Cohesion Countries Research Articles

A new innovation paradigm: European cohesion policy and the retreat of public science in countries in Europe's scientific periphery

AbstractThis article seeks to undertake a critical assessment of the changing position of public science in the entrepreneurial ecosystem of the countries on the periphery of European research. These countries are driven by new innovation paradigm based on entrepreneurship, which are implemented within the European Smart specialization strategy (S3). This article argues that S3 is widely implemented in the cohesion countries and, while it provides substantial resources for science, technology, and innovation, it fails to provide sustainability in the public research sector. This has direct implications for policies concerning innovation and entrepreneurial ecosystems. In order to prove the thesis, the article provides theoretical argumentation for emergence of a new innovation paradigm, driven by the rise of the entrepreneurial ecosystem, its incorporation into S3, and a consequent retreat of science policy in favor of entrepreneurial policy. The empirical analysis is focused on the funding trends seen in the business and public research sectors over the last decade (2008–2017), which have clearly shown that S3 has not contributed, despite expectations, to an increase in public expenditure for science. This signifies S3's neglect of public research within entrepreneurial ecosystems and challenges the ability of S3 to reduce wide disparities in research and innovation performance across the European Union. This ultimately endangers the innovation potential of the entrepreneurial ecosystem itself.

Reforming the EU Budget: A Time Series Analysis of Institutional and Partisan Effects

The marginal involvement of the EU in redistributive policies and its limited fiscal resources have led to a lack of attention to the EU budget and its determinants. In this paper I analyse an original dataset containing yearly data on the main macro-categories of expenditure and how they have changed over the last three decades (1984-2013). Using time series analysis, I find that the ability to form winning coalitions in the Council, the ideological position of the co-legislators, and some ‘structuring events’ - like the adoption of the Multiannual Financial Framework and the accession of the cohesion countries - have a significant role in driving the process of budgetary reform.

Using QCA to explain firm demography in the European Union

Entrepreneurship is currently considered one of the major foundations of economic growth. There is a strong tendency to understand entrepreneurship as technology, self-employment, new ideas, innovation, or wealth creation. We can thus expect more developed countries to show higher growth rates, given the importance of firms' development for economic and social growth. For this reason, it is important to determine the conditions that have the greatest influence on entrepreneurship dynamics at the macroeconomic level. Using firm birth and death rates (related to business dynamics and entrepreneurship), we focus on the European Union and use qualitative comparative analysis techniques to determine the necessary and sufficient conditions for business dynamics. After dividing the whole EU sample into cohesion and non-cohesion countries, we find that entrepreneurship in cohesion countries is driven by necessity, while in non-cohesion countries, it is driven by opportunity.

Testing for Stochastic Convergence: The Case of the Cohesion Countries

In this paper, the issue of income convergence in the EU-15 is addressed. Our data set consists of annual log real GDP per capita for the four Cohesion countries and cover the period 1950-2007.The empirical part of the paper applies complementary the Bernard and Durlauf (1995) and Nahar and Inder (2002) methodology.Applying the former, we failed to accept the hypothesis of stochastic convergence of real per capita GDP of the four Cohesion countries towards the EU-15 average.In contrast, the Nahar and Inder test provides strong evidence of convergence for Spain, Portugal and Greece.

Az EU területi politikájának a változásai közép-kelet-európai nézőpontból

Az EU bővítése és Közép-Kelet-Európa integrációja a centrum-periféria relációban történik. Ezen országoknak kettős függősége alakult ki: a gazdaságuk az FDI-tól, a közszféra fejlesztései az uniós támogatásoktól függnek. Az EU politikájában az elmúlt másfél évtizedben bekövetkezett változások kedvezőtlenek a kohéziós szakpolitika és a kevésbé fejlett régiók és kohéziós országok szempontjából. A strukturális és kohéziós politika alárendelődött a lisszaboni stratégiának, majd a „területileg vak” Európa 2020 stratégiának. Ma már az új kohéziós politika inkább szolgálja az általános integrációs célokat, a szupranacionális kormányzás erősítését, mint közvetlenül a regionális szakpolitikát. A kohéziós politika eddigi kedvezményezetteinek a szempontjából kedvezőtlennek minősíthetjük, hogy egyre nagyobb hangsúlyt és támogatást kapnak a fejlett területek és a nagyvárosi régiók. Ha az unió minden régiójában támogatja az erőforrások minél jobb hasznosítását, akkor az a centrumtérségek, a nagy gazdasági koncentrációk további erősödéséhez és a perifériák végleges leszakadásához vezet. Az EU versenyképességének az erősítése úgy is megtörténhet, hogy fenntartjuk a klasszikus szolidaritásra épülő területi politikát, és eszközeit továbbra is a kohéziós országok és a legelmaradottabb régiók fejlesztésére fordítjuk.

Cohesion Policy in Transition Comparative Aspects of the Polish and Hungarian Systems of Implementation

Currently the preparation of the new 2014-2020 multiannual financial framework period is taking place in all areas - e.g. the sectorial legislation, such as the establishment of the new system of Cohesion Policy, is in progress. The rules are being formed in the spirit of a new approach; result orientation will become the main goal which requires a change of attitude in the operation of the institution system. Poland and Hungary are two cohesion countries, both of them using a significant amount of structural funds to finance public investments. Despite the common regulation at EU level the two countries are seemingly choosing different solutions in order to guarantee smoother implementation that will allow policy objectives and results to be achieved more effectively – Hungary is centralizing and Poland is rather decentralizing the system. What is behind this phenomenon? Which is the best way to strengthen the efficiency of the cohesion policy? Our paper will present the institutions systems and mechanism, administrative procedures working in the cohesion policy and compare the Polish and Hungarian systems. It will analyze the directions of changes under the new cohesion policy regulation with regard to the functioning institutions system and national specificities. At the end of our analysis we try to identify good practices and make general recommendations.

European Union budget politics: Explaining stability and change in spending allocations

The marginal involvement of the European Union (EU) in redistributive policies and its limited fiscal resources have led to a notable lack of attention by EU scholars towards the EU budget and its dynamics. Yet the nature of the budgetary data and their high usability for statistical analysis make them an excellent tool for studying and measuring policy change in the EU. In this article, I analyse an original dataset containing yearly data for the main categories of expenditure and how they have changed over the last three decades (1979–2013). Using time-series analysis, I find that the ability to form winning coalitions in the Council, the ideological positioning of the co-legislators and the inclusion of the cohesion countries have played a significant role in driving budget change.

Growth and Convergence in the EU-15: More Evidence from the Cohesion Countries

Abstract This paper analyzes income convergence within EU-15 over the period 1995 to 2013. By means of panel data techniques, we examine conditional β-convergence controlling for the impact of some economic factors such as investment in physical and human capital, inflation, government consumption and openness. In addition, the role of two institutional variables, corruption and bureaucracy is examined. We found that corruption, affects negatively the growth, in the full sample. On the contrary bureaucracy, hasn’t any significant effect on the growth performance of the wealthier EU members, while affects rather differently the economic performance of the four cohesion countries, namely Portugal, Ireland, Greece, and Spain, hampering growth.

Assessing economic convergence in the EU: is there a perspective for the ‘cohesion countries’?

This article analyses the stochastic income convergence within the EU-15. The empirical analysis uses per capita GDP, in PPP and in constant prices of 2005 for the period 1950 to 2010. Apart from the traditional DF type tests we also account for possible structural changes. In this direction, we employ the Zivot-Andrews (1992) and the Lee-Strazicich (1999, 2003) testing procedures, for one and two breaks, endogenously determined. Furthermore, we apply the Carlino and Mills (1993) methodology proposed for the detection of β-convergence. The overall evidence supports the existence of two discrete clubs, the first by the ‘cohesion countries’ (Portugal, Ireland, Greece and Spain) and the second by the remaining members. In particular, there is a clear evidence of convergence within each club, whereas between clubs there is a luck of catching-up effects. Furthermore, investigation of correlation between relative per capita GDP of each country and several factors that are often identified as growth stimulants, namely Total Factor Productivity, FDI, investment and openness confirm, with the exception of Greece, a strong association between these factors and the convergence process. However, progress in the convergence has not been uniform across countries and over time, reflecting the specific interactions between domestic and international factors and their impact on the convergence process of individual countries.

Economic Growth and Inflation in Europe: A Tale of Two Thresholds

AbstractThis article reassesses the impact of inflation on long‐term growth for a panel of 14 European Union countries in the years prior to monetary unification. While previous research mostly focuses on a linear nexus or allows for a piecewise linear relationship with a single threshold, this study takes account of a more complex relationship. The empirical estimates for the full EU sample confirm the hypothesis that the relationship between inflation and growth is positive for very low inflation rates (that is, below an estimate of 1.6 per cent), insignificant thereafter and negative for high, two‐digit inflation levels. The estimate of the inflation level that divides the insignificant from the negative effect is found to be higher in the group of traditional cohesion countries than for the rest of the sample.

Disaggregating the impact of the European Union Cohesion Policy: Differentiated responses in the internalisation of the policy’s ‘added value’ in Greece and Ireland

This paper explores the divergent ‘added value’ that the implementation of the European Union’s (EU) Cohesion Policy (CP) had in two of the original cohesion countries, Greece and Ireland. The implementation of the CP entails the transposition of the added value that arrives at the domestic level of the recipient countries and intends to promote changes in the administrative and institutional structures. The paper identifi es fi ve areas in which the added value has infl uenced Greece and Ireland, cohesion, political, policy, operational and policy learning. We argue that Greece has faced signifi cant diffi culties in internalising certain components of the CP added value because of a series of domestic administrative and institutional arrangements that mediated this relationship. In the case of Ireland there have been better patterns of adjustment to the components of the CP added value because the previously established institutional and administrative arrangements were reformed by the domestic Irish governments.

Foreign direct investments, energy efficiency, and innovation dynamics

Rapid growth in energy consumption influences on the one hand energy prices and endangers energy supply security; on the other hand, it distresses ecological balances. In this respect, the efficient use of energy resources plays a key role for challenging these problems in the long run. Thus, without innovations and its diffusion to broad regions, global energy efficiency improvements cannot be realized. In this context, foreign direct investments (FDI) are important elements of technology transfer to developing countries and to emerging economies. However, they can also change the structure of the host economies as well. Having said that, these structural effects are frequently ignored in the relevant literature. The aim of this paper is to explain the relationship between FDIs and technology determined energy efficiency by considering the structural effects as well. For this purpose, the change of industrial energy intensity has been analyzed using decomposition methodology that adjusts structural effects from energy intensity changes. Finally, a panel data analysis with country specific effects has been conducted which reflects a significant correlation between FDI and technology determined energy efficiency improvements in the eastern EU members and cohesion countries. These results affirm the existing theoretical basis regarding positive effects of FDIs on technology level of host countries on the one hand. Another conclusion, on the other hand, is that economic integration indirectly contributes also to efficient use of resources.

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What can we learn from the distribution of trade patterns?

This paper proposes an empirical framework for analyzing the dynamics of trade specialization, using a symmetric transformation of the standard Balassa (Manch Sch Econ Soc Stud 33(2):99–123, 1965) index and the conditional density estimation methods suggested by Hyndman et al. (J Comput Graph Stat 5(4):315–336, 1996). The framework is implemented using data on the cross-sector export and import specialization of the four initial EU Cohesion countries over the last 40 years. We discuss the importance of studying both the distribution’s external shape and the intra-distribution dynamics and why it is interesting to include imports in the analysis. We find a reduction of the overall degree of export specialization in Portugal, Greece and Spain. Conversely, Ireland has the strongest export specialization and there is evidence of an increase over time. The export intra-distribution dynamics reveal persistence of the specialization status in the four countries, especially for high values of the index. In all countries, the degree of specialization is higher for exports than for imports and intra-distribution dynamics reveal more mobility of import specialization than that of exports.

The regional policy of the European union and its results in Portugal: Convergence and divergence in practice

Portugal is often mentioned as one of the models of old cohesion countries. However, the development of the country was not continuous and did not bring along the catching up of all the regions. How far does the European Union’s structural support influence the development process of Portugal and how can the effects of structural support be measured in terms of the development of the country? What results and impact did the European Union’s structural policy have in Portugal in the last quarter-century? What are the lessons learnt and what could be done to make the implementation of the Funds more effective in the future? To what extent was the convergence of growth levels achieved between the Portuguese regions and the national average concerning structural support? The author tries to answer these questions amongst others, while dealing with the evaluation of the results of Structural Funds in Portugal and the convergence of the Portuguese regions.

Explaining the Uneven Economic Performance of the EU Cohesion Countries: An Export-Led Growth Approach

This article explains the differences in growth rates between the cohesion countries of the EU: Ireland, Spain, Portugal and Greece. Employing a decomposition growth approach, it is found that the main driver of growth differences lies in productivity. The remarkably higher Irish growth rates in the 1990s are sourced to greater productivity growth resulting from higher investment in human capital and technology. The export-led growth approach reasonably predicts the growth rates and the prediction is more precise when differences in productivity growth are controlled for. Higher economic growth is explained by the higher income elasticity of exports relative to imports.

Spatial heterogeneity and interregional spillovers in the European Union: Do cohesion policies encourage convergence across regions?

Using a spatial econometric perspective, the speed of convergence for a sample of 163 regions of the European Union (EU) over the period 1981–1996 is estimated. For this purpose, we use a specification strategy which allows an explicit modeling of both spatial heterogeneity and spatial autocorrelation found in the analyzed sample. The estimated final model combines groupwise heterocedasticity, the identification of two spatial regimes and spatial dependence. Our results show how an appropriate consideration of the role of spatial effects can shed new insights into the European convergence process. We find that regions in the EU cohesion-fund countries (Ireland, Greece, Portugal and Spain) are converging separately from the rest of regions of the EU. Our estimations indicate that over the analyzed period, there was a faster conditional convergence in relative income levels of the regions belonging to Cohesion countries (5.3%) than in the rest of the regions of the EU (3.3%). Therefore, our results contrast with other evidence that points to the fact that the convergence process in Europe has weakened or even has stopped at the beginning of the 1980s. Moreover, our work shows clear evidence of separate spatial convergence clubs among EU regions.

Is Ireland a Role Model for SME Development in the New EU Member States?

Beyond their many differences, the similarity of economic situations between Ireland in the early 1970s and the small new member states today invites research as to whether Ireland is a useful case study with regard to small and medium–size enterprise development. Positioned in the wider current debate on the factors that cause growth, as epitomised for example by the Sapir Report, this work is timely given that in less than three decades, the Irish economic outlook has improved from that of one of the four cohesion countries of the EU to earning the accolade of ‘celtic tiger’ during the 1990s. This article explores the following questions: are all the ingredients of the Irish experience for SME development present in the NMS? What lessons can be learned? What are the similarities and contrasts between SMEs in Ireland and in the NMS? As well as highlighting the existence of similarities, it is argued that advantages exist in the NMS which were absent when Ireland joined the then Common Market in 1973.

Indicators for the Assessment of Member States' GHG Emission Trends and Burden Sharing Commitments: The Cohesion Countries

Do Member States (MS) show clear signs that they are abating their GHG emissions? In view of recent trends in emissions, are the Burden Sharing Agreement targets too ambitious for the MS and, particularly, for the cohesion countries? Would this provide an argument for the revision of these targets? This paper tries to answer these questions, which have been asked in Europe at both the policy and academic level. It proposes and develops a set of indicators and applies them to the EU context, assessing the likely trends in GHG emissions in Europe. The main conclusion is that the cohesion countries should not ask for a renegotiation of targets. Their emissions have increased beyond their economic growth patterns because of the weak implementation of both institutional and technological measures aimed at GHG mitigation.

An Analysis of the Economic Convergence Process in the Transition Countries

The paper is analysing the process of economic convergence of transition countries during the period 1995-2004. Within the analysed period unconditional B-convergence across the transition economies existed. We could also discover the reduction of dispersion of income levels between accession countries (sigma-convergence). Comparative analyses of the new EU member states (NMS) economic convergence with the previous entrants into EU (Ireland, Greece, Spain, and Portugal) revealed that NMS have been much more successful in their convergence process before joining EU. Analyses of the macroeconomic, human capital, infrastructure indicators of the current accession countries compared with the previous cohesion countries indicated that the new members have been much better prepared to the enlargement. This allows drawing conclusion that the NMS face an opportunity to obtain much more rapid convergence process than expected by previous analyses, which have seriously undervalued the positive role of the pre-accession harmonisation process of NMS with the implementation of the major economic reforms in order to guarantee macroeconomic stability.