Developed European Economies Research Articles

On influencing factors for Sustainable Development goal prioritisation in the automotive industry

Sustainability has become a key corporate strategy inspiring companies to implement the 17 Sustainable Development Goals (SDGs) in accordance with the 2030 Agenda for Sustainable Development proposed by the UN. Although studies do examine the SDG priorities, to our knowledge, the main factors that influence the prioritisation of the SDG remain hazy. We identify the SDG priorities in the automotive industry worldwide and from the point of view of the geographic, cultural, social, and economic specifics of the countries in which these companies operate. The automotive industry is a good subject of analyses because it is a pillar of the global economy and a main driver of macroeconomic growth, stability, and technological prosperity. We accordingly employ frequency analysis and the PROMETHEE multi-criteria decision-making method. The PROMETHEE method not only prioritises researched groups, but also the dependencies between the evaluating criteria and profiles of the groups’ performance. Frequency analysis showed that SDG 8 ’Decent work and economic growth’ was adopted by 81% of companies, followed by 3 ’Good health and well-being’, 5 ’Gender equality’, 12 ’Responsible consumption and production’, 13 ’Climate action’, and 4 ’Quality education’, which had similar frequencies. Overall, these six SDGs were adopted by at least 66% of companies. However, the PROMETHEE analysis confirms that SDG priorities are highly dependent on the continent and country’s basic economic performance. Companies from developed Asian economies and developing African economies have significantly different SDG priorities than the rest of the world. We also identified similarities between the developing American and developed European economies, the developing economies of America and Asia, the developed economies of America and Europe, and developing Asian and developed European economies. These findings may be particularly important for practice (managers, professional associations, investors, shareholders, and other stakeholders) and policy (policymakers, regulatory bodies, and sustainability initiatives).

Dialectic of Russia’s war in Ukraine: between geopolitics and energy welfare

Russia’s invasion of Ukraine has clearly shown how fragile the global geopolitical order is, in particular regarding the energy and food systems. International media picture a human tragedy of war intertwined with discussions of food and energy security. In addition, subjective fears of a decline in the quality of life and consumer welfare in developed European economies are voiced. The article aims to describe this specific dialectic related to the war as it reaches beyond warfare itself and increasingly affect the social welfare of European countries. Results of surveys conducted in ten European countries confirm the dominance of respondents’ concerns for their own socio-economic situation and their desire to end the war as soon as possible, even at the expense of Ukrainian concessions to Russia. These social attitudes are decisive when it comes to whether the Ukrainians may further be supported or not. Moreover, these sentiments must be taken into account by those in power in individual European countries. Ultimately, such attitudes may exert the pressure that could contribute to ending the war.

WHAT DETERMINES THE APPLICATION OF IFRS 3 IN ACCOUNTING FOR GOODWILL?

Accounting treatment of goodwill is often described as one of the most complex and controversial topics in the field of financial reporting, so it is of primary interest to examine the factors that affect application of IFRS 3 in Serbia given the low quality of financial reporting in developing countries to which Serbia belongs. Paper results show low quality of financial reporting on domestic business combinations which is an indicator to professional and regulatory bodies that there is significant room for improvement in this field. Research findings also show that: type of audit firm, the country of origin in which ultimate owner of an acquirer operates, legal form of an acquirer and finally transaction size play an important role in determining whether an acquirer will apply IFRS 3 when it comes to accounting for goodwill. Besides that paper reveals that materiality of goodwill is of significantly lower magnitude in domestic transactions than in transactions realized in developed European economies, but that the average percentage of consideration transferred allocated to goodwill is almost identical which implies that on average domestic and European M&As are equally motivated by the acquisition of goodwill as of the acquisition of identifiable net assets.

Bulgaria in the Eurozone – Other Countries’ Experience and Comparisons

On July 10 2020 Bulgaria joined the preparatory mechanism for the Eurozone ERM II, but the opinions expressed are still divided. The author’s opinion is that in the debate for or against Bulgaria joining the Eurozone, the actual data provides the strongest arguments. Economic indicators and facts about five former socialist countries that are already in the Eurozone are presented in the paper. There are solid arguments in favor of joining in the analysis of the three Baltic countries – Estonia, Latvia and Lithuania, as well as Slovenia and Slovakia. These countries’ development as part of the monetary union and their economic indicators after this important step show their goal for real convergence with developed European economies. The author accepts two issues as especially important – what happens to inflation in these economies after joining the Eurozone and what the comparison concerning real convergence shows. Croatia, along with Bulgaria, has become a part of ERM II and the Banking Union, hence why it is also included in the analysis.

Easterlin paradox revisited: Do increases in income bring higher levels of income satisfaction?

In this paper, we examine the relationship between income and income satisfaction in the pool of developed European economies, for the period between 2002 and 2018. Although the nexus between income and most subjective well-being indicators is frequently investigated in prior studies, the research investigating the relationship between income and income satisfaction over time is non-existing. We find that during the observed period real disposable household income significantly increased, while the satisfaction with household income remained constant. Furthermore, the analysis within hierarchical linear modeling shows that while between-country variations in income affect income satisfaction, this is not the case for income variations over time. Our findings support the notion of the Easterlin paradox, which indicates that in the long-run increases in income do not lead to higher levels of well-being. Explanations for such results may be found in the social comparison theory, hedonic adaptation theory and aspiration level theory: increasing income does not bring positive effects on income satisfaction due to relevance of the relative and not the absolute income, adaptation to income changes, or higher levels of aspirations resulting from income rise.

Impact of ICT development on economic growth. A study of OECD European union countries

Most of the scientific literature recognizes a positive impact of Information and Communication Technologies (ICT) on economic growth. In contrast, different investigations suggest that this impact is limited or even null, that is, there are mixed results.In view of this problem, we conducted a study whose objective is to analyse the impact of ICT on economic growth.To address the study, we apply Partial Least Squares (PLS), using the databases of Digital Economy and Society Index (DESI) and the Organisation for Economic Co-operation and Development (OECD), which allowed us to analyse those European Economic Community countries, members of the OECD, in order to reduce the differences in economic development between the countries analysed. As far as we know, this is the only work that studies the relationship between ICT and economic growth by measuring ICT with the Digital Economy and Society Index database (DESI), in European Union countries that belong to the OECD and that apply the PLS-SEM technique.Based on the empirical results, the paper suggests that progress in the deployment and use of ICT drives the economic growth of countries that are within the framework of developed European economies.

An Evaluation of the Predictive Capabilities of the Yield Curve in India

This paper proposes an evaluative study of the predictive capabilities of the yield spread on economic performance in India. While literature on the subject is vast, studies so far have centered primarily on the U.S. and other developed European economies. In line with previous literature, we choose the spread between the 3-month and 10-year treasury bonds to conduct our analysis, using data from the beginning of 1995 till the end of 2019. We use the probit model to check whether curve inversions predict recessions within the country, finding the spread to be a significant determinant either immediately or 2-quarters ahead. However, in terms of predicting economic performance, the spread shows much weaker capabilities, containing minimal information on changes in real GDP, inflation rates or industrial production. With the yield curve being an easy to track monetary policy indicator, proving its forecasting potential should prove an aid to policymakers and sheds light on the importance of monetary policy for developing countries, establishing the need for further academic research on the subject in the developing and underdeveloped countries of the global east.

Structural Panel Bayesian VAR Model to Deal with Model Misspecification and Unobserved Heterogeneity Problems

This paper provides an overview of a time-varying Structural Panel Bayesian Vector Autoregression model that deals with model misspecification and unobserved heterogeneity problems in applied macroeconomic analyses when studying time-varying relationships and dynamic interdependencies among countries and variables. I discuss what its distinctive features are, what it is used for, and how it can be analytically derived. I also describe how it is estimated and how structural spillovers and shock identification are performed. The model is empirically applied to a set of developed European economies to illustrate the functioning and the ability of the model. The paper also discusses more recent studies that have used multivariate dynamic macro-panels to evaluate idiosyncratic business cycles, policy-making, and spillover effects among different sectors and countries.

From Refugees to Trans-local Entrepreneurs: Crossing the Borders between Formal Institutions and Informal Practices in Bosnia and Herzegovina

Abstract This article focuses on the former war refugees, who (partly) returned to their homeland Bosnia and Herzegovina and became significant investors in their local communities. We are particularly interested in their experiences with manoeuvring between different countries and institutional environments, as these refugee entrepreneurs are running their businesses simultaneously in developed European economies (Switzerland and Sweden) and in their home country. Although the two companies run by the former refugees described in the article are located in the areas that remain divided along the ethnic lines caused by the war (Srebrenica and Banja Luka), we find that the post-war returnees’ businesses are ethnically tolerant and inclusive, sending a powerful message to the formal institutions, which often act in the opposite way.

The impact of economic growth on pollution in developed European countries

In this paper, we empirically investigate the impact of economic growth on environmental degradation in developed European economies during the period of study from 1985 to 2015. For the econometric methodology, we utilise the Cobb-Douglas production function. From the cointegration tests of Kao and Fisher, we confirm the existence of a cointegration relationship between the economic growth and pollution. Also, we confirm the hypothesis of basic CEK which assumes the presence of a bidirectional relationship between economic growth and CO2 emissions in developed European countries during the period of study (1985–2015). In addition, we find that there is a two-way causal relationship among energy consumption and pollution in developed European countries.

The Dark Side of the Labour Market: Institutional Change, Economic Crisis and Undeclared Work in Greece during the Crisis

Recent scholarly work has shifted its attention from the prevalence of the shadow economy in less developed country contexts, towards an examination of the incidence of undeclared work within developed European economies. However, little is known about the interaction between institutional changes and their interplay with the informal sector of the labor market. This study attempts a first empirical examination of the incidence and prevalence of undeclared work in the case of Greece during the economic recession. It unpacks the different manifestations of this phenomenon, namely, the under-declaration of employment, the false declaration of employment and the non-payment of wages or salaries. It is argued that the state and civil morality framework as well as the changing power dynamics in the labor market can help explain to a large extent the prevalence and proliferation of undeclared work during the crisis.

The Impact of Economic Growth on Pollution in Developed European Countries

In our study, we empirically examine the influence of economic growth on environmental degradation in the developed European economies through the period of study beginning in 1985 to 2015. For the econometric methodology, we employ the Cobb-Douglas production function. From the tests of cointegration (Kao and Fisher tests), we corroborate the existence of a cointegration nexus among the economic growth and pollution. Also, we confirm the hypothesis of basic EKC which assumes the existence of a bidirectional relationship between economic growth and emissions of CO2 in developed European countries during the period of study (1985-2015). In addition, we conclude that there is a two-way causal nexus among energy consumption and pollution in developed European countries.

The review of health system of the Kingdom of Denmark and United Kingdom

The paper deals with the functioning and development of national health systems in the Kingdom of Denmark, which is a very stable member of the European Union (EU) and United Kingdom, regardless of its recent outbreak (Brexit) from a large European family. The main goal is to make a review of the necessity of creation of professional health personnel, their mobility, financing of business processes and medical procedures, and also on general problems that the health systems are facing every day. As these are highly developed European economies, it is known that the creators of their health policies are continuously working on the improvement of health systems, ensuring adequate health care and raising and maintaining a high level of collective health for the population. Lately, in these kingdoms, many people believe that for the proper functioning of health sector in general, the way of obtaining of necessary financial resources, their amounts and sustainability of the sources have no big importance, while as far more significant emerge the influences of globalization processes which like hurricane destroy systems (insufficient professional staff) without legal and economic-medical arrangements. Given that the authors are not fully in agreement with this statement, they pledge to the invited authorities to pay more attention on the policy of financing, human capital, its improvement and elimination of health inequality, especially in the field of primary health care.

INNOVATION CAPABILITIES IN EU COUNTRIES: HAVE CENTRAL AND EASTERN EUROPEAN COUNTRIES BEEN CATCHING UP?

The paper answers two questions: which innovation capabilities most strongly differentiate CEECs and highly developed European economies and to what extent CEECs’ performance within each of the innovation capabilities has changed over a decade. The research method is based on construction of composite indicators describing national performance within five innovation capabilities in two periods: 1998–2000 and 2010–2012 as well as regression analysis in order to test the accuracy of the main findings. The study has allowed to arrive at a conclusion that CEECs have been able to catch up to highly developed European economies with respect to absorptive capacity related to the existence and use of technological infrastructure as well as participation in inward technology transfer in the form of FDI and capital goods imports. There is, however, a lingering performance gap in new knowledge and innovation creation capabilities and R&D effort. Continuation of this trend and lack of considerable improvement also in terms of absorptive capacity related to the quality of human resources might result in CEECs’ permanent inability to catch up to their highly developed European counterparts.

Trade implications of the Euro in EMU countries: a panel gravity analysis

In this paper, we study the intra-EMU and intra-Eurozone trade effects of the euro adoption on 29 European Economic and Monetary Union countries (including 17 Eurozone economies and Iceland) from the period 1994 through 2011. We employ a generalized gravity model that controls for an extended set of trade theory and policy variables. The gravity model is estimated using the robust panel data techniques that includes times effects, besides country-specific effects. The various econometric specifications of the gravity equation, on the whole dataset of 29 economies, yield positive and significant impact (to be around 14 %) of the euro currency adoption on bilateral trade flows. Next, euro effect on bilateral trade and exports on a smaller dataset is estimated. The estimated results suggest that bilateral trade and exports increase by 20.81 and 18.57 %, respectively, when both the countries belong to the Eurozone. This effect is larger than the one obtained when only one of the two trading partners uses the euro as its currency. In addition, the validity of the assumptions of Heckscher–Ohlin (H–O) theory are checked for the countries under study. The estimated results reject the H–O theory in favor of Modern Trade theories. However, the low value of the coefficient on respective variable suggests that, over the period, the type of trade among these countries has transited from inter-industry trade to horizontal intra-industry trade. This suggests that these developed European economies are on the path of economic convergence via intra-industry trade.

Income convergence in the process of the Western Balkan states' accession to the European Union

One of the main expectations in European transition economies is that the processes of building the market economy and European integrations lead to a significant increase in the living standard, as well as to catching up with the level of the income per capita achieved in developed European economies. A quarter century after the beginning of transition, many of the former socialist countries joined the EU and significantly increased their GDP per capita. On the other hand, transition in the countries of the so-called Western Balkans has disappointed in this sense. The paper tests the existence and speed of income convergence in the Western Balkan states and developed EU countries, in comparison with the so-called 'New Member States'. The results indicate that, despite the achieved income convergence in the pre-crisis years, the outbreak of the global economic crisis has revealed many structural and reform problems that the countries of the region have been facing for a long time. Catching up with developed EU members' average GDP per capita stopped in the Western Balkan states after the beginning of the crisis, with a simultaneous increase in the income gap between the Western Balkan states and the new EU member states.

Service sector statistics in India: problems and way forward

Purpose – It has been observed in various studies that the “servicization” of the structures of production and employment has taken place in India. However, a problem peculiar to this sector or several types of services is that the output of some components of this sector is difficult to measure as well as to value it in monetary terms. The purpose of this paper is to identify the problems encountered in the measurement of service sector output. Design/methodology/approach – The paper makes use of secondary sources of data including various reports, books and journals, etc. An attempt has been made in this paper to review those studies which deal with measurement problems in services sector output. Findings – In the Indian context, it has been found that the data base on the service sector is highly disorganized. It has been recognized in studies that the limitation of the existing system is marred by the absence of a well-organized mechanism for maintaining a regular and proper database for this sector. A large number of the unorganized units are located in the service sector and the composition of units in the domain undergoes changes at a rapid pace because new units or newer service areas come into existence and others disappear with alarming frequency. Therefore, the need for “devising a proper classification of services” by identifying all new services and adopting a suitable methodology so as to maintain international comparability of data has been highlighted in various studies. Originality/value – Although there are studies which try to point out measurability problems of services in developed European economies, however, studies related to service sector statistics problems in India are far less in number. This paper will therefore mainly focus on the service sector statistics problems in India and point out the way forward.

What are the Indications of the Comparative Analysis between SME Economy in Croatia and in Germany?

Small economy, well known as S&M, is important part of every national economy. Around 60% to 70% of total employment is employees in S&M in all European countries. S&M is key factor of social and national economic stability. That is why developed countries take special attention to S&M.Companies what belong to S&M from developed European countries attempt to be included in global business trends, for example they are included in export-import businesses outside of Europe and their portion in these kinds of businesses are 10%. Countries in transition are just trying to manage development of S&M, it means development of S&M is happening spontaneously. Transition from central planning economy to market economy has been paid with lower quality of development for S&M. Export-import businesses where are included S&M companies from countries in transition are linked only for neighboring countries and there is almost no any intercontinental businesses.The world financial crises are much deeper than what was expected, because there is no ideas how to solve these financial problems. The biggest corporations in the world are not prepared to solve social and economic problems in national economies. That is why S&M is getting more important role in global economic stability. Further to economic crises the role of government in national economy has been replaced by regional and local economies. It means S&M companies are together with local areas become factor of development for sustainable economic development and manage this development.Comparative analyses of S&M in developed European countries and European countries in transition for the first level of analysis, showed high level of similarity for strategic positioning of S&M in national economies. Analysis of basic factors for development, apropos characteristics of factors for development showed important differences between developed European countries and European countries in transition. What kind of unfavorable specificities of S&M for countries in economic transition making influence? On what way is possible to contribute for development of S&M for countries in transition? What has to be the role of government for development of S&M for economies in transition, compare to developed European economies? How to link S&M from developed European economies with economies in transition? These basic questions will be answered in this analysis and in the same time will join to requirements for incentive development of S&M and eliminate key differences between S&M in developed European economies and European economiesin transition.

Monetary Policy Transmission Mechanism in Poland - What Do We Know in 2011?

In the light of the results of empirical studies presented in the Report and the literature available it may be concluded that the form of the monetary policy transmission mechanism in Poland is consistent with structural features of the Polish economy and coincides with those characteristic of more developed European economies, e.g. the euro area. Although the financial intermediation system is less developed than in the euro area, Poland, like the new EU Member States is characterised by a lower degree of rigidity and more frequent price adjustments (as a result of a relatively higher and more volatile inflation), due to which there exist no grounds for stating that the transmission mechanism is weaker in these countries than in the euro area countries. The characteristics of the monetary policy transmission mechanism in Poland, which changed considerably in the transition period along with the development of the financial system and changes in the monetary policy, displayed symptoms of stabilisation in 2004/2005-2007. Poland’s accession to the European Union, resulting in a major reduction of macroeconomic uncertainty, was one of the factors that contributed to this process. The monetary policy transmission mechanism was, however, disturbed by the financial crisis. Its impact on the transmission mechanism remains strong, which is demonstrated notably by the analysis of the effectiveness of transmission mechanism channels.

Two Deficits and Economic Growth: Case of CEE Countries in Transition

The main goal of this contribution was to provide evidence on the dynamic interdependencies between economic growth and budget and trade deficits in ten new EU members in transition in the last decade. It is worth to note, that besides establishing directions of causal relationships this paper also derived some suggestions on signs of the dynamic dependencies analyzed. Outcomes of this paper confirmed that the budget deficits were significantly slowing down the GDP growth rates in case of new EU-members in transition. In addition, these deficits had negative impact on the convergence process of examined countries towards the highly developed European economies. The evidence supporting adverse causality was considerably weaker. The empirical results allow to claim that in the period under study there was a unidirectional negative Granger causality from budget deficits to trade deficits. Therefore, in case of CEE economies in transition the twin deficit hypothesis was not the case.