EXPERIENCES AND TENDENCIES TO DECENTRALIZE THE CAPABILITIES OF THE ECONOMIC POLICY AT THE EUROPEAN UNION LEVEL

Romania's integration in the European Union implies, apart the complex process of policy transfer, the learning of new modes to make policies characteristic to a multi-level governance and partnership culture. Of the different levels of governance of the European model, the regional level ("regional governance") most faithfully reflects, in our opinion, the complexity of reconfiguring the role of state in economy, at the beginning of this new millennium, in the European Union space and presents the highest practical importance for Romania, as a new Member State of the European Union, for, at the regional level, the structures are more flexible and the good practices are more rapidly assimilable. The selection of the best regional growth and development economic policies, the choosing of the objectives out of a series of competing options, the calibration in time and space of powers, roles, capabilities, and responsibilities and the encouragement of the win-win solutions call upon the choice and combination of some appropriate and efficient instruments. Representative for the new context, the regional growth and development policy must integrate, in Romania too, more knowledge, more creativity, new combinations of capabilities and new fields of expertise. This paper presents preliminary research results afferent to the post-doctoral research project: "Growth and regional development economic policies. Challenges for Romania in the context of economic-financial crisis and European model integration", carried out in the project "Economic scientific research, reliance of human welfare and development in European context", the Romanian Academy, "Costin C. Kiriţescu" National Institute for Economic Research, project financed for the 2010-2013 period from the European Social Fund (EFS) and implemented by the Romanian Academy, "Costin C. Kiriţescu" National Institute for Economic Research, in the period of time 1 December 2010 - 30 November 2012, coordinator: Professor Dr. Valeriu Ioan Franc. The question we intend to answer, in the present phase of our research, based on the comparative analysis of the decentralisation systems of several Member States of European Union, respectively on the analysis of the regional disparities existing at the European Union level and of the effects of the economic integration, is - to what extent the capabilities of the regional policy should rather be concentrated in the hands of regional authorities or of the European Union than to be left individually to the Member States which should conceive their own regional policy? What we intend in this paper, based on the analysis of some experiences to decentralize the capabilities of economic policy at the European Union level, is to identify the regional implications of the interconnection of decentralization, centralization, respectively supra-nationalization tendencies and, implicitly, the analysis of the way to reconfigure the role of state in economy at the regional level, in the context of integration in the European model. The examination of the way to reconfigure the role of state in economy at regional level requires the review of the allocative, distributive, and regulating roles of the state from a regional perspective, the analysis, on one side, of the decentralization of economic policy capabilities from the national level to the regional level (for example, national level: pure public goods supply, for instance, national defence and the centralization of fiscal policy capabilities in order to achieve macroeconomic stability and revenue redistribution; regional level: mixed public goods supply, for instance, waste collection and community policy), on the other hand, the centralization/decentralization of regional capabilities at the European Union level.European integration, role of state in economy, decentralization, regional governance, regional growth and development policy

Should the Government Finance Public Goods in Rural Areas? A Review of Arguments

This paper reviews three arguments why government should not directly finance public goods provision in the countryside: (1) sorting and voting of residents leads to efficient local public goods provision, (2) community governance better copes with incomplete contracting in public goods, and (3) public provision drives out voluntary private provi-sion of public goods. Theory and empirical evidence partly support these arguments. The adequate level of rural governance appears to be often below the national or Euro-pean level, and policy should focus on the institutional premises of public goods provi-sion rather than on centralized payments to public good providers.

WHY AND HOW SHOULD THE GOVERNMENT FINANCE PUBLIC GOODS IN RURAL AREAS? A REVIEW OF ARGUMENTS

This paper reviews three arguments why government should not directly finance public goods provision in the countryside: (1) sorting and voting of residents leads to efficient local public goods provision, (2) community governance may better cope with incomplete contracting in public goods, and (3) public provision drives out voluntary private provision of public goods. Theory and empirical evidence partly support these arguments. The adequate level of rural governance appears to be often below the European or national level, and policy should focus on the institutional premises of public goods provision rather than on centralized payments to public good providers.Rural areas, public goods, institutions, agricultural policy reform, Public Economics,

Putting Free-Riding to Work: A Partnership Solution to the Common-Property Problem

The common-property problem results in excessive mining, hunting, and extraction of oil and water. The same phenomenon is also responsible for excessive investment in R&D and excessive outlays in rent-seeking contests. We propose a "Partnership Solution" to eliminate or at least mitigate these excesses. Each of N players joins a partnership in the first stage and chooses his effort in the second stage. Under the rules of a partnership, each member must pay his own cost of effort but receives an equal share of the partnership's revenue. The incentive to free-ride created by such partnerships turns out to be beneficial since it naturally offsets the excessive effort inherent in such problems. In our two-stage game, this institutional arrangement can, under specified circumstances, induce the social optimum in a subgame-perfect equilibrium: no one has a unilateral incentive (1) to switch to another partnership (or create a new partnership) in the first stage or (2) to deviate from socially optimal actions in the second stage. The game may have other subgame-perfect equilibria, but the one associated with the ``Partnership Solution'' is strictly preferred by every player. We also propose a modification of the first stage which generates a unique subgame-perfect equilibrium. Antitrust authorities should recognize that partnerships can have a less benign use. By organizing as competing partnerships, an industry can reduce the ``excessive'' output of Cournot oligopoly to the monopoly level. Since no partner has any incentive to overproduce in the current period, there is no need to deter cheating with threats of future punishments.partnerships;common property;tragedy of the commons;cartels

Shut Up and Fish: The Role of Communication when Output-Sharing is used to Manage a Common Pool Resource

Schott et al. (2007) have shown that the “tragedy of the commons” can be overcome when individuals share their output equally in groups of optimal size and there is no communication. The assignment of individuals to groups as either strangers or partners does not significantly affect this outcome. In this paper we investigate whether communication changes these results. Communication reduces shirking, increases aggregate effort and reduces aggregate rents, but only when communication groups and output-sharing groups are linked. The effect is stronger for fixed groups (the partners treatment) than for randomly reassigned groups (the strangers treatment). Performance is not distinguishable from the no- communication treatments when communication is permitted but subjects share output within groups different from the groups within which they communicate. Communication also tends to enhance the negative effect of the partnered group assignment on the equality of individual payoffs. We use detailed content analysis to evaluate the impact of various categories of communication messages on behaviour across treatments.Common pool resources; Communication; Coordination; Cooperation; Free-riding Behaviour in Teams; Partners and Strangers; Experiments

Modeling the Use of Nonrenewable Resources Using a Genetic Algorithm

This paper shows, how a genetic algorithm (GA) can be used to model an economic process: the interaction of profit-maximizing oil-exploration firms that compete with each other for a limited amount of oil. After a brief introduction to the concept of multi-agent-modeling in economics, a GA-based resource-economic model is developed. Several model runs based on different economic policy assumptions are presented and discussed in order to show how the GA-model can be used to gain insight into the dynamic properties of economic systems. The remainder outlines deficiencies of GA-based multi-agent approaches and sketches how the present model can be improved.

Promoting decentralised and flexible budgets in England: Lessons from the past and future prospects

The UK has traditionally been viewed as a classic example of a unitary state in which central institutions dominate decision making. The recent Labour Government sought to counter this convention through devolution to Scotland, Wales, Northern Ireland and London and administrative decentralization to the English regions. This article examines New Labour’s efforts to promote sub-national policy discretion and fiscal autonomy via the Regional Funding Allocations (RFA) process. Findings are subsequently drawn upon to offer insights into the difficulties the Coalition Government is likely to face in its endeavor to decentralize functions and budgets to local authorities and communities. The paper addresses two central questions (i) Can New Labour’s attempt to promote decentralized and flexible budgets in England be viewed asevidence of a transition to a more fluid, multi-level form of governance? (ii)What lessons can be harnessed from the RFA experience in taking forward the Coalition government’s plans to promote fiscal discretion at the sub-national tier? It concludes that there are deep-rooted barriers in Whitehall that may limitthe freedoms and flexibilities pledged to local government and could undermine efforts to decentralize

1. Strengthening International Regulation Through Transnational New Governance: Overcoming the Orchestration Deficit. 2. International Regulation without International Government: Improving IO Performance through Orchestration

1. A new kind of international regulatory system is spontaneously arising out of the failure of international 'Old Governance' (i.e., treaties and intergovernmental organizations) to adequately regulate international business. Nongovernmental organizations, business firms, and other actors, singly and in novel combinations, are creating innovative institutions to apply transnational norms to business. These institutions are predominantly private and operate through voluntary standards. The Authors depict the diversity of these new regulatory institutions on the 'Governance Triangle,' according to the roles of different actors in their operations. To analyze this complex system, we adapt the domestic 'New Governance' model of regulation to the international setting. 'Transnational New Governance' potentially provides many benefits of New Governance and is particularly suitable for international regulation because it demands less of states and intergovernmental organizations (IGOs). However, Transnational New Governance does require states and IGOs to act as orchestrators of the international regulatory system, and that system currently suffers from a significant orchestration deficit. If states and IGOs expanded 'directive' and especially 'facilitative' orchestration of the Transnational New Governance system, they could strengthen high-quality private regulatory standards, improve the international regulatory system, and better achieve their own regulatory goals. 2. International organizations (IOs) have been widely criticized as ineffective. Yet scholars and practitioners assessing IO performance frequently focus on traditional modes of governance such as treaties and inter-state dispute-resolution mechanisms. When they observe poor performance, moreover, they often prescribe a strengthening of those same activities. We call this reliance on traditional state-based mechanisms 'International Old Governance' (IOG). A better way to understand and improve IO performance is to consider the full range of ways in which IOs can and do operate - including, increasingly, by reaching out to private actors and institutions, collaborating with them, and supporting and shaping their activities. Such actions are helping to develop an intricate global network of public, private and mixed institutions and norms, partially orchestrated by IOs, that we call 'Transnational New Governance' (TNG). With proper orchestration by IOs, TNG can ameliorate both 'state failure' - the inadequacies of IOG - and 'market failure' - the problems that result when the creation and evolution of norm-setting institutions is highly decentralized. Orchestration thus provides a significant way for IOs to improve their regulatory performance. Some IOs already engage actively with private actors and institutions - we provide a range of illustrations, highlighting the activities of the UN Environment Programme (UNEP). Yet there remains a significant 'orchestration deficit' that provides real opportunities for IOs. We draw on the lessons of existing IO activities to suggest additional possibilities for improving IO performance. -- 1. Ein internationales regulatorisches System neuer Art entsteht derzeit spontan aus dem Versagen der internationalen 'Old Governance' - also der bestehenden internationalen Verträge und Organisationen - dabei, den internationalen Handel angemessen zu regulieren. Nichtregierungsorganisationen, Unternehmen und andere Akteure - allein und in ganz neuen Kombinationen - schaffen sich neue internationale Einrichtungen, um transnationale Normen auf internationale Geschäftstätigkeit anzuwenden. Es geht dabei vornehmlich um private Einrichtungen, die vor allem über freiwillige Standardbefolgung wirken. In diesem Beitrag werden die unterschiedlichen Regulierungseinrichtungen als Teil eines 'Governance Dreiecks' beschreiben und das geschieht vor allem in Blick darauf, welche Rollen die unterschiedlichen Akteure in ihrer Tätigkeit spielen. Um dieses komplexe System zu untersuchen passen wir das innenpolitische Regulierungsmodell der 'New Governance' an den internationalen Rahmen an. Die 'Transnational New Governance' enthält viele Vorteile der 'New Governance' und sie ist für die internationale Regulierung besonders angemessen, weil sie geringere Anforderungen an die Staatenwelt und an die intergouvernementalen Organisationen, die IGOs, stellen. Allerdings ist es für eine wirksame 'Transnational New Governance' weiterhin erforderlich, dass die Staaten und die IGOs das internationale regulatorische System 'orchestrieren'. Das heutige internationale regulatorische System leidet allerdings unter einem Orchestrierungsdefizit. Würden die Staaten und die IGOs die 'anweisende' und 'ermöglichende' Orchestrierungsfunktion des 'Transnational New Governance System' ausbauen, dann stärkten sie die privaten regulatorischen Standards von hoher Qualität, verbesserten das internationale regulatorische System und könnten ihre eigenen regulatorischen Ziele besser verwirklichen. 2. Internationale Organisationen (IOs) werden vielfach ob Ihrer Ineffizienz kritisiert. Allerdings konzentrieren sich Wissenschaftler und Praktiker bei dieser Bewertung der Leistungsfähigkeit von IOs häufig auf Maßstäbe, die den herkömmlichen Formen von Governance - wie internationalen Verträgen und den Mechanismen für die Schlichtung zwischenstaatlicher Konflikte - entlehnt sind. Soweit eine ungenügende Leistung festgestellt wird, empfehlen sie zudem meist, Tätigkeiten der traditionellen Art zu verstärken. Wir bezeichnen dies als ein Sich-Verlassen auf die herkömmlichen staats-basierten Mechanismen, als 'International Old Governance' (IOG). Man versteht die IOs besser und verbessert ihre Leistungsfähigkeit aber der Situation weitaus angemessener, wenn man die gesamte Vielfalt wirklicher und möglicher IO-Tätigkeiten in den Blick nimmt: Das umfasst vor allem, dass die IOs private Akteure und Organisationen einbeziehen, mit ihnen zusammenarbeiten, ihre Aktivitäten stützen, sie formen und ihnen Richtung geben. Diese Tätigkeiten schaffen ein fein gesponnenes globales Netzwerk von öffentlichen, privaten und gemischten Organisationen und Normen, das seinerseits teilweise durch die IOs orchestriert wird. Dieses Netzwerk bezeichnen wir als 'Transnational New Governance' (TNG). Wenn die Orchestrierung durch IOs gut funktioniert kann sie auch Staatsversagen (state failure) abmildern - also hier die Inadäquanzen von 'International Organization Governance' - und ebenso kann sie Marktversagen ausgleichen, also die Probleme, die sich ergeben wenn Herausbildung und Schaffung normgebender Einrichtungen höchst dezentralisiert verläuft. Über die Orchestrierung können die IOs auch die Leistungsfähigkeit ihrer Regulierungen erhöhen. Einige IOs sind schon jetzt stark zusammen mit privaten Akteuren und Einrichtungen unterwegs; in diesem Beitrag mustern wir das Spektrum solcher Aktivitäten. Wir betonen dabei die Unternehmungen des UN Environment Programme (UNEP), des Umweltprogramms der VN. Allerdings verbleibt ein erhebliches 'Orchestrierungsdefizit', das für die IOs zugleich Herausforderung und Chance ist. Wir stützten uns auf den Erfahrungsschatz der vorgefundenen IO-Aktivitäten, um den Möglichkeitsraum der IOs für die Zukunft auszumessen und Maßnahmen zur Verbesserung der Leistungsfähigkeit von IOs anzuregen.