Periphery Countries Research Articles

EU Economic Governance as a Supranational Determinant of Health Inequalities in the Eurozone

The COVID-19 pandemic raises the question of austerity's problematic social toll for health in the south of Europe. Has EU economic governance constrained health spending? If so, have these spending levels led to inequalities, which in turn shaped responses to the pandemic? EU economic governance is often dismissed as ineffective because of its poor track record of compliance. Yet austerity is blamed for negative health outcomes. This article shows that the EU fiscal rule is a determinant of health because it affects fiscal policies of European countries. First, the analysis of EU member states during 1995–2018 shows that austerity policies affect health spending and health inequalities. Euro-area countries under the EU Excessive Deficit Procedure significantly consolidated their health spending. The contractionary effect was concentrated in southern countries, contributing to rising health inequalities across the core and periphery. Finally, the analysis shows the pandemic implications of health inequalities, as periphery countries with a track record of high consolidation display more stringent (and costly) COVID-19 response models. This analysis contributes to understanding the supranational determinants of health in the EU, showing the pervasive spillover effects of the fiscal framework on national health policies.

The ecological currency hierarchy: empirical support for currency power driven asymmetries in environmental and social autonomy

ABSTRACT The intersection of the International Monetary System (IMS) and ecological degradation and social inequality remains, despite some excellent examples, a relatively underexplored area. This paper draws upon the literature to argue that an ecological currency hierarchy (ECH) describes how a hierarchy of currencies grants Core countries considerable autonomy over their economic direction while Periphery countries are subject to conditions in the Core. As capital continuously seeks returns, Core economies can sell debt regardless of global economic circumstances, while the Periphery may only do so when returns in the Core are high and risk tolerance is high. When conditions in the Core offer low returns on investment, foreign direct investment floods into the Periphery driving up their debt levels and material extraction. This structural debt/material extraction dynamic is a function of having a non-Core currency and leaves Periphery countries unable to engage in long-term, autonomous economic planning. We conduct econometric analyses using World Bank, International Monetary Fund, and International Resource Panel data to confirm that having a Core currency increases demand for debt and lowers material extraction, while also confirming that rates of return on investment in the Core drive foreign direct investment, debt, and material extraction in the Periphery.

Solidarity on a divided continent: Perceptions of ‘centre’ and ‘periphery’ determine European citizens’ willingness to help other EU countries

This article argues that citizens structure their fiscal solidarity with other European Union countries along a ‘centre–periphery’ divide. This claim is empirically investigated using a Heckman probit selection model on two surveys in 2020 and 2021 among citizens of 13 European countries, which allows to account for differences in the familiarity of the issue and other countries. The results show that individuals in centre countries are more likely to express solidarity with other centre countries than with periphery countries, and vice versa. More broadly, the findings show that citizens perceive a power hierarchy among European Union member states, and that there is a spatial relational dimension to European fiscal solidarity. These results underscore the challenges facing the European Union in achieving greater fiscal solidarity. They also highlight the need to address the structural inequalities between member states.

Modern slavery disclosure regulations in the global supply Chain: A world-systems perspective

This study provides a linguistic analysis of three modern slavery disclosure regulations, the California Transparency in the Supply Chain Act (CTSCA) 2010, section 54 of the UK Modern Slavery Act 2015 and the Australian Modern Slavery Act 2018. These regulations require companies to report their actions to tackle labour exploitation within global supply chains. Based on World-System Theory (WST: Wallerstein, 1975, 1979, 2015) and by relying on Critical Discourse Analysis (CDA), we examined the disclosure regulations and found that the texts of and discourses around the regulations are not neutral and allow social wrongs to continue in global supply chains. Although regulators claim modern slavery disclosure regulations to be a step in the right direction, our investigation reveals a different picture: the linguistic features of the regulations support the perpetuating risk of modern slavery in global supply chains based in the periphery countries. We argue that changing the current global power structure/system is necessary to address the grand challenges of regulating modern slavery. There is a need for disclosure regime that can protect vulnerable communities, including workers in the global supply chains.

‘Space-time dents’ in global value chains – The Hungarian case

AbstractThe paper takes a special perspective to summarise what researchers have revealed on global value chains in Hungary. The ‘space-time’ structure is how the ‘force field’ of the amount of value added is shared and how the process it creates characterises specific global value chain networks. There is a growing literature that reveals the ‘dents’ of the GVC force field: the uneven distribution of value-added content, and mainly the controversial possibilities to upgrade in the network. Hungary is a typical example of a semi-peripheral or integrated periphery country. The paper discusses the lessons of different global value chain relations of the country in different geographical environments in terms of the two dimensions of ‘space’ and ‘time’; that is the potential and structure of value added and its dynamics, as well as compares them through an automotive industry case study.

Heterogeneous international monetary transmissions: The role of inflation

In the context of the trilemma hypothesis, we document heterogeneous international monetary transmissions, emphasizing the essential role of inflation. Periphery countries' monetary policy autonomy is subject to their inflation. Facing an interest rate hike of a center country, periphery countries are more willing to follow when their inflation levels are high. Following an interest rate hike helps ease periphery countries' domestic inflation pressure. In contrast, those countries with low inflation are more inclined to follow the center country's interest rate cut. We further confirm that periphery countries' monetary policy autonomy is enhanced by capital controls and flexible exchange regimes, consistent with the trilemma hypothesis.

Economic freedom in EU periphery: recent developments of disparities in economic freedom areas between center and periphery countries

Economic freedom in EU periphery: recent developments of disparities in economic freedom areas between center and periphery countries

A pre-pandemic analysis of the global fertiliser trade network

In this paper a complex network analysis of global fertiliser trade during the period 2014–2018 has been carried out. The goal is to study its structure both at the global and local level, identifying communities and main players, motifs, structural holes and brokerage roles. The persistency and variability of trade links have also been analysed. The Global Fertiliser Trade Network is characterised as a small-world network with scale-free properties, revealing a high level of reciprocity and centralisation. The network has a core-periphery structure consisting of five core countries (namely EU, USA, China, Brazil, and the Russian Federation) which trade among themselves and with most periphery countries, which have sparse connections between them. The interregional and community analyses indicate a moderate level of heterophily and a geographical component in the trade communities. The network also exhibits an overall tendency toward intransitivity which implies a strategic advantage for countries that act as brokers. This study provides a clear picture of the situation prior to the COVID pandemic and the Ukraine military conflict. Those events have affected global fertiliser trade in a way that has yet to be fully ascertained. The purpose of this paper is to firmly establish a reference against which to gauge the direction and magnitude of those changes.

Convergence and depopulation processes in the Center-Periphery system

The paper proposes advancement of a stratum demographic model characterized by the presence of two strata — the Center and the Periphery, which are different in respects of their way of life, development level and social values. The processes of convergence and depopulation in the heterogeneous system of the Center-Periphery type were studied. Various variants of “catch-up development” of the Periphery are considered within the framework of numerical simulation. Modes of economic growth that contribute to the convergence of income levels in the countries of the Center and the Periphery are indicated, depending on the value of the characteristic time of convergence. There are identified the regimes of a stable and supposedly irreversible depopulation of the Periphery. It is shown that economic participation of the Center in changing the situation in the Periphery countries might be necessary to achieve economic convergence for maintaining the stability of the entire system. As an explanatory principle of the observed phenomena, the institutional trap concept is proposed. A number of socio-economic interpretations of the dynamics of the Center-Periphery system as well as the possibility of the System behavior control by appropriate management decisions are discussed on the results of computer modeling. Further development of the proposed model may include studying other scenarios of economic interaction and taking into account additional demographic and migration parameters in the equations of economic growth.

Nation-bounded internationalization of higher education: a comparative analysis of two periphery countries

ABSTRACT Internationalization of higher education (IHE) has become one of the most prominent strategies in national policies and universities’ agendas during the past three decades. IHE provides numerous benefits to nations, institutions, and higher education stakeholders and plays a vital role in improving the quality of education and research. However, it is difficult to argue that all countries equally benefit from IHE; that is, power inequalities between countries in the world are reflected in universities’ efforts and outcomes regarding internationalization. To analyse the effects of national boundaries on IHE, this article presents qualitative research conducted in two European countries: Poland and Turkey. Thirty-six semi-structured interviews were conducted with international office professionals. The results revealed that IHE in Poland and Turkey, as examples of peripheral countries in terms of IHE, is restricted by political instability, economic impotency and socio-cultural legacies. These factors lead to a nation-bounded internationalization experience for higher education institutions and individual stakeholders in both countries. The results also revealed some differences between the two countries and it is argued that decentralized internationalization strategies designed based on nations’ unique characteristics are needed to drive the progressive values of IHE forward.

Monetary policy shocks and resource misallocations in the Periphery: Evidence from Chinese provincial bond yields

We examine the effects of monetary expansions in the center on the excess yields of government bonds in the periphery. We show that the excess yields widen, and the widening is larger, the larger the misallocation of resources in the periphery. Specifically, we examine a panel of over 2500 local Chinese government bonds in 31 provinces, and find that the expansion of Chinese money supply surprisingly raises the excess yields of local bonds over Chinese sovereign bonds, and the gap is larger, the higher the degree of misallocation or other institutional failures in the province. By treating Chinese provinces as small emerging market open economies, we can draw implications for periphery countries in a common currency area, of an expansion in money supply in the center. Our results suggest that the increase in global liquidity post the 2009 and Covid-19 crises can lead to future fragility in the periphery countries.

Public debt and r-g risks in advanced economies: Eurozone versus stand-alone

Differentials between interest rates on government bonds (r) and economic growth rates (g) are a key determinant of public debt dynamics. What are the predictors of r-g, and what risks do policy-makers face? Applying regression methods to data on 22 OECD countries over 1970–2018 shows that higher public debt levels are not predictive of more unfavourable r-g in both Eurozone and stand-alone countries, where the latter issue debt in their own currency. The Euro Crisis – a period characterised by doubts over whether the ECB would backstop government bond markets – is linked with more unfavourable r-g, but only in Euro periphery countries. Our results suggest that the Eurozone’s institutional architecture affects r-g risks. While we find that predicted probabilities of future r – g < 0 are typically significantly higher than 50 % across OECD economies under conditions similar to the pre-Covid-19 years, r-g risks are most significant in the Euro periphery.

Measuring macroeconomic convergence and divergence within EMU using long memory.

This paper tests for convergence of EMU inflation rates and industrial production by testing for the existence of fractional cointegration relations. The notion of fractional cointegration allows for long-term equilibria with a higher degree of persistence than allowed for in the standard cointegration framework. Over the full sample from 1999:Q1-2021:Q4, we find evidence of fractional cointegration in both inflation and industrial production among many country pairs. Our results suggest some evidence for "convergence clusters" among either core or periphery countries in the case of inflation. Similarly, we find stronger evidence of cointegration pairs among core countries for industrial production compared to periphery or mixed core-periphery groups. Testing for a break in the persistence structure, the results show evidence of a break in the persistence of both inflation and industrial production in a number of countries. Inflation persistence is substantially higher after the break, suggesting a higher potential for diverging processes during economic crises. On the contrary, for the case of industrial production, persistence is lower during the post-crisis period.

Unbalanced global vaccine product trade pattern: A network perspective

Mass vaccination is the most cost-effective intervention in response to public health events. Thus, equitable access to vaccine products is essential to ensure global human health. Based on the global vaccine product trade data from 2000 to 2018 and employing social network analysis, this paper explores the unbalanced pattern of global vaccine product trade and assesses the sensitivity interdependence between countries. Overall, the analysis shows that global vaccine product trade links have long been highly concentrated within developed countries in Europe and America. Nevertheless, with the rise of global and regional hub countries, the global vaccine product trade network has begun to evolve from a unipolar structure with the U.S. as the sole core to a multipolar structure with the U.S. and Western European countries as the core. Meanwhile, emerging countries, represented by China and India, are increasingly participating in the global vaccine product trade network and are beginning to play an important role. The formation of this multipolar pattern has provided countries in the Global South with more options for cooperation in the vaccine product trade and reduces the sensitivity interdependence of network periphery countries on core countries, which consequently reduces the global supply risk of vaccine products.

Did small banks trade off lending with government bond purchases during the Sovereign debt crisis?

At the beginning of the decade, many banks in euro-area periphery countries shifted their portfolios from corporate lending towards sovereign debt holdings. According to some scholars, this was the result of the moral suasion exerted by domestic authorities; others suggest instead that it was the outcome of a free choice of weak banks that bet-for-resurrection increasing the holdings of risky, high yielding government bonds. Our analysis shows that the contemporaneous increase in banks’ total assets and the portfolio readjustment from loans to government bonds can be explained by a surge in the risk-premium required by banks on corporate lending. After briefly describing our hypothesis within a simple model of a bank’s portfolio choice, we test its empirical implications on a large sample of individual loan data granted by over 100 Italian small banks during the post sovereign debt crisis period (2012–2014). Our results provide convincing evidence in support of the hypothesis that the banks which increased the most their government bond holdings were also those which reduced more significantly their credit supply.

ECB monetary communications: Market fragmentation at stake

We provide evidence that monetary policy in the Euro Area can unintentionally produce market fragmentation risk. This risk is estimated from changes in long-term bond yields around ECB monetary policy communications between 2002 and 2021. These shocks cause longer-term bond yields in periphery countries to rise significantly, which ultimately hurts their economies. The time series of these shocks are publicly available.

Comparative Green Advantage: Growth Regimes and Public Investment in Renewable Energy R&amp;D

AbstractMany consider research and development (R&amp;D) a crucial pillar of decarbonization, yet few have investigated what actually drives investment. What drives public investment in renewable energy R&amp;D in wealthy democracies? Using OECD data, this research note tests a number of hypotheses from the literature and finds that public investment in renewable energy R&amp;D is most closely associated with growth regimes and their related characteristics. Furthermore, the ‘most invested’ are dynamic services export‐led growth regimes who are deindustrializing and moving towards knowledge‐based sectors like information and communications technology and finance. In short, economies investing the most in renewable energy R&amp;D have the least structurally carbon‐intensive growth regime. As international economic integration locks many countries into specific path‐dependent roles, these findings suggest that there is a comparative advantage to the green transition. It concludes with a discussion of the asymmetric green capacities between core and periphery countries in the European Union.

Errors and Challenges Associated with Investing in EMU Government Bonds

This article highlights some of the main practical errors and challenges associated with investing in Economic and Monetary Union (EMU) government bonds and the difficulties in implementing EMU government bond strategies. These challenges refer to both portfolio allocation and to factor bond portfolios. Different country economic fundamentals, central bank policy, market timing, market risks, model and management risks, liquidity, and idiosyncratic country risks as well as spillover effects should be considered when investing in individual EMU government bonds. These essential properties of EMU bonds are not adequately addressed in portfolio allocation models (e.g., the tracking error or the mean–variance optimization) applied to single bond portfolios from equity investing. The main EMU government bond disparities are associated with country risks, which can be generalized to the main difference between core and periphery country yield spreads.

Should fiscal policies be centralized in a monetary union? A dynamic game approach

In this paper we analyze dynamic interactions in a monetary union with three fiscal players (the governments of the countries concerned) and a common central bank in the presence of exogenous shocks. The model is calibrated for the euro area and includes a fiscally more solid core block denoted as country 1 as well as a fiscally less solid periphery block represented by countries 2 and 3. Introducing two periphery countries allows us to capture different attitudes of the periphery countries towards the goal of sustainable fiscal performance. Moreover, different coalition scenarios are modelled in this study including a fiscal union, a coalition of periphery countries and a coalition of fiscal-stability oriented countries. The exogenous shocks are calibrated in such a way as to describe the last major crises in the euro area, namely the financial crisis, the European sovereign debt crisis, the Covid-19 crisis, and the Ukraine war (energy price) crisis. Using the OPTGAME algorithm we calculate a cooperative Pareto and non-cooperative feedback Nash equilibrium solutions for the modelled scenarios. The fully cooperative solution yields the best results. The different non-cooperative scenarios allow insights into the underlying trade-off between economic growth, price stability and fiscal stability.

English linguistic neo-imperialism in the era of globalization: A conceptual viewpoint.

As Phillipson warned, "[l]inguistic imperialism [is] alive and kicking" and has become even more subtle in an era when English has become the global lingua franca. With this, this conceptual paper aims to propose features of linguistic neo-imperialism by describing how English has continuously spread and retained its power in various domains particularly in periphery countries, whether ex-colonies or non-colonies. Broadly, we highlight these features from the aspects of communication, business, academia, and education. The features of English linguistic neo-imperialism are interrelated and interactive in these fields, reinforcing the current dominant position of English. We then proceed with drawing implications for the local languages, particularly in their preservation and use alongside English and other dominant lingua francas.