EU cohesion policy and the equity-efficiency trade-off - Adding dynamics to Martin's model

As a result of the combination of endogenous growth theory with the approach of the new economic geography (NEG), several models have been developed to explain spatial income inequality and to formulate possible policy strategies taking into account the equity-efficiency trade-off. The dynamics of this problem should be considered as fundamentally important for the enlargement of the EU, because with respect to the new Member States from Central and Eastern Europe (CEECs), EU cohesion policy is confronted with a double challenge: how can it contribute to attain higher national growth (and therefore convergence towards the EU average income per capita) and at the same time contribute to the decrease of regional disparities within the new Member States? This analysis is particularly appealing against the background of the alleged equity-efficiency trade-off that regional policies often suffer from. After the introduction, in the second part of this paper, some light is shed on this equity-efficiency trade-off in the framework of an overview surveying the theoretical literature on the issue. In the third part of the paper, a model presented by Philippe Martin (1999) is presented. Martin’s model combines the approaches of NEG and endogenous growth theory. In the fourth part, we develop a very simple dynamic version of the Martin model, followed by its formal analysis. We examine the effect of a monetary transfer to the poorer region, financed by the EU in the context of its cohesion policy interventions. In the fifth part, we derive some regional policy implications of the dynamised version of the Martin model. We find that there is a case for a “two step regional policy approach” in order to tackle the equity-efficiency trade-off challenge: this approach first aims to support the richer region and thus aggregate growth in the whole integrated area, and then to pursue an equity-oriented cohesion policy by fostering firm creation and innovation in the poorer region.

EU cohesion policy and the equity-efficiency trade-off - Adding dynamics to Martin's model

As a result of the combination of endogenous growth theory with the approach of the new economic geography (NEG), several models have been developed to explain spatial income inequality and to formulate possible policy strategies taking into account the equity-efficiency trade-off. The dynamics of this problem should be considered as fundamentally important for the enlargement of the EU, because with respect to the new Member States from Central and Eastern Europe (CEECs), EU cohesion policy is confronted with a double challenge: how can it contribute to attain higher national growth (and therefore convergence towards the EU average income per capita) and at the same time contribute to the decrease of regional disparities within the new Member States? This analysis is particularly appealing against the background of the alleged equity-efficiency trade-off that regional policies often suffer from. After the introduction, in the second part of this paper, some light is shed on this equity-efficiency trade-off in the framework of an overview surveying the theoretical literature on the issue. In the third part of the paper, a model presented by Philippe Martin (1999) is presented. Martin's model combines the approaches of NEG and endogenous growth theory. In the fourth part, we develop a very simple dynamic version of the Martin model, followed by its formal analysis. We examine the effect of a monetary transfer to the poorer region, financed by the EU in the context of its cohesion policy interventions. In the fifth part, we derive some regional policy implications of the dynamised version of the Martin model. We find that there is a case for a "two step regional policy approach” in order to tackle the equity-efficiency trade-off challenge: this approach first aims to support the richer region and thus aggregate growth in the whole integrated area, and then to pursue an equity-oriented cohesion policy by fostering firm creation and innovation in the poorer region

Remittances and their impact on Economic Growth

In the worldwide economy, remittances represent one of the major international flows of financial resources. Worker remittances constitute an increasingly important mechanism for the transfer of resources from developed to developing countries, and remittances are the second-largest source, behind foreign direct investment, of external funding for developing countries. Sometimes the flows of remittances can exceed the flows of foreign direct investment (FDI). Yet, literature on worker remittances has so far focused mainly on the impact of remittances on income distribution within countries, on the determinants of remittances at a micro-level, or on the effects of emigration and remittances for specific countries or regions.This paper tries to study the impact of remittances on various macroeconomic and developmental aspects for the economy. This study aims to observe the impact of remittances on economic growth, using a panel data set of 21 developing countries, during the period 1992–2012. These countries have experienced a major increase in remittance inflows, and at this time accounts for the bulk of total remittance receipts, compared with other regions. The paper is then to review the theoretical as well empirical literature devoted to remittances, in order; first, to select the arguments that can be applied to the countries and second, to identify empirically if there are significant relationships between remittances and GDP per capita in these countries

Remittances' impact on the labor supply and on the deficit of current account

Remittances as one of the main benefits of international migration have a great and important impact on the countries of origins and make migration a topic of special interest for many researchers. Workers' remittances represent an important financial flows and a major source of private external finance for many developing countries, which they receive them in large quantity. For many economies, remittances represent a sizable and stable source of funds that sometimes exceed official aid or financial inflows from foreign direct investment. One substantial drawback of remittances is that it means developing economies lose their best, most skilled young workers. It can lead to a situation where so many adults have migrated to a richer country; children are being brought up by grandparents. This has both an economic and social cost. The economy loses because young workers are not available; society loses out by the displacement effect of young adults not being there. On the other hand, people wouldn't undertake the upheaval of moving to other countries, if they didn't think their families would benefit and the country benefits too. The free movement of labor enables greater opportunities for people in developing economies and also helps developing economies gain important foreign currency revenue. Developed countries benefit from a more elastic supply of labor, enabling greater labor market flexibility. Remittances may increase consumption and enhance investments and have a significant impact to finance economic growth in receiving economies. In particular, migrants' transfers of funds, being inflows of foreign currencies that can be used to repay foreign debt, are less volatile compared to other financial flows. For some countries money sent back in the form of remittances from migrant workers are mostly used for consumption and investments and comprise a substantial portion of GDP and their balance of payments. This paper examines the impact of remittances as an income source to finance the balance of payment deficit. First, it documents the increasing share of remittances relative to other foreign capital flows to Albania and Southeast countries, distribution of remittance inflows across countries. This is followed by some analysis of the potential benefits and costs of remittances in recipient countries. The paper drawing on the case of Albania, Serbia, Bosnia Herzegovina, Moldova, Bulgaria, Romania and Republic of Macedonia, the paper shows the positive impact that rising remittances can have on the improvement of current account balance. Finally, also examines the role of remittances in funding decreasing Albanian National Debt. Workers' remittances to Albania are nevertheless an important financial flow-with perhaps, significant developmental effects. Albania earns a large amount of worker's remittances which since 1992 they have grown rapidly. It is well known that they represent the second largest inflow of incomes, are less costly and increased mostly consumption level. Our results point the positive impact of remittances in financing the deficit of the balance of payments and are a stable source of incomes

Optimal control for the thermistor problem

This paper is concerned with the state-constrained optimal control of the two-dimensional thermistor problem, a quasi-linear coupled system of a parabolic and elliptic PDE with mixed boundary conditions. This system models the heating of a conducting material by means of direct current. Existence, uniqueness and continuity for the state system are derived by employing maximal elliptic and parabolic regularity. By similar arguments the linearized state system is discussed, while the adjoint system involving measures is investigated using a duality argument. These results allow to derive first-order necessary conditions for the optimal control problem

The land use - land degradation nexus in Mediterranean landscapes - drivers of changes and key processes at selected Natura 2000 sites of Crete, Greece

The land use–land degradation nexus in Cretan landscapes in regions with Natura 2000 sites was analyzed by an explorative expert driven study based on literature, field work and photo documentation methods with the aim of determining status, drivers and key processes of change. Drivers of current land use changes have been worked out by (1) general tourism developments and tourism related land uses; (2) irrigated olive yard developments; (3) fenced large-scale goat pastures and (4) large scale greenhouses. Key processes of change have been identified and qualitatively assessed for 5 regions with NATURA 2000 areas based on a non-ranked set of 11 descriptive indicators. The analysis includes the status-description and the importance assessment of land degradation processes in selected NATURA 2000 sites. Threats and pressures taken from the NATURA 2000 documentation and the land use – land degradation nexus and the analysis are a suitable basis for future land management in order to reach land degradation neutrality. The result of our analysis opens a new research field for a better integration of the normally thematically isolated analysis in geography, biology/nature conservation and agricultural policy analysis about the drivers and processes in landscape systems towards a better understanding the trends in land cover change (e.g. vegetation/soil degradation), the trends in productivity or functioning changes caused by land uses and as well for the trends in carbon stock change

The Land Use - Land Degradation Nexus in Mediterranean Landscapes: – Drivers of Changes And Key Processes at Selected Natura 2000 Sites of Crete, Greece

The land use–land degradation nexus in Cretan landscapes in regions with Natura 2000 sites was analyzed by an explorative expert driven study based on literature, field work and photo documentation methods with the aim of determining status, drivers and key processes of change. Drivers of current land use changes have been worked out by (1) general tourism developments and tourism related land uses; (2) irrigated olive yard developments; (3) fenced large-scale goat pastures and (4) large scale greenhouses. Key processes of change have been identified and qualitatively assessed for 5 regions with NATURA 2000 areas based on a non-ranked set of 11 descriptive indicators. The analysis includes the status-description and the importance assessment of land degradation processes in selected NATURA 2000 sites. Threats and pressures taken from the NATURA 2000 documentation and the land use – land degradation nexus and the analysis are a suitable basis for future land management in order to reach land degradation neutrality. The result of our analysis opens a new research field for a better integration of the normally thematically isolated analysis in geography, biology/nature conservation and agricultural policy analysis about the drivers and processes in landscape systems towards a better understanding the trends in land cover change (e.g. vegetation/soil degradation), the trends in productivity or functioning changes caused by land uses and as well for the trends in carbon stock change