Newsletter July 2017

ZEW’s Research Department “Economics of Innovation and Industrial Dynamics” and the National School of Development (NSD) of Peking University (PKU) jointly organised the fourth annual meeting of the International Consortium for China Studies (ICCS), entitled “Perspectives on China’s Development and the Openness of Global Markets: The Nexus of Political, Economic and Social Issues” on 20 and 21 June 2017. Over the course of the two-day annual meeting held at ZEW in Mannheim, 25 international researchers presented their latest findings concerning a number of topics, including China’s changing role in international trade, technological innovation, and global economic growth.

In a meta study, the Mannheim Centre for European Economic Research (ZEW) has been investigating the “Opportunities and Challenges of Digitalisation in Baden-Württemberg”. In this study, special attention is devoted to five topics: namely, economics, mobility, education and training, healthcare, and e-government. Furthermore, the study also addresses cross-cutting topics such as research, development and innovation, digital infrastructure, sustainability, and cyber security. The meta study was conducted on behalf of the State of Baden-Württemberg and served as input for the newly developed digitalisation strategy of the Government of Baden-Württemberg.

As Germany’s social market economy is increasingly faced with challenges resulting from the progressing digitalisation, there are a number of questions which still remain unanswered: What regulatory measures and investments are necessary to ensure a successful digital transformation? And which social market economy principles are affected by this transformation? These were some of the questions addressed by Professor Irene Bertschek, head of the Research Department “Digital Economy” of the Mannheim Centre for Economics Research (ZEW), in her speech at the fifth “Bad Boller Wirtschaftsgespräch” on 14 July 2017. The conference centred on the topic “Social Market Economy and Digitalisation”.
 

The teams who will compete in the final of the high school competition YES! – Young Economic Summit have now all been announced. In the qualification rounds of the competition, 250 high school students from all over Germany presented their ideas on how to solve some of the most pressing global economic questions of our time and had the opportunity to discuss them with economics experts. The 14 winning teams will present their ideas at the YES! final in Kiel on 28 and 29 September 2017.

The Centre for European Economic Research (ZEW) has published a special issue of the journal “Environmental and Resource Economics” addressing several approaches of behavioural economics in the context of environmental economics. The special issue, entitled “New Directions in Behavioural Environmental Economics”, features an introduction as well as nine contributions on recent research findings. The contributions had previously been presented at a ZEW workshop on behavioural environmental economics.
 

World Environment Day took place on 5 June. This year’s theme was “Connecting People to Nature”. Critics of environmental protection policies such as US President Donald Trump, who recently announced the US’s withdrawal from the Paris Climate Agreement, are often sceptical as to whether the benefits we receive from a clean environment can outweigh the costs of environmentally friendly policies on the economy. Nature’s gifts are often hard to value in monetary terms. What we can, however, measure is how much we appreciate and value a clean environment and efforts to do so have already produced some surprising results.

On 23 and 24 June 2017, around 80 international researchers visited the Mannheim Centre for European Economic Research (ZEW) to attend the annual conference on the Economics of Information and Communication Technologies. The conference is jointly organised by ZEW’s Research Department “Digital Economy” and the Mannheim Centre for Competition and Innovation (MaCCI), and is partly funded by the German Research Foundation (DFG). This year, keynote speeches from Google chief economist Hal Varian and Amazon economist Steven Tadelis marked the highlights of the 15th annual conference.

In many German cities the allocation of available nursery school places is not transparent and carries considerable costs for both parents and nursery staff. Alongside the current shortage of nursery places, inefficient allocation procedures are making the shortage seem more acute than it actually is. One possible blanket solution to the problem would be to introduce a central allocation system, which would deliver good market design through the use of tried and tested algorithms.

What kind of growth might we see in China’s economy in the short to medium term? Will the Chinese economy be able to continue this success in the long term? What reforms are necessary to cushion the effects of social upheaval? These were just some of the questions addressed by prominent experts from the worlds of politics, economics and research in a podium discussion on 26 June 2017. ZEW welcomed more than 100 guests to the event, which was held in collaboration with the Baden Württemberg Ministry of Economic Affairs, Labour and Housing at the Haus der Wirtschaft in Stuttgart.

The phenomenon of the data economy comes with a number of opportunities, challenges and risks. As the process of digitalisation advances and more and more data is made available and processed online, what consequences could arise with respect to market power, consumer protection, copyright laws and other regulations? Which changes are to be expected in the new data economy with regard to the relationship between individuals and large companies? These are some of the questions that were discussed at the panel discussion which took place following the lecture given by Professor Hal Varian at the Mannheim Centre for European Economic Research (ZEW) on 23 June 2017.

The risk of poverty in old age in Germany is expected to increase further within the next 20 years given that employment and interest rates develop normally. By 2036, around 20 per cent of the pensioners at the age of 67 will be affected by old-age poverty. These are the findings of a study conducted by the Mannheim Centre for European Economic Research (ZEW), in collaboration with the German Institute for Economic Research (DIW Berlin), on behalf of the Bertelsmann Foundation.

ZEW mourns the passing of Professor Arnold Picot. Picot was a long-serving member of the ZEW Scientific Advisory Council, where his valuable contributions helped to enrich the institute’s research and to steer ZEW’s dynamic development over the years. The experienced business economist was particularly concerned with contributing to ZEW’s strategic approach to the research field of Digital Economy.
 

Dr. Frank Bohn is a visiting researcher in ZEW’s Research Department “Corporate Taxation and Public Finance” from 17 to 28 July 2017. He is an assistant professor for international economics and political economy at Radboud University Nijmegen in the Netherlands. His research interests focus on economic budget manipulation, national traits and financial crises as well as monetary and fiscal policy. On 20 July Frank Bohn held a ZEW Research Seminar on the political impact of the economic situation and the role of economic growth during election periods. His research results suggest that political manipulation is even more pronounced during a recession in the run-up to an election, i.e. with municipalities incurring even higher deficits than normal during these times. During his visit at ZEW, Bohn also worked on another paper on the same topic, but related to country data.

As of 3 July 2017, ZEW in Mannheim has been playing host to a group of students from China as part of the international UIBE Summer School programme. A total of 25 students from the University of International Business and Economics (UIBE) in Beijing, all currently on degree courses in some way related to economics, will spend three weeks at ZEW to learn more about economic activity in the German and European arena through a number of different modular courses.
 

About a year ago, the majority of UK voters decided the UK should leave the European Union. Yet the details of Brexit still have to be worked out. The UK parliamentary election held in June this year has increased uncertainty in this matter. The EU internal energy market is a showcase for how Brexit may threaten market integration between the UK and the continental EU. When asked about the effects of the UK leaving the EU internal energy market, the vast majority of experts in France and Germany thought that an “Energy Brexit” would hurt the UK more than it would the EU.

According to the current survey for July (5–19 July 2017), the economic outlook for China has declined significantly, falling by 13.8 points. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently no higher than minus 4.1 points (June 2017: 9.7 points) and thus far below the long-term average of 5.1 points.

The ZEW Indicator of Economic Sentiment for Germany fell slightly by 1.1 points in July 2017 and now stands at 17.5 points. The indicator thus still remains below the long-term average of 23.8 points. The assessment of the current economic situation in Germany decreased by 1.6 points in July. The corresponding indicator, however, still remains at a fairly high level of 86.4 points. “Our overall assessment of the economic development in Germany remains unchanged compared to the previous month.

The outlook for the German economic growth in the coming six months continues to be positive. This is now also reflected in the survey results for the eurozone,” comments ZEW President Professor Achim Wambach, PhD.

About a year ago, the majority of UK voters decided the UK should leave the European Union. Yet the details of Brexit still have to be worked out. The UK parliamentary election held in June this year has increased uncertainty in this matter. The EU internal energy market is a showcase for how Brexit may threaten market integration between the UK and the continental EU. When asked about the effects of the UK leaving the EU internal energy market, the vast majority of experts in France and Germany thought that an “Energy Brexit” would hurt the UK more than it would the EU.

This is one of the key findings of the Energy Market Barometers conducted among experts from academia and industry by the Mannheim Centre for European Economic Research (ZEW) and the Grenoble École de Management (GEM).

When companies struggle to fill their vacancies with skilled workers, this can have a considerable negative impact on overall economic development. The economic consequences of such skills shortages are largely dependent on how the companies affected choose to react. According to the results of a study carried out by the Mannheim Centre for European Economic Research (ZEW) on behalf of the German Federal Ministry for Economic Affairs and Energy, the vast majority of firms in Germany are still able to fill all of the skilled positions they need. There are, however, some firms finding it increasingly difficult to recruit enough skilled workers.

One of the central goals of the G20 is to improve the resilience of its members against the negative effects of economic crises. A study conducted by the Mannheim Centre for European Economic Research (ZEW), in collaboration with the Bertelsmann Stiftung, compared the way how eight OECD countries have coped with crisis-related slumps in exports since the 1970s. While Germany, Japan and Australia turned out to be particularly robust countries which cope with export-sector crises comparatively well, France and Italy are particularly vulnerable in this respect. The United States are a case apart as US GDP tends to stabilise fairly quickly, while inequality increases in the aftermath of a crisis.
 

Executives at German companies operating in China have given an overwhelmingly positive assessment of both the current economic situation and future economic development in China. In the most recently conducted survey, the indicator for expected economic development over the next twelve months jumped from minus 3.5 points in the second quarter to 17.1 points. This is the highest result since the fourth quarter of 2013. These are the findings of the current ZEW-PwC China Economic Barometer, a survey carried out by the Mannheim Centre for European Economic Research (ZEW) together with the accounting and consulting firm PricewaterhouseCoopers (PwC).
 

Digitalisation and its political and social ramifications as well as potential reform measures to ensure increased cooperation in Europe were the main topics up for discussion during a recent fact-finding visit from the Deputy Minister President and Minister of the Interior, Digitalisation and Migration for Baden-Württemberg, Thomas Strobl, to the Centre for European Economic Research (ZEW) in Mannheim. The minister was greeted by ZEW President Professor Achim Wambach as well as the institute’s Director of Business and Administration, Thomas Kohl, who both gave him an overview of the research being conducted at ZEW as well as the institute’s achievements in the field of policy advice and in supporting the careers of talented young researchers.

Subsidies for European farmers from EU resources should be reduced after 2020. A total of more than 400 billion euros – over one third of the EU budget – is allocated to the agricultural sector within the current Multiannual Financial Framework. This allocation of the budget is no longer adequate to meet current challenges. Instead, the EU should devote more resources to new policy areas which actually provide European added value, such as defence, migration and foreign policy. These are the results of a study carried out by the Mannheim Centre for European Economic Research (ZEW) at the initiative and on behalf of the Bertelsmann Foundation.

Our publications are available for download in PDF format. PDF files can be viewed using for example the Acrobat Reader, which you can download for free at https://acrobat. adobe. com/us/en/acrobat/pdf-reader. html

Wolfgang Briglauer; Carlo Cambini; Michael Grajek
Speeding Up the Internet: Regulation and Investment in European Fibre Optic Infrastructure

Wolfgang Briglauer; Carlo Cambini; Thomas Fetzer; Kai Hüschelrath
The European Electronic Communications Code: A Critical Appraisal with a Focus on Incentivizing Investment in Next Generation Broadband Networks

Martin Brown; Karolin Kirschenmann; Thomas Spycher
Numeracy and the Quality of On-the-Job Decisions: Evidence from Loan Officers

Wolfgang Habla; Ralph Winkler
Strategic Delegation and International Permit Markets: Why Linking May Fail

Bernd Fitzenberger; Stefanie Licklederer
Additional Career Assistance and Educational Outcomes for Students in Lower Track Secondary Schools

Vanessa Behrens, Marius Berger, Martin Hud, Paul Hünermund, Younes Iferd, Bettina Peters, Christian Rammer and Torben Schubert
Innovation Activities of Firms in Germany – Results of the German CIS 2012 and 2014

Daniel Arnold, André Nolte and Annette Hillerich-Sigg
Fachkräftemangel: Reaktionen der Betriebe sowie Auswirkungen auf Investitionsentscheidungen und Wachstum (Skills Shortages: Companies‘ Reaction and the Effects on Investment Decisions and Growth)

Irene Bertschek, Daniel Erdsiek, Reinhold Kesler, Thomas Niebel and Fabienne Rasel
Metastudie: Chancen und Herausforderungen der Digitalisierung in Baden-Württemberg (Meta Study: The Opportunities and Challenges of Digitalisation in Baden-Württemberg)

Oliver Lerbs and Jenny Pirschel
Auswirkungen von Niedrigzinsen auf das Verhalten von Banken in Dänemark (Behavioural Effects of Low Interest Rates on Banks in Denmark)

Analysis of Economic Data for the Cluster ICT, Media, Cultural Economy

Evaluation of Tax Incentives 2017

Literature Survey on the Productivity Slowdown and its Relation to Innovation Activities

Time Series Data on the Innovator Share

Work 4.0 – Opportunities and Challenges for Luxembourg

Speaker: Prof. Juan J. Dolado (Charles III University of Madrid)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Location of the event: Eltville (Rheingau)

Speaker: Jun. Prof. Dr. Marie Elina Paul (University of Duisburg-Essen)
Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Sascha Steffen (ZEW), Karin Dohm (Deutsche Bank, Global Head of Regulatory Affairs), Prof. Dr. Danuta Hübner (Member of the European Parliament and former Commissioner for Regional Policy), N.N. (European Commission, tbc), Natacha Valla, PhD (European Investment Bank and CEPII - leading French think tank in international economics)
Moderation: Laura Noonan (Financial Times, London)
Location of the event: Representation of the State of Baden-Württemberg to the European Union, Brussels

Picture Credits: press release of 24 July 2017: iStock.com/shironosov, press release of 17 July 2017: iStock.com/George Clerk, press release of 13 July 2017: iStock.com/Yuri Arcurs_web, news article of 11 July 2017: Springer-Verlag, press release of 7 July 2017: iStock.com/sharrocks, news article of 3 July 2017: Shutterstock.com/rvdw footage, press release of 30 June 2017: iStock.com/valio84sl, news article of 28 June 2017: Thomas Hörner, news article of 26 June 2017: © panthermedia.net/chrissi
All further pictures: ©ZEW