COVID-19 crisis will raise EU-Central European tension

2020 ◽  
Keyword(s):  
Financial Markets ◽  
Economic Impact ◽  
Central Europe ◽  
Euro Area ◽  
Local Governments ◽  
Central Government ◽  
Crisis Response ◽  
Content Type ◽  
Central European ◽  
Containment Measures

Subject The economic impact of COVID-19 on Central Europe. Significance The economic sudden stop which the COVID-19 pandemic has caused in the three non-euro-area states of Central Europe (CE-3) is unprecedented and profound. It is due to the confluence of aggressive containment measures to halt the spread of the disease, the collapse in trade with the euro-area (especially Germany) and the rush to safety in financial markets. The pandemic is further straining ties between CE-3 and Brussels, a relationship already frayed by battles over the EU’s trillion-euro budget and marked differences in responses to the crisis. Impacts The region’s auto industry is slowly reopening, Toyota’s Polish plant following Audi’s Hungarian engine factory and Hyundai’s Czech works. Governments will closely watch the phased lifting of restrictions elsewhere to assess the effectiveness and sustainability of strategies. In Hungary, the central government is suspected of discriminating against opposition-held local governments in its crisis response.

Market nerves roil Turkey and Central Europe

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Financial Markets ◽  
Central Europe ◽  
Euro Area ◽  
Inflection Point ◽  
Oil Prices ◽  
Oil Price ◽  
Content Type ◽  
Policy Guidance

Significance Markets have taken badly the Fed's more hawkish policy guidance for 2017, not expecting such a shift in monetary policy so soon. The shift in US monetary policy comes just as the ECB is preparing the ground for the gradual withdrawal of monetary stimulus. While Turkish assets are the most vulnerable partly because of the severe escalation in political risk, the Polish zloty is also at risk thanks mainly to its status as one of the most liquid EM currencies. Impacts Investors see global financial markets at an inflection point as monetary policy gives way to fiscal policy as the main source of stimulus. This monetary-to-fiscal shift will fuel uncertainty about the direction of asset prices. Rising oil prices will allay concerns about deflation in the euro-area. As major Emerging Europe currencies suffer, the ruble is rising against the dollar amid oil price rises and Trump’s Russia-friendly remarks.

Fast growth will support Central European asset prices

2018 ◽  
Keyword(s):  
Emerging Markets ◽  
Financial Markets ◽  
Euro Area ◽  
Asset Prices ◽  
Bond Market ◽  
Bond Markets ◽  
Monetary Policies ◽  
Content Type ◽  
Central European

Subject The muted impact on Central Europe’s financial markets of this month’s sharp declines in asset prices in Russia and Turkey. Significance Much harsher US sanctions on Russia, together with Turkey’s continued loss of policy credibility, have led Russian and Turkish stocks to plunge by nearly 12.0% and 7.5%, respectively, in dollar terms since the start of April. This contrasts with rises in Polish (5.5%), Czech (3.3%) and Hungarian (2.0%) equities, and a slight decline for the MSCI Emerging Markets (EM) index. Central Europe’s vulnerability is rather to the recent slowdown in growth in the euro-area; the ECB’s ultra-loose monetary policies are providing support to the region’s bond markets. Impacts The VIX Index ‘fear gauge’ is back below its long-term average and is at its lowest level since the outbreak of volatility in late January. The latest reading from Germany’s ZEW Index shows a majority of investors now expecting the country’s economic prospects to deteriorate. Turkey’s high-yielding local bond market has managed to attract nearly 900 million dollars of foreign inflows so far this year.

Fiscal decentralization, preference for government innovation and city innovation

2020 ◽  
Vol 14 (2) ◽  
pp. 391-409 ◽  
Author(s):  
Siying Yang ◽  
Zheng Li ◽  
Jian Li
Keyword(s):  
Development Strategy ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Negative Impact ◽  
Moderating Effects ◽  
Content Type ◽  
Effect Model ◽  
Fiscal Expenditure ◽  
Government Innovation

Purpose The purpose of this paper is to examine whether fiscal decentralization has impacts on city innovation level and to examine the moderating effects of the preference for government innovation in China. Design/methodology/approach Using a panel data of China’s 278 cities from 2003 to 2016, the authors first use fixed-effect model and quantile regression to analyze the impact of fiscal decentralization on city innovation level and the variations of impacts conditional on different innovation levels, followed by a mediating effect model to test the moderating effects of the preference for government innovation and its temporal and spatial heterogeneity. Findings The paper finds that fiscal decentralization significantly inhibited city innovation, and with the improvement of city innovation level, the inhibition demonstrated characteristics of “V” type variation. When the degree of fiscal decentralization is between 0.377 and 0.600, the inhibition of fiscal decentralization on city innovation level is the weakest. We further show that fiscal decentralization also inhibits the government's preference for innovation, reduces the proportion of fiscal expenditure on innovation and has a negative impact on city innovation. In addition, the influence of fiscal decentralization on city innovation present clear heterogeneity in space and in time. On one hand, the inhibition of fiscal decentralization on city innovation level in eastern China is significantly weaker than that in central and Western China; on the other hand, after the implementation of China’s innovation-driven development strategy in 2013, the negative impact of fiscal decentralization on city innovation disappeared. Research limitations/implications The research findings have certain policy implications. That is, in the process of decentralization reform, on the one hand, the central government should strengthen the supervision over the fiscal expenditure of local governments and ensure that the central government can play a leading role in the local development strategy, on the other hand, the central government should guard against the distortion of fiscal decentralization on local governments' fiscal expenditure behavior. In addition, the central government should also focus on the heterogeneity of the impacts of fiscal decentralization on cities under different strategic backgrounds and different levels of innovation. Originality/value This paper extends prior research by bringing the decentralization system reform into the study of city innovation system and analyzing its mechanism and its temporal and spatial heterogeneity.

Understanding the forces and critical features of a new reporting and budgeting system adoption by Indonesian local government

2020 ◽  
Vol 16 (1) ◽  
pp. 145-167
Author(s):  
Harun Harun ◽  
David Carter ◽  
Abu Taher Mollik ◽  
Yi An
Keyword(s):  
Local Government ◽  
Local Governments ◽  
Central Government ◽  
Dominant Role ◽  
New Technology ◽  
National Level ◽  
Accounting System ◽  
Local Authorities ◽  
Content Type ◽  
Policymaking And Implementation

Purpose This paper aims to critically explore the forces and critical features relating to the adoption of a new reporting and budgeting system (RBS) in Indonesian local governments. Design/methodology/approach The study is based on an intensive analysis of document sources and interview scripts around the institutionalization of RBS by the Indonesian government and uses the adaption of Dillard et al. (2004) institutional model in informing its findings. Findings The authors find that at the national level, the key drivers in RBS adoption were a combination of exogenous economic and coercive pressures and the wish to mimic accounting reforms in developed nations. At the local government level, the internalization of RBS is a response to a legal obligation imposed by the central government. Despite the RBS adoption has strengthened the transparency of local authorities reports – it limits the roles of other members of citizens in determining how local government budgets are allocated. Research limitations/implications The results of the study should be understood in the historical and institutional contexts of organizations observed. Practical implications The authors reinforce the notion that accounting as a business language dominates narratives and conversations surrounding the nature of government reporting and budgeting systems and how resource allocation is formulated and practiced. This should remind policymakers in other developing nations that any implementation of a new accounting technology should consider institutional capacities of public sector organizations and how the new technology benefits the public. Social implications The authors argue that the dominant role of international financial authorities in the policymaking and implementation of RBS challenges the aim of autonomy policies, which grant greater roles for local authorities and citizens in determining the nature of the budgets and operation of local authorities. Originality/value This study extends institutional theory by adapting the Dillard et al. (2004) model in explaining the forces, actors and critical features of a new accounting system adoption by local governments.

Migrants help keep Central European populists in power

2016 ◽  
Keyword(s):  
Central Europe ◽  
Migration Policy ◽  
Refugee Crisis ◽  
Medium Term ◽  
Content Type ◽  
Central European ◽  
Eu Integration ◽  
The Future ◽  
The Eu

Subject Populists' exploitation of the refugee crisis in Central Europe. Significance Support for populist parties has risen after last year's refugee crisis across the EU, but nowhere have they been as successful as in Central Europe (CE). Peddling migrant fears has secured the re-election of Robert Fico's Smer (Slovakia) and the revival of Viktor Orban's Fidesz (Hungary) from a post-election popularity slump. On the back of the migration tide, populists are transforming CE's political trajectory. Impacts A united CE front will gain prominence at the EU, stoking tensions with Berlin on migration policy and the future of EU integration. The strengthened legitimacy of illiberal positions on migration will foster the emergence of imitators elsewhere in Europe. The chance of an EU-level, long-term solution to the refugee crisis will remain slim in the medium term.

Central European defence cooperation will increase

2016 ◽  
Keyword(s):  
Central Europe ◽  
European Perspective ◽  
Content Type ◽  
Central European ◽  
Eu Integration ◽  
The Us ◽  
Angela Merkel ◽  
The Creation ◽  
Defence Cooperation ◽  
First Time

Subject The Central European perspective on greater EU cooperation in defence. Significance The proposal on August 26 by German Chancellor Angela Merkel and the leaders of the Central European 'Visegrad Four' (V4) countries for the creation of a European army was the first time such a clarion call had been made collectively by EU leaders, as opposed to the more modest idea of developing European defence cooperation and capability. It is surprising that Poland was part of the initiative, given its commitment to NATO and trans-Atlantic relations, which are often taken as a reason to oppose further EU integration. Impacts Brexit has brought forth a variety of proposals to strengthen the EU's military arm. However, political and operational challenges mean that neither deeper cooperation nor a full EU army will be achieved easily, if ever. Insecurity about Russia and the US NATO commitment to Central Europe underlie the call, but cannot be meaningfully addressed soon. Poland will remain staunchly pro-NATO but must prepare for defence alternatives that can include EU forces.

Colombia vote raises concerns for mining firms

2016 ◽  
Keyword(s):  
Local Governments ◽  
Central Government ◽  
Mining Activity ◽  
Government Support ◽  
Constitutional Court ◽  
Mining Activities ◽  
Content Type ◽  
Mining Companies ◽  
Legal Costs ◽  
Mining Projects

Subject Local vetoes on mining activities. Significance Local governments opposed to mining projects planned in their districts have been awarded new powers to derail developments through a series of decisions from the Constitutional Court. On July 29, authorities in Tolima became the first to leverage one such decision in order to approve plans for a referendum over a proposed local ban on mining activity. Impacts Even firms with strong central government support will have scant protection from regulatory risk. Mining companies may see legal costs mount as they prepare appeals against court rulings that could undermine the viability of projects. Delays will further undermine government efforts to bolster Colombia's economy via the expansion of this strategic industry.

Fiscal decentralization in Korea

2018 ◽  
Vol 7 (3) ◽  
pp. 279-290 ◽  
Author(s):  
Im Gon Cho
Keyword(s):  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
National Government ◽  
Policy Recommendations ◽  
Content Type ◽  
Low Level ◽  
Local Taxes ◽  
Local Municipalities ◽  
High Level

Purpose The purpose of this paper is to make policy recommendations for the current fiscal decentralization discussion by examining the operating mechanisms of local taxes, unconditional grants, and conditional grants within the fiscal relationships between the national government and local governments in Korea. Design/methodology/approach After examining the current fiscal relationships between the national government and the local governments, this paper analyzes trends of local taxes, unconditional grants from both national and high-level local governments, and conditional grants from both national and high-level (or provincial level) local governments between 2002 and 2015. Local governments are classified into high-level local governments, and three types of low-level local governments are: si, kun, and ku. Findings Since the structure of local government finances in Korea is very complicatedly intertwined, the present decentralization discussion regarding increasing the share of local tax revenues may not achieve its purpose of fiscal decentralization. The authorities in charge of revenue allocation should be first decentralized at high-level local governments; high-level local governments should then arrange unconditional and conditional grants from high-level local governments to low-level local governments while taking into consideration unconditional and conditional grants from the national government to low-level governments. Originality/value The dichotomy between the central government and local municipalities has been utilized in the existing discussion regarding fiscal decentralization in Korea, but this study highlights the important resource allocation roles of high-level local governments.

Cross-sectoral comparison of concessions in transport

2014 ◽  
Vol 4 (1) ◽  
pp. 22-39 ◽  
Author(s):  
Thierry Vanelslander ◽  
Gilles Chomat ◽  
Athena Roumboutsos ◽  
Géraldine Bonnet
Keyword(s):  
Local Governments ◽  
Central Government ◽  
Development Project ◽  
Content Type ◽  
Road Development ◽  
Fuzzy Logic Approach ◽  
Full Analysis ◽  
Logic Approach ◽  
Mode Of Transport ◽  
Practical Implications

Purpose – The purpose of this paper is to present a methodology of comparing concession projects developed in different transport sub-sectors. The methodology is tested in the comparison of three different cases, each of which represent a particular mode of transport: a road development project, a city tramway project and a port lock construction initiative. Design/methodology/approach – A fuzzy logic approach methodology is applied in carrying out the comparison between cases. Granulation is achieved by employing a Contextual (Ws) Risk Analysis Framework, as risks constitute the basis to public private partnership (PPP) structure. Linguistic variables are then used to describe the comparative findings. Findings – The methodology presented allows for the comparison of three cases from different transport sub-sectors. Identification of similarities provides the potential to transfer experience from one sector to the other. With respect to the three cases studied, it was identified that traffic risk seems to be passed on to the private operators in relation to the level of exclusivity. Finally, PPP projects initiated by central government (as opposed to those initiated by local governments) seem to be more finance-driven than service-driven. Research limitations/implications – As the number of cases to be compared increases, quantitative comparative analysis fuzzy set values can be included in order to carry out a full analysis. The present approach should be considered introductory, as fuzzy sets are not generated due to the limited number of surveys (cases) compared (hence the term “pre-fuzzy”). Practical implications – The methodology presented and the cases tested indicate the possibility for knowledge/experience transfer and the transferability of best practices. Originality/value – Cross-sub-sectoral comparisons for transport PPP projects have not been identified in literature.

A new Italian centre-right government could be weak

2018 ◽  
Keyword(s):  
Financial Markets ◽  
Euro Area ◽  
Democratic Party ◽  
Critical Level ◽  
Grand Coalition ◽  
Content Type ◽  
The Eu

Significance The last month has seen two important developments. First, polls suggest the combined vote for the centre-right is approaching the critical level needed for a majority. Second, both centre-right Forza Italia and the centre-left Democratic Party (PD) have ruled out a grand coalition. Both prefer a second election if no coalition wins a majority. Impacts Even if no bloc wins a majority, President Sergio Mattarella will try to resist a second election. Forza Italia and the PD might renege on their campaign pledges and form a grand coalition if no bloc wins a majority. As long as Forza Italia remains the largest party in the centre-right bloc, a referendum on euro-area membership is unlikely. A Eurosceptic alliance between the League and the M5S would unsettle the EU and financial markets.

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