On the new economic philosophy of crisis management in the European Union

This essay attempts to go beyond presenting the bits and pieces of still ongoing crisis management in the EU. Instead it attempts at finding the ‘red thread’ behind a series of politically improvised decisions. Our fundamental research question asks whether basic economic lessons learned in the 1970s are still valid. Namely, that a crises emanating from either structural or regulatory weaknesses cannot and should not be remedied by demand management. Our second research question is the following: Can lacking internal commitment and conviction in any member state be replaced or substituted by external pressure or formalized procedures and sanctions? Under those angles we analyze the project on establishing a fiscal and banking union in the EU, as approved by the Council in December 2012

Wirtschaftliche Entwicklung und Demokratie: ist Demokratie ein Wohlstandsmotor oder ein Wohlstandsprodukt?

Economically highly developed countries are mostly democratic. But does this association constitute a causal relationship according to which democracy is a determinant of economic development? Or is it, conversely, economic development that paves the way for democratization? This paper gives an overview of the recent empirical literature that has dealt with this question. The empirical evidence raises doubts about the existence of any direct causation. However, there seem to be indirect causal mechanisms. Democracies seem to implement better conditions for the accumulation of human capital, in particular in terms of a rule of law. On the other hand do democracies not simply arise as consequence of economic development, but because of an adequate social environment with little inequality, that may be associated with economic well-being

Worker remittances and the global preconditions of ‘smart development’

With the growing environmental crisis affecting our globe, ideas to weigh economic or social progress by the ‘energy input’ necessary to achieve it are increasingly gaining acceptance. This question is intriguing and is being dealt with by a growing number of studies, focusing on the environmental price of human progress. Even more intriguing, however, is the question of which factors of social organization contribute to a responsible use of the resources of our planet to achieve a given social result (‘smart development’). In this essay, we present the first systematic study on how migration – or rather, more concretely, received worker remittances per GDP – helps the nations of our globe to enjoy social and economic progress at a relatively small environmental price. We look at the effects of migration on the balance sheets of societal accounting, based on the ‘ecological price’ of the combined performance of democracy, economic growth, gender equality, human development, research and development, and social cohesion. Feminism in power, economic freedom, population density, the UNDP education index as well as the receipt of worker remittances all significantly contribute towards a ‘smart overall development’, while high military expenditures and a high world economic openness are a bottleneck for ‘smart overall development’

Viable tax constitutions

Taxation is only sustainable if the general public complies with it. This observation is uncontroversial with tax practitioners but has been ignored by the public finance tradition, which has interpreted tax constitutions as binding contracts by which the power to tax is irretrievably conferred by individuals to government, which can then levy any tax it chooses. However, in the absence of an outside party enforcing contracts between members of a group, no arrangement within groups can be considered to be a binding contract, and therefore the power of tax must be sanctioned by individuals on an ongoing basis. In this paper we offer, for the first time, a theoretical analysis of this fundamental compliance problem associated with taxation, obtaining predictions that in some cases point to a re-interptretation of the theoretical constructions of the public finance tradition while in others call them into question

State history and economic development: evidence from six millennia

The presence of a state is one of the most reliable historical predictors of social and economic development. In this article, we complete the coding of an extant indicator of state presence from 3500 BCE forward for almost all but the smallest countries of the world today. We outline a theoretical framework where accumulated state experience increases aggregate productivity in individual countries but where newer or relatively inexperienced states can reach a higher productivity maximum by learning from the experience of older states. The predicted pattern of comparative development is tested in an empirical analysis where we introduce our extended state history variable. Our key finding is that the current level of economic development across countries has a hump-shaped relationship with accumulated state history

The Coevolution of Economic and Political Development

This paper establishes a simple model of long run economic and political development, which is driven by the inherent technical features of di¤erent production factors, and political con‡icts among factor owners on how to divide the outputs. The main capital form in economy evolves from land to physical capital and then to human capital, which enables their respective owners (landlords, capitalists, and workers) to gain political powers in the same sequence, shaping the political development path from monarchy to elite ruling and …nally to full su¤rage. When it is too costly for any group of factor owners to repress others, political compromise is reached and economic progress is not blocked; otherwise, the political con‡icts may lead to economic stagnation

Constraints to Economic Development and Growth in the Middle East and North Africa

When comparing the speed and extent of economic development in different geographic regions of the world over the past 20 years, the under-average performance of Arab countries in general and Arab Mediterranean countries in particular is striking. This is despite an overall favorable geo-strategic situation at the crossroads of three continents, with excellent connections to sea and waterways and in direct proximity to the European Union, one of the world’s economic hubs. It is also despite the minor importance of negative factors such as a high-burden diseases or high levels of ethnic fractionalization. In this paper, I focus on identifying the most important constraints on Arab Mediterranean economic development. I use state-of-the-art econometric tools to quantify constraints that have been identified through economic theory and studies of the political economy characteristics of the region. The empirical results offer support for the central hypothesis that limited technological capacities and political economy structures are the primary constraints on economic development. With a view to international structural adjustment efforts, my findings imply that the limited success of the Euro-Mediterranean policy to stimulate the economic development of the Arab Mediterranean countries might be because structural adjustment efforts do not tackle—or at least do not sufficiently tackle— these constraints.Vergleicht man Geschwindigkeit und Umfang der wirtschaftlichen Entwicklung der verschiedenen Weltregionen in den vergangenen zwanzig Jahren, so fällt insbesondere das unterdurchschnittliche Abschneiden der arabischen Länder im Allgemeinen und der arabischen Mittlemeerländer im Besonderen ins Auge, und dies trotz einer insgesamt vorteilhaften geographischen Lage im Schnittpunkt dreier Kontinente mit exzellenten Anschlussmöglichkeiten an See- und Wasserwege, trotz der direkten Nachbarschaft zum Weltwirtschaftsdrehkreuz Europäische Union und trotz der relativ geringen Bedeutung wichtiger entwicklungshemmender Faktoren, beispielsweise ethnische Zersplitterung oder massive Ausbreitung von Krankheiten wie AIDS oder Malaria. In diesem Aufsatz wird versucht, von den unterschiedlichen Hemmfaktoren wirtschaftlicher Entwicklung, die in der wirtschaftstheoretischen Literatur und/oder in MENARegionalstudien diskutiert werden, diejenigen herauszuarbeiten, die wirtschaftliche Entwicklung am stärksten behindern oder möglicherweise stärker als andere. Dabei benutze ich modernste ökonometrische Verfahren, um den Einfluss der verschiedenen erklärenden Variablen zu quantifizieren. Die Ergebnisse stützen die Eingangshypothese, dass insbesondere mangelnde technologische Kapazitäten und Fähigkeiten sowie regionalspezifische politökonomische Strukturen die wirtschaftliche Entwicklung in den arabischen Mittelmeerländern behindern