Poverty and Wealth Reporting of the German Government: Approach, Lessons and Critique

The Capability Approach has been adopted as a theoretical framework for official Poverty and Wealth Reports by the German government. For the first time, this paper provides information on the use of the Capability Approach in this reporting process to international readers. We show the background and processes that might have led the government to adopt Amartya Sen’s Capability Approach as a framework for the reports and describe the Capability-related structure and main contents of the recent 3rd Poverty and Wealth Report. We also explain why the extension of the Capability Approach from poverty to wealth issues in German reports may be promising also for analyses of capability deprivation in general. Finally, we discuss major shortcoming and challenges of the reporting and end with a brief conclusion.capability approach, poverty, wealth, affluent countries, Amartya Sen

A Capability Approach for Official German Poverty and Wealth Reports: Conceptual Background and First Empirical Results

The majority of the literature related to Amartya Sen´s Capability Approach (CA) has been devoted to questions of development and developing countries. In this paper, however, with a theoretical concept and first empirical results at hand, we shed some light on Sen´s argument that the CA is also relevant to wealthy countries (Sen, 1999, p. 6). First, we discuss the political background of CA applications in the case of Germany. Second, we sketch out a new analytical framework for the assessment of poverty and wealth in affluent countries in general from a CA perspective. Third, we show how this framework can be based on a corresponding set of feasible indicators and up-to-date representative information in the German Socio-Economic Panel Study (GSOEP). Finally, three selected empirical examples underline the resulting possibilities for analyses of gender inequalities, the unequal distribution of political participation and interdependencies between financial and nonfinancial issues of poverty and wealth within this integrative framework.poverty, wealth, capabilities, Amartya Sen, affluent countries, poverty determinants.

Light Transmission Through Arctic Sea Ice - Large-Scale Studies on Seasonality and Spatial Variability

Arctic sea ice has declined and become thinner and more seasonal during the last decade. One consequence of this is that the surface energy budget of the Arctic Ocean is changing. Solar light transmitting into and through sea ice is of critical importance for the state of sea-ice and the timing and amount of primary production. The light field in and under sea ice is highly variable: horizontally, vertically, and over seasons. At the same time, observations of light transmittance through sea ice are still sparse, because the under-ice environment is difficult to access and high quality measurements are challenging. Furthermore, it is necessary to generalize measurements in order to obtain Arctic-wide estimates of light conditions and energy budgets

FDI and Domestic Investment: An Industry-Level View

Previous empirical work on the link between domestic and foreign investment provides mixed results which partly depend on the level of aggregation of the data. We argue that the aggregated home country implications of foreign direct investment (FDI) cannot be gauged using firm-level data. Aggregated data, in turn, miss channels through which domestic and foreign activities interact. Instead, industry-level data provide useful information on the link between domestic and foreign investment. We theoretically show that the effects of FDI on the domestic capital stock depend on the structure of industries and the relative importance of domestic and multinational firms. Our model allows distinguishing intra-sector competition from inter-sector linkage effects. We test the model using data on German FDI. Using panel cointegration methods, we find evidence for a positive long-run impact of FDI on the domestic capital stock and on the stock of inward FDI. Effects of FDI on the domestic capital stock are driven mainly by intrasector effects. For inward FDI, inter-sector linkages matter as well

FDI and Domestic Investment: An Industry-Level View

Previous empirical work on the link between domestic and foreign investment provides mixed results which partly depend on the level of aggregation of the data. We argue that the aggregated home country implications of foreign direct investment (FDI) cannot be gauged using firm-level data. Aggregated data, in turn, miss channels through which domestic and foreign activities interact. Instead, industry-level data provide useful information on the link between domestic and foreign investment. We theoretically show that the effects of FDI on the domestic capital stock depend on the structure of industries and the relative importance of domestic and multinational firms. Our model allows distinguishing intra-sector competition from inter-sector linkage effects. We test the model using data on German FDI. Using panel cointegration methods, we find evidence for a positive long-run impact of FDI on the domestic capital stock and on the stock of inward FDI. Effects of FDI on the domestic capital stock are driven mainly by intrasector effects. For inward FDI, inter-sector linkages matter as well.foreign direct investment; domestic capital stock

Barriers to exporting: Firm-Level Evidence from Germany

Recent literature stresses the importance of low productivity as a barrier to the international expansion of firms. But financial frictions or adverse employment conditions at home could matter as well. In this paper, we present new empirical evidence on the importance of these factors. We use a detailed micro-level dataset of German firms which simultaneously provides information on exports, financial frictions, and labor market conditions. Our paper has three main findings. First, in line with earlier literature, we find a positive impact of size and productivity on firms’ export activities. Second, financial constraints affect the entry into foreign market (extensive margin) more than the volume of exports (intensive margin). Third, labor market conditions have a mixed impact on export activities. The most consistent finding is that firms covered by collective bargaining agreements are less likely to be exporters and export less.multinational firms, exports, firm heterogeneity, productivity

Firm-Specific Factor Market Constraints and FDI: Evidence from Germany

Firms that invest abroad are large and more productive than their domestic counterparts. But to what extent are the international activities of firms also driven by differences across firms in terms of their access to external finance and the labor market conditions that there are facing? In this paper, we present new empirical evidence based on a detailed micro-level dataset of German firms. Our paper has three main findings regarding the firm-level determinants of FDI. First, in line with earlier literature, we find a positive impact of size, productivity, and R&D activity on firms’ FDI activity. Second, labor market conditions have a mixed impact on FDI. Personnel shortage tends to have a significantly positive impact on the probability to invest abroad, whereas wage cost problems and the existence of collective bargaining agreements have a negative effect. Third, financial constraints have a mixed impact as well. While self-reported financial constraints do not significantly affect FDI activity, cash flow has a positive impact.multinational firms, firm heterogeneity, productivity, financial constraints, labor market constraints

Does Russian gas weaken energy security in Europe? Lessons from the Baumgarten incident. CEPS Commentary, 19 December 2017

On December 12th, an explosion in the Baumgarten gas hub in Austria, a key distribution knot for the European gas market, led to a disruption in gas transmission that affected a large part of Europe. The incident caused Italy to declare a state of emergency and disrupted supply to the UK from Belgium and the Netherlands. Simultaneously, an outage in Norway caused flow reductions from Europe’s largest gas production site “Troll”, which compounded the supply problems. Amplified by a demand peak in the UK due to unusually cold weather, prices were directly affected, with short-term prices in the UK reaching a four-year high (up 35%).[1] The incident has affected the gas market and may lead to further repercussions throughout the remainder of the winter, when demand stays high due to household consumption for heating