Technological Specialization as a Driving Force of Production Specialization

The paper analyses the impact of the technological specializations of the EU-15 countries on their production specializations. A neoclassically inspired empirical model is specified and estimated to explain for the considered countries the value added shares of the manufacturing industries in the area of R&D-intensive technology as well as in the area of the remaining technology by technological differences and relative factor endowments. Technological specialization is approximated by the patent stocks in the areas of leading-edge, high-level and the remaining technology, while further technological differences are captured by indices of transferable knowledge and fixed country effects. The empirical results show that the technological specializations of the EU countries are an important driving force of their production specializations.Factor Supply, Panel Data Analysis, Production Specialization, Technological Specialization,

Innovations, technological specialisation and economic growth in the EU

economic growth, economic convergence, technological specialisation, techonolgy diffusion, ricardian technological specialisation, Jungmittag

The Direct and Indirect Effects of Product Market Regulations in the Retail Trade Sector - Theoretical Aspects and an Exploratory Data Analysis

The reduction of regulatory restrictions is arguably the most strongly advocated policy for improving economic performance in EU countries, particularly in many service activities, where regulatory barriers to competition are still widespread. This technical report considers the direct and indirect effects of product market regulations (PMR) applying to the retail trade sectors in the EU countries. Retail and wholesale trade are one of the largest service sectors in the EU. The functioning of the retail market affects the whole economy, because of its size and also because of its linkages with other sectors of the economy. It is also important for consumers, who spend 30% of their consumption expenditures in retail shops. This technical report is divided into two parts. The first part provides a review of the theoretical literature on the relationships between anti-competitive PMR and economic performance in the directly affected sector as well as in upstream and downstream linked sectors. We also discuss special features of the retail trade, which are relevant to understand the indirect impacts of this sector's PMR on upstream manufacturing sectors. The second part of the report provides an exploratory data analysis of the development of retail trade PMR as well of their direct and indirect effects on economic performance. Direct effects on economic performance comprise the impact on the market structure, labour productivity and ICT investment in the retail trade sectors of the EU countries. Since food items represent – with 40% to 60% ‒ the largest part of retail turnover, the analysis of the indirect effects focuses on the impact on consumer prices for food, food demand of private households and employment in the food sector. We find evidence for negative direct and indirect effects of retail trade regulations in the investigated areas. However, further research is needed to check the robustness of the findings and to employ more elaborated statistical analyses for the 28 EU countries. This will only be feasible if more internationally comparable data on retail trade PMR will become available.JRC.B.5-Circular Economy and Industrial Leadershi

Institutions, Telecommunications Dynamics and Policy Challenges: Theory and Empirical Analysis for Germany

The telecommunications sector was liberalized in the US and the EU in 1984 and 1998, respectively. In EU countries, price cap regulation has shaped this sector in a pro-competitive way that - with telecommunications obviously being a key element of the information and communications sector (ICT) - has obviously contributed to higher employment and growth. Integrating the use of telecommunications in a macroeconomic production function is the analytical starting point for our interdependent analysis of output, use of telecommunications and employment. Based on unit root and co-integration analysis as well as an error correction three-equation model which are estimated simultaneously, we present results both on long run links and short run links between telecommunications, output and employment. Considering various scenarios suggests that a fall in the relative price of telecommunications can generate a cumulated employment increase of 760,000 within seven years. This points to the need for maintaining the regulation of fixed-line telecommunications networks in Germany with due emphasis on efficiency-enhancing competition. The institutional setup for regulating telecommunications could be improved in Germany and other EU countries.telecommunications dynamics, institutional setup

Service Trade Restrictiveness and Internationalisation of Retail Trade

Based on a review of recent economic theories dealing with the internationalisation of firms and a discussion of necessary adaptations of these theories to special features of the retail trade sector, this technical report offers an empirical analysis of the determinants of the extensive and intensive margin of retail trade FDI activities of 42 countries in 23 EU countries. Special attention is paid within a gravity model framework to the impact of service trade restrictions on both margins of retail trade internationalisation. The use of hurdle models for count data to estimate the determinants of the extensive margin takes into account that there are a lot of zero counts for the number of retail trade firms controlled by a country j in an EU country i. The estimation results for the extensive margin of retail trade FDI activities show that service trade restrictiveness increases the hurdle that at least one firm from country j controls a retail trade firm in country i. Once one firm from country j has been able to jump over this hurdle, the existing service trade restrictions are neither a relevant factor for the number of following firms from country j in that market nor for the average employment and sales of these firms.JRC.B.5-Circular Economy and Industrial Leadershi

Politikberatung und empirische Wirtschaftsforschung: Entwicklungen, Probleme, Optionen für mehr Rationalität in der Wirtschaftspolitik

Der Beitrag geht von der Beobachtung aus, dass es um die Akzeptanz der empirischen Wirtschaftsforschung in der Politikberatung nicht gut bestellt ist. Es wird argumentiert, dass die Ursachen dafür sowohl auf der Nachfrageseite nach Politikberatung als auch auf der Angebotsseite für empirische Wirtschaftsforschung liegen. Darauf aufbauend wird aus ökonometrischer Sicht eine mehrstufige Modellierungsstrategie vorgeschlagen, die ein wesentliches Element der durch die Anbieterseite verursachten Akzeptanzprobleme – die sog. Kochbuch-Ökonometrie – überwindet, weil sie in mehreren Schritten, deren Zulässigkeit in geeigneter Weise überprüfbar sein sollten, wenn möglich, zu validen strukturellen Modellen führt. Weil dies allein sicher nicht ausreicht, damit die empirische Wirtschaftsforschung eine wesentliche Basis für rationale Politikmaßnahmen wird, muss ihre Rolle in Lehre, Forschung und Politikberatung insgesamt gestärkt werden. Hierzu wird abschließend eine Reihe von Handlungsoptionen auf nationaler und supranationaler Ebene formuliert.Politikberatung, Empirische Wirtschaftsforschung, Modellierungsstrategie

Service Trade Restrictions of the EEA Countries: A Multivariate Data Analysis for the European Business Services

This study uses a multidimensional approach to condense the information available in widely used service trade policy indicators and to describe the service trade restrictiveness of the European Economic Area (EEA) countries in five business service sectors (computer services and the four professional services) in a comparative way. Specifically, the study provides a multivariate data analysis of the sub-indices of the original OECD service trade restrictiveness index (STRI) applying to third countries without a Preferential Trade Agreement (PTA) and the same sub-indices of the OECD intra-EEA STRI. Additionally, the OECD FDI regulatory restrictiveness index is included in the analysis. The multivariate data analysis includes a correlation analysis, principal component analysis, and a cluster analysis. Briefly summarised, the following results are obtained: The correlation analysis shows that business services sectors of those EEA countries that are highly protected against third countries are also relatively highly protected against other EEA countries. Furthermore, there is a complementarity of the restrictions on foreign entry and movement of people with regard to their impact on trade of skilled labour-intensive professional services. The principal component analysis identifies for all business service sectors the overall service trade restrictiveness in the sector under consideration as the most important latent factor that accounts for between 35% (architecture services) and 45% (legal services) of the total variance of the included indicators. Finally, for each business service sector, the cluster analysis identifies clusters of countries that are among themselves relatively homogeneous in terms of their service trade restrictions. This allows deriving cluster-specific policy recommendations.JRC.B.5-Circular Economy and Industrial Leadershi

Service Trade Restrictiveness and Foreign Direct Investment: Evidence from Greenfield FDI in Business Services

We study the impact of service trade restrictions on bilateral greenfield FDI projects in four different business services sectors within a gravity model framework. Project level FDI data for 42 destination countries and up to 41 source countries spanning the years 2014 to 2018 is taken from the fDi Markets database, and restrictions from the OECD’s Service Trade Restrictiveness Index (STRI). Using a negative binomial estimator to explain the number of bilateral FDI projects, we find that service trade restrictions represent a significant barrier for greenfield FDI. In 3 out of 4 business services we obtain statistically significant evidence of a negative impact. Furthermore, the explanatory power of the models generally improves when using the sub-components of the STRI (restrictions to foreign entry, restrictions to the movement of people and other service trade restrictions), instead of the single aggregated index value. Based on the estimated impacts of the different restrictions, we carry out a series of simple simulations of how the number of expected FDI projects would increase in response to a hypothetical policy reform, and propose some sector-specific policy recommendations.JRC.B.5-Circular Economy and Industrial Leadershi

Economic Feasibility, General Economic Impact and Implications of a Free Trade Agreement Between the European Union and Georgia

This study of the feasibility, costs and benefits of a free trade agreement between the EU and Georgia was conducted from July 2007 to April 2008 under contrach with the European Commission. The first meeting in Brussels in September 2007 with staff members of Directorates-General for Trade, External Relations, Economic and Financial Affairs, Internal Market and Services, Competition, Enterprise and Industry proved indispensable in our work on this report. During mission to Tbilisi in October 2007 the consultations were held with a number of ministries, research institutes and business organizations. We greatly benefited from consultations with the Ministry of Economic Development, Standardization Office, UN Team Leader for Economic Development, State Minister for Reforms Coordination, Ministry of Energy, Office of Deputy State Minister for European and Euro Atlantic Integration, American Chamber of Commerce, Georgian Chamber of Commerce, IMF, World Bank, EBRD, GEPLAC – Georgian European Policy Legal Advice Centre, Wine Producers Association, Federation of Georgian Businessman. The European Commission Delegation to Georgia provided us with extensive information, consultation on key policy issues and organizational support, for which we are very grateful. Several authors contributed to this study. David Dyker is the author of the introductory section (chapter 2) and the analysis of services sectors (chapter 7). Michael Emerson is the author of section on regional integration scenarios (charter 3) and he also provided very valuable comments on all chapters in this study. Sveta Taran, Peter Holmes and Michael Gasiorek are the authors of chapter 4 employing the Sussex Framework to study the impact of a free trade agreement. Michael Gasiorek and Peter Holmes also provided valuable comments on the CGE modelling section. Evgeny Polyakov, Andrei Roudoi as well as Nino Chokheli and Giorgi Pertaia contributed to the chapter on the institutional and regulatory harmonization (chapter 5). The team from the Global Insight including Andre Jungmittag, Vicki Korchagin, Evgeny Polyakov and Andrei Roudoi supervised the implementation of the survey and completed the analysis of the survey results (chapter 6). Also the same team from Global Insight contributed chapter 10 on sensitive sectors. The implementation of the survey of NTBs was conducted by CASE-Transcaucasus under the supervision of Tamaz Asatiani. The analysis of FDI flows and their likely trends following an FTA was prepared by Malgorzata Jakubiak, while the estimation of the potential FDI flows was conducted by Alina Kudina (section 8.4). The CGE analysis (chapter 9) was written by Maryla Maliszewska, who also acted as the project manager and the editor of the study. Finally, conclusions are a collective work of all the authors. Sierz Naurodski and Elena Kozarzewska provided an excellent administrative support. I would like to take this opportunity to thank them all for their cooperation, valuable contributions and comments.European Neighborhood Policy, free trade agreement, institutional harmonization, EU, Georgia.

Economic Feasibility, General Economic Impact and Implications of a Free Trade Agreement Between the European Union and Armenia

This study of the feasibility, costs and benefits of a free trade agreement between the EU and Armenia was conducted from July 2007 to April 2008 under contract with the European Commission. The first meeting in Brussels in September 2007 with Staff members of Directorates-General for Trade, External Relations, Economic and Financial Affairs, Internal Market and Services, Competition, Enterprise and Industry proved indispensable in our work on this report. During mission to Yerevan in October 2007 the consultations were held with a number of ministries, research institutes and business organizations. We greatly benefited from consultations with the representatives of the Ministry of Energy, Customs State Committee, Ministry of Trade and Economic Development, Chamber of Commerce and Industry, Union of Manufacturers and Businessmen (Employers) of Armenia, National Institute of Standards, Wine Producers Union, Ministry of Finance and Economy AEPLAC Ministry of Foreign Affairs, Armenian Development Agency UNDP, IMF and the World Bank. The European Commission Delegation to Armenia provided us with extensive information, consultation on key policy issues and organizational support, for chich we are very grateful. Several authors contributed to this study. David Dyker is the author of the introductory section (chapter 2) and the analysis of services sectors (chapter 7). Michael Emerson is the author of section on regional integration scenarios (chapter 3) and he also provided very valuable comments on all chapters in this study. Sveta Taran, Peter Holmes and Michael Gasiorek are the authors of chapter 4 employing the Sussex Framework to study the impact of FTA. Michael Gasiorek and Peter Holmes also provided valuable comments on the CGE modelling section. Evgeny Polyakov, Andrei Roudoi as well as Gevorg Torosyan contributed to the chapter on the institutional and regulatory harmonization (chapter 5). The team from the Global Insight including Andre Jungmittag, Vicki Korchagin, Evgeny Polyakov and Andrei Roudoi supervised the implementation of the survey and completed the analysis of the survey results (chapter 6). Also the same team from Global Insight contributed chapter 10 on sensitive sectors. The implementation of the survey of NTBs was conducted by AVAG Solutions under the supervision of Vardan Baghdasaryan and Melik Gasparyan. The analysis of FDI flows and their likely trends following an FTA was prepared by Malgorzata Jakubiak, while the estimation of the potential FDI flows was completed by Alina Kudina (section 8.4). The CGE analysis (chapter 9) was prepared by Maryla Maliszewska, who also acted as the project manager and the editor of the study. Finally, conclusions are a collective work of all the authors. Sierz Naurodski and Elena Kozarzewska provided an excellent administrative support. I would like to take his opportunity to thank them all for their cooperation, valuable contributions and comments.European Neighborhood Policy, free trade agreement, institutional harmonization, EU, Armenia