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The numbers are breath-taking and they reflect the growing scale and prominence of Gulf air carriers in the international aviation market. Emirates, Etihad and Qatar Airways together have just ordered over 200 of new Boeing 777X aircraft, a more fuel-efficient version of the 777 jumbo. Here we have the monopsony power of major buyers coming face to face with the duopolistic market power of the dominant aircraft manufacturers - US plane maker Boeing, and European rival Airbus.
Check out our revision notes on monopsony power using the link belowread more...»
UK immigrants who arrived since 2000 are less likely to receive benefits and less likely to live in social housing than UK natives. What’s more, over the decade from 2001 to 2011, they made a considerable positive net contribution to the UK’s fiscal system, and thus helped to relieve the fiscal burden on UK-born workers.
The positive contribution is particularly evident for UK immigrants from the European Economic Area (EEA – the European Union plus three small neighbours): they contributed about 34% more in taxes than they received in benefits over the period 2001-11.
These are the central findings of a comprehensive analysis of the fiscal consequences of immigration to the UK, published today by the Centre for Research and Analysis of Migration (CReAM) at University College London.read more...»
The Confederation of British Industry has today launched a report called Our Global Future: The Business Vision for a Reformed EU - The report calls for further EU reform not least the completion of the single market in particular in services and the new internet economy. They argue for more free trade deals with other countries and regions.
The report produces estimates – based on past academic studies – that EU membership adds £62bn-£78bn a year to UK gross domestic product, equal to the combined economies of northeast England and Northern Ireland. That works out at £3,000 per household and £1,225 per individual. The fact sheets from the report can be found hereread more...»
Economics student Anthony Beaumont writes on the policies that might sustain an improvement in the Croatian economy as it settles into being the 28th member nation of the EU single marketread more...»
With a deep recession and persistently high rates of unemployment among younger people. fears are growing about a brain drain in Portugal as highly qualified university graduates leave the country in search of a better life. Peter Wise, Financial Times Lisbon correspondent, reports on what the trend means for the troubled Portuguese economy. Losing "the best of a generation" poses important long-term threats to the competitiveness of the Portuguese economy. Some are moving to Angola and Brazil, the UK has also attracted skilled workers in health care, banking and IT.read more...»
Whilst the UK appears to remain the most Eurosceptic of the EU member states, other countries are lining up to join the exclusive club we're so keen to distance ourselves from. I suppose it is like having a season ticket to watch Manchester United when you are a Manchester City fan.
Croatia is the latest member to join the EU despite all of the recent Economic problems in Greece, Spain, Portugal and Cyprus, and joins the party just as the collective is about to make a huge trade agreement with the USA.
As an interesting lesson-starter (this activity will last about 10 minutes), are your students able to identify the location of all 28 member states if they are presented with a 'blank' map of Europe. The Balkan and Baltic states pose the greatest challenge!
The Powerpoint file accessed below poses that question. Teachers can run the show and then reveal the 28 countries on their screens or give out the student worksheets (with corresponding map) before going through the correct answers. Note - there are two possible worksheets - the first asks students to apply a number to the given list of the 28 states and the second is blank and asks students to fill in the names of the 28 states in the 'map' order (and is therefore a little more challenging).
Click on this link to access the file. This link will take you to a Google Drive post where you can then download the file to your own computer.
The scale of the new London Gateway Super deepwater Port is truly stunning and its importance to the economy as a trading nation is hard to underestimate - Britain will have a new world class hub port in a key location impacting on many trades and services in and around the South East and beyond. It has taken 10 years to establish and build this huge new infrastructure project, building eventually started in 2008.
Behind the port sits Europe's largest logistics park connected to the South east by road and rail.
This Financial Times news video looks at the background to the project - it is a good example to consider of the macroeconomic consequences of the investment. What price a new Thames Estuary airport (supported by Boris Johnson) to amplify the transformative impact in the years ahead?
Update: BBC news (November 2013) - click hereread more...»
Here are some links to resources covering the accession of Croatia to the European Union as the country becomes the 28th member nation of the EU Single Market. This BBC news article tracks Croatia's progress from isolation to full membership of the EU. For a fact sheet on Croatia this handout from Eurostat looks pitch perfect! We have also produced a one-page case study factsheet on Croatia for students and teachers - Croatia_Joins_EU.pdfread more...»
An updated version of my EU economy study companion is being researched and written at the moment - but in case this might be useful as a revision resource, here is a stream version of the January 2012 document.read more...»
The European Union's carbon emissions trading scheme is under huge pressure at the moment and there are many who believe that the market-based system of carbon pricing has effectively collapsed.
- There is a fundamental over-supply of carbon permits in the market - on some estimates, an excess of supply of over 840 million permits (one permit = one tonne of CO2)
- This has caused a sharp fall in the market price of carbon to below Euro 5 per tonne
- At such low prices there is an incentive to use coal rather than cleaner natural gas for electricity generation
- Latest figures show that greenhouse gas output in Europe fell in 2012 by 1.4% - but this is largely the result of very weak economic growth in the EU
(Source: The Economist) - click here
Fantastic interactive website here lets you check out migration flows both inward and outward from any country you care to look at.
Increasing foreign language proficiency could be a key policy tool for encouraging greater mobility of labour between countries of the European Union and reducing the huge differences in rates of youth unemployment. According to research by Professors Ainhoa Aparicio-Fenoll and Zoe
Kuehn, including foreign language studies in the compulsory school curriculum fosters migration across European countries.
The annual NORFACE migration conference at University College London this week has generated plenty of new research papers on the economics of international migration, a topic that of growing significance for students of globalisation, competitiveness, innovation and growth. Some of the key findings are summarised below together with external links to relevant articles and news reportsread more...»
The European Union has just released some new figures on the spread of hourly labour costs among the member nations of the European Union. Labour costs are made up of wages & salaries and non-wage costs such as employers' social contributions e.g. national insurance payments in the UK. Students who have covered aggregate supply and demand theory might be able to consider why changes in labour costs can have an effect on key macroeconomic indicators such as inflation, demand, exports and growth.
Hourly labour costs are different from unit labour costs - the latter takes into account the productivity of people employed. For example, a 5% rise in hourly labour costs will leave unit labour costs unchanged if productivity rises by 5% over the same time period.read more...»
The scale and depth of the unemployment crisis in Europe is confirmed by fresh figures released by Euro Stat. Unemployment in the Euro Zone was 12.0% in February 2013 and the jobless rate for the European Union as a whole was 10.9%. Last month there were 26.3 million people counted as out of work in the twenty-seven countries within the single market, 19 million of whom live in Euro Zone countries. In the last year alone, unemployment in the Euro Zone has jumped by over 1.7 million but this aggregate figure hides large country differences and persistent regional and local variations. Here is the contextual data to take into the exam:
Geoff and the team are hard at work preparing their comprehensive support pack for teachers and students preparing for OCR A2 Unit F585 on the Global Economy.
We're hoping to have the F585 Toolkit ready to despatch by Wednesday 27 March and we'll email it out to colleagues who request it over Easter if they have already broken up for the holiday.
The OCR F585 Toolkit can be ordered directly online here or by downloading and completing this printable order form.
The Toolkit provides unrivalled analysis and evaluation of each of the 5 F585 research extracts: namely
Extract 1: The birth and growth of the eurozone
Extract 2: New EU member states and the euro
Extract 3: Estonia’s economic growth and development
Extract 5: Estonia’s progress towards sustainable development
There has been plenty of discussion in recent weeks about whether Britain might seriously start to consider leaving the European Union? Here is a selection of news pieces and discussion videos on the vexed question of UK membership.read more...»
The headline news from the Financial Times could not be starker. Ford Motors has announced the closure of its last two remaining assembly plants in the UK with the probably loss of thousands of jobs. The Ford Transit plant in Southampton will close in early 2013 and a tooling factory will close in Dagenham, east London. Workers in these two factories are paying a heavy price for the sustained fall in new vehicle orders and production since the credit crunch came in 2007. Since then there has been a more than 20 per cent decline in total demand for vehicles. New passenger car registrations in Europe are expected to be just over 9 million in 2012 compared to 13 million in 2011 and 15 million in 2007. Demand for commercial vehicles has also suffered as businesses have cut back on their capital investment.
Ford is not alone in making difficult decisions to restructure their European business as a way of stemming losses and maintaining competitiveness in a hugely difficult market. Many other leading car manufacturers are taking steps to lower their production costs and survive this turbulent period:read more...»
The international parcels industry is a superb example of a network industry where the fixed costs are high and the marginal cost of collecting, sorting and delivering each parcel is way below the average cost for a particular parcel business. Two global integrators, UPS and TNT Express are set to join forces in Europe as part of a merger but the European Competition Commission is investigating this planned horizontal integration on the grounds that a much larger combined business will raise market concentration levels to a position that might harm consumers.
“UPS and TNT Express are two out of the only four so-called “integrators” currently operating in Europe. Integrators are companies that control a comprehensive air and road small package delivery network throughout Europe and beyond and are capable of offering the broadest portfolio of such services. The other integrators present in Europe are DHL, which is owned by Deutsche Post, and FedEx, a US-based company”
(EU Competition Commission press release, July 2012)
This new video from The Economist provides some excellent background on the industry and gives a vivid illustration of the investment needed to run an international parcels business.read more...»
Competitiveness will be key to Spain’s prospects of a durable economic recovery and the chances of cutting debt. Spain would probably benefit from a devaluation of her currency but there are other factors that drive competitiveness in global markets. Indeed there are plenty of large and medium large Spanish businesses that have growth and export potential even if Spain stays within the Euro Zone. The growing share of Spanish service exports is a good sign especially in the areas of financial services and engineering.
This FT video looks at what Spain might do to bolster overall competitiveness including a focus on research and development and innovation together with economic reforms designed to raise productivity.read more...»
The European Union is bringing in tough new laws covering the collection and recycling of the growing mountain of electrical waste - also known as e-waste. From 2016 - for every hundred tonnes of electrical items put on the market during the previous three years member countries will have to collect and recycle 45 tonnes of e-waste. The EU directive provides an opportunity for businesses that can recycle and reuse electrical products and their many component parts - the high global prices for essential raw materials gives added impetus to the challenge to tackle the e-waste problem. This news video also looks at entrepreneurial activity in recycling waste in India.read more...»
The financial crisis in the European Union is prompting an exodus of many young people from struggling EU countries - this short new report looks at the effects of people from France migrating to the Ivory Coast - does the host nation benefit in the medium term?read more...»
Alcohol-related accidents are the leading cause of death and serious injury for victims of car crashes in France and the government has decided to introduce a strong behavioural nudge by making it compulsory for every car to have a portable breathalyser kit in their vehicles or risk a fine. This applies to every vehicle including those driven by tourists. Vehicle owners will have until November 2012 to get used to it before the fines are imposed.
Having a breathalyser in the glove box or on the front passenger seat might well be an effective reminder for people before they turn on the ignition. Reminders of our mortality and/or our morality can often prime us to make safer, better choices. I applaud the French government for introducing this new law. All motorists must also have with them a high-visibility safety vest and a warning triangle.read more...»
A revision blog on the economic impact of migration on the UK economyread more...»
Catastrophically high unemployment in countries such as Spain are causing people to leave the Med in search of work elsewhere and thousands are trying their luck in South America. This short video from Al Jazeerah news looks at the growing number of people heading to Argentina looking for a job or perhaps the chance to start a new business. Watching it is a chance to revise some of the factors that affect the geographical mobility of labour? This Economist report looks at some of the causes of geographical immobility of labour.read more...»
The price of carbon emissions permits inside the EU’s emissions trading system has fallen to a record low. A sharp fall in total CO2 emissions in Europe has been the driving factor behind the fall in the carbon price. Last year Germany’s CO2 emissions fell by 1.2% and the UK saw a 7.2% reduction. The overall decline in the 27 country ETS was 2.4% in 2011 causing the carbon price to drop below 7 Euros per tonne.read more...»
For several years the European Union Competition Commission has been targeting the oligopolistic mobile phone industry accusing it of damaging consumer welfare with high roaming charges when people are travelling and working within Europe. Yesterday marked another landmark in the battle between the regulators and the industry.read more...»
Here are some links to video resources on prospects for further enlargement of the European Union single market.read more...»
Migration from one country to another has become an increasingly important feature of our globalizing world and it raises many important economic, social and political issues. About 200-million people — about 3% of the world’s population — now live in countries in which they were not born. In the United Kingdom in 2010, the number of international migrants as a percentage of the population rose above 10% for the first time after several years of high rates of net inward migrationread more...»
This excellent news piece from Ben Cohen at Channel 4 looks at the increasingly aggressive patent war being fought by the manufacturers of the world’s leading mobile phone and tablet devices - the most profitable products in the digital economy. “Where once the giants (Google and Apple) competed on features, they now compete on patents.”
The news feature looks in particular at the intellectual property surrounding the slide-screen technology used by millions to unlock a device. Apple claims the IP to this but a video tracked back to twenty years ago suggests that developers were already thinking of something remarkably similar long before the iPhone came into existence. Can the makers of Android defend legal claims from Apple that their IP has been infringed? And who will end up paying for the enormous legal fees and possible extra licencing costs?
This feature article from the BBC web site is essentially about the vital importance of high-knowledge industries in sustaining competitiveness and growth in a globalising world. Europe lags behind many emerging countries in terms of the resources devoted to science and technology, research and development and creative industries in particular.
But the article makes reference to the expansion of science cities - knowledge clusters that bring together higher education expertise and entrepreneurial zeal - their number continues to grow from California and Boston in the USA, Cambridge in the UK, Education City in Qatar, Science City in Zurich and Digital Media City in Seoul. All good examples to use of the commercial leverage from external economies of scale in high-tech industries.
How about this for economies of scale in the renewable energy industry? A new photovoltaic park has opened in Les Mées in France, By the end of 2011, solar panels will cover 200 hectares and produce around 100MW, making it the biggest solar array in France.
Each of the AQA a2 economics papers contains data response questions where understanding and awareness of the context of the economics of the European Union comes into play. We have a EU Economy in Focus study companion which is published in updated form each year. Details are available here. One area for revision focuses on the analysis diagrams that might be used to support your answers to EU context questions, I have put together a listing of topic areas where a diagrammatic approach might pay dividends - it is not exhaustive of course, merely some suggestions that might be useful. It appears below:read more...»
There is much focus on Chinese foreign direct investment in Africa and Latin America - China is also making huge investments in Australia as my friend Mark Johnston writes about in this blog. Here Euro News looks at investment in the European Union by Chinese owned businesses. New motorways in Poland ahead of the 2012 European Football Championships, co-financed by the EU, are being built by Chinese companies. The Chinese are also buying up public debt, in Greece, Spain and Portugal.
I have put together a short revision exam-style question for AQA Unit 3 (Micro) focusing on some of the issues / problems facing the European Airline industry. Many of the established airlines are part-state owned and the question of nationalisation, government emergency funding / state aid was highly topical this time last year in the wake of the recession and the volcanic ash crisis. The document can be downloaded below and I have linked also to some other A2 micro revision resourcesread more...»
The EU Competition Commission got into a LATHER about alleged price fixing by a number of multinational soap and washing powder producers and in a ruling today they have imposed fines on Unilever and Procter & Gamble €315.2m ($456m) for fixing washing powder prices in eight countries within the single market. An investigation was prompted by whistle-blowing from Henkel, a German competitor (manufacturer of Persil) and so the investigation CYCLE began. Unilever was fined €104m and Procter & Gamble was fined €211.2m. Henkel was not WHITER THAN WHITE but under EU cartel rules, it avoided a hefty fine because of alerting the authorities to the price fixing scheme.read more...»
A hat tip to Philippe Legrain for spotting this piece in the Wall Street Journal highlighting the chasm in educational outcomes in Portugal (Western Europe’s poorest nation) contrasted with other EU countries. Only 28% of Portuguese aged 25-64 have completed secondary school vs 85% in Germany and 91% in the Czech Republic. “Portugal must generate enough long-term economic growth to pay off its large debts. An unskilled work force makes that hard.” More hereread more...»
All twenty-seven nations of the EU are members of the single market. Seventeen countries have entered the Euro Area and share a common currency. Under EU law, as an EU national, you cannot be charged a higher price than local residents when buying products or services anywhere else in the EU, unless the price difference is justified.
Price convergence shows the degree to which prices for goods and services in European Union Member States have moved together, or converged, and is an important indicator of the success of the internal market.
In contrast, price divergence shows the degree to which prices have moved apart. It is calculated by examining the coefficient of variation of the comparative price levels. The lower the coefficient, the greater is price convergence within the EU
Our Timetric chart tracks what has happened to comparative prices within the EU over the years. We see a gradual process of price convergence but there remain widespread and persistent price differences across Europe for similar / standardised products - from petrol to hotel rooms, from clothing to a meal out. I ask students if they can explain some of these price differences and if they can use cost and revenue curve analysis to illustrate them?read more...»
I will keep this blog updated with a selection of video clips relevant to the study of the EU - please check below for some links and embedded videosread more...»
Has the growth and development of the European Union single market and the Euro accelerated a process of price convergence within the EU? Price convergence means that the gap in prices for the same good or service has come down and in theory, having one currency and an open market ought to bring down the extent of price variations. Our Timetric chart below tracks what has been happening to the price convergence indicator. A fall in the measure indicates a coming-together of average prices.read more...»
Paul Mason continues his journey through some of the countries inside the EU facing an economic crisis. Portugal is in recession, construction has slumped and the government is introducing fiscal austerity measures but they are keenly aware that the sovereign debt crisis is yet to hit the economy with full force. A vivid and colourful report from one of the BBC’s top reporters.
One of the unintended consequences of the steep rise in the real price of cigarettes in the UK is the strong incentive to bring contraband cigarettes into the UK from elsewhere in the EU single market.
This Guardian article reports on the expected rise in smuggling as cigarette duties reach fresh highs in 2011. The average price of a pack of 20 cigarettes reached £6.29 in the UK last summer, compared with £2.80 in Spain and £1.57 in Poland.
I am teaching European and Global context for A2 macro this term and one of the key topics is the economics of EU enlargement. The opportunities to attract inflows of direct investment is one of the major attractions for new EU countries as they enter the single market. Here is a selection of videos promoting FDI into a selection of European nations.read more...»
With EU carbon emissions market has closed since the middle of January after hackers stole €30m of permits the economics of a EU wide carbon tax has been given fresh prominence in recent weeks. Charles Hart evaluates the arguments for and against a tax on emissions in this super applied micro essay. After the essay there are some links to recent blog posts and other resources on carbon trading and carbon taxation.read more...»
This is one of the longest running disputes in trade history. Europe and the US have been fighting for more than six years over each other’s subsidies for large passenger aircraft in the duopolistic battle between Boeing and Airbus. Now the World Trade Organisation has found that Boeing received at least $5bn (£3.1bn) in illegal subsidies and was only able to launch its 787 Dreamliner with such support. Airbus has als been found to be in breach of receiving illegal state aid. Reuters provides useful background here.
The Telegraph reports here that Mozilla’s Firefox has overtaken Internet Explorer as the preferred browser for internet users in Europe. And Google’s Chrome is fast gaining a strong foothold in this intensely competitive market. The market share data suggests an oligopoly but we know that despite the dominance of a small number of web browsers, the reality is that competition is fierce and millions of web users have their own quite strong preferences!
Lots to think about here in terms of economic efficiency - not least dynamic efficiency and innovation in the market.
And also the impact of competition policy in action .... as the article says at the end
“Since early 2010, Microsoft has offered millions of European customers that use its Windows software the option of using 12 different internet browsers. This followed an agreement in December 2009, when European Union regulators accepted Microsoft’s pledge to give consumers better access to rival browsers, ending a long antit-trust dispute.”
A hat tip to Ian Goff for spotting the article. If you want to keep an eye on what is happening to market share on a daily basis this is the link to the StatCounter site
Not all instances of collusive behaviour are deemed to be illegal by the European Union Competition Authorities. Practices are not prohibited if the respective agreements “contribute to improving the production or distribution of goods or to promoting technical progress in a market.”
• Development of improved industry standards of production and safety which benefit the consumer
• Information sharing designed to give better information to consumers
• Research joint-ventures and know-how agreements which seek to promote innovative and inventive behaviour in a market. The EU has introduced a “R&D Block Exemption Regulation” for this
In December 2010 the EU Competition Commission introduced new guidelines on the types of ‘horizontal cooperation’ that is allowed under EU laws. And here is a good recent example - the development of and agreement on joint industry standards in Europe for mobile phone chargers which means that mobile and smartphone users will soon be able to use a standardised charger.
The common charger will make life easier for consumers, reduce waste (good for the environment) and benefit businesses who dont have to spend as much on developing their own charger technologies.
Apple, Emblaze Mobile, Huawei Technologies, LGE, Motorola, NEC, Nokia, Qualcomm, RIM, Samsung, Sony Ericsson, TCT Mobile (Alcatel), and Texas Instruments have all signed up to the agreement.
I have put together a listing of suggested reading / articles on different aspects of the economics of the EU. This is available for download below as a pdf file.read more...»
The economic and financial affairs unit of the EU has produced this resource on inflation within the European Union. It covers the meaning and measurement of inflation, inflation expectations and some study notes on the consequences of inflation for people living inside the single market. It is available here.
A new law has come into force this week in Greece banning smoking in enclosed public spaces and tobacco advertising.
It is estimated that more than 40% of Greek adults smoke - well above the EU’s average of 29% - which is perhaps why at a time of fiscal austerity, it is surprising/impressive that the Greek government have pursued this policy. Cigarettes bring in a significant amount of tax revenue (either via indirect or corporation taxes) which will be lost. But then maybe it will save a lot more money via its health bill. (or maybe they are just hoping people will flaunt the rules and collect fines!).
Having said this, this latest attempt to stop smokers, is its 4th attempt in a decade - following a tobacco ban in public places on July 1 of this year too. The demand for habit-forming goods is too inelastic to go away overnight…