as argued above, this lack of reform is the manifestation of government resistance to
their loss of power in spite of citizens’ aspirations, it becomes very important to deal with the political failure
and to better align governments’ incentives with the wishes of their own citizens.
One possible way forward is to reduce the barrier between shared and national competencies in order
to lower the stakes and make it easier to reform the QMV process. The current principle is that the acquis
communautaires are permanent, even though conditions may have changed significantly. That any decision
to centralize a policy domain is irreversible carries two implications. First, the decision itself is inevitably
considered with considerable prudence. This then slows down integration. The justification for sheltering
the acquis is that it prevents disintegration, a potential unravelling of previous integration steps. There is
some merit to that view but there must exist a trade-off between the danger of back-sliding and the
12 For a discussion of clubs-within-clubs, see Aggarwal and Dupont (2004).
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14. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
absolute preservation of passed decisions. This is indeed the kind of consideration that explains why
national constitutions are sheltered from easy reform but not frozen forever.
Another implication of the absolute sheltering of the acquis is the certainty that their domain is bound
to expand. Faced with such a prospect, governments inevitably wish to preserve a significant degree of
control. As decision-making reform grapples with the relative weights to be put on national control and on
collective effectiveness, it becomes natural national control be emphasized. The sheltering of the acquis
may be a key contributing factor to Europe’s major political failure.
This suggests that it should be possible to move policy domains in both directions, from national
sovereignty to shared competence and the other way around. Such a change would lower the stakes of
both centralization at the EU level and of QMV voting. By making centralization safer because reversible,
it could not only encourage experimentation – and thus speed up integration – but also make governments
more willing to lower the hurdles in decision-making.
There are many ways to proceed. One solution would be making the street from shared and not-shared
competencies fully both-ways. Unanimity rule would still prevail for any change of status. Another,
more radical, solution would be to apply sunset clauses to some or all centralization decisions.
4.3. More Power to the People
A different way of dealing with governments’ conflict of interest between preserving their own power
and yielding to citizens’ desire to speed up integration is to reduce their power. The traditional approach
is to build checks and balances, in particular to vest power with the Commission whose interest is to
deepen integration. This is why the Commission has been given the right to set the agenda and the task of
“guarding the Treaty”. The limits of this approach have been obvious for many years. Since the end of the
Delors Commission, governments have been able to rely increasingly more on intergovernmentalism. The
result is a pause in the integration process and difficulties in adapting EU governance to enlargement. The
feeling that Europe has lost its heart is partly related to this evolution.
The draft constitution’s response has been to widen the influence of the European Parliament, which is
presented as closer to citizens’ preferences. Irrespective of whether this is true or not, the rising influence
of the European Parliament comes more at the expense of the Commission than at the expense of national
governments. Overall, this evolution is likely to slow down, rather than speed up integration since the
Commission is its main advocate. What are the other possibilities?
Following on the reasoning behind the draft constitution, one possibility is to enhance the European
Parliament’s influence relative to that of national governments. In contrast with – or in addition to – the
draft constitution, which focuses on formal rights, the idea would be to emphasize legitimacy.
Governments enjoy a strong degree of national legitimacy because they are democratically elected. In
theory, the Parliament should also enjoy a high degree of European legitimacy and should therefore be the
main source of democratic accountability in the EU. In practice, however, the fact that elections to the
Parliament are conducted at the national level, and are mostly determined by domestic political issues,
undermines the Parliament’s legitimacy. The Parliament is also divided along both party and national lines,
with the result that its own decisions are not always easily understood by the citizens, when they care.
Changing the way the Parliament is elected could make a more decisive contribution than enhancing the
co-decision process. The key principle here would be to make elections European-wide. This can be done
in a variety of ways – see Berglöf et al. (2003) for a discussion; what matters is that the European
Parliament achieve sufficient legitimacy and cohesion to act as an effective counter-power to the Council.
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An alternative would be to enhance the legitimacy of the Commission. Currently, the Commission is a
hybrid, combining legislative and executive powers and subject to the kind of limited democratic
accountability that typically applies to bureaucracies. As Guardian of the Treaty, it is meant to be non-political
and indeed it brings together Commissioners that are not jointly supported by any majority, either
in the Council or in the European Parliament. Its legitimacy vis a vis the Council is therefore highly limited,
which explains why governments can easily promote the role of inter-governmentalism and thus largely by-pass
the Commission in domains that are not shared competencies, in particular the integration process.
There exist two broad ways of giving the Commission more influence through legitimacy. The first one is
the parliamentary model: the Commission could be elected by the Parliament. The second one is the
presidential model: the President of the Commission could be directly elected by all European citizens.13
In both cases, the Commission would become more explicitly politicized, which could require that it
disposes of some of its technical missions, especially those that concern the enforcement of the Single
Market, including competition and trade.
5. Conclusions
This paper has argued that there is no inherent trade-off between enlargement and deepening.
Enlargement does not obviously dilutes the union, but it requires some adjustments, mainly in the decision-making
process. The Nice Treaty’s failure to do so has led to the Convention of 2002-3 but the resulting
draft Treaty falls way short of even modest expectations. The EU seems stuck because of its inability to
deal with its very success, the integration of most of the continent.
Contrary to many assertions, the EU is not being diluted nor is it becoming looser. Today’s union is
considerably more structured than the old Community of Six and there is no evidence that it has become
more heterogeneous. It faces three distinctive challenges.
First, the most obvious integration steps have been taken. The next potential ones are all controversial;
this is precisely why they were not adopted earlier. The easy answer, to stop here and limit the EU to a
Common Market, is unlikely to be sustainable. Integration breeds the need for more integration.
Second, the difficulties in adjusting the decision-making procedure reflect the traditional tension
between national sovereignty and the collective interests. National governments are not well suited to deal
with this problem. They face a conflict of interest between their reluctance to give up power and the need
to rationalize the EU governance and the aspirations of their citizens.
Third, the increase in the range of domains subject to shared competences calls for more democratic
control at the EU level. This inevitably means the emergence of a European-level legitimacy, which means
autonomous sources of power that clash with the continuing predominance of the nation-state as locus of
all legitimacy.
The sense that Europe has lost its heart is not borne by backsliding but by the contrast because of the
dramatic progress already achieved and the difficulties of dealing with their consequences. The European
way has always been to deal pragmatically and in small increments with the requirements of deeper
integration. It is very unlikely that this approach can be changed. Still, bolder steps are required, pretty
13 For a discussion of the relative merits of the two systems, see Persson and Tabellini (2003); for an application to the EU, see Berglöf et al.
(2003).
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much in line with previous periods of slowdown followed by periods of acceleration. The last acceleration,
the “re-launch of Europe” that characterized the 1980s, led to the adoption of the Single Act and the
monetary union. The fifth enlargement of 2004 has given a false impression of acceleration, but it was
widening, not deepening. A new acceleration is now required. Like the previous one, it needs to be
carefully prepared.
16
17. References
Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Aggarwal, Vinod K. and Cédric Dupont (2004) “"Collaboration and Coordination in the Global Political Economy”,
in: John Ravenhill, ed. Global Political Economy, Oxford: Oxford University Press: 28-49.
Alesina, Alberto, and Robert Barro (2002) “Currency Unions”, Quarterly Journal of Economics 117: 409– 436.
Baldwin, Richard, Erik Berglöf, Francesco Giavazzi and Mika Widgrén (2001) “Nice Try: Should the Treaty of Nice be
Ratified?”, Monitoring European Integration 11, London: CEPR.
Baldwin, Richard and Mika Widgrén (2003) “Power and the Constitutional Treaty: Discard Giscard?”,
http://www.cepr.org
Baldwin, Richard and Mika Widgrén (2004) “Council Voting in the Constitutional Treaty: Devil in the Details”,
unpublished paper, Graduate Institute of International Economics,
http://hei.unige.ch/%7Ebaldwin/PapersBooks/Devil_in_the_details_BaldwinWidgren.pdf
Berglöf, Erik , Barry Eichengreen, Gérard Roland, Guido Tabellini and Charles Wyplosz (2003) “Built to Last: A
Political Architecture for Europe”, Monitoring European Integration 12, London: CEPR.
Bordignon, Massimo, Luca Colombo and Umberto Galmarini (2003), “Fiscal Federalism and Endogenous Lobbies’
Formation”, CESifo Working Paper no. 1017, August.
Buchanan, James and Gordon Tullock (1962), „The Calculus of Consent: Logical Foundations of Constitutional
Democracy“, Ann Arbor: University of Michigan Press.
Frankel, Jeffrey A. and Andrew K. Rose (2002) “An Estimate of the Effect of Currency Unions on Trade and Output”
Quarterly Journal of Economics 117(2): 437-466.
Persson, Torsten and Guido Tabellini (2000) Political Economics, Cambridge: MIT Press.
Persson, Torsten and Guido Tabellini (2003) The Economic Effects of Constitutions, Cambridge: MIT Press.
Tabellini, Guido and Charles Wyplosz (2003) Réformes structurelles et coordination en Europe (with Guido
Tabellini), Paris: La Documentation Française.
Wyplosz, Charles (2004) “The Challenges of a Wider and Deeper Europe”, in: K. Liebscher, J. Christl, P. Mooslechner
and D. Ritzberger-Grünwald (eds.), The Economic Potential of a Larger Europe, Cheltenham: Edward Elgar.
17
18. Appendix. Figures
Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Figure 1. Support to a common defence and security policy among European Union member states
18
Source: Eurobarometer, December 2004
19. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Figure 2. One common foreign policy among the member states of the European Union, towards other countries
Answers: For
19
* Cyprus North (55%)
Source: Eurobarometer, December 2004
20. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
20
Figure 3. Percent citizens "feeling national"
70
60
50
40
30
20
10
0
L
CY
SK
I
M
LV
PL
S L O
D
E
F
LT
RO
DK
BG
CZ
EST
H
B
NL
IR L
P
A
TR
GR
S
SF
UK
Source: Eurobarometer EB59, July 2003.
Figure 4. Passage probabilities in the EU
Source: Baldwin and Widgrén (2003).
21. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Figure 5. National perceptions of benefits from EU membership
21
80
70
60
50
40
30
20
10
0
01-04-83 01-04-86 01-04-89 01-04-92 01-04-95 01-04-98 01-04-01 01-04-04
Average Standard deviation
Source: Eurobarometer
Question: Taking everything into consideration, would you say that (your country) has on balance benefited or not from being a member of
the European Community (Common Market)? Answer: benefited.
Enlargements: 1986: Portugal and Spain; 1995: Austria, Finland and Sweden: 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Malta, Poland, Slovakia and Slovenia.
Figure 6. Preference for national foreign policy
35
30
25
20
15
10
5
0
Oct-89 Oct-91 Oct-93 Oct-95 Oct-97 Oct-99 Oct-01 Oct-03
Average Standard deviation
Source: Eurobarometer.
Question: Foreign policy towards countries outside the European Union should be decided by the (NATIONAL) government/mainly at national
level. Answer: yes.
Enlargements: see Figure 4.
22. Studies & Analyses No. 293 – Charles Wyplosz – Has Europe Lost its Heart?
Figure 7. Actual and desired speed of European integration
CY
UK S
22
Source: Eurobarometer 62, January 2005
Figure 8. Actual and desired speed of European integration
6
5
4
3
2 4
Perceived speed
Desired speed
GR
HU PL
P
DK
FI
A
LT
CZ SK
I E
MT
SN
NL B
LV
F
L
IRL
EST
D
3 5
Source: Eurobarometer 62, January 2005
Note: for definition of scales, see Figure 8.