EU’s Baltic strategy: realities of the crisis and the vision of a region (PDF; 117 KB)
Source: Trans European Policy Studies Association

How is the global economic crisis shaping the dynamics of cooperation around the Baltic sea? The region’s image of “success story” quickly gave place to worries and doubts as the economies of the Baltic countries plunged into recession. The crisis puts under question various ambitious plans and strategies for the region’s development as a role model for global competitiveness, innovation and cooperation. More importantly, the crisis reveals that “region-building”, which has been one of the trademarks of EU’s policy-making, becomes increasingly problematic for both Brussels and national governments.

Banking Crisis: reforming corporate governance and pay in the City
Source: House of Commons Treasury Select Committee

In this Report, the third in our series on the banking crisis, we focus our attention on remuneration in the City of London, as well as on the nexus of private actors–including non-executive directors, institutional shareholders, credit rating agencies, auditors, the media–who are supposed to act as a check on, and balance to, senior managers and the executive boards of banks.

On remuneration we conclude that the banking crisis has exposed serious flaws and shortcomings in remuneration practices in the banking sector and, in particular, within investment banking. We found that bonus-driven remuneration structures encouraged reckless and excessive risk-taking and that the design of bonus schemes was not aligned with the interests of shareholders and the long-term sustainability of the banks. We express concern that the Turner Review downplays the role that remuneration played in causing the banking crisis and question whether the Financial Services Authority has attached sufficient priority to tackling remuneration in the City. The Report outlines clear failings in the remuneration committees in the banking sector, with non-executive directors all too willing to sanction the ratcheting up of remuneration levels for senior managers whilst setting relatively undemanding performance targets. We propose a number of reforms to remuneration in the banking sector. These include enhanced disclosure requirements on firms about their remuneration structures and about remuneration below board-level, reforms to remuneration committees to make them more open and transparent, and a Code of Ethics for remuneration consultants.

+ Full Document (PDF; 1.7 MB)

Trade policy in a time of crisis: Suggestions for developing countries
Source: Centre for Economic Policy Research

The world is enduring the worst economic setback since the Great Depression. Real estate and share prices have fallen sharply; major firms are failing; credit conditions are extremely tight; manufacturing production has dropped like a stone; commodity prices have plunged; and unemployment is rising everywhere. Major central banks are riding to the rescue with near-zero interest rates, deposit guarantees, emergency loans to private firms, and the purchase of corporate debt. The US, other advanced countries, and a few emerging nations with ample reserves are enacting huge fiscal stimulus programs. The G20 has promised to boost the resources of the IMF and the Multilateral Development Banks by over $1 trillion. But even these unprecedented monetary, fiscal and international resource measures will take time to put the world on the road to recovery. Misery is widespread and could last well into 2010.

Poor countries are especially hard hit. According to the World Bank, slower economic growth in 2009 will add an additional 53 million people to those living on less than $1.25 a day and 64 million to those living with less than $2 a day (World Bank, 2009). This figure comes on top of the 130-155 million people pushed into poverty by soaring food and fuel prices during 2008. As World Bank President Robert B. Zoellick stated: ‘While much of the world is focused on bank rescues and stimulus packages, we should not forget that poor people in developing countries are far more exposed if their economies falter. This is a global crisis requiring a global solution. The needs of poor people in developing countries must be on the table’ (Giles and Barber 2009).

Full Document (PDF; 760.2 KB)

The London Summit: What is the Summit for?
Source= Foreign and Commonwealth Office

On 2 April 2009, world leaders from the G20 countries - representing 85% of the world’s output - will meet in London. They will meet against the backdrop of the worst international banking crisis in generations.

Confidence in the international banking system has fallen. Major institutions have failed. Countries around the world have entered recession, with falling trade and rising unemployment.

At the Summit, countries need to come together to enhance global coordination in order to help restore global economic growth. World leaders must make three commitments:

• First, to take whatever action is necessary to stabilise financial markets and enable families and businesses to get through the recession.
• Second, to reform and strengthen the global financial and economic system to restore confidence and trust.
• Third, to put the global economy on track for sustainable growth.

The London Summit will take place against the backdrop of exceptionally challenging economic circumstances. But, just as after the Second World War visionary leaders laid the groundwork for 30 years of prosperity and growth, built on international economic cooperation, this crisis is also an opportunity.

The world’s leading economies can come together and lay the foundations not just for a sustainable economic recovery, but also for a genuinely new era of international economic partnership - a global deal, in which all countries have a part to play and all will see the benefits.

+ Links to finance ministries and central banks of the G20

Business profit share and investment rate higher in the EU than in the USA (PDF; 338 KB)
Source: Eurostat

This “Statistics in Focus” is a new publication based on the national accounts data of the non-financial corporations sector. In 2007, which is before the ongoing slowdown, non-financial corporations were more profitable in the euro area and EU than in the US. The highest share of operating profit in value added was observed in Norway and the lowest in the US. Such profit shares generally tended to increase over the 2000-2007 period, compared with the share of labour costs. This was the case in the US, the euro area and the EU (except Denmark, the Baltic countries and Italy). Non-financial corporations invested more in proportion to their value added in the euro area and in the EU than in the US. Highest investment rates were recorded in the Baltic countries and the lowest in the UK. Investment rates fluctuated over 2000-2007 with a net increase in Spain whereas a net fall was recorded in Germany, the US and the UK.

Globalisation and its impact on Wales (PDF; 668 KB)
Source: House of Commons Welsh Affairs Committee
From the Summary:

In the twenty-first century, the economy of Wales cannot be considered in isolation, but must be seen in the context of global opportunities and threats. Today, national economies are no longer independent entities operating separately, but are interdependent. Much of the evidence we took in the course of this inquiry was informed by the particular economic circumstances in Wales at the time. In 2007, witnesses reported rising house prices and an in-flow of migrant workers to Wales. Since that time, the challenges of globalisation have become even more starkly apparent in the light of the global economic downturn. As economies have become interlinked, so economic problems can spread more easily from one country to another.

Globalisation, however, is undoubtedly a phenomenon that is here to stay. Today, more than ever, it is important for Wales to maximise the economic return that can be derived from global trade. As companies cut costs to remain viable in a worsening economic climate, Wales will need to make the most of its local strengths and the skills of its workforce in order to remain a desirable location in which to do business. This Report puts forward the fundamental elements necessary for a successful global economic strategy. We believe that our conclusions and recommendations will prove particularly valuable in the current climate if they receive careful consideration by all parties, including central and local government and the Welsh Assembly Government.

In Wales, globalisation has often been viewed as a wholly negative phenomenon, endangering jobs and triggering the decline in the industries which have traditionally sustained the Welsh economy, such as coal mining and heavy manufacturing. It is certain that, for Wales, globalisation means change and a transition to new forms of economic activity. It is no longer feasible to build an economy based on the production of mass market commodities which can be carried out more cheaply elsewhere. Instead, Welsh companies must move up the value chain, making use of higher level and specialist skills to offer premium goods and services which cannot be sourced abroad. This process is challenging and governments in both London and Cardiff have a responsibility to ensure the Welsh population is as prepared as it can be for the demands of the global marketplace. In the longer term, the rise in global trade holds out the prospect of increased prosperity as the economy recovers and markets expand. For those countries able to negotiate the transition successfully, the result should ultimately be a rise in standards of living.

To make the most of globalisation, Wales must exploit its strong local identity and values. Our inquiry has convinced us that adaptation to globalisation should not involve adopting a ‘neutral’ brand identity. On the contrary, it is the power of localism that will provide a foundation from which to approach the world. Wales has many strengths on which it can build, including expertise in high technology sectors, food and drink, hospitality, tourism, broadcasting and the creative industries. Wales has already moved a long way from its industrial roots in coal mining and textiles. Today, small businesses make up the vast majority of the business stock. These are often at the forefront of innovation, but place great value on their local origins and character. This is a powerful combination of assets, which can be harnessed to the benefit of the Welsh economy. Small businesses may find the prospect of entering the global marketplace daunting, but with the right support and by joining forces and working collaboratively, the sector has the potential to add significantly to Wales’s prosperity.

Panorama of European Union trade — 2007 Edition (data 1998-2006)
Source: European Commission/Eurostat

Global economic integration creates opportunities for growth and for development. The European Union is committed to ensuring that the European economy is open to the world and competitive on the world stage. Citizens and economic decision-makers will find in this publication the essential statistical information on European Union and Euro area external trade, and trade between member states.

+ Full Document (PDF; 6.13 MB)

Japan: Challenges and Opportunities in the Global Economy (PDF; 146 KB)
Source: Wilton Park

The key conclusions of the conference were: The current financial crisis has highlighted the interconnectivity of the global economy which many believe requires a shared international response. There is a growing realisation that the global financial crisis is increasingly impacting negatively on the Japanese economy. This reinforces the feeling that ‘we are all in this together’.

The rapid and concrete response by both the US and EU governments to the current credit (crunch) suggests they have already learned from Japan’s 1990s credit crunch experience. There are further direct lessons for the US and EU including the need to ensure prompt disclosure of and disposal of bad debts to prevent further economic weakening.

Japan, with its huge cash reserves, is in a strong position to take advantage of global business opportunities resulting from the current global economic turmoil.

Despite the growth of China, Japan will remain a dominant player in the Asian region and may emerge as a ‘global balancer’ in the trilateral relationship between the US, EU and Asia.

Japan needs to re-engage globally with a more strategic mindset and awareness of its national brand. It could demonstrate greater multilateral leadership on key global issues such as climate change. If Japan is to ‘re-emerge’, a critical factor will be the nature of its bilateral relationship with China. Japan and China need to resolve a number of bilateral issues to create a real partnership of equals. Its relationship with China needs to be conducted separately from relations with the US.

In spite of some domestic opposition to globalisation, Japan’s democratic values and respect for the rule of law, ensure that it will continue to be valued as a reliable, long term partner by the EU, US and Asian partners.

Toxic Substances in Articles: The Need for Information
Source: Nordiska ministerrådet

The use of toxic chemicals in articles is a growing concern for public health and the environment. International trade results in substances being transported among regions. From toys and household items to electronic equipment and automobiles, toxic substances in articles are an increasingly important factor contributing to the global burden of toxic substances. Toxic substances in articles may pose threats at every stage of the product life cycle - production, use, and disposal or recycling.

In this report, we consider a factor that is critical for the sound management of substances in articles: the availability of information. At present, there is no global system for provision of information about substances in a wide range of articles.

First, the report describes the problem of toxic substances in articles, with detailed case studies of selected examples and considers the advantages that would result from better information management systems. Second, the report considers existing efforts to generate and disseminate information about substances in articles, both regulatory requirements and voluntary initiatives. Third, the report offers suggestions as to the questions and themes that would need to be considered in order to improve management of information about substances in articles.

+ Full Report (PDF; 10.5 MB)

Hat tip: MV

World Economic Outlook Update: Global Economic Slump Challenges Policies
Source: International Monetary Fund

World growth is projected to fall to 1.2 percent in 2009, its lowest rate since World War II. Despite wide-ranging policy actions, financial strains remain acute, pulling down the real economy. A sustained economic recovery will not be possible until the financial sector’s functionality is restored and credit markets are unclogged. For this purpose, new policy initiatives are needed to produce credible loan loss recognition; sort financial companies according to their medium-run viability; and provide public support to viable institutions by injecting capital and carving out bad assets. Monetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability. Moreover, international cooperation will be critical in designing and implementing these policies.

Global growth in 2009 is expected to fall to 1.2 percent when measured in terms of purchasing power parity and to turn negative when measured in terms of market exchange rates. This represents a downward revision of about 13.4 percentage point from the November 2008 WEO Update. Helped by continued efforts to ease credit strains as well as expansionary fiscal and monetary policies, the global economy is projected to experience a gradual recovery in 2010, with growth picking up to 3 percent. However, the outlook is highly uncertain, and the timing and pace of the recovery depend critically on strong policy actions.

+ Direct lInk to Document (PDF; 533 KB)

International Cooperation in Science and Technology
Source: European Commisssion Directorate-General for Research

The launch of the 2007-2013 Seventh Framework Programme for Research (FP7) places a renewed emphasis on International Cooperation in Science and Technology, which is increasingly seen as being at the centre of Community policies.

The new approach of International Cooperation in FP7 aims at supporting European competitiveness through strategic partnerships with third countries in selected fields of science, facilitating access to research carried out elsewhere in the world, and tackling specific challenges that third countries face or which have a global character on the basis of mutual interest and mutual benefit.

In order to maximise impact, international activities take place across all Specific Programmes of FP7 in a complementary and synergistic manner. The Cooperation Programme enables research cooperation between different global research partners in collaboration with European researchers. The People Programme meets the need to foster both incoming and outgoing international mobility of researchers. The Ideas Programme supports excellence in frontier research and enables individual top international researchers to participate in Europe-led teams. The Capacities Programme supports a range of activities to strengthen S&T cooperation policies with other regions of the world and represents a significant novelty compared to previous Framework Programmes.

This is a series of regional reports (PDFs):

+ Latin America

+ Western Balkan Countries

+ Eastern Europe and Central Asia

+ Sub Saharan Africa

EU-27 trade with NAFTA in 2007
Source: Eurostat

In 2007, the European Union’s (EU-27) trade in goods with North-American Free Trade Agreement (NAFTA) countries registered exports with a total value of EUR 308.5 billion against imports worth EUR 216.4. Although the EU’s trade balance remained largely positive (EUR 92 billion), a significant decrease of 16% was registered between 2006 and 2007. This was the first decrease since 2000. Among the three NAFTA countries, the USA remained by far the main EU partner, accounting for 85% of EU exports to, and 84 % of EU imports from NAFTA countries. Trade with Mexico has developed rapidly: EU exports increased by an average 5.6% and EU imports by 7.0% between 2000 and 2007; trade with Canada remained more important in absolute terms but increased less strongly over the same period (3%, both for exports and imports). Germany and the UK are the main EU partners for the NAFTA countries. The trade balance was positive (or only slightly negative) in all EU countries except for the Netherlands where the deficit amounted to EUR 9.3 billion. The highest trade surplus was registered by Germany (EUR 45.1 billion). Manufactured goods were the most traded (83% of total trade), especially ‘Machinery and vehicles’ (42% of the total).

+ Full Document (PDF; 0.21 MB)

Economic Globalisation: A Challenge for Official Statistics
Source: European Free Trade Association

The seminar provided national statistical offices with a forum to share ideas and discuss approaches to cope with the distortions caused by the activities of multinational enterprises on the production of statistics. The seminar addressed globalisation in the context of national accounts and the effect on gross domestic product, gross national income and other parts of the accounts.

Presentations at the seminar were provided by the Organisation for Economic Co-operation and Development (OECD), Eurostat, UNECE, Canada, Ireland, Netherlands, Norway, Slovenia, Switzerland, Ukraine and United Kingdom. This publication includes the papers that were presented at the meeting.

+ Full Document

Global Operating Models for Managing Knowledge Work
Source: Deloitte LLP

Increasingly, companies are spreading “knowledge work” tasks – such as research and product development – overseas as a means to increase competitiveness, reduce costs, access new talent pools and establish a presence in emerging markets. Yet many struggle to achieve the performance to which they aspire.

This paper describes how a structured approach for understanding the link between decision-making (how work is governed) and workflow (how work is organized) can help global businesses structure their organizations effectively for knowledge work. We propose a typology of organization models comprising two dimensions: the degree of workflow across locations and the structure of decision-making responsibilities. We also present several case studies that depict organizations at different points in their journeys.

The framework we present can serve as a starting point for you to understand how strategic choices between the structures of your organization’s decision-making and workflow can help you address organizational design questions and, ultimately, achieve more positive outcomes in your global knowledge-work initiatives.

+ Full Document (PDF; 291 KB)

Free registration required.

A European Economic Recovery Plan
Source: European Commission

The recovery plan is the Commission’s response to the current financial and economic crisis. It aims to restore consumer and business confidence, restart lending and stimulate investment in the EU’s economies, create jobs and help the unemployed back into work. The plan is designed to create a basis for rapid agreement between Member States to get Europe’s economy moving again. The European Commission calls on the European Heads of State and Government to adopt the plan at their meeting on 11-12 December 2008.

+ Full Document (PDF; 62 KB)