Pension reform in the Baltic States: Convergence with “Europe” or with “the world”?

Abstract The Baltic States – Estonia, Latvia and Lithuania – join the European Union in 2004. This paper examines pension reform in the three countries over the past decade in the light of the “European social model” and the “World Bank model”. Part one seeks to define these two models. It shows how the former emphasizes income adequacy and solidarity while the latter stresses fiscal sustainability, savings and economic growth. Part two looks at reforms made and proposed. Initial reforms involved raising the retirement age and relating benefits more closely to earnings and service. This resulted in the establishment of pension systems similar to those in many European countries. Subsequent reforms involved attempts to shift from a publicly financed, purely “pay‐as‐you‐go” system to one based upon “funding” and private, individual accounts. Such systems have been promoted by the World Bank. The appropriateness of this approach – its high transition costs, potentially high administration costs, and longer‐term implications for the relative income status of retired people – is questioned. Part three draws conclusions. In the short and medium term, policymaker should safeguard income adequacy rather than seek the doubtful advantages of funding – in other words, look more to “Europe” than to “the world”.     

Transmission of monetary policy in the US and EU in times of expansion and crisis

In this work, the effectiveness of monetary policy and its transmission channels are analyzed before and after the 2007 economic crisis in the United States and the Eurozone by using a VAR model. We find that, in the United States, monetary policy before and after the crisis have been effective, with special emphasis on the “risk channel”. In the Eurozone, monetary policy was also effective before the crisis, being transmitted through the “credit channel”. Once the crisis erupted, unconventional monetary policy remained effective only at the start of the crisis; the risk channel then became the effective transmission mechanism.     

Comparing policy advisory systems beyond the OECD: models,dynamics and the second-generation research agenda

ABSTRACT

The concept of “policy advisory systems” was introduced by Halligan in 1995 as a way to characterize and analyze the multiple sources of policy advice utilized by governments in policy-making processes. The concept has proved useful and has influenced thinking about both the nature of policy work in different advisory venues as well as how these systems change over time. However, to date this work has examined mainly cases of developed countries and its application to developing and transitional countries is less certain. This paper sets out existing models of policy advisory systems based on Halligan’s original thinking on the subject and assesses the findings of many existing studies into OECD countries that advisory systems have been changing as a result of the dual effects of increased use of external consultants and others sources of advice – “externalization” – and the increased use of partisan advice inside government itself – “politicization”. Determining whether or not such changes have also characterized the situations found in developing and transitional countries and at the international-domestic and state-sub-state levels is the subject of the papers in this Special Issue.     

多边贸易体制下中国发展中国家地位问题研究——基于历史、现实与规范的多维考察

当前,发展中国家地位问题受到国际社会的高度关注,已成为世界贸易组织改革中的主要讨论议题。然而,现行世界贸易组织多边规则体系中并没有关于“发展中国家地位”的清晰界定,“自我认定”的方式正遭受一些国家的挑战。发展中国家地位和特殊与差别待遇条款密切相关,世界贸易组织规则体系中涵盖的155项特殊与差别待遇条款为发展中国家的国内政策提供了一定的灵活性,尽管多数为“最佳努力条款”。中国的发展中国家地位兼具身份和契约的双重属性,部分发达国家迫使中国放弃发展中国家地位,本质上旨在继续维持其在国际经济秩序中的主导地位。虽然中国的发展正处于“强起来”的第三阶段,但仍须坚持发展中国家地位不动摇。放弃发展中国家地位并不等于将获得发达国家的自动接纳,相反,还会影响到在其他国际组织和国际事务中的角色扮演,中国的发展离不开广大发展中国家的支持。当然,坚持发展中国家地位并不等于需要和其他发展中成员享受完全一致的差别待遇,在后续谈判中,中国可以保持一定的灵活性。在国际治理中,中国也将继续为国际社会的发展提供解决方案,树立负责任大国形象。     

The asymmetric impact of the pandemic crisis on interest rates on public debt in the Eurozone

The outbreak of Covid-19 has played the role of a ‘game changer’ in the way countries of the Eurozone have faced the economic consequences of the pandemic crisis. This paper investigates what has happened to the interest rates of the sovereign bond in selected countries of the Eurozone during 2020. While the pandemic crisis can be interpreted as a symmetric shock, we found some important asymmetric consequences both in the sovereign bond market and the credit default swap market. Even though the European Central Bank (ECB) has played a fundamental role in easening tensions, especially with the announce of the Pandemic Emergency Purchase Programme (PEPP), countries with a higher pre-Covid level of the debt-to-GDP ratio have been found to undergo a significant jump in interest rates and a greater perceived risks of default. Important policies implications emerge in relation to the future role of the ECB.     

The welfare state in liquidation?

This paper is about the most recent reforms of cash benefit systems and the sociopolitical debate in eight European countries. The welfare state and the social security system rank high on the political agenda. After many years of economic crisis, with increasingly widespread unemployment and changed family patterns, the welfare system that developed in most western European countries since the end of the Second World War is the focus of attention. In a world of increasing international trade, with competition from countries — in eastern Europe and Asia as well as the United States — which have not developed such comprehensive systems of social security, one of the main issues in the debate is whether western Europe can afford to maintain welfare at the existing level, or whether it is necessary to make fundamental changes. But the discussion also centres on what can be called the welfare state's own internal problems.     

European Union Policy on Asylum and Immigration. Addressing the Root Causes of Forced Migration: A Justice and Home Affairs Policy of Freedom,Security and Justice?

This paper contributes to the debate on the development of the future common European Union Policy on Asylum and Immigration. It seeks to explain the rationale behind the evolution of the Union's policy outlook on asylum and immigration. It then analyses the most recent Union‐wide policy tools available to address asylum and migration issues, arguing that common European asylum policies thus far have focused on containment of migration flows seen as a threat to the European internal security regime and in response to perceived populist pressures. The return and readmission clauses now being implemented, in agreements with countries outside of the Union, serve to illustrate this point, as does the political willingness to extra‐territorialize asylum processing. However, the focus on eliminating the root causes of migration flows is a relatively new paradigm, developed since the 1999 Tampere European Council. Although off to a slow start, the European Union Neighbourhood and Partnership Instrument may become an institutional outlet to create a more normative framework for asylum and migration. The success of such a framework is contingent upon breaking with earlier conceptualizations of “asylum” as a security threat. Implicit in such a framework is the need to retain a clear distinction between asylum‐ and labour‐related migration. Partnerships must also be granted a budget sufficient for their establishment in real terms with countries of origin and transit. Lastly, there must be changes in modes of governance, as well as institutional reform, if efforts to elaborate a strategy on asylum and migration are to be executed successfully. Curiously, while the proposed Treaty establishing a Constitution for Europe sought to abolish the pillar structure put in place by the 1992 Treaty of Maastricht, it would have retained the institutional inhibitions imposed by long‐existing tensions between national and community administrations and the “inter‐pillar” battles between the foreign policy, humanitarian and development dimensions of the EU apparatus. The current political debate about moving Europe “closer to its people”, following the rejection of the proposed Constitution at national referenda in France and the Netherlands, appears unlikely to solve any of these tensions.     

The dynamics among entrepreneurship,innovation, and economic growth in the Eurozone countries

Economic growth in the Eurozone has been lacklustre over the last two decades due to increased global competition from economic players in other regions, economic and financial crisis, and political uncertainties within the zone. To increase the global competitiveness of the region, the European Union launched the Europe 2020 Strategy to raise the level of entrepreneurship and innovation, which are purported to be key drivers of economic growth. The main purpose of this paper is to investigate whether this assertion is true. Thus, the paper investigates the Granger causal relationships among entrepreneurship development, innovation, and economic growth for a sample of the Eurozone countries for the period 2001–2016. Using a vector error-correction model, the study finds that in the long run, both entrepreneurship and innovation stimulate economic growth. In the short run, strong causal links exist but are not always uniform. The results reveal that Eurozone countries should indeed base their growth strategies on policies that promote innovation and policies that create incentives for entrepreneurship.     

Exchange rate and wage policies in Central and Eastern Europe

After the eastern enlargement of the European Union (EU) and due to increasing labor market integration, wage determination in Central and Eastern Europe (CEE) has become a key issue in European economic policy making. In addition, a controversial discussion concerning the monetary integration of CEE countries into the EMU has emerged. Both issues have earned particular academic and political interest because Eastern and Western Europe are at different stages of economic development and volatile international capital flows seem to require either a higher degree of wage or exchange rate flexibility. Based on the Scandinavian model of wage adjustment by Lindbeck (1979), we analyze the role of exchange rates in the wage determination process of the Central and Eastern European countries to identify which exchange rate strategy contributes to faster wage convergence in Europe. Panel estimations suggest that workers in countries with fixed exchange rates are likely to benefit in the long run from higher wage increases.     

Active Ageing Index in Korea – Comparison with China and EU countries

The evidence‐based policymaking relies on the use and robustness of the available data. Many conceptual and operational difficulties restrict this process, not least in making use of evidence to identify policy priorities. The Active Ageing Index (AAI), developed originally for the 28 European Union countries, offers a strong motivation in this respect. This paper reports on the development of the AAI for Korea, a country where speed and level of population aging is among the highest in the world. Drawing on the comparative analysis of the AAI results for Korea, China, and European countries, we find that Korea's AAI (35.3) is higher than the average of the AAI for all EU countries (33.9) but lower than China (37.3). Fitting Korea into the overall ranking with the EU countries and China (ranked 7), Korea is ranked 11, just behind Germany (10). The AAI results in Korea show that the employment domain performs extremely well compared with the EU countries, but other domains, especially “Social participation” and “Independent, healthy and secure living,” are achieving less favorable outcomes. High employment among the current cohorts of older workers in Korea can be attributed largely to the constraints of low pension income status.     

Children against parents? The politics of intergenerational recalibration in Southern Europe

Traditionally, Southern European countries displayed remarkably elderly biased social policy arrangements. This article introduces the notion of intergenerational recalibration to capture reforms aimed at rebalancing the generational profile of Southern European welfare states via the expansion of family policy and social assistance schemes—both monetary benefits and care services—and retrenchment in the field of pensions. Then, it elaborates theoretically on the political dimension of this policy strategy, focusing on the implications of the peculiar combination of expansionary and retrenchment reforms, to advance the hypotheses that domestic politics would prevent the realization of such an agenda, whereas the latter would be favored by a major role of supranational actors, especially the European Union. To test these hypotheses, we systematically analyze policy trajectories in the field of pensions and social assistance in Italy and Spain between the mid‐1990s and 2016. This allows, first, to argue that investment in “pro‐children” measures has not adequately balanced the reduction of pro‐parents expenditure and, second, to question the idea that domestic political incentives to expand “pro‐children” policies are necessarily too weak as well as the “enabling” role of external pressures in pursuing intergenerational recalibration.     

Office of Economic Opportunity: U.S.A.

The Office of Economic Opportunity (OEO), was created at the height of Lyndon Johnson's “Great Society” anti-poverty programmes. It represented a degree of radical activism that reached its culmination in the 89th Congress (1965-66) and indeed has never been repeated: that Congress was perhaps the only genuinely left-liberal one this century (outside the New Deal era, at any rate). The OEO's social policies were tied to a particular theory of public and social administration: that a “rival” federal agency to the existing ones (Health, Education and Welfare, now Health and Human Services; Housing, and Urban Development, et al) could escape their conservative norms. Both at the federal level and in the “field” agencies it spanned to implement its programmes, the new approach to social administration was to by-pass traditional channels. This short, illustrative rather than definitive article, examines how such an approach was undermined by both the U.S. political structure and by traditional “politics as usual”. It is but a snapshot of the era. However, it hints at the general problems that such approaches to “by-passing” traditional agencies and attempting to develop a new autonomy in social reform may have in many countries, especially those with decentralized political structures. For, while decentralized politics provides opportunities as well as barriers to reformers seeking to by-pass traditional elites (which themselves tend to be decentralized, mirroring political structures), it is suggested here that the balance sheet will tend to be negative from the viewpoint of reformist social administration.     

A macro‐financial analysis of pension system reforms in emerging Europe: The performance of IRAs and policy lessons for Serbia

The article explores the initial macro‐financial performance of partial pension system “privatizations”— involving privately‐managed individual retirement savings accounts (IRAs) — undertaken in many emerging European countries. Using empirical data for a period of close to a decade, the evidence shows that returns on privately‐managed IRAs have been below the implicit rate of return of public pay‐as‐you‐go (PAYG) systems. High operating costs and undeveloped capital markets are identified as major contributing factors to the failure of privately‐managed IRAs to meet reform expectations. In light of empirical evidence, Serbia is advised to focus on parametric PAYG reforms and to avoid reforms that involve the partial “privatization” of the pension system.     

Why does Europe grow more slowly than the United States?

Recovery from the recent financial crisis and “great recession” has been slower than after previous recessions in most developed countries and areas, especially Europe. But Europe's growth problem is structural in character and started much earlier. This paper analyzes the structural causes of the European slow growth, evaluates the policies that Europe adopted to overcome it, and concludes that even with the appropriate policies, the prospects for accelerating growth in Europe will be difficult, especially in the context of the current US-China trade war.     

试论战后日本公共外交运作模式的演变

战后日本公共外交的运作模式经历了由基本运作模式向改良型运作模式的转变。在基本运作模式中,一国讯息由政府主导下的相关机构及人员发出,经对方国家的信息传播节点后抵达普通公众视野。这种方式在冷战结束后,越来越无法适应新的国际环境。动员更多的非政府行为体参与其中,构建跨国共同体网络,借助商业模式来传播本国的价值理念,以及将象征本国国家形象的组织嵌入对方基层社会之中,已成为冷战之后特别是21世纪以来日本公共外交运作模式进行改良的主要方向。通过在这些方向上的摸索,日本最终形成了“议程设置式公共外交”“商业模式公共外交”“嵌入式公共外交”三种改良型运作模式。虽然这些运作模式尚未完全成熟,且有些模式真正能在多大程度上影响别国政策还有待进一步检验,但其至少在国家形象的塑造上获得了成功,提升了别国民众对日本的好感度。     

Reorganizing Social Policies through Social Partnerships: Greece in European Perspective

In postwar Western Europe social policies in the wider sense relied in many countries on neo‐corporatist policies of implementation. Since the 1980s such policies have ceased to be as dominant as they used to be, being associated with what has been called “policy communities” and “policy networks”. As far as the reforms pursued by many countries in order to readjust their economies and labour markets are concerned, significant shifts of such a kind were observed. Illustrations of these trends are presented in a comparative section. We attempt to demonstrate the dual structures of social policy formation and implementation, i.e. neo‐corporatist and network/policy community policies, and to discuss the “how” of such policies, i.e. their “raison d’être” and their “real world” enforcement. Against a background of various semi‐corporatisms and adversarial trade union politics, Greece is trying at the moment to adopt this pattern in several social policy areas, though this is not yet quite visible. Neo‐corporatism is also enhanced. We attempt to show where neo‐corporatism is tried (e.g. certain “social dialogue” structures) and where policy communities are encouraged (e.g. public health, local social policies, etc.). Sometimes the boundaries between the two systems are blurred, with some social dialogue committees appearing as quasi‐policy communities. Finally we endeavour to examine the outcomes of such policies and to see their inner logic against the theoretical background. The concept of multilevel governance as a wider policy instrument which incorporates both the above systems is of special interest here.     

The Cultural Discovery and Practical Implications of “Chinese Values”*

The social reforms in China since the late 1970s represent an arduous process in which the Chinese nation, in its own way, has reflected upon the many disadvantages of the “civilization of modernity,” and has explored, created and practiced “Chinese values,” pursuing and shaping new spiritual convictions and new (rational) value beliefs for its national culture. In a deeper sense, “Chinese values” are endowed with a marked orientation toward practice and follow the logic of genuinely implementing society's “public values” on the basis of the intrinsic and organic integration of the personal and public and the national and cosmopolitan. This manifests the pursuit of a noble belief in justice and a commitment to a universal and genuine good life for the Chinese populace today. What “Chinese values” seek to forge is an image of “the Chinese” that manifests not only the disposition and breadth of vision of a contemporary “citizen of the world,” but also the fine traits of tolerance, benevolence, responsibility, and courage, as well as self-esteem, self-improvement, confidence, and self-reliance.     

The “ugly” face of social investment? The politics of childcare in Central and Eastern Europe

In this article, we aim to understand the development dynamics of a specific area of social investment (SI), that is, childcare policies, in the context of postcommunist politics and the recent right-wing turn that took place in the Czech Republic, Hungary, and Poland. This article identifies varieties of channels for promoting SI. First, in taking the perspective of the “mixed economy of welfare,” we argue that attempts made to introduce elements of SI to the childcare policies involved various leading roles available for either the private sector or state/public domain. Second, it is important to distinguish between implicit/unintended and explicit/intended projects both in relation to cases in which SI strategy is applied via marketization/privatization and when it involves a government-led project. Third, we take into account the politics of SI implementation that might involve applying certain principles central to policy concepts (such as “investment”) in justifying policy instruments incompatible with original ideas. Although arguments about SI have been extensively used by Eastern European leaders, their goal has been to justify welfare reforms that were implicitly or explicitly directed towards the middle class while excluding the “nondeserving” often based on ethnic identity. We characterize Poland as a case of “implicit marketization,” the Czech Republic as a case of “explicit privatization,” and the Hungarian version of SI as a case of “explicit public dualization.” In this, we show that in some cases, the implementation of SI approaches by right-wing populist parties might rear its “ugly” head.     

Mending Nets in the South: Anti-poverty Policies in Greece, Italy, Portugal and Spain

The marginal role of social assistance and the absence of minimum income programmes have long been thought to constitute defining characteristics of the southern European model of welfare. Nevertheless, over the 1990s significant innovations in this field have taken place. The paper aims to contribute to the analysis of recent developments by critically examining the experience of anti‐poverty policies in Greece, Italy, Portugal and Spain. It is argued that the “patchiness” of safety nets in southern Europe is due to a unique set of constraints, the most relevant of which are the role of families and the “softness” of state institutions. A review of national profiles reveals that new policies introduced in all four countries mark progress towards redressing some of the historical imbalances of that welfare model. In particular, fully fledged minimum income schemes now operate in Portugal and in certain Spanish regions, while an experiment involving a number of Italian municipalities is still in progress. In spite of this, the paper concludes that social safety nets in southern Europe remain frail in terms of institutional design as well as political support and legitimacy.     

Differences in wage determination in the Eurozone: A challenge to the resilience of the common currency

Different developments in wages and unit labor costs across countries can reduce the synchronization of business cycles within a currency area and therefore be a potential source of asymmetric shocks and/or asymmetric response to a common shock. In this paper, we use novel econometric methods to identify differences and similarities in wage determination across Eurozone countries. Results show that wages have different determinants across euro area countries, among which two relatively distinct groups can be identified. In particular, wages in Germany, Austria, Belgium, Luxembourg, the Netherlands and Finland behave more similarly, are less sticky and respond more to macroeconomic conditions than those in the group composed of Italy, Spain, Portugal, France and Ireland. Moreover, the equilibrium wage has been affected by a structural change contemporaneous to the international financial crisis. Finally, structural reforms since the euro crisis have contributed to make labor market structures in Eurozone countries more similar, which contributed to improve the resilience of the Eurozone, but the job is not completed yet.