Economic Dynamics in Eastern Europe and Asia · 29 East European post-socialist economies have gone...
Transcript of Economic Dynamics in Eastern Europe and Asia · 29 East European post-socialist economies have gone...
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Economic Dynamics in Eastern Europe and Asia
(see also various papers in the Journal International Economics and Economic Policy;
IEEP)
Prof. Dr. Paul J.J. WelfensJean Monnet Professor for European Economic Integration; chair
for Macroeconomics; president of the European Institute for International Economic Relations at the University of Wuppertal,
Alfred Grosser Professorship 2007/08, Sciences Po, Paris, Research Fellow, IZA, Bonn, Non-Resident Senior Fellow at AICGS/Johns
Hopkins University, Washington [email protected], www.eiiw.eu;
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Content
1. Introduction
2. Economic Dynamics: Basic Concepts
3. Key Aspects of Eastern Europe
4. Key Aspects of Asia
5. Interdependencies and International Organizations
6. Joint Challenges
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1. Introduction Economic Dynamics
Short-term instabilities in countries and regionsof the world economy (e.g. Asian crisis 1997/98)
Long run changes and challenges: rise ofJapan/Korea in the 1980s and 1990s; rise of China 1978-2029 (?); 2015-30 GDP of China will double
Current account imbalances: CA>>0 Jap, CH, GE
Links between EU and Asia (China + ASEAN + Japan + Korea)
New multilateral banks: BRICS bank + Asian Infrastructure Investment Bank(AIIB); China: One Belt, one Road (Obor = 60 Obor countries)
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EU28/27 (Eurozone with 19 countries)
Japan & ASEAN (EU single market since 2016)
USA China
Interdependency
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Interdependency (change of Y has effect ofY*; and this has repercussion effect on Y)
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Dynamics concern
Output/income dynamics and trade dynamics
Technological dynamics and FDI dynamics
Demographical dynamics/migration dynamics
Financial market dynamics
Expectation dynamics
Political dynamics
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1. Introduction
29 East European post-socialist economieshave gone through broad transformation withmany dimensions – EBRD Reports; also EU membership for some countries & globalization
Asian countries are under the tripleimpact of economic globalization, the rise ofChina and the fact that 60% of the worldpopulation are in Asia; Asean Countries (10) key player besides Japan, India and China
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Post-Transition Countries
Eastern Europe/former Soviet Union = 29 post-socialist countries
Chaos in late 1980s in the socialist countries: high inflation, stagnation or output decline, massive devaluation (black market exchange rate e“: effective money supply M“ = M+e“M*); there was much currency substitution; corruption, partlyhigh foreign indebtedness: P = M“V/Y
Growth of the socialist shadow economy (SE) (compare socialist SE and capitalist SE: WELFENS)
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Socialist Systems in Eastern Europe/Soviet Union (backgroundinfo; and Venezuela these days –more or less)
Socialist command economy has plannedoutput in state-owned firms (SOFs) andthere is a monopoly state-owned bankingsystem and a monopoly organization ofexports (firms sell to state-owned export organization)
Allocation of official output (C) to workers in export firms, the military, government people= creating an excess demand in the officialsystem –which has state-administered price pofficial
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The Demise of SocialistSystems not much understood
Problems began in the 1960s when no longer elastic laborsupply in agriculture (for industry‘s expansion!);
Output growth in industrialized sector started todecline, could have been maintained only withbetter innovation policy – but innovation record ofsocialist firms mostly week
Weak sectoral innovation organizations; directors offirms disliked innovation= disruption of traditional production = undermining achievement of plannedoutput goals: basis for director‘s career
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Socialist Economy: Official economy and socialist shadoweconomy (psh>poff); official system allocates officialoutput (distance HE0) to persons CE0
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Note: In a market economy:If the marginal costs wouldbe equal to p0FF the equi-librium output is q1; theDemand in shadow economyis only the arch E0Z (inter-section with inofficial supply
curve if k‘shadow is low
Socialist Shadow Economy:has supply curve thatreflects marginal costs, including risk & corruption
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Economic Dynamics...
Product innovations&process innovations
Expansion of the digital economy
Trade expansion/regional integration...
Foreign direct investment inflows; outflows
Demographic pressure 2050=10 bill. people; and ageing in
Japan, EU, CH, later US, after that developing countries(effect on savings)
Institutional changes; e.g. ASEAN in 2015 with the status of single market!
Environmental challenges/Global Warming(CH,US..)
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Economic Interdependence
USA, China, EU28 (all three about the same size in terms of GDP PPP figures), plus Japan and ASEAN (600 mill. people)
EU eastern enlargement took place in 2004 (10), 2007 (Romania, Bulgaria) and 2012 (Croatia); EU28 will shrink due to BREXIT (?): UK is 18% of EU28 GDP, 12% ofpopulation; expected output decline UK -6% in the long run; implies for EU27 -1%, UK additional -0.2% P. Welfens/EIIW, U. of Wuppertal 12
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Economics of BREXIT
Not a correct referendum: economicinformatiom from Treasury study publishedApril 18 not in the 16 pages brochure ofgovernment mailed to households in England: April 11-13); with this info: 52% remain; seeWelfens, 2016, An Accidental BREXIT and IIEP
Politico-economic noise until 2019 at least
EU will push for Commonweath strategy – not consistent... P. Welfens/EIIW, U. of Wuppertal 13
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Current Challenge is SovereignDebt Dynamics
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Europe and Asia part of the global economic system (institutions andrules)
Global Economic SystemInternational
Organizations; IMF, WTO;
G20 as
special actorsince 2008
Regional Integration Schemes;
EU, Euro Area;
ASEAN, APEC
TTIP, TPP (2015)
National PolicyMakers; with the
US, the EU and
China plus Japan as big players
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Basic Perspectives
Transatlantic Banking Crisis 2008/09
Euro Crisis 2010-15
BREXIT 2016 (UK referendum on EU membership; majority51.9% for Leave)
Eurozone recovery 2015-2017
Deflation pressure in Eurozone, UK, US in 2015/2016; Quantitative Easing UK & Eurozone = extremely low interestrate i; and r; growth rate Eurozone 2016 about 1,7%, 2017..
China entering New Normal = 6-7% growth instead of10% previously; possibly only 5% in reality, but still veryhigh; government emphasizing innovation dynamicssince 2016 P. Welfens/EIIW, U. of Wuppertal 16
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Regional Free Trade Agreements
Trans-Pacif Partnership (TPP) US with 12 countries, incl. Japan and Australia: agreement 2015
US with EU: Transatlantic Trade and In-vestment Partnership TTIP; 2013-?; EU hasfree trade agreement with Singapore, Korea, Thailand (soon), but no equivalent to TPP
CETA (EU-Canada) in 2016 signed?
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Economic Growth in Asia: Real GDP Growth Rates 1990-2000; 2000-2010: Japan, Korea, China, Thailand, Indonesia
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1990-2000 2000-2010
Japan 11.86 7.68
South Korea 80.44 50.25
Indonesia 51.19 66.49
China 169.56 170.84
Thailand 54.64 52.78
Source: WDI
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Economic Growth in Eastern Europe (PL, HU, CZ, SL) and Russia, 1990-2000; 2000-2010
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1990-2000 2000-2010
Czech Republic 4.38 39.58
Poland 44.94 46.56
Hungary 2.58 21.46
Slovak Republic 1.96 59.32
Source: WDI
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Economic Catching-up in Asia
Japan – relying on export dynamics, access to open US marketin 1960s, 1970s, 1980s; more so on China in the 1990s andthereafter.
Industrial policy: picking winners/losers? Does it work?
Focus on industries with economies of scale (BRANDER/SPENCER); import restriction= export promotion
Korea, Taiwan, Hongkong, Singapore = Newly industrializingcountries = outward-oriented growth (relying on exports; and FDI
inflows, partly subcontracting)
China after 1978 – opening up; China in Dec. 2016 marketeconomy? US already said no (despite 15 years over: WTO 01)
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Asian Crisis 1997/98 (ASEAN..)
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Asian EconomicCrisis
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Prior to Asian Crisis 1997/98...
Asean countries recorded
High growth
Low government deficits, moderate inflation rate
Quasi-fixed exchange rate – idea of policymakers: keeping real interest rates low
Asian crisis started in Thailand with massive depreciation, strong increase of interest rate in response to capital outflows, recession; Malaysia regulated/stopped capital outflows (did it work?)
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Thailand: CA was negative over yearsprior to 1997; then „sudden stop“; massive swing in CA-GDP ratio 97/98
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CA = (S+T) – (I+G);Consider that Y=C+S+T and hence
CA = Y – (C+I+G)Improve CA by reducing C(...), G, I(..)
Many years of current account deficit
imply high foreign indebtedness(e.g. due to Thai firms‘ borrowing abroad);1997/98 regionalization syndrom =other countries in the region (also) affected for various reasons...
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Inflation and Interest Rate in Thailand and Indonesia, 1990-2011 (yearly; IMF); Indonesia with big crisis
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-10
0
10
20
30
40
50
60
70
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Indonesia (Interest Rate) Thailand (Interest Rate) Indonesia (Inflation) Thailand (Inflation)Source: IFS
Asian Crisis 1997/98
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Inflation Rate and Interest Rate in Poland and Hungary, 1990-2011 (IMF)
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0
5
10
15
20
25
30
35
40
45
50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Hungary Poland Hungary PolandSource: IFS
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If Capital Account IsLiberalized...
Typically much short-term capital inflowsat first
In a system of fixed exchange rate interestparity will hold: i= i* + a“E (a“E is expecteddevaluation rate in %).
If expected devaluation rate is zero then i=i* (+R)
If high share of short-term capital inflows there isrisk of sudden high outflows later; better morelong term portfolio investment + FDI inflows
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Asian Economic Crisis 1997/98
Economic growth high in 1980s and early 1990s, but system ofeffectively fixed exchang rate
Partly problems in financial markets („cronycapitalism“; companies obtained loans fromcertain banks often not on sound economicbaisis)
1) Currency mismatch: firms took loans in foreigncurrency (at low interest rate; e.g. in US), but revenue in Baht (Thailand; etc.); 2) maturity mismatch: short-term financing of long term projects = risky(1+2=„Original Sin“)
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Eastern European Post-Socialist Countries
Collapse of socialist command economy in the 1980s;
Command economy with state-owned firms, central planning ofoutput and prices, fixed exchange official exchange rate: goalwas sustained growth without unemployment and inflation
problems were corruption, economic inefficiency of big State-ownedenterprises (SOEs), declining terms of trade (due to rise of Asian NICs‘ exports), inelastic labor supply = rising wages= rising money supply=hidden inflation = fall of effective real wage rate; high devaluation ofcurrency in black foreign exchange markets. Motivation to work in officialeconomy was declining, growth very low; high foreign indebtedness(Poland, GDR) weak innovativeness; strikes in Poland in 1984, martial law,
Inefficient central planning; shadow economy rising, official economy crisis!
1991+: Transformation to market ec. (Poland 1989, end ofSoviet Union in 1991)
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The Russian Crisis (and Oil)
High growth after initial recession in CEECs; efficiencygains from opening up and structural change/privatization(&restructuring), FDI inflows, innovations, trade expansion
Crisis in Russia in 1998 in the context of Asian crisis – thelatter „forced“ many countries to export more oil, includingMexico, oil and gas prices fell in 1997/98 as a consequenceof Asian crisis (=decline of demand & increase of oil supply; Indonesia, Brunei etc.); in 2000 oil price fell below 10$/barrel
Economic recovery in Russia 2001-2014; since then sanctionsand declining relative oil prices = slow growth (?crisis?)
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Russia could be stabilizedunder president Putin
High growth in Russia after 1999, partly asconsequence of rising oil and gas prices
2014 Ukraine (Crimea) crisis, economicsanctions of the West vis-à-vis Russia; 2014-2016 Russia facing recession, reinforced byfalling oil prices in 2014/2015. Russia hasgas/oil exporting contract with new pipeline
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Share of Asian Countries in EU Exports and EU Imports
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0
5
10
15
20
25
30
35
40
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Exportshare ImportshareSource: Eurostat
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Degree of Openness in Asia (Selected
Countries), 1980, 1990, 2000, 2010: X/Y
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1980 1990 2000 2010
China 10.65 16.07 23.33 29.55
India 6.03 6.93 12.82 22.77
Indonesia 34.18 25.33 40.98 24.56
Japan 13.42 10.29 10.88 15.19
South Korea 32.06 27.95 38.56 52.37
Malaysia 56.69 74.54 119.81 97.30
Thailand 24.11 34.13 66.78 71.25
Source: WDI
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Degree of Openness in Eastern European EU Countries (X/Y)
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1980 1990 2000 2010
Belarus 45.96 69.21 54.12
Bulgaria 35.71 33.12 50.46 57.77
Czech Republic 40.53 60.93 67.86
Estonia
84.59 79.42
Hungary 39.09 31.14 74.60 86.55
Latvia 47.71 41.64 53.81
Lithuania 52.09 44.75 68.58
Poland 26.20 27.12 42.25
Romania 16.73 32.69 23.49
Russian Federation 18.16 44.06 29.89
Slovak Republic 26.55 70.45 81.25
Slovenia 90.76 53.70 65.42
Source: WDI
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Export-GDP Ratio, Import-GDP Ratio
Import GDP ratios also high andincreasing
This reflects international division of labor
Rising role of intermediate products
High share of intra-industrial trade
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Effective trade openness – has totake into account size of country
Size corrected openness shows
As regards „true openess“ US is relatively open among OECD countries
Some small countries are not as open as onemight think at first sight (e.g. Sweden); smallcountries always are relatively open – sizecorrected openness of Greece is much lowerthan comparable other small countries
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Links Between EU and Asia
Trade
FDI
Internet
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Migration and Ageing
Much immigration in Europe: South to North, East to West (see OECD Migration Report)
In Asia only limited migration
Ageing as new phenomenon in Europe and Asia
Japan No. 1 in terms of ageing; Germany No. 2
But Germany has immigration: net 2012: 360 000, 2013: 430 000
Japan has very limited immigration; pressure in Japan to raise tax rate for retirement benefits high
Long run challenge to adjust social security systems37P. Welfens/EIIW, U. of Wuppertal
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Global EnergyChallenge/Renewables
Germany‘s share of renewable electricity was 25% in 2014, on some days>100%; large subsidies (€ 20 bill. per year for market value of renewable energy of € 2 bill.!); volatility of renewable energy implies thatreserve capacity of fossil fuel generation necessary
Renewable energy subsidies in Germany have noeffect on energy innovation (acording toExpertenrat Forschung und Innovation)
Problems with emission permit trading in EU; price2014/2015 only 7 €/ton – low and volatile price
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Major Challenges in Europe...and Asia 2015/2016
EU facing wave of refugees from wars in Iraq, Afghanistan, Syria; most refugees would like to
go to Sweden, Germany, Austria – ad hoc allocation ofrefugees; Germany had about 1 million refugees in 2015
Eurozone still not fully stable (Greece withproblems, Italy?, Portugal!)
UK might leave EU in 2019
EU and European Commission is rather weak;
Risk of EU disintegration; US growth 2008-2016 is10% ahead of EU
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Asian countries and nuclearenergy
Nuclear energy accident in Fukushima (Japan) in 2011 and certain risks...
Nuclear risks in Japan and other countries; power plants closed 2011-2013, rising imports of gas/coal
Biggest possible nuclear power plant accident in Germany (Ewers) would be about € 6000 bill (2x GDP); N. power plants have insurance for € 2.5 bill.
Nuclear power plants expansion in China
Much investment in coal power plants (India, China) P. Welfens/EIIW, U. of Wuppertal 40
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Negative External Effects of NuclearEnergy (Expected Damage Probabilityimplies lower DD1)
Risk Pricing (t’ is insurance premium)
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International Links Through TradeAND FDI (also technology transfer)
Foreign direct investment inflows: cumulated FDI inflows/K is share α* offoreign ownership in the capital stock K (in country 2: share α in K*)
We must make a distinction betweenGDP (Y) and gross national income (Z); Z = Y + net income from abroad (thismeans dividends obtained from country 2 minus dividends paid to country 2)
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Recall that with production functionY=Kß(AL)1-ß – where K capital stock, A knowledge, L labor and 0<ß<1 – the shareof profits in GDP will be equal to ß(provided that there is competition in goodsmarkets and factor markets)
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What Determines International Differencesin Per Capita Income z:=Z/L and z* (abroad)?
Long run perspective with focus on per capitaGDP (Y/L), based on production function
Real GNP (Z) = Y + net income from abroad
If country I (home country) receives foreign direct investmentinflows the cumulated FDI inflows imply that partα* of capitalstock K is owned by foreign investors; part (α*) of profitsaccrues to foreign subsidiaries; ß is profit share in Y
Z = Y(1-α*ß); assumption: no FDI to country II
Z*= Y* +α*ßY/q*; q*:= eP*/P real exchange rate
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Growth in a closed economy (L given): Determineper capita income y# and Y#
(1) Y=K ß L1-ß; 0<ß<1; Y output, K capital, L
labor
Savings (2) S= sY; 0<s<1; capital depreciation rateδ; 0<δ<1;note y:=Y/L=(K/L)ß; define k:=K/L: y=kß
Grosss investment (3) I= dK/dt +δK; t time index
Goods market equilibrium condition S=I; (4) S/L = I/L
(5) dk/dt = skß –δk; δdepreciation rate of capital
Long run equilibrium (dk/dt=0): k#=(s/δ)1/(1-ß)
y#=(s/δ)ß/(1-ß) ; Y#=L(s/δ)ß/(1-ß) ; Y#=Lv‘0.5 if ß=1/345P. Welfens/EIIW, U. of Wuppertal
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Neoclassical Growth Model will beconsidered in modified setup (withFDI inflows); e‘ is Euler number
Neoclassical model shows that the long runlevel of the growth path is raised bysavings rate s (and reduce by income tax rate)
Growth rate of output Y in model withpopulation growth L=L0e‘nt is given by n
Growth rate of Y in model with n>0 andtechnological progress rate a (growth rate ofknowledge A) is a+n; growth of y:=Y/L is „a“.
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OA is level of growth rate ofoutput per capita; t is time
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O
lny# = (ß/(1-ß))(lns – τ) + at (where dlnA/dt:=a>0)
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In Reality 2 More Elements toBe Considered
1) population growth: growth rate is n(exogenous); capital intensity will be stableonly if K growth at the rate n! As n declinesper capita income will rise in long run...
2) role of knowledge (A); subsequently will be Harrod-neutral=labor-augmenting;
Growth rate a can be exogenous
Growth rate a can be explained: endogenousgrowth modelling (role of R&D, varieties etc.)
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Consider China... Growth rate of labor supply in industry and services has been
positive 1978-2014; labor supply declining since 2015
Growth rate of knowledge (a: total factorproductivity growth) has increased throughrising imports of knowledge-intensive products and –later – rising FDI inflows (with associatedinternational technology transfer); and later throughrising human capital formation (2013: 31 mill. students) and R&D (research and development): Germany had 2.5 mill. students; 1% from China
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China‘s economic expansion
Opening up in 1978, some private firms...
Special economic zones for foreinginvestors (initially a few regions, later more); roughly € 100 bill. per year in 2005-2015
Growth rates initially of about 10%, since2014 only about 7%; per capita income isabout 1/3 of EU (basis purchasing power parity figures)
WTO membership in 2001, hardly capital flow liberalization; very high savings ratio. Potential conflicts about islands in Asia
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Population Growth Rate n: WhatDetermines Long Run Per Capita Income y#:= Y/L
Neoclassical growth modelf (t time index):
(1) Y=KßL1-ß; 0<ß<1; (1.1) y=kß (k:=K/L)
(2) S=sY (savings function); (2.1) S/L=sy; 0<s<1
(3) Gross investment I= dK/dt + δK (δ=depreciation rate)
Goods market equilibrium condition S=I or S/L = (dK/dt)/L + δK/L; define capital intensity k:=K/L and note here that (4) dk/dt = (dK/dt)/L – nkwhere n:= (dL/dt)/L; combine (1.1), (2.1), (3), (4):
dk/dt=0 gives k#=(s/(δ+n))1/1-ß; y#=(s/(δ+n))ß/(1-
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Some reflections on growthmodel with population growth
dk/dt = skß –(n+δ)k;
The long run equilibrium value of the capitalintensity k#= s/(n+δ)1/(1-ß)
k# the higher the higher s and the lower n and δ
Country with high n has lower k and lower y!
dk/dt>0 if the per capita savings exceed the term (n+δ)k –the element nk indicates the investment needed to maintainthe capital intensity despite the increase of the population, δk is per capita investment needed in the form ofreinvesment
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Next Step is True Growth Model withGrowth Rate of Knowledge (a) and ofLabor (n); Knowledge is A (dlnA/dt :=a)
Production function Y =K ß (AL)1-ß
Note that if k‘:=K/(AL) we have dk‘/dt = (dK/dt)/L – (n+a)kwhere n:= (dL/dt)/L and a:=(dA/dt)/A.
We call AL labor in efficiency units;
We also can consider role of foreign direct investment for capitalaccumulation and the steady state solution for k and k‘, respectively; moreover, there is taxation (income tax rate τ)
Foreign investors have propensity to invest in county I (see s‘)
see Welfens, P., 2011, Innovations in Macroeconomics, 3rd edition, Springer. Global number of downloads of thisbook is about 5000
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Growth Model explains per capita income (t istime index, τ income tax rate; α* is share of K owned
by investors from country II; profit income is ßY, A
knowledge, L labor)
(1) Y =K ß (AL)1-ß; WELFENS (2012)
(2) S= s(1- τ)Y(1- α*ß) + s‘α*ßY; s‘ is
reinvestment rate of foreign investors
Growth rate of A(t) is a, of L(t) is n; capital deprecia-tion rate δ;equilibrium condition S= dK/dt+δK; divide by AL: S/(AL)=δk‘+dk‘/dt+(a+n)k‘; k‘:=K/(AL)
Long run equilibrium (steady state: dk‘/dt=0) is givenby k‘#={[s(1- τ)+α*ß(s‘- s(1-τ))]/(a+n+δ)}ß‘;
ß‘:=[ß/(1-ß)]; y‘:=Y/(AL) = k‘#ß‘;54P. Welfens/EIIW, U. of Wuppertal
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Long Run Per Capita Income y:= Y/L; y‘:=Y/(AL); e‘ Euler number
y:=A0 {[s(1- τ)+α*ß(s‘- s(1-τ))]/(a+n+δ)}ß‘ e‘at
Per capita income y:= y‘A0e‘ at ; e‘ Euler number
Level of the growth path is higher in thepresence of foreign direct investment inflowsthan in a closed economy if s‘> s(1- τ)
Endogenous growth rate of knowledge (a‘ is the
autonomous growth rate of knowledge)/progress function
a = a‘ + λα*a*; here λ is a positive parameter; cumulated FDI
inflows contribute to international technology transfer55P. Welfens/EIIW, U. of Wuppertal
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What Determines Development ofPer Capita Income (y; or lny) in theLong Run?
1) The level of the growth path
2) the permanent growth rate (slope ofthe graph in lny-t-diagramme)
3) the per capita income in the long run equilibirumthus is determined by both 1) and 2)
if the level of the per capita income should fall whilethe growth rate is raised the long run impact on y# is positive
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Level of Growth Path and Long Run Growth Rate (dlnα/dt=tg α). Rise of
Growth Rate of A(t) in t=T
57
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Opening up of China for trade in 1978; opening upfor FDI inflows could shift CD curve upwards...
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FDI Inflows Raise Level of Growth Path AND Trend Growth Rate if...
If s‘>s(1-τ) then level of growth path is raisedthrough cumulated FDI inflows (s‘ is thereinvestment rate of profits of foreign firms)
Trend growth rate positively influenced by growthrate of foreign knowledge (a*) in the source countryof FDI
Countries in eastern Europe and Asia which haveattracted high FDI inflows could raise per capita real GNP!
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Foreign GNP Per Capita
Foreign real national income Z* (* forforeign variable)= Y* +α*ßY/q*; q*:= eP*/P; division by q* translates real income units of country I into units ofcountry II
Z*/L* is an important variable; is raisedby profits from country I.
Two-way FDI also could be considered
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Share of Cumulated FDI InflowsRelative to Y, Selected Countries in 2010
Italy: 25%
Germany: 40%
France: 60%
If K/Y is 4, then share of cumulated FDI inflowsrelative to K is:
Italy: 6,25% (rather low; limited technology transfer)
Germany: 10%
France: 15%; Ireland, Belgium: about 50%
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Economic Growth and Crises
• Transformation, investment & internet
• Trade, FDI & the EU
Eastern Europe
catching up
• Investment, includingFDI
• Institutions & Internet
Asian economies
catching up
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The Link Beetween Eastern Europe and Asia is RUSSIA
Oil and Gas from Russia
Eastern Europe‘s
interests andfears (Ukraine
crisis)
EU as Russia‘spartner,
Russia in WTO 2012
Asia is majorenergy
importer (not all countries)
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Competition Between Europa and Asia
Asia is net importer of oil and gas
Eastern Europe also is importer of oil and gas; some competition between Eastern Europa and Asia to obtain oil and gas from Russia atfavorable prices
Gas markets are regional markets
Oil market is a global market (1 price); there iscompetition between oil/gas and renewableenergies (solar, wind, geothermal, water
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Oil and Gas Ressources = +/-
Problem of Dutch Disease (in Russia, in Indonesia, in…)
Relative price of non-tradables(construction/houses, services) increaseand the N-sectors expands,
T-sector is shrinking; hence net exports will fall so that current account deficit problem
Corruption also is a problem
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Common Traits of Eastern Europe and Asian Countries
Countries in both eastern Europe +Asia are eager to catch-up vis-à-
vis the US (or Western Europe) in terms of per capital income
Catching up requires
Trade = efficiency gains: specialization & scale ec.
Domestic investment plus FDI inflows
Political stability
Human capital formation
Knowledge (A) accumulation
Growth of bank credit and of stock markets
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How to Organize EconomicCatching-up
Try to do it alone but in cooperation with US = big rich market; Taiwan, Korea, Hongkong, Singapore 70s
Try to achieve joint progress (e.g. ASEAN countries, initially starting as a group ofcountries interested in joint security – duringthe Vietnam War), later joint interest in economic integration = removing internaltariffs, opening up = more competition & moretrade; also liberalization of capital flows
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Key Issues for Transition Countries in Eastern Europe and Countries in Asia
Sequencing
First open up for trade, then capital flowliberalization; or other way round? (the later no ascapital flows can be very volatile and if highinflows we get an appreciation of the currency –under flexible exchange rates – or overinvestmentand inflation (under fixed rates); until 1998 fixedexchange rates in Asia (vis-à-vis $), mostly fixedexchange rates in Europe (vis-à-vis D-Mark)
Structural Change and Growth67P. Welfens/EIIW, U. of Wuppertal
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Careful Analysis of Common Interests and Rivalries
Some regional integration in both Asia and Eastern Europe
Relatively new political freedom in eastern European countries and Asian countries – tendency towardsnationalism?/NO tendency to easily surrender policyautonomy and install supranational institutions (atleast not in Asia)
Growing trade and investment links; USA as keypartner (also TTIP!); worries about € area instability
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POWER and the Shapley Value In international organizations a majority of
country votes is needed for a decision: 2012 Nobel Prize Co-Winner Shapley defines power
by the relative ability of a country to switch a loser coalition of countries into a majoritywinner coalition; the marginal power is zero if a country‘s joining of an existing coalition nevertilts the weight of the new coalition into a winner team; under unananimous voting thepower of all countries is the same (e.g. WTO)
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Foreign Direct Investment (FDI) in A Macro Perspective
FDI plays a crucial role in most easternEuropean countries and in most Asian countries (more in China than in India; seeUNCTAD, World Investment Report); someAsian countries have become important sourcecountries of FDI
If Y=Kß(AL)(1-ß) FDI inflows will affect capitalaccumulation (dK/dt) and knowledge (A); fromcountry II‘s knowledge (A*) spillover possible
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Some FDI Aspects (WELFENS, 2011), Innovations in Macroeconomics
Real gross national product (Z) vs real GDP (Y):
Under competition capital income in home country(I) is equal to ßY (0<ß<1);
If share of foreign ownership in K is α* (0< α*<1) then Z= Y(1- α*ß); note that e is exchange rate…
Z* (foreign real GNP)= Y* + α*ßY/q*; q*:=eP*/P
Consequently: S = sY(1-τ)(1- α*ß) + s‘α*ß; S is
savings; not correct in all standard text books…
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WELFENS: Innovations in Macroeconomics... (impact of level of
growth path)
Savings rates in Asia relatively high, low in some EU
countries; particularly in Greece.
Growth rate of technological progress (a) can be explained
by R&D-GDP ratio (R&D = research & development) and
the share in inward FDI inflows
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Winning in the GlobalizationProcess/Opening up
Country is winner if
Big firms active and innovative
Incentives for entrepreneurship, high techcompanies: venture capital available
High FDI inflows
Adequate R&D promotion
Role of cluster promotion
...
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Modernization and Opening up
Catching-up
Import ofcapital goods
andtechnology(via FDI)
Import ofintermediate
products
Export of final goods
(quality!)
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Potential Problems WhenOpening up for Trade
Current accountdeficits high overyears= foreignindebtedness+
Imports could consistlargely of imported
consumption goods!*
Devaluations; high exchangre rate
volatility
P. Welfens/EIIW, U. of Wuppertal 75
Imported capital goods contribute to K and A, respectively; ability to repay isreinforced if production potential is raised.
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Asia
Unfovorable:
Japan might face instability in the context of high debt-GDP (exceeding 240 % in 2014)
Favorable growth prospects:
Favorable demographic dynamics in the medium term (population growth until 2040 or 2050...)
Prospects for strong economic catching-up in somecountries (e.g. Philippines, Indonesia, Vietnam, India)
Techno-globalization: R&D is split up internationally
P. Welfens/EIIW, U. of Wuppertal 76
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Global Imbalances?
77-6,00
-4,00
-2,00
0,00
2,00
4,00
6,00
8,00
10,00
12,00
Canada France Germany Italy Japan United Kingdom United States China RussianFederation
Current Account Balance (in % of GDP, annual data, source: OECD)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Figure 9: Current Account Balance
P. Welfens/EIIW, U. of Wuppertal
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The Debt GDP Ratio
78
Country 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995
European Union 27 87,2 86,2 83,0 80,2 74,8 62,5 59,0 61,6 62,9 62,3 61,9 60,4 61,0 61,9 65,7 66,4 68,3 NA NA
Euro area 17 92,6 91,8 88,0 85,6 79,9 70,1 66,3 68,6 70,2 69,6 69,2 68,0 68,2 69,2 71,6 72,8 73,2 73,7 72,0
Belgium 100,8 100,5 98,0 96,0 95,8 89,3 84,1 88,0 92,0 94,0 98,4 103,4 106,5 107,8 113,6 117,2 122,5 127,2 130,2
Bulgaria 18,5 17,6 16,3 16,3 14,6 13,7 17,2 21,6 27,5 37,0 44,4 52,4 66,0 72,5 77,6 79,6 105,1 NA NA
Czech Republic 44,9 43,9 41,2 38,1 34,4 28,7 27,9 28,3 28,4 28,9 28,6 27,1 23,9 17,8 15,8 14,5 12,6 11,9 14,0
Denmark 42,1 40,9 46,5 42,9 40,6 33,4 27,5 32,1 37,8 45,1 47,2 49,5 49,6 52,4 58,1 61,4 65,4 69,4 72,6
Germany 80,7 82,2 81,2 83,0 74,4 66,7 65,2 68,1 68,6 66,3 64,4 60,7 59,1 60,2 61,3 60,5 59,8 58,5 55,6
Estonia 11,7 10,4 6,0 6,7 7,2 4,5 3,7 4,4 4,6 5,0 5,6 5,7 4,8 5,1 6,5 6,0 7,0 7,6 8,2
Ireland 120,2 116,1 108,2 92,5 65,1 44,2 24,8 24,7 27,2 29,4 30,7 31,9 35,2 37,5 48,0 53,0 63,7 72,7 81,2
Greece 168,0 160,6 165,3 145,0 129,4 113,0 107,4 107,3 101,2 99,8 98,3 102,6 104,7 104,4 94,9 95,4 97,5 100,3 97,9
Spain 87,0 80,9 68,5 61,2 53,9 40,2 36,2 39,6 43,1 46,3 48,8 52,6 55,6 59,4 62,4 64,2 66,2 67,5 63,3
France 92,5 90,5 85,8 82,3 79,2 68,2 64,2 64,0 66,7 65,0 63,2 59,0 56,9 57,4 58,9 59,5 59,4 58,0 55,4
Italy 121,8 123,5 120,1 118,6 116,0 105,7 103,1 106,1 105,4 103,4 103,9 105,1 108,2 108,5 113,0 114,2 117,4 120,2 120,9
Cyprus 78,1 76,5 71,6 61,5 58,5 48,9 58,8 64,7 69,4 70,9 69,7 65,1 61,2 59,6 59,3 59,2 57,4 53,1 51,8
Latvia 44,7 43,5 42,6 44,7 36,7 19,8 9,0 10,7 12,5 15,0 14,7 13,6 14,1 12,4 12,5 9,6 11,1 13,9 15,1
Lithuania 40,9 40,4 38,5 38,0 29,4 15,5 16,8 17,9 18,3 19,3 21,0 22,2 23,0 23,6 22,6 16,4 15,3 13,8 11,4
Luxembourg 21,6 20,3 18,2 19,1 14,8 13,7 6,7 6,7 6,1 6,3 6,1 6,3 6,3 6,2 6,4 7,1 7,4 7,4 7,4
Hungary 78,0 78,5 80,6 81,4 79,8 73,0 67,1 65,9 61,7 59,5 58,6 55,9 52,7 56,1 60,8 60,9 62,9 72,4 85,6
Malta 75,2 74,8 72,0 69,4 68,1 62,3 62,3 64,4 69,7 71,7 67,6 59,1 60,9 54,9 57,1 53,4 48,4 40,1 35,3
Netherlands 73,0 70,1 65,2 62,9 60,8 58,5 45,3 47,4 51,8 52,4 52,0 50,5 50,7 53,8 61,1 65,7 68,2 74,1 76,1
Austria 74,3 74,2 72,2 71,9 69,5 63,8 60,2 62,3 64,2 64,7 65,3 66,2 66,8 66,2 66,8 64,4 64,1 68,1 68,2
Poland 53,7 55,0 56,3 54,8 50,9 47,1 45,0 47,7 47,1 45,7 47,1 42,2 37,6 36,8 39,6 38,9 42,9 43,4 49,0
Portugal 117,1 113,9 107,8 93,3 83,1 71,6 68,3 63,7 62,5 57,5 55,7 53,7 51,1 48,4 49,4 50,3 54,3 58,2 59,2
Romania 34,6 34,6 33,3 30,5 23,6 13,4 12,8 12,4 15,8 18,7 21,5 24,9 25,7 22,5 21,7 16,6 15,0 10,6 6,6
Slovenia 58,1 54,7 47,6 38,8 35,3 21,9 23,1 26,4 26,7 27,3 27,2 27,8 26,5 26,3 24,1 23,1 22,4 21,9 18,6
Slovakia 53,5 49,7 43,3 41,1 35,6 27,9 29,6 30,5 34,2 41,5 42,4 43,4 48,9 50,3 47,8 34,5 33,7 31,1 22,1
Finland 51,7 50,5 48,6 48,4 43,5 33,9 35,2 39,6 41,7 44,4 44,5 41,5 42,5 43,8 45,7 48,4 53,9 57,0 56,6
Sweden 34,2 35,6 38,4 39,4 42,6 38,8 40,2 45,3 50,4 50,3 51,7 52,5 54,7 53,9 64,3 69,9 71,2 73,3 72,8
United Kingdom 94,6 91,2 85,7 79,6 69,6 54,8 44,4 43,4 42,5 40,9 39,0 37,5 37,7 41,0 43,7 46,7 49,8 51,3 51,2
United States 111,8 108,9 103,5 99,1 90,4 76,5 67,5 66,9 68,2 68,6 60,7 57,4 55,0 55,1 61,2 65,0 68,4 71,1 71,9
Table 3: General Government Consolidated Gross Debt - GDP Ratio (in %)
Source: AMECO Database P. Welfens/EIIW, U. of Wuppertal
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The Deficit-GDP Ratio
79
Table 4: General Government Deficit - GDP Ratio (in %)
Source: AMECO Database
Country 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995
European Union 27 -3,29 -3,62 -4,47 -6,54 -6,89 -2,42 -0,88 -1,48 -2,46 -2,85 -3,16 -2,59 -1,50 0,56 -1,03 -1,91 -2,72 -4,23 -6,96
Euro area 17 -2,90 -3,22 -4,12 -6,23 -6,38 -2,12 -0,68 -1,36 -2,51 -2,90 -3,14 -2,67 -1,96 -0,11 -1,49 -2,30 -2,84 -4,32 -7,23
Belgium -3,30 -2,96 -3,72 -3,81 -5,58 -0,99 -0,05 0,38 -2,49 -0,13 -0,11 -0,09 0,41 -0,04 -0,64 -0,94 -2,25 -3,97 -4,52
Bulgaria -1,70 -1,89 -2,09 -3,12 -4,33 1,67 1,16 1,87 1,04 1,86 -0,40 -1,19 1,07 -0,54 0,10 1,27 0,83 -10,07 -7,98
Czech Republic -2,61 -2,87 -3,09 -4,84 -5,84 -2,23 -0,74 -2,38 -3,25 -2,85 -6,71 -6,53 -5,59 -3,62 -3,59 -4,83 -3,62 -3,13 -12,80
Denmark -1,96 -4,08 -1,84 -2,51 -2,65 3,24 4,81 5,16 5,21 2,09 0,10 0,37 1,49 2,26 1,34 -0,04 -0,60 -2,03 -2,92
Germany -0,74 -0,87 -1,00 -4,27 -3,21 -0,06 0,24 -1,64 -3,32 -3,76 -4,15 -3,85 -3,08 1,14 -1,61 -2,33 -2,75 -3,35 -9,49
Estonia -1,27 -2,36 1,03 0,25 -2,02 -2,94 2,39 2,46 1,61 1,65 1,67 0,27 -0,06 -0,23 -3,46 -0,69 2,16 -0,35 1,09
Ireland -7,52 -8,29 -13,11 -31,16 -14,02 -7,34 0,07 2,91 1,66 1,37 0,40 -0,35 0,89 4,71 2,69 2,35 1,11 -0,10 -2,03
Greece -8,39 -7,27 -9,10 -10,35 -15,59 -9,82 -6,47 -5,73 -5,46 -7,59 -5,70 -4,81 -4,51 -3,73 -3,10 -3,86 -5,95 -6,70 -9,15
Spain -6,34 -6,44 -8,51 -9,34 -11,18 -4,50 1,92 2,37 1,27 -0,11 -0,35 -0,21 -0,53 -0,94 -1,22 -3,02 -4,01 -5,51 -7,20
France -4,19 -4,50 -5,15 -7,07 -7,54 -3,33 -2,73 -2,33 -2,92 -3,58 -4,07 -3,27 -1,65 -1,51 -1,80 -2,62 -3,31 -4,03 -5,46
Italy -1,11 -2,03 -3,95 -4,60 -5,44 -2,71 -1,63 -3,43 -4,45 -3,53 -3,61 -3,10 -3,14 -0,83 -1,94 -2,67 -2,73 -6,97 -7,45
Cyprus -2,50 -3,41 -6,30 -5,31 -6,12 0,94 3,50 -1,20 -2,43 -4,12 -6,56 -4,44 -2,25 -2,34 -4,35 -4,17 -5,06 -3,22 -0,85
Latvia -2,09 -2,08 -3,49 -8,17 -9,77 -4,24 -0,39 -0,48 -0,39 -1,03 -1,62 -2,29 -1,96 -2,79 -3,86 0,03 1,48 -0,44 -1,56
Lithuania -2,95 -3,25 -5,49 -7,22 -9,44 -3,29 -1,01 -0,45 -0,50 -1,53 -1,27 -1,86 -3,54 -3,20 -2,81 -3,01 -11,68 -3,21 -1,53
Luxembourg -2,22 -1,75 -0,59 -0,85 -0,81 3,00 3,68 1,35 0,00 -1,10 0,46 2,10 6,11 5,97 3,40 3,37 3,66 1,19 2,42
Hungary -2,94 -2,53 4,28 -4,21 -4,57 -3,72 -5,15 -9,41 -7,92 -6,47 -7,29 -8,98 -4,10 -3,04 -5,50 -7,96 -5,96 -4,44 -8,77
Malta -2,94 -2,55 -2,72 -3,72 -3,76 -4,60 -2,36 -2,79 -2,95 -4,71 -9,21 -5,84 -6,43 -5,84 -7,74 -9,93 -7,70 -7,98 -4,20
Netherlands -4,65 -4,43 -4,67 -5,10 -5,56 0,52 0,18 0,54 -0,26 -1,75 -3,12 -2,09 -0,24 1,97 0,41 -0,87 -1,25 -1,89 -4,34
Austria -1,93 -2,98 -2,60 -4,49 -4,12 -0,93 -0,87 -1,55 -1,70 -4,45 -1,51 -0,71 -0,05 -1,68 -2,30 -2,35 -1,80 -3,98 -5,78
Poland -2,54 -3,02 -5,11 -7,85 -7,37 -3,68 -1,88 -3,63 -4,07 -5,38 -6,19 -4,99 -5,27 -3,03 -2,31 -4,28 -4,63 -4,87 -4,41
Portugal -3,08 -4,68 -4,25 -9,82 -10,15 -3,63 -3,15 -4,61 -6,53 -4,01 -3,68 -3,38 -4,76 -3,27 -3,08 -3,88 -3,69 -4,86 -5,36
Romania -2,18 -2,83 -5,24 -6,83 -9,01 -5,68 -2,91 -2,24 -1,16 -1,22 -1,50 -2,00 -3,49 -4,67 -4,41 -3,21 -4,42 -3,57 -1,99
Slovenia -3,84 -4,25 -6,42 -6,01 -6,08 -1,86 -0,05 -1,36 -1,50 -2,25 -2,67 -2,45 -3,95 -3,71 -3,03 -2,37 -2,35 -1,11 -8,31
Slovakia -4,87 -4,68 -4,82 -7,68 -8,00 -2,09 -1,81 -3,17 -2,81 -2,36 -2,78 -8,22 -6,51 -12,27 -7,42 -5,33 -6,31 -9,91 -3,41
Finland -0,40 -0,74 -0,55 -2,54 -2,49 4,30 5,30 4,15 2,84 2,45 2,59 4,11 5,08 6,94 1,66 1,59 -1,37 -3,47 -6,13
Sweden 0,05 -0,29 0,29 0,25 -0,72 2,17 3,61 2,34 2,18 0,63 -1,03 -1,25 1,52 3,59 0,92 0,74 -1,54 -3,21 -7,42
United Kingdom -6,46 -6,68 -8,32 -10,20 -11,46 -5,05 -2,70 -2,69 -3,43 -3,45 -3,39 -2,06 0,48 3,57 0,92 -0,11 -2,17 -4,26 -5,92
United States -7,11 -8,29 -9,61 -10,63 -11,55 -6,42 -2,76 -2,05 -3,21 -4,41 -4,91 -3,90 -0,54 1,54 0,77 0,39 -0,81 -2,22 -3,22
P. Welfens/EIIW, U. of Wuppertal
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80
Direct fiscal impact of financial rescues, per cent of GDP
Net revenue/cost for
general government
General
government assets
General
government
liabilities
Contingent
liabilities
2008-10 2010 2010 2010
Austria –0,5 2,0 2,6 7,8
Belgium 0,1 5,3 5,9 15,8
Estonia 0,0 0,0 0,0 0,0
Finland 0,0 0,0 0,0 0,0
France 0,1 0,1 0,0 4,7
Germany –1,6 10,9 12,5 3,6
Greece 0,2 1,7 1,7 25,4
Ireland –22,9 2,1 23,0 106,4
Italy 0,0 0,3 0,3 0,0
Luxembourg –0,1 6,3 6,2 3,3
Netherlands –0,6 8,5 9,0 6,8
Portugal –1,3 3,6 3,6 3,1
Slovak Republic 0,0 0,0 0,0 0,0
Slovenia 0,1 0,0 0,0 6,2
Spain 0,1 2,3 2,5 5,7
Euro area (15) –0,9 4,3 5,1 6,5
EU27 –0,8 4,2 5,1 8,6
Note: Gross costs over the period in some cases exceed net revenue costs as the result of gains or asset sales,
while the assets and liabilities have also evolved through the crisis.
Source: OECD Economic Area Surveys EURO AREA (2012), P.34
P. Welfens/EIIW, U. of Wuppertal
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81
Net foreign asset position and net public assets, As a percentage of GDP
Source: OECD Economic Area Surveys EURO AREA (2012), P. 36
-120
-100
-80
-60
-40
-20
0
20
40
60
80
100
120
PRT GRC IRL ESP EST SVK ITA EA15 FRA AUT SVN FIN NLD DEU BEL LUX
Net foreign asset position, as a percentage of GDP
Net foreign assets, 2008 Net foreign assets, 2008-10 change
-120
-100
-80
-60
-40
-20
0
20
40
60
80
100
120
PRT GRC IRL ESP EST SVK ITA EA15 FRA AUT SVN FIN NLD DEU BEL LUX
Net public assets, as a percentage of GDP
Net public assets, 2008 Net public assets, 2008-10 change
P. Welfens/EIIW, U. of Wuppertal
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Average term to maturity(total debt)
82P. Welfens/EIIW, U. of Wuppertal
0
2
4
6
8
10
12
14
16
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
France Germany Italy Spain United States UK (domestic) UK (foreign)
Source: OECD
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Macro Economic Data/FiguresLectures of Professor Welfens
Selected international macro statistics (monetary and real
macro data)
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Output, Employment, Inflation, Interest Rates, Monetary Growth
Consider the data presented in the medium and long run
Compare countries and regions
Identify critical periods/crisis
Links between monetary and real developments
P.J.J. Welfens, www.eiiw.eu (2014) 84
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Macroeconomic Data (Welfens), selected
P.J.J. Welfens, www.eiiw.eu (2014) 85
-6
-4
-2
0
2
4
6
8
10
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Annualpercentchan
ge
RealGDPgrowth,1985-2014,Prognose2014-2019Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
Advancedeconomies
Emergingmarketanddevelopingeconomies
World
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P.J.J. Welfens, www.eiiw.eu (2014) 86
-6
-4
-2
0
2
4
6
8
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Annualpercentchan
ge
RealGDPgrowth,1985-2014,Prognose2014-2019Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
France
Germany
Italy
Spain
UnitedKingdom
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P.J.J. Welfens, www.eiiw.eu (2014) 87
-10
-5
0
5
10
15
20
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Annualpercentchan
ge
RealGDPgrowth,1985-2014,Prognose2014-2019Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
China,People'sRepublicof
Japan
UnitedKingdom
UnitedStates
Euroarea
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P.J.J. Welfens, www.eiiw.eu (2014) 88
0
5000
10000
15000
20000
25000
30000
35000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
US$
GNIpercapita,constant2005,1980-2013Source:WorldBank,WorldDevelopmentIndicatorsDatabase
Highincome
Low&middleincome
World
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P.J.J. Welfens, www.eiiw.eu (2014) 89
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
US$
GNIpercapita,constant2005,1980-2013Source:WorldBank,WorldDevelopmentIndicatorsDatabase
France
Germany
Italy
Spain
UnitedKingdom
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P.J.J. Welfens, www.eiiw.eu (2014) 90
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
US$
GNIpercapita,constant2005,1980-2013Source:WorldBank,WorldDevelopmentIndicatorsDatabase
China
Euroarea
Japan
UnitedKingdom
UnitedStates
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P.J.J. Welfens, www.eiiw.eu (2014) 94
0
5
10
15
20
25
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
%
Nominallong-terminterestrate,1980-2013Source:EuropeanCommission,AmecoDatabase
Germany
Spain
France
Italy
UnitedKingdom
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P.J.J. Welfens, www.eiiw.eu (2014) 95
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P.J.J. Welfens, www.eiiw.eu (2014) 96
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P.J.J. Welfens, www.eiiw.eu (2014) 97
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P.J.J. Welfens, www.eiiw.eu (2014) 98
-6
-4
-2
0
2
4
6
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
PercentofGDP
Currentaccountbalance,1985-2014Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
Advancedeconomies
Emergingmarketanddevelopingeconomies
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P.J.J. Welfens, www.eiiw.eu (2014) 99
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
PercentofGDP
Currentaccountbalance,1985-2014Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
France
Germany
Italy
Spain
UnitedKingdom
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P.J.J. Welfens, www.eiiw.eu (2014) 100
-6
-4
-2
0
2
4
6
8
10
12
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
PercentofGDP
Currentaccountbalance,1985-2014Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
China,People'sRepublicof
Japan
UnitedKingdom
UnitedStates
Euroarea
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P.J.J. Welfens, www.eiiw.eu (2014) 101
0
20
40
60
80
100
120
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
PercentofGDP
Generalgovernmentgrossdebt,1985-2014Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
Advancedeconomies
Emergingmarketanddevelopingeconomies
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P.J.J. Welfens, www.eiiw.eu (2014) 102
0
20
40
60
80
100
120
140
160
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
PercentofGDP
Generalgovernmentgrossdebt,1985-2014Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
France
Germany
Italy
Spain
UnitedKingdom
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P.J.J. Welfens, www.eiiw.eu (2014) 103
0
50
100
150
200
250
300
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
PercentofGDP
Generalgovernmentgrossdebt,1985-2014Source:IMF,WorldEconomicOutlookApril2014,www.imf.org
China,People'sRepublicof
Japan
UnitedKingdom
UnitedStates
Euroarea
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P.J.J. Welfens, www.eiiw.eu (2014) 104
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P.J.J. Welfens, www.eiiw.eu (2014) 105
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Thank you for your attention!
107P. Welfens/EIIW, U. of Wuppertal