Newsletter August 2019

Robotics, automation, Internet of Things, and Big Data: industry 4.0 opens up new opportunities for companies worldwide. Driven by the automotive industry, Mexican industry has experienced considerable growth, which presents abundant opportunities for German companies to bring their expertise on digitisation to Mexico – ideal conditions for the information event and cooperation exchange on all aspects of the vehicle and supplier industry in Mexico, taking place on 26 September 2019 at ZEW.

The exhibition ship MS Wissenschaft will anchor on the Rhine promenade in Lindenhof from 2 to 5 September 2019. On board is the ZEW exhibit “Wie Künstliche Intelligenz Sprache und die Welt verstehen lernt” (“How Artificial Intelligence Learns to Understand Language and the World”), which provides insights into economic research using AI. On 3 September, Dr. Dominik Rehse, head of ZEW’s Junior Research Group “Digital Market Design”, will discuss from 6 p.m. on deck what’s inside the data.

Around 90 international researchers came to ZEW in Mannheim to discuss current scientific questions concerning the digital economy. On 27 and 28 June 2019, ZEW hosted the 17th conference on the “Economics of Information and Communication Technologies” organised by the ZEW Research Department “Digital Economy”. The conference has long been considered one of the most important international scientific conferences in the field of digital economy.

The research award “Zukunft der Arbeitswelt” (“The Future of the Working World”) will be conferred for the seventh time by the Volksbank Weinheim Foundation in cooperation with ZEW. With the award, the Volksbank Weinheim Stiftung and ZEW aim to honour young economists from the Rhine-Neckar Metropolitan Region. The prizes will be awarded to the best doctoral thesis, endowed with 3,000 euros, and the best master’s thesis, endowed with 2,000 euros. The recipients will have the opportunity to complete a research stay at ZEW. The deadline for submissions is 31 October 2019.

As of 29 July 2019, ZEW in Mannheim has been playing host to a group of students from China as part of the international ZEW Summer School programme. A total of 17 students from various degree courses, which are all in some way related to economics, are taking part in a three-week programme at ZEW that prepares them for international careers in the industry or in academia.

Summer is a time for rest and relaxation. Yet for many vacationers traveling by train, it is also filled with stress. In 2018, over a quarter of Germany’s long-distance trains were delayed by five minutes or more, an increase of 3.6 per cent relative to the previous year. And this statistic does not take into account the 2.4 per cent of scheduled trains that were cancelled.

Assistant Professor Malcolm Wardlaw was a visiting researcher in the ZEW Junior Research Group “Competition and Innovation” in ZEW’s Department “Corporate Taxation and Public Finance” from 22 July to 9 August 2019. He is an assistant professor of finance at the University of Texas at Dallas in the USA. Furthermore, he was a visiting assistant professor at the University of Michigan until the end of July 2019. His research focuses on corporate finance, banking and institutional capital as well as labour and finance. His current work concentrates mainly on the impact of financial contracting on various firm stakeholders. During his visit, he worked with ZEW researcher Dr. Bernhard Ganglmair on topics relating to the textual analysis of loan contracts and the determinants of loan detail and conformity. Moreover, Malcolm Wardlaw talked about the persistent decline in establishment-level workplace injury rates after private equity buyouts of publicly-traded U.S. firms in a ZEW Research Seminar on 25 July 2019.

Dr. Frank Bohn was a visiting researcher at ZEW’s Research Department “Corporate Taxation and Public Finance” from 22 July to 2 August 2019. He is an assistant professor for political economy and international economics at Radboud University Nijmegen in the Netherlands. His recent publications are on monetary economics and public finance, especially on political budget and forecast cycles. During his visit at ZEW he worked on political budget cycles, on pension reserve funds, and on imagined communities (Benedict Anderson, 1983) and the decline of democracy.

Investments in environmentally friendly technologies may not only benefit the environment; eventually, they can also result in cost savings and profit increases for companies. This is particularly the case for small and medium-sized enterprises (SMEs), as a study by ZEW shows.

The majority of German citizens do not only believe that lobbying groups have an enormous influence on German and European politics; they also take a very negative view towards their political influence. In addition, the German population is similarly critical of the influence of lobby groups on the European Union’s climate policy. Supporters of the Greens, the Left Party and the right-wing party AfD took a far more negative stance towards lobbying at the EU level than voters of the Union parties (CDU/CSU), Social Democratic Party (SPD) and Free Democratic Party (FDP).

The majority of Germans also expressed the wish for more transparency with regard to lobbying activities, hoping that this will reduce the influence of lobbyists on politics.

Chemical start-up companies in Germany are providing the country’s chemical industry with innovative products and services, boosting the entire sector. But as far as the provision of venture capital to these companies and the general start-up activity in the chemical industry are concerned, Germany lies considerably behind other European countries. These are the key findings of a study conducted by ZEW and Leibniz University Hannover’s Center for Economic Policy Studies (CWS), on behalf of the German Chemical Industry Association (VCI).

In the current debate on climate protection, an increasing amount of voices are calling for a step change in politics, public administration, and firms away from business travel and toward more phone and video conferences. Firms in the German information economy have already started to implement this change. Around 57 per cent of companies in this sector have replaced business trips with digital conference solutions in the past three years – this decision was, however, driven by economic rather than ecological reasons.

This is the result of a special assessment included in the current Sector Report on the Information Economy, for which ZEW surveyed around 1,000 companies in the German information economy.

Economic sentiment among companies in the information economy has been largely positive in the second quarter of 2019. The ZEW sentiment indicator for the information economy is currently at 63.6 points, signalling that the majority of companies continue to have a positive view of the current economic climate. The sub-indicator of business expectations, however, shows a bleaker outlook for the third quarter of 2019. The sentiment indicator is the result of a survey conducted among firms in the German information economy by Mannheim-based ZEW in June 2019 (further information on the survey can be found at the bottom of this press release).

In the most recent survey for August (7–15 August 2019), the expectations regarding the Chinese economy decreased by 4.8 points. This leaves the CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, at a current level of minus 4.9 points (July 2019: minus 0.1 points). The CEP indicator has been below its long-term average of 1.5 points since March 2018 and has been experiencing an almost uninterrupted series of negative readings since April 2018.

The ZEW Indicator of Economic Sentiment for Germany once again decreased sharply in August 2019. Expectations are now at minus 44.1 points. This corresponds to a drop of 19.6 points compared to the previous month. The indicator’s long-term average is 21.6 points. The ZEW Indicator of Economic Sentiment is therefore at its lowest level since December 2011. Over the same period, the assessment of the economic situation in Germany worsened considerably by 12.4 points, with the corresponding indicator falling to a current reading of minus 13.5 points in August.

The US central bank Federal Reserve made a turnaround in interest rate policy and lowered its base rates by 0.25 per cent to range between 2.0 and 2.25 per cent. Professor Friedrich Heinemann, head of the “Corporate Taxation and Public Finance” Research Department at ZEW, comments on the Fed’s Interest Rate Decision.

After experiencing a rather weak development in 2017 and for the most part of 2018, the situation regarding the number of mergers and acquisitions (M&A) completed worldwide has improved slightly. This is reflected in the development of the ZEW-ZEPHYR M&A Volume per Deal Index. The index, which depicts worldwide M&A activities in a twelve-month moving average, climbed four points to a level of 115 points between September 2018 and March 2019. The downward trend of the index thus seems to have stopped at least temporarily. This is the result of calculations conducted by ZEW, on the basis of the Zephyr database of Bureau van Dijk.

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

This issue contains a Focus on Europe with the following articles:

Janna Axenbeck
Environmental Innovation and Firm Profitability – An Analysis with Respect to Firm Size

Bernhard Ganglmair, Alex Colcomb and Noah Myung
Expectations of Reciprocity when Competitors Share Information: Experimental Evidence

Robert Germeshausen and Nikolas Wölfing
How Marginal is Lignite? Two Simple Approaches to Determine Price-Setting Technologies in Power Markets

Nicolas Fugger, Vitali Gretschko and Martin Pollrich
Sequential Procurement with Limited Commitment

Bernd Fitzenberger and Arnim Seidlitz
The 2011 Break in the Part-Time Indicator and the Evolution of Wage Inequality in Germany

Robert Germeshausen and Kathrine von Graevenitz
State Mandates on Renewable Heating Technologies and the Housing Market

Mareike Bahn, Anne Berkemeier, Petra Deger, Havva Engin, Adalbert Evers, Rebecca Höhr, Oksana Kovtun-Hensel, Svenja Kück, Martin Lange, Georg Mildenberger, Friedhelm Pfeiffer, Verena Schmid, Katrin Sommerfeld, Corinna Uebel and Christina West
Reallabor Asylsuchende in der Rhein-Neckar-Region 2016–2019 – Analysen und Handlungsempfehlungen (Real-World Laboratory: Asylum Seekers in the Rhine-Neckar Region 2016–2019 – Analyses and Recommendations for Action)

Marius Berger, Birgit Gehrke and Christian Rammer
Innovationsindikatoren Chemie 2019 (Innovation Indicators in the Chemical Industry 2019)

Contributions to Innovation Monitoring of Rhine-Neckar Metropolitan Region

Effective Levels of Company Taxation within an Enlarged European Union and Related Supporting Services – Update 2019

Mannheim in the Competition for Talent – An Analysis of Factors to Increase the Local Supply of Highly Qualified Employees

Speaker: Simon Jäger (Massachusetts Institute of Technology (MIT), Cambridge, USA)
Location of the event: ZEW, Mannheim

Speaker: Fabian Ocker (Karlsruhe Institute of Technology (KIT))
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Speaker: Sihua Ding (University of Cambridge, United Kingdom)
Location of the event: ZEW, Mannheim

Location of the event: University of International Business and Economics, Beijing, China

Speaker: Silke Übermesser (Friedrich Schiller University Jena)
Location of the event: ZEW, Mannheim

Location of the event: ZEW, Mannheim

Speaker: Karin Mayr-Dorn (Johannes Kepler University Linz, Austria)
Location of the event: ZEW, Mannheim

Podium: Heike Göbel (Moderation), Professor Dr. Friedrich Heinemann (ZEW), Professor Dr. Thomas König (Professor of Political Science at the University of Mannheim), Joachim Menze (Head of the European Commission Regional Office in Munich), Guido Wolf (Baden-Württemberg Minister of Justice and European Affairs)
Location of the event: ZEW, Mannheim

Speaker: Prof. Dr. Juliane Kokott (Court of Justice of the European Union)
Location of the event: ZEW, Mannheim

Podium: Prof. Dr. Melanie Arntz (ZEW), Fabrizia Benini (European Commission), Ignacio Doreste (European Trade Union Confederation), Patrick Schwarzkopf (VDMA Robotics + Automation), Dr. Ulrich Zierahn (ZEW)
Location of the event: Representation of the State Baden Württemberg to the European Commission, Brussels

Postdoctoral Researcher (f/m/d, 100 %) for the Research Department “Economics of Innovation and Industrial Dynamics”

Researcher & Data Scientist (f/m/d) (Doctoral Student, 100 %) for the Research Department “Economics of Innovation and Industrial Dynamics”

Picture Credits: press release of 27 August 2019: iStock.com/baona, news article of 26 August 2019: asawin/pxhere.com, news article of 23 August 2019: Ilja Hendel/WiD, press release of 23 August 2019: iStock.com/James Thew, news article of 06 August 2019: ZEW/Volksbank Weinheim, news article of 31 July 2019: Anna Logue Fotografie / ZEW, press release of 31 July 2019: Anna Logue Fotografie / ZEW, news article of 26 July 2019: Anna Logue Fotografie / ZEW
 
All further pictures: © ZEW