2013. vol. 8. No. 4

Johansson Åsa – Senior Economist, Structural Policy Analysis Division, Economics Department, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: asa.johansson@oecd.org

Guillemette Yvan - Senior Economist Macroeconomic Policy Division, Economics Department OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: yvan.guillemette@oecd.org

Murtin Fabrice -Economist, Household Statistics and Progress Measurement Division, Statistics Directorate, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail:fabric.murtin@oecd.org

Turner David - Head of Division, Macroeconomic Analysis Division, Economics Department, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: david.turner@oecd.org

Nicoletti Giuseppe - Head of Structural Policy Analysis Division, Economics Department, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: Giuseppe.nicoletti@oecd.org.

de la Maisonneuve Christine – Statistician, Structural Policy Analysis Division, Economics Department, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: christine.maisonneuve@oecd.org.

Bousquet Guillaume -Statistician, Macroeconomic Analysis Division, Economics Department, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: Guillaume.Bousquet@oecd.org

Spinelli Francesca - Statistician, Trade in Services Division, Trade and Agriculture Directorate, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: Francesca.spinelli@oecd.org

Abstract

This report presents the results from a new model for projecting growth of OECD and major non-OECD economies over the next 50 years as well as imbalances that arise. A baseline scenario assuming gradual structural reform and fiscal consolidation to stabilise government-debt-to GDP ratios is compared with variant scenarios assuming more ambitious policies. This report sketches the possible transition from the current conjuncture to growth developments in OECD and non-OECD G20 countries up to 2060 focusing on the interaction between technological progress, demographic change, fiscal adjustment, global imbalances and structural policies. Several policy defining findings are highlighted.

Once the legacy of the global financial crisis has been overcome, global GDP could grow approximately at 3% per year over the next 50 years. Growth will be enabled by continued fiscal and structural reforms and sustained by the rising share of relatively fast-growing emerging countries in global output. Growth of the non-OECD will continue to outpace the OECD, but the difference will narrow over coming decades. From over 7% per year over the last decade, non-OECD growth will decline to around 5% in the 2020s and to about half that by the 2050s, whereas trend growth for the OECD will be around on average 1¾ to 2¼% per year. The next 50 years will see major changes in the relative size of world economies. Fast growth in China and India will make their combined GDP measured at 2005 Purchasing Power Parities (PPPs), soon surpass that of the G7 economies and exceed that of the entire current OECD membership by 2060. Notwithstanding fast growth in low-income and emerging countries, large cross-country differences in living standards will persist in 2060. Income per capita in the poorest economies will more than quadruple by 2060, and China and India will experience more than a seven-fold increase, but living standards in these countries and some other emerging countries will still only be one-quarter to 60% of the level in the leading countries in 2060. In the absence of more ambitious policy changes, rising imbalances could undermine the growth. As the current cycle unwinds, the scale of global current account imbalances may increase and return to pre-crisis peaks by 2030. Government indebtedness among many OECD countries will exceed thresholds at which there is evidence of adverse effects on interest rates and growth. Global interest rates may therefore start to rise over the long-term. Bolder structural reforms and more ambitious fiscal policy could raise long-run living standards by an average of 16% relative to the baseline scenario of moderate policy improvements. Ambitious product market reforms, which raise productivity growth, could increase global GDP by an average of about 10%. Policies that induce convergence towards best practice labour force participation could increase GDP by close to 6% on average.

Ziemann Volker –Economist, Public Economic Division, OECD, 2, rue André Pascal, 75775 Paris Cedex 16, France; E-mail: Volker.ziemann@oecd.org

Abstract

This study assesses the linkages between structural policies and macroeconomic stability using a panel of OECD countries. Business cycle and time-series characteristics of GDP and its components are employed to define various measures for economic instability and for the persistence of adverse shocks. The notion of macroeconomic stability is assessed through two statistical exercises. First, time-series statistics and characteristics of growth distributions across the OECD are explored. Second, resilience and persistence patterns following macroeconomic shocks are investigated building on business cycle features.

Besides disentangling positive and negative shocks and providing a broader definition of macroeconomic stability, the present empirical setup demonstrates that the interaction between policies and outcomes is lagged rather than instantaneous. Policy settings are related to macroeconomic stability over the subsequent 5-year period.

The findings suggest that some growth-enhancing policies such as lowering employment protection also reduce macroeconomic fluctuations, while others (such as the design of a counter-cyclical tax system) may generate trade-offs between growth and stability. A pro-cyclical tax structure seems to help alleviating the persistence of adverse macroeconomic shocks.

Berg Andrew - Assistant Director in the IMF’s Research Department, 700 19th Street, N.W., Washington, D.C. 20431; E-mail: Aberg@imf.org

Ostry Jonathan D. - Deputy Director of the IMF’s Research Department, 700 19th Street, N.W., Washington, D.C. 20431; E-mail: Jostry@imf.org

Abstract

The relationship between income inequality and economic growth is complex. Some inequality is integral to the effective functioning of a market economy and the incentives needed for investment and growth. But inequality can also be destructive to growth, for example, by amplifying the risk of crisis or making it difficult for the poor to invest in education. The evidence has also been mixed: some find that average growth over long periods of time is higher with more initial equality; others find that an increase in equality today tends to lower growth in the near term.

The authors find that longer growth spells are robustly associated with more equality in the income distribution. For example, closing, say, half the inequality gap between Latin America and emerging Asia would, according to our central estimates, more than double the expected duration of a growth spell. Inequality typically changes only slowly, but a number of countries in our sample have experienced improvements in income distribution of this magnitude in the course of a growth spell. Inequality still matters, moreover, even when other determinants of growth duration — external shocks, initial income, institutional quality, openness to trade, and macroeconomic stability — are taken into account.

A key implication of these results is that it is difficult to separate analyses of growth and income distribution. The immediate role for policy, however, is less clear. The analysis does perhaps tilt the balance towards the notion that attention to inequality can bring significant longer-run benefits for growth. Over longer horizons, reduced inequality and sustained growth may thus be two sides of the same coin.

Andrey Shelepov -Junior Researcher of the Global Governance Research Centreof the International Organisations Research Institute, National Research University “Higher School of Economics”, PhD student of the Department for International Monetary and Financial Relationships, National Research University “Higher School of Economics”, 20, Mysnitskaya, Moscow, Russia; E-mail:ashelepov@hse.ru

Abstract

The paper presents an analysis of 2012 G20 Mexican Presidency results. It is based on a model of balancing external conditions and national priorities for developing a Presidency’s proposals on its agenda in informal institutions (supply-demand model). The paper reveals to what extent the Mexican Presidency has managed to ensure: 1) a high level of response to the key global governance challenges in the agenda and summit decisions; 2) a balance between national and other members’ interests in the Presidency priorities; 3) utilizing the institution’s capabilities; 4) conformity of the role chosen by the Presidency (organizer, mediator, political leader, national representative) to the combination of external and internal conditions.

To identify the key global governance challenges, an analysis of global risks of the coming decade has been carried out, based on the annual reports of the World Economic Forum and other international institutions. An analysis of these risks relevance to ten of the G20 members, including Mexico, has also been implemented. The level of the key challenges reflection in the G20 documents and decisions in 2008-2011, and the level of reflection in the Presidency documents have been traced. The assessment was based on the correlation of the results for the significance of the key global governance challenges for the G20 members; the significance of the global governance challenges for Mexico; the level of the challenges reflection in the G20 documents and decisions in 2008-2011; and the level of the challenges reflection in the 2012 G20 summit documents and decisions. The correlation between the first three factors allows identify the Presidency role which is most suitable to address each of the challenges considered, while the level of the challenges reflection in the 2012 G20 summit documents and decisions demonstrates which role has been actually chosen.

The results of the analysis show that the roles of organizer and mediator assumed by the Mexican Presidency to develop the agenda and elaborate the G20 decisions have helped to ensure continuity of the G20 agenda and fast balance of internal demand and partner countries’ priorities on the key global governance challenges. However, on a number of issues the Presidency failed to perform the role of the leader and utilize the institution’s capabilities which could provide an opportunity for forging breakthrough decisions, and upgrading the quality of cooperation to address some of the challenges, for instance, in the economic area. This relates to the issues of growing volatility in energy and agricultural prices, income disparity and unintended negative consequences of regulation, where the need to find solutions with the highest common denominator remains.

The results of testing the model lead to the conclusion that anticipatory analysis of external and internal demand factors along with the institution’s capabilities using the supply-demand model can contribute to enhancing the effectiveness of presidencies in informal institutions.

The research was carried out with financial support of Russian Humanities Research Foundation within the framework of a research project “Elaborating a Supply – Demand Model to Balance External Demand and National Priorities in the Presidency Proposals for Agenda in G20, G8 and BRICS”, project  №12-03-00563.

Marina Larionova - Dr. of Political Science, Head of International Organisations Research Institute, National Research University “Higher School of Economics”, 20 Myasnitskaya, Moscow, Russia; E-mail:mlarionova@hse.ru

Mark Rakhmangulov -Deputy Director of the Global Governance Research Centre of the International Organisations Research Institute,National Research University “Higher School of Economics”,20 Myasnitskaya, Moscow, Russia; E-mail:MRakhmangulov@hse.ru

Andrei Sakharov - Junior Researcher of the Global Governance Research Centreof the International Organisations Research Institute, National Research University “Higher School of Economics”, PhD student of the Department of International Affairs, National Research University “Higher School of Economics”,20 Myasnitskaya, Moscow, Russia; E-mail: agsakharov@hse.ru

Elizaveta Safonkina - Junior Researcher of the Research Center for International DevelopmentAssistance of theInternational Organisations Research Institute, National Research University “Higher School of Economics”,20 Myasnitskaya, Moscow, Russia; E-mail: esafonkina@hse.ru

Andrey Shelepov -Junior Researcher of the Global Governance Research Centreof the International Organisations Research Institute, National Research University “Higher School of Economics”, PhD student of the Department for International Monetary and Financial Relationships, National Research University “Higher School of Economics”, 20, Mysnitskaya, Moscow, Russia; E-mail:ashelepov@hse.ru

Abstract

The paper explores the outcomes of Russian Federation G20 Presidency in 2013. The analysis is based on the model of balancing external conditions and national priorities for developing an agenda in informal institutions (supply-demand model). This analytical paradigm allows to reveal to what extent the Presidency has managed to ensure: 1) a high level of response to the key global governance challenges in the agenda and summit decisions; 2) a balance between national and other members’ interests in the Presidency priorities; 3) utilizing the institution’s capabilities; 4) conformity of the role chosen by the Presidency (organizer, mediator, political leader, national representative) to the combination of external and internal conditions.

Russia took over the responsibility for coordinating the G20 work from Mexico, accepting the rotating presidency of this premier forum for economic cooperation on December 1, 2012. The G20 met the fifth year of its work under conditions of a two speed recovery which by March 2013 transformed into a three speed recovery. Unsteady and sluggish growth, persisting imbalances and downside global economy risks demanded that this forum of the world largest economies concentrate the efforts on developing a set of measures aimed at boosting sustainable, inclusive and balanced growth and jobs creation around the world. These priorities constituted the core of the Russian G20 presidency concept, aimed at ensuring sustainable global growth and rebuilding of trust between the world economy different agents in accordance with the G20 mission and capability.

Consolidating efforts on its core economic and financial priorities, the G20 also launched collaboration to overcome such risks as increasing income disparities, chronic underinvestment into development of safe, secure and modern infrastructure, unforeseen consequences of regulation.

The analysis findings reveal that the Russian presidency managed to ensure a good balance of national interests and the partners’ priorities in the G20 agenda; utilizing the G20 capabilities to respond to the key global governance challenges. The choice of the presidency role depended on the nature of the issues and was defined by a combination of internal and external conditions. Thus, the acuteness of the problem for all summit participants determined demand for leadership in including into the economic forum agenda the debate on a peaceful resolution of the conflict in Syria. On employment and social policies the Russian presidency combining the roles of an organizer and a political leader helped upgrade the G20 dialogue to a new quality level.

A major success factor in deliberation and adoption of the comprehensive action plan on base erosion and profit shifting was the OECD capability to take responsibility for the plan development. With the OECD leadership, solid experts’ foundation, and a high level of relevance of the problem for all members, the presidency supported the process as the organizer.

On the topic of stimulating long-term investment, a priority for Russia as well as most of the G20 partners, the presidency managed to consolidate the efforts of several international institutions over a short period. On this priority, as well as on the financial regulation reform, the presidency acted as a representative of the national interests and an organizer. In developing the new development strategy the choice in favor of a combination of a mediator and an organizer proved most productive. As a result the G20 agreed a new cooperation for development outlook.

The presidency active collaboration with the international organizations and engagement with social partners was instrumental in harnessing their experts’ potential and enhancing the G20 transparency, legitimacy and effectiveness. The G20 institutions consolidation continued through development of new coordination mechanisms and strengthening accountability.

Under the Russian presidency the G20 reaffirmed its value as the premier economic cooperation forum. Emphasizing restoring strong and inclusive growth and employment while ensuring fiscal sustainability, the leaders for the first time in the history of the G20 stressed that the well-being of individual people should be at the center of the growth agenda. This consequential outcome of the five years collaboration might be a start of a new G20 agenda where inclusiveness is one of the pillars of growth.

The research was carried out with financial support of Russian Humanities Research Foundation within the framework of a research project “Elaborating a Supply – Demand Model to Balance External Demand and National Priorities in the Presidency Proposals for Agenda in G20, G8 and BRICS”, project  №12-03-00563.

Romanova Tatiana– PhD in Political Studies, Associate professor of the School of International Relations of St. Petersburg State University, 7-9, Universitetskaya Embankment, St. Petersburg, Russia; E-mail: romanova@mail.sir.edu

Abstract

The presented article provides an analysis of EU-Russian relations in the framework of Russia’s accession to the WTO. The author looks at current Russian and EC documents to conduct this analysis.

The WTO has already become an integral part of EU-Russian relations. However, long-term, strategic consequences of Russia’s accession to the WTO for the dialogue between Moscow and Brussels have not been sufficiently assessed. Thematic and institutional aspects are to be considered. Thematically the WTO is an organization, which maintains a trade and economic regime, i.e. a specific set of rules. It thus clarifies possible goals of EU-Russian cooperation, leaving Brussels and Moscow with the choice of very clearly defined schemes like a free trade area or a custom union. Besides, Russian participation in the WTO allows solving the problem of inequality in the process of legal approximation between Moscow and Brussels. The first institutional aspect to be mentioned is the quasi-judicial body, which the EU and Russia acquired through the WTO. Moreover, the WTO also creates new possibilities for strengthening intergovernmental relations between Russia and the EU. Both aspects facilitate depoliticisation of EU-Russian economic relations.

The author demonstrates that Russia’s accession to the WTO is beneficial both for Russia and EC.

Sergey Barinov - PhD in Geography, Research Fellow, National Research University Higher School of Economics, 20, Myasnitaskaya, Moscow, Russia; E-mail: sbarinov@hse.ru

Peter Kiryushin – PhD in Economics, Moscow State University, Research Fellow; 1 Leninskie Gory, Moscow, Russia; E-mail: lab_pepp@econ.msu.ru

Abstract

The institutions development features are discussed in significant number of papers focused on the euroregions issue. There are three groups of borders with noticeable differences in the institutional conditions: the European Union internal state borders; the CIS internal state borders; and the borders between the EU and CIS members. The paper discusses a comparative case study of these three types of euroregions (Oresund, Pskov-Livonia and Dnieper). The authors look at the following aspects of the regions’ collaboration: cooperation of regional authorities and local self-government, preservation of cultural heritage, cultural exchange, cooperation for education development, environmental protection, implementation of joint projects in transport infrastructure development, coordination of regional development programmes and developing joint strategies. SWOT analysis was used to conduct a comparative study.

The case studies comparative analysis reveals the existence of special mechanisms that are supported by funds and generate delayed outcomes. Such mechanisms are used within the EU, some of them (particularly INTERREG) are limitedly applied within the EU and CIS borders but they are absent within CIS members borders.

The authors demonstrate that business and NGO exert very limited influence within CIS internal borders. This could be explained by budget problems and the institutional environment peculiarities. Cooperation in innovations and technologies development is limited due to lack of demand in collaboration in this area. The priority areas of collaboration are cooperation in educational and socio-cultural development within this type of euroregions.

Kukushkina Julia –Postgraduate student of the Department of International Economic Organizations and European Integration, Faculty of World Economy and International Affairs, National Research University “Higher School of Economics”, 20, Mysnitskaya, Moscow, Russia; E-mail: ykukushkina@mail.ru

Ostrovskaya Elena -  PhD in Economics,lecturerof theDepartment of International Economic Organizations and European Integration, Faculty of World Economy and International Affairs, National Research University “Higher School of Economics”, 20, Mysnitskaya, Moscow, Russia; E-mail: eostrovskaya@hse.ru

Abstract

The article discusses crucial issues of regional economic integration with the participation of the Russian Federation. A wide variety of sources: relevant documents, newspapers articles, experts opinions, policymakers speeches were studied by authors to conduct the analysis. The authors interlink the Eurasian integration and Russia-EU strategic partnership and analyze prospects for relations between the Customs Union of Russia, Belarus and Kazakhstan (Customs Union (CU)) and the European Union. Both Russia and the CU members, as well as the EU are interested in building up common economic space from the Atlantic to the Pacific Ocean. Drivers and obstacles to the common economic space between the two regional blocs are identified. Russia’s membership in WTO is the foundation for a success of measures aimed at connecting the integration processes. Nevertheless, the CU accession to the WTO remains an issue of great importance. The authors assert that Russia’s accession to WTO overall has positive impact on Russia’s development and integration processes in the European and CIS areas. The paper concludes that Russia should facilitate Kazakhstan’s and Belarus’s WTO accession and act as a link between European and post-Soviet integration. Otherwise the cooperation between Russia and European Union will stagnate. Joint transcontinental infrastructure and transport projects development will provide new opportunities for integration processes.

Natalia Vasilieva - Dr. of Philosophy, Professor at the Department of Global Politics of the School of International Relations of the Saint-Petersburg State University, 7-9, University Embankment, St. Petersburg, Russia; E-mail: nbasil@sir.edu

Marina Lagutina - PhD in Political Science, Senior Lecturer, School of International Relations, Saint-Petersburg State University, 7-9, University Embankment, St. Petersburg, Russia; Е-mail: manipolis@hotmail.com

Abstract

Political decisions of the Eurasian states leaders (Kazakhstan, Russia and Belorussia) and the vivid discussion within academic and expert community of a Eurasian Union establishment led to a rise in research in integration processes within the post soviet area. The presented article discusses prospects of a new global-regional integration project (Eurasian Union). The purpose of this paper is to analyze experts’ opinions and explore prospects of the Eurasian Union. The authors describe and analyze various points of view on the problem. “Eurasian optimists” and “Eurasian skeptics” were identified within this analysis. It was also demonstrated that the leaders and policy makers of the main world states (EU, USA, China) do not have a conceptual opinion on a Eurasian Union project. The reason of such attitude could be attributed to the negative outcomes of the last 20 years integration within the post soviet area. The authors of the article present their own vision of the political and economical prospects of the Eurasian Union. Summing up pros and cons of the Eurasian project the authors come to the conclusion that the position of Eurasian optimists is more justified as a shift from a state-centered system to a global system with regional associations of states as actors is one of the modern trends. Therefore, the Eurasian Union establishment is seen as an objective tendency of the world development.

Elena Martynova - PhD student at the Faculty of World Economy and International Affairs of the National Research University “Higher School of Economics”, Moscow, 20 Myasnitskaya, Russia; E-mail: emartynova@hse.ru

Abstract

One of the main trends in the recent years has been the shift of global economic development to the Asia-Pacific Region (APR). Consequently, the political importance of the region has increased greatly. The integration processes taking place in the region attract the attention of many researchers. Whether the Association of Southeast Asian Nations (ASEAN) is an effective organization or not has been a matter of dispute among international affairs experts for a long time. The ASEAN’s place in the world politics and economy does not render itself to an easy assessment. In the academic community there is a lively debate about how to analyze the international relations in East and Southeast Asia. Methodological questions of studying the international organizations in the Asia-Pacific region have not yet received much coverage either in Russian and foreign literature. In this regard, a comparative analysis of the theoretical approaches to the study of ASEAN, one of the most influential organizations in the Asia-Pacific region, is very important.

This article explores the main theoretical approaches to the study of international relations in Southeast Asia. Most researchers tend to believe that the study of the region should not be carried out within one theory or generally accepted paradigm such as realism or constructivism. The presented analysis highlights that the abundance of the different theoretical frameworks complicates achievement of consensus on the effectiveness of ASEAN as an organization between the researchers. However, theoretical pluralism is the most productive approach since it contributes to the objective analysis of contemporary international relations.