The European economy in 1999 and 2000: Report

World economic growth this year is likely to remain as weak as in 1998, despite a gradual acceleration in the course of the year. The volume of world trade is estimated to have fallen significantly in the latter half of last year, and to date there are few signs of a rapid recovery. However, there are indications of improved investor sentiment in a number of emerging market economies, and the monetary authorities in many industrial economies have lowered shortterm interest rates significantly since last autumn. In the absence of further financial market turmoil, a modest global recovery is expected to develop this year, led by improved prospects for the Asian economies. World GDP is expected to rise by 3 per cent in 2000, after growth of 2V4 per cent this year (Table 1). The industrial economies as a group are not expected to contribute significantly to the overall rebound. The economy of the United States has remained much stronger than expected, but could experience a soft landing next year, particularly if the Federal Reserve decides to tighten monetary policy. Activity in Japan may at best stabilise next year after two years of declining GDP, with many firms continuing to have excess capacity, and domestic demand expected to remain weak. The continuing weakness of Japan will help to keep the upturn in the emerging markets within bounds. Growth should pick up in Western Europe over the next eighteen months, helped by the present relaxed monetary conditions. However, a recovery this year remains far from assured, with activity likely to be particularly weak in Germany and Italy. The present, historically low, rate of inflation in the industrial world may rise slightly, partly as a result of some recovery in world prices for primary commodities, recently in particular for oil. In the euro area, import prices will also rise as a result of the recent depreciation of the euro against the dollar. The continued strength of the dollar can be partly attributed to the very strong performance of the American economy compared with the European economy, and to the rising interest rate differentials with Europe. We expect that developments in the opposite direction will weaken the dollar again. Section VI of this report illustrates a scenario with a more substantial weakening in the aftermath of a collapse in equity prices. The Western European economy has been strongly affected by the adverse developments in the crisis regions. This has depressed industrial production significantly over the past year. The prospects for Europe are heavily dependent on the timing and extent to which these effects fade away. The American economy has been a strong engine for world economic growth up to now, but there are several imbalances that may lead to a slowdown over the next eighteen months. This could have a substantial impact on the European economy. --

The European economy in 1998 and 1999

World economic activity remains relatively robust, although the Asian crisis casts a shadow over the picture. The rate of growth of world trade has slowed down since last fall, but is expected to remain above its trend level. International price developments remain quite moderate. Oil prices have declined substantially, and are among the lowest of the decade. Inflationary pressures are also limited in the industrial countries, as capacity constraints are not yet significant there and excess supply has materialized worldwide. The industrial countries show a sustained growth rate between 2Vi and 3 per cent on average. However, the combination of strong growth and low inflation is the result of divergent developments between countries. • The US economy has been until recently particularly buoyant, as strong domestic demand has more than offset the dampening effect of falling exports to Asia. The Japanese economy remains in the doldrums. The threat of a deflation has recently prompted a substantial stimulation programme aiming at preventing a further deterioration of confidence. \^ Economic growth in Asia has been-severely_ restricted, in particular in the ASEAN countries and Korea, although extensive rescue operations have brought the situation in the worst hit countries more or less under control. The impact on the European countries is as yet rather limited, as negative trade effects are largely compensated for by beneficial effects of lower imported inflation and lower interest rates. Thus Western Europe is in a position to sustain the recovery that began in mid-1996. Prospects have been strengthened as uncertainties associated with the implementation of the EMU have now been dissipated. The time has now come to begin to view the EMU countries as a single entity from the viewpoint of economic management, even if differences persist in many fields. --

The European economy in 1998 and 1999: An update

A. Situation and Prospects for the European Economy 3 I. Slower Growth of the World Economy 3 II. Weaker Expansion of the European Economy 5 III. Economic Policy 7 B. Country Reports 9 I. Germany: Upturn Continues Despite Financial Turbulence 9 II. Confidence Still High in France, Though Off Its Peak 9 III. Downturn in the UK Economy 10 IV. Italy: A Fragile Recovery 11 --

Global Value Chains and Market Formation Process in Emerging Export Activity: Evidence from Ethiopian Flower Industry

経済学 / EconomicsThis paper provides a case study of the Ethiopian flower export industry which successfully emerged at time when the EU market (main destination) was already characterized by increasingly stringent standards and delivery requirements. Entering this market required a multitude of capabilities at firm, sector and national levels. Several of these capabilities were absent or weak in the domestic market when the new activity kicked off. The paper analyzes how the capabilities of individual firms and the industry at large co-evolved and the role of various actors in the ‘market formation’ process.JEL Classification Codes: O12, O13, O19http://www.grips.ac.jp/list/jp/facultyinfo/sonobe_tetsushi