Macroeconomic Difficulties Research Articles

Стабильность условий предоставления налоговых льгот как принципиальная основа режима инвестиционной деятельности в Российской Федерации

This paper covers aspects of the legal nature of stabilisation with regard to investment tax incentives. The relevance of the research is related both to the current macroeconomic difficulties and the corresponding need to encourage investment activity, and to the latest trends in jurisprudence and lawmaking. This article will examine the effect of the tax “stabilisation clause” in the use of investment tax incentives. The article will substantiate the thesis that stabilisation applies to any investment incentive due to the fact that the invariability of investor support measures follows from the constitutional regulation of the operation of law over time. It will also define the content of a legitimate reasonable expectation, which is ensured through the stability of tax benefits.

The Situation of CEE Economies after the COVID-19 Crisis

Abstract Written in late summer of 2022, this article aimed to provide an overview on the intra-EU cohesion of the EU Member States that transformed the communist system into a democratic market economy in 1988–90. The study analyses the economic background of these states for sustainable catching-up in the European Union. The result is a picture of a divided CEE area, where some states showed macroeconomic imbalances and economic growth, while others started to catch up with the solid background of the eurozone membership or its future perspective. In terms of most parameters, Hungary is in the first group but – together with Romania – is also facing serious macroeconomic difficulties.

АНАЛИЗ УРОВНЯ И ДИНАМИКИ ПРОИЗВОДИТЕЛЬНОСТИ ТРУДА МЕТАЛЛУРГИЧЕСКИХ ПРЕДПРИЯТИЙ

The metallurgical industry is the most important component of the Russian economy. The activities of the companies that represent it are aimed at increasing labor productivity through the effective use of various factors. However, the increasing complexity of international competition, macroeconomic difficulties in the development of the domestic market and recent changes stimulate metallurgical enterprises to solve the problems of labor productivity growth through an intensive growth model. The aim of the work was to study the level of labor productivity of metallurgical companies, its factor-by-factor analysis to understand the dynamics of change and management prospects. The results of the study showed that the observed growth in labor productivity in metallurgical production in 2017-2018 mainly due to an increase in the use of resource factors, and primarily due to an increase in the capital-labor ratio, which is explained by the need to develop an outdated material and technical base of the metallurgical complex. At the same time, the trend of transition to an intensive growth path that emerged in 2019, due to the intensification of the use of interfactor productivity elements, whose contribution to productivity growth reached almost 40% during this period, was leveled out by the crisis phenomena caused by the spread of COVID-19.

Diversification of the economy in the context of globalization (case of Azerbaijan)

Research background:Azerbaijan, as a country with rich mineral resources, faces macroeconomic difficulties due to income instability. In 2011-2013, during the period of high world oil prices, Azerbaijan began to diversify the economy and develop the non-oil sector at the expense of oil and gas export revenues. The need to diversify the economy and export has become especially important in the conditions of increased global competition and the integration of the national economy into the world economy.Purpose of the article:The aim of the issue is assessment and study the characteristics of diversification of the economy of Azerbaijan, analyze the dependence of the country’s economic development on the degree of diversification of its economy and exports, assess the level of economic diversification of the country.Methods:To measure the level of diversification, we used indicators such as Herfindahl-Hirschmann export diversification index, and industry concentration in GDP. The originality and value of the research lies in revelation a number of indicators specific to the Azerbaijani economy that affect economic growth based on correlation-regression analysis and other econometric methods. According to econometric characteristics, the resulting model is adequate and confirms the empirical findingsFindings & Value added: The results of the study showed that deeper diversification of the economy is required. To overcome oil dependence and conduct effective economic diversification, it is necessary to develop processing industries, expand the accessibility of small and medium enterprises to financial resources, and stimulate foreign investment in the non-oil sector.

Covid-19 outbreak and the need for rice self-sufficiency in West Africa.

In the decade since the 2008 global food crisis, West African countries have made efforts to raise domestic rice production and to make the region self-sufficient. Today, West Africa produces nearly two-thirds of Africa’s rice. The region’s rice import dependency has fallen from nearly half of local consumption in 2010 to about 30%. In spite of this improvement, the region remains the world’s second largest rice importer. The situation of Benin, Burkina Fasso, Gambia and Niger remains challenging with rice import dependency still exceeding 70%. Production in some countries has fallen even below the 2010 level due to civil strife, climatic changes and macroeconomic difficulties. Countries of the region, on average, allocate less than 5% of their budget to agriculture, less than half the share committed in the Maputo Agreement. The Covid-19 outbreak and corresponding preventive lockdowns have posed a new challenge as food supply chains were stretched; production, transportation and consumption fell sharply; and household income was affected. In addition, closure of frontiers and temporary trade disruption in major Asian rice exporters has led to increase in rice prices in the international market. In late April, rice futures rose to reach a level not surpassed since 2011. This threatens to further aggravate an already fragile food security situation in the region. The crisis again points to the need for greater efforts at the national and international level to achieve food security. West African countries will need to enhance public spending on agriculture with a greater focus on measures aimed at improving rice productivity.

Nova falha jurídica e falhas económicas do Tribunal Constitucional colombiano

It is undeniable that the Constitutional Court has issued numerous sentences of advanced during its existence. However, his work is not so commendable in economic matters. Indeed, citing noble purposes but with a wrong or non-existent technical analysis, the Constitutional Court has recently issued rulings with harmful economic effects. This article shows some examples of such failures, indicating why these generate macroeconomic difficulties or, alternatively, cause microeconomic distortions in certain markets. This article also analyzes the reasons that motivate these economic failures to finally propose some courses of action to avoid these errors.

Análise de mercado e nível de concentração da indústria de papel tissue no Brasil

O objetivo dessa pesquisa foi avaliar o nível de concentração do mercado brasileiro de papéis tissue e analisar seus reflexos em termos de desempenho relativo por linha de produto. Papéis tissue, ou papéis sanitários, compõem um segmento que abrange a produção de uma linha bastante variada de produtos, incluindo desde papel higiênico, papel toalha até fraldas e lenços para bebês, cujas características mais aparentes são maciez e textura aveludada, constituindo-se em um nicho de mercado diferenciado. A participação do segmento tissue na produção total de papéis no Brasil tem apresentado crescimento constante nos últimos anos, e estudos prospectivos do setor indicam que esse indicador deve se manter acima de 4% ao ano até 2020. A pesquisa foi exploratória e descritiva, com abordagem mista, sendo parte qualitativa, com a abordagem do método interpretativo Estrutura-Conduta-Desempenho (ECD), e parte quantitativa, com o cálculo dos índices de concentração de mercado, e a estratificação da linha de produtos. De forma geral, os resultados mostraram que o segmento apresenta uma estrutura industrial de baixa concentração de mercado, tendência que tem se consolidado nos últimos anos. Através dos resultados foi possível concluir que devido à forte concorrência no segmento, com diferenciação de itens por linha de produtos, o mix de tecnologias de processo, e o foco em eficiência operacional e na redução de custos, condicionam os padrões de conduta e as estratégias de produção, o que permitiu a introdução de novos produtos, de melhor qualidade, sem que houvesse aumentos de preços significativos. Essa configuração de fatores é a característica mais importante para sustentar a tendência de crescimento desse segmento industrial.

The “Hierarchy of Institutions” reconsidered: Monetary policy and its effect on the rule of law in interwar Poland

Traditional wisdom in economics holds that institutional change runs from political institutions to economic ones, with the distribution of political power affecting the creation of property rights and rule of law. This hierarchy of institutions has been observed in macroeconomic policy, where it has long been understood that there are political incentives for economic mismanagement, namely the creation of inflation. But are there longer-term effects of currency manipulation on the rule of law in a country? That is, does the hierarchy not always hold? This paper answers this question by focusing on a specific case of monetary instability, the newly-independent Second Polish Republic of 1918 to 1939. Using appropriate econometric techniques on a new database of historical data, I find that monetary profligacy correlates strongly with significantly lower levels of the rule of law. This result is robust to several tests and most specifications, including the use of a new variable for measuring access to the political system. The results suggest that monetary instability is a threat to political institutions in its own right, eroding the rule of law in addition to creating macroeconomic difficulties.

The role of economic perceptions in influencing views on climate change: an experimental analysis with British respondents

ABSTRACTExisting analysis suggests that individuals may reduce their concern for and belief in climate change as a result of macro-economic difficulties. Such conclusions are predominantly based on repeated cross-sectional and pooled data making it difficult to separate out the effects of economic conditions from other explanatory factors. Approaching this question through experimentally priming individuals to feel a certain way about the economy has also proven difficult due to economic perceptions being difficult to alter in a survey setting [Kachi, Bernauer, & Gampfer, 2015. Climate policy in hard times: Are the pessimists right? Ecological Economics, 114, 227–241]. This article thus investigates a related question on the effect of the salience of economic perceptions on climate change views using an online question-order experiment, whereby salience denotes the prominence of the issue in the mind of the respondent. Respondents were randomly assigned to receiving an economic prompting question before or after being asked about their climate change views. The results show no effect of the prompting on belief in anthropogenic climate change, but they do show an effect of prompting on prioritization of taking urgent action to address climate change. Those with a non-positive view of the economy were less likely to support urgent action in comparison to those who considered the economy to be performing well if they were asked first about their economic evaluations. The salience of economic evaluations and the direction of such evaluations would not be significant if economic evaluations themselves were not important, and thus the findings also reveal that economic evaluations do matter.Key policy insightsBelief in anthropogenic climate change is not affected by the salience of economic perceptions.Support for taking urgent action to implement policies to address climate change is impacted by the salience of macro-economic perceptions, with respondents who have their non-positive economic perceptions brought to the forefront of their minds displaying reduced support for urgent action.Policies that aim to tackle climate change are more likely to have bottom-up support from the public during periods when the economy is perceived to be prosperous.

Drivers of Populism: A Four-country Comparison of Party Communication in the Run-up to the 2014 European Parliament Elections

The aim of this article is to analyse what different types of populist communication styles emerged during the 2014 European Parliament election campaign and under which conditions political parties selected specific populist communication styles. To do this, a comparative quantitative content analysis of press releases in the run-up of the latest European Parliament elections has been conducted for parties in France, Germany, Austria and Greece. The article presents a definition of populism based on the contemporary academic discourse, which focuses on the transnational nature of the European political field. It is shown that populist party communication is more pronounced on the fringes of the political spectrum and in countries struggling with severe macroeconomic difficulties. Contrary to intuitive expectations, the perceived populist rhetoric of exclusivity in the context of the European sovereign debt crisis, which is identified as a central feature of right-wing populism, barely takes place within populist party communication.

Transfer Provisions of BITs in Times of Financial Crises

This article discusses the provisions on investment-related transfers, which are routinely included in International Investment Agreements (IIAs) and Bilateral Investment Treaties (BITs). Under many transfer provisions the right of investors to transfer funds related to covered investments is apparently not subject to any explicit limitation. The article discusses the problems connected with the absence in many BITs of explicit derogations to the permitted transfers, and temporary exceptions to such transfers in case of balance of payments or macroeconomic difficulties. After having analysed the scarce case law on the matter, the article highlights the cautious approach, taken (at least until now) by arbitral tribunals in interpreting transfer provisions. Finally the article illustrates the growing trend in the international treaty practice towards the inclusion of transfer provisions, accompanied with safeguard provisions in case of serious balance-of-payments difficulties and external financial difficulties.

TRANSFER PROVISIONS OF BITS IN TIMES OF FINANCIAL CRISIS

This article discusses the provisions on investment-related transfers, which are routinely included in International Investment Agreements (IIAs) and Bilateral Investment Treaties (BITs). Under these transfer provisions the right of investors to transfer funds related to covered investments is apparently not subject to any explicit limitation. The article discusses the problems connected with the absence in many BITs of explicit derogations to the permitted transfers, and temporary exceptions to such transfers in case of balance of payments or macroeconomic difficulties. After having analysed the scarce case law on the matter, the article highlights the cautious approach, taken (at least until now) by arbitral tribunals in interpreting transfer provisions. Finally the article illustrates the growing trend in the international treaty practice towards the inclusion of transfer provisions, accompanied with safeguard provisions in case of serious balance-of-payments difficulties and external financial difficulties.

Demographic Influences on Saving-Investment Balances in Developing and Developed Economies

This paper studies demographic differences between lower-income, less developed countries (the South) and higher-income developed countries (the North). It analyzes the implications of heterogeneous demographic evolutions for aggregate saving-investment imbalances, exchange rates, and the resulting net capital flows between North and South. An optimistic perspective suggests that the North can run a current-account surplus sizable in relation to the Northern economy, thereby transferring large net amounts of financial capital to the South. This paper argues that an optimistic perspective is a plausible characterization of demographic influences on North-South capital flows in the historical period between 1950 and the mid-1970s. For historical decades after the 1970s and for the initial decades of the 21st century, however, a less optimistic perspective is appropriate. Demographic forces considered by themselves are likely to diminish rather than augment the flow of Northern saving to the South as a fraction of the Southern economy. The fundamental causes of these effects are shifts in relative demographics between the South and the North. The qualitative conclusion holds regardless of whether the demographic transition in Southern economies is somewhat faster and sooner or somewhat slower and delayed, regardless of whether growth in Southern total factor productivity is vigorous or weak, and regardless of whether cross-border goods substitutability is modest or strong. Public policy concerned with demographic trends in higher-income Northern nations should recognize that demographic asymmetries with lower-income Southern economies are unlikely, by themselves, to ease resolution of Northern macroeconomic difficulties caused by population aging.

Varieties of Capitalism: Production and Market Relations in the USA and Japan

During the 1980s, Japan’s macroeconomic strength encouraged widespread interest in the competitive advantages associated with its organizationorientated micro-level institutions. However, with Japan’s more recent macroeconomic difficulties and prolonged stagnation, and in the light of America’s relative success, pressure for institutional reform in the direction of the American model is mounting. Liberalization of trade and capital movements has contributed to increasing economic interdependence and integration of the world’s advanced nations. Customers and investors in Japan and the USA alike are demanding that firms be increasingly responsive to changes in technologies and market requirements and that they deliver consistently high quality products and services at low prices. At the same time, the increase in foreign equity investment in Japan means that, like their American counterparts, Japanese firms are being urged to prioritize shareholder interests, deliver continuous improvement in short-term financial results and be transparent in their reporting. However, despite very similar pressures to those faced by American firms, Japan is evolving incrementally and developing a hybrid system that continues to maintain its emphasis on a resource-based approach to productive system effectiveness and organizational competitiveness. Focusing on the contrasting cases of Japan and the USA, The Embedded Corporation: Corporate Governance and Employment Relations in Japan and the United States describes developments in corporate governance and human resource management (HRM) — analysing the influence of globalization, shifts in macroeconomic performance and declining union strength on employment practices, the strategic role of HRM and the professional status of the HR executive in this context. Traditionally, Japanese firms have been what Jacoby describes as ‘organisation oriented’ while American firms have been more ‘market oriented’. This is reflected in the dominant features of their respective systems of corporate governance and work organization, where despite movement towards the American model, the Japanese system

Fiscal Straitjacket: The Politics of Macroeconomic Reform in Brazil, 1995–2002

Brazil's President Fernando Henrique Cardoso will be remembered for his administration's accomplishments as well as the problems his government left unresolved. On the one hand, fiscal policy represents one of Cardoso's success stories: the Plano Real curbed inflation, established economic stability, and enabled the central government to rein in subnational governments' out-of-control spending patterns, which had been a key source of macroeconomic instability. However, the question remains whether Brazil can truly escape from the political and economic consequences of past fiscal profligacy. Despite many successes, Cardoso's own policies have created additional obstacles that future administrations will necessarily confront, in particular a dramatic increase in Brazil's internal debt. Observers of Brazil should count both sides of the accounting ledger when evaluating the Cardoso administration. Much has been gained, but the costs of those gains must be recognised and the impact of those gains on the range of policy choice available to future administrations understood. This article explores the factors that contributed to Brazil's macroeconomic difficulties prior to 1995, and then explores how the Plano Real provided the Cardoso administration with leverage to constrain the capacity of subnational actors to affect Brazil's economy. Subsequently, however, the paper describes how the Cardoso administration's policies have created Brazil's current ‘fiscal straitjacket’, and concludes by discussing how Cardoso's policies will constrain future administrations.

A economia política da reforma macroeconômica no Brasil, 1995-2002

This article examines the successes and limits of the macroeconomic and fiscal reforms under the Fernando Henrique Cardoso Administration in Brazil. The author begins by studying factors that contributed to macroeconomic difficulties prior to 1995, then proceeds to examine how the Real Plan enabled the Cardoso Administration to control interference by State Governors in the national economy. The article then describes how former President Cardoso's policies generated the current ''fiscal straitjacket'' in Brazil, and concludes by discussing how the Cardoso government's legacy may continue to constrain action by future Brazilian Administrations.

Japan's slow-down: monetary versus real explanations

Two kinds of view about the recent stagnation of the Japanese economy have been particularly popular. The first adopts a perspective, arguing that Japan has fallen into a liquidity trap from which only unconventional monetary policy can save it. The second maintains that a large part of Japan's macroeconomic difficulties is structural and related to problems in the side of the economy. We argue here that it is hard to justify a neat division between these real and monetary problems. Declining expectations of future productivity may have depressed real interest rates and reduced monetary policy flexibility, but they are also likely to have prompted real responses that have contributed to stagnation. In the long run, the conclusions of the two kinds of diagnosis are complementary, but in the short term tension may exist, with loose monetary policy weakening incentives for structural reform, and structural adjustment exacerbating demand deficiency. Copyright 2000 by Oxford University Press.

Fundamentals versus external shocks: Brazil's growing exposure to currency crises

While financial globalization does not lack theoretical economic merit, the more far-reaching practical consequences of this phenomenon are often not fully appreciated from the vantage point of North America or the European Union. In particular, globalization can make it more difficult for emerging economies to achieve macroeconomic stabilization. This is especially true if the countries in question have chosen the vehicle of pegged exchange rates as an important element of domestic anti-inflation policy. The chief macroeconomic difficulties for emerging economies in a world of volatile capital flows can include a loss of monetary control, a real appreciation of the domestic currency, and a worsening of economic fundamentals leading to damaging currency crises. This paper concentrates on the recent experience of Brazil as illustrative of the abject plight faced by many developing countries attempting to secure economic stabilization against the background of the present globalized international economy.

State enterprise performance and soft budget constraints: The case of Bulgaria

AbstractThis paper analyses the performance of state enterprises in Bulgaria during 1992‐94. Consistent with the literature on other transitional economies, this paper finds that one key factor underlying (the lack of) enterprise adjustment in Bulgaria during this period was the availability of financing. Empirically, the (lack of) past adjustment and the softness of finance are the best predictors of current adjustment. Many state enterprises, mostly smaller ones, appear to have adjusted to the new economic structure, partly in response to tighter budget constraints. However, a number of large, hard‐core lossmaking state enterprises did not adjust, due primarily to the soft budget constraints that they faced. These enterprises crowded out profitable enterprises, both public and private, through their large financing requirements, adversely affecting economic growth. Moreover, continued bank financing of these large loss‐makers decapitalized the banking system, and budgetary financing of their losses, largely through tax arrears, has undermined fiscal policy. This lack of enterprise adjustment and the resulting financial indiscipline lies at the core of the macroeconomic difficulties that Bulgaria has recently faced.

China's Macroeconomy in Transition

Is macroeconomic stability the Achilles heel of the Chinese economy? Recurrent bouts of inflationary disorder lead some observers to worry that the Chinese government is unable to control the economy. Macroeconomic difficulties show up in a pattern of repeated boom and bust cycles, in which each boom is accompanied by an acute inflationary phase and significant disruption. Moreover, since the reform era began, the peak annual inflation rate of each successive cycle has been higher than that of the preceding one. The most recent attempts to cool off the economy have only led to additional questions. An austerity policy was decreed at the end of June 1993, yet inflation actually accelerated in 1994, and it was not until mid-1995 that it dropped to the levels of mid-1993. The Chinese government was engaged in a quest for an economic “soft landing” for two years without a net reduction in the inflation rate!