Political turmoil and early elections in Bulgaria (by Rumen Dobrinsky; pp. 1-4) Keywords: Bulgaria, elections Countries covered: Bulgaria Topics: Other A revival of industrial policy as a growth model for Russia? (by Peter Havlik; pp. 5-6) Keywords: industrial policy, growth model Countries covered: Russia Topics: Macroeconomic Analysis and Policy; International Trade, Competitiveness and FDI The determinants of income polarization at the household and country level across the EU (by Mario Holzner; pp. 7-10) Keywords: income polarization, fiscal policy Countries cove...more

Summary The protracted recession in the euro area will continue to be a drag on the economic growth of most CESEE countries in 2013. By and large, those countries are small open economies held hostage to the excessive fiscal austerity pursued in the euro area and the sluggish progress on the part of its policy-makers in adequately addressing the structural roots of the crisis. At the same time, the private sector demand in the CESEE countries is unlikely to recover substantially in the near term either. Wherever there will be an increase in investments, it will be primarily funded via public...more

(Report based on Background Study for European Competitiveness Report 2012, see http://ec.europa.eu/enterprise/policies/industrial-competitiveness/competitiveness-analysis/european-competitiveness-report/index_en.htm) Summary Countries belonging to the European neighbourhood are highly diverse. Their diversity is multidimensional (geographical, socio-economic, political, cultural, religious, etc.) and the individual dimensions all have important implications for EU policies towards the region(s), for EU institutional relations with individual neighbourhood countries and for these countri...more

The recent economic downturn The decline in GDP during the recession has been concentrated in manufacturing and construction and triggered significant (though smaller) declines in basic services (distribution, hotels and restaurants, and transport). The decline in manufacturing production was particularly strong in Germany, while in Spain and Ireland as well as the Baltic states there was a pronounced decline in construction, which had expanded markedly in these countries over the years preceding the recession. Just as in previous economic downturns in the EU, the recent recession has h...more

(Reprint from: WIFO-Monatsberichte, Vol. 85, No. 5, May 2012) Zusammenfassung Die gegenwärtige Wirtschaftskrise weist alle jene Merkmale auf, die mit finanziellen, verschuldungsbezogenen und strukturellen Aspekten von Leistungsbilanzkrisen verbunden werden. Daraus ergeben sich dauerhaft dämpfende Effekte für die Entwicklung der Gesamtnachfrage in den mittel-, ost- und südosteuropäischen Ländern, sodass sich eine nachhaltige Erholung verzögert. Die vorübergehende Belebung 2010/11 war insbesondere vom Export getragen. Deutliche Entwicklungsunterschiede zwischen den einzelnen Ländern Ostmitte...more

This paper examines the impact of offshoring on labour elasticities for a sample of 40 countries over the period 1995-2009 using the recently compiled World Input-Output Database (WIOD). Including measures of narrow and broad offshoring, as well as indicators of manufacturing and services offshoring, in conditional and unconditional labour demand equations we find that offshoring has an overall neutral or slightly positive effect on employment. This result hides differences across industry types and across employment types however, with additional results indicating a negative effect of services offshoring in many industry types. Positive effects of other offshoring measures are found in high-tech manufacturing and for high-educated employment in particular....more

For the CESEE countries, wiiw expects 2012 to be a rather disappointing year. GDP growth will be rather slow – at least when judged by the past standards and the ambitions harboured only a few years ago. Some countries (Czech Republic, Hungary, Slovenia, Bosnia and Herzegovina, Serbia) will suffer a mild recession or come close to it (Bulgaria, Romania, Montenegro). 2013 will be characterized by external imbalances developing anew in some countries, although these are not expected to culminate in a repetition of precipitate and disorderly rebalancing crises. The imbalances, if allowed to widen, may come to a sticky end later. The fiscal consolidation in many CESEE countries is pursued despite the revealed weakness of private consumption and investment, amid signs of flagging demand for CESEE exports....more

This report describes the migration patterns of Romanian migrants in Italy before and after the accession of Romania into the European Union (EU). The findings and the main results presented throughout the report were collected by carrying out a survey in three main cities of Italy: Milan, Turin and Rome which are recognized as the main destination regions of Romanians who have migrated to Italy since free visa liberalization in May 2004. The report focuses on four broad areas: the profile and migration plans of migrants, regional differences and basic characteristics; labour market pattern...more

Slovakia after the elections (by Doris Hanzl-Weiss; pp. 1-3) Keywords: Elections, Fiscal policy Countries covered: Slovakia Topics: Macroeconomic Analysis and Policy Labour market issues in Europe’s Eastern and Western Balkan neighbours (by Hermine Vidovic; pp. 4-9) Keywords: Labour market, Unemployment Countries covered: SEE, CIS Topics: Labour, Migration and Income Distribution Net private savings in relation to the government’s financial balance (by Kazimierz Laski and Leon Podkaminer; pp. 10-13) Keywords: Saving, Investment, Financial balances, Fiscal policy Count...more

The European Union and the MENA countries: fostering North-South economic integration (by Sándor Richter; pp. 1-5) Keywords: North-South, economic integration Countries covered: European Union, MENA Topics: Labour, Migration and Income Distribution Europe's position in trade in knowledge-intensive business services (by Joseph Francois and Olga Pindyuk; pp. 6-12) Keywords: trade, knowledge-intensive business services Countries covered: European Union, OECD, East Asia Topics: International Trade, Competitiveness and FDI What kind of socio-economic order do we need in Euro...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Fasting or Feasting? Europe - Old and New - at the Crossroads, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. For the CESEE countries, wiiw expects 2012 to be a rather disappointing year. GDP growth will be rather slow – at least when judged by the past standards and the ambitions harboured only a few years ago. Some countries (Czech Republic, Hungary, Slovenia, Bosnia and Herzego...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Fasting or Feasting? Europe - Old and New - at the Crossroads, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. For the CESEE countries, wiiw expects 2012 to be a rather disappointing year. GDP growth will be rather slow – at least when judged by the past standards and the ambitions harboured only a few years ago. Some countries (Czech Republic, Hungary, Slovenia, Bosnia and Herzego...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled New Divide(s) in Europe?, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. The present economic crisis bears all the familiar hallmarks of the financial, debt-related and structural aspects of current account crises. All these aspects have lasting level effects and recovery can be very protracted. Export-led growth was an important feature of the recovery period 2010-2011, yet signi...more

The free movement of persons is a fundamental right guaranteed to European Union (EU) citizens which is about to change not only the size of migration flows but also the behavior of migrants regarding the duration of stay. In our empirical analysis we show that migrants who intend to live only temporary in Germany are more likely to remit a higher amount of money. As we have seen in the UK, strong remittances flows provoke fears among natives of a loss in domestic purchasing power. Using a general equilibrium model with altruistic households and imperfect labor markets, we show that Germany wi...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Recovery – in Low Gear across Tough Terrain, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe. All Central, East and Southeast European (CESEE) countries will return to growth in 2011. The post-crisis GDP growth will be slower than before and not suffice to generate additional jobs. The role of external demand gradually weakens, while both household consumption and gross fixed inves...more

The Vienna Institute for International Economic Studies (wiiw) has just published its latest Analyses and Forecasts. The report, titled Will exports prevail over austerity?, analyses current economic situation and medium-term forecast for the countries of Central, East and Southeast Europe, and China The Central, East and Southeast European (CESEE) economies will experience on average a minor rebound of economic growth to 1% in 2010 which will speed up to 2.5% in 2011 and 3.5% in 2012. GDP growth will be higher in the CIS countries and in Turkey, about average in the Central European N...more

In line with previous literature we find that strict employment protection deters foreign direct investment. This finding is consistent with the view that rigid labor markets result in high adjustment and exit costs which discourage firm investment. Moreover, our results also show that the deterrent effect of rigid labor markets depends on the skill-intensity of a location, a result which has not been established empirically so far. ...more

As of 2008, an estimated twelve million immigrants live illegally in the United States, and large numbers of undocumented foreigners reside also in other advanced destination countries. If governments are not able or willing to stick to their official immigration policy, why do they set such a policy in the first place? The purpose of this paper is to address this apparent puzzle, by developing a political agency model, in which there is uncertainty on the potential supply of immigrants, and politicians - who face a re-election - can either share the preferences of the median voter or be captured by a pro-business lobby. We show that, if a pro-median politician is in power, illegal immigration can only occur as a result of uncertainty. If a pro-business politician sets instead the migration policy, he might find it optimal to announce a binding quota in order to be re-elected, and not enforce it in order to favor a business lobby. Thus, strategic considerations by elected politicians might play an important role in explaining the apparent inability of governments to implement o±cial immigration policies and the large resulting number of illegal immigrants....more