Europe’s economy performed surprisingly well in summer and fall 2021 and is, as expected  experiencing the typical seasonal economic slowdown this winter. Whether growth picks up again depends largely on developments in the corona virus pandemic. The emergence of new virus variants poses the risk that existing vaccines may be less effective against these mutations. This uncertainty weighs on the expectations of consumers, investors and employees – and weakens economic growth. The interplay of all risks could result in an economic downturn.

The new year started with a heated debate about Europe’s taxonomy for sustainable activities. It is the first test both for the unity of the new German government and for the ability of the French EU presidency to act as an honest broker. This blog post answers the three most important questions to guide this somewhat frayed debate.

Another year, another try. Once again, we try to forecast the events most likely to induce crucial changes for the world (economy) in 2022. However, our approach is a bit different this year: first, we focus more on Europe. We won’t look at European events only, but we will pay special attention to those events that will greatly influence Europe’s position in world affairs

Visit (in German only)

Today’s post differs slightly from our usual posts. This one does not analyze a global economic trend, a political action, or the EU’s strategy – but instead is about an interactive online game. A couple of days before Christmas, seemed an appropriate time. Not only fun but also useful (well, after all, it is still about political action and the EU’s strategy.)

GED blogpost series on globalization scenarios

The global economy is experiencing a period of rapid upheaval. Technological advances and growing rivalries are tugging at the world’s power structures as major economic players engage in a geostrategic competition. The United States, China, Europe, and other ambitious actors must align their economies to reflect the emerging realities. 

Russia’s Power Play and the EU’s Neighbourhood Policy

The Eastern Partnership initiative has contributed to the understanding that Europe is more than the European Union. The long-awaited first face-to-face summit after 2017 confirmed, however, that with its post-2020 agenda “Recovery, Resilience, and Reform” Brussels still does not call a spade a spade when it comes to its integration competition with Moscow. The struggle for political and judicial sovereignty and integrity in the neighborhood will thus continue against the background of unfavorable geopolitical realities.


Is Inflation coming? Part I: Drivers of Inflation in the short run

In October 2021, prices paid by consumers in the eurozone were four percent higher than in October 2020 – the highest rate of increase since the summer of 2008. Effects of the corona pandemic are responsible for this. When these expire, we can expect lower inflation rates as early as next year.


Is Interdependence the Neighbourhood Strategy for a “Geopolitical EU?”

In light of the increasing “great-power” competition and despite the EU’s ambition to become an influential global player, the Union has so far demonstrated little ability to navigate the challenges Belarus poses. Analysing the poor track record of EU-Belarus relations offers important lessons.

Europe played a marginal role in the German election campaign – to the dismay of the country’s federalist community. That said, the coalition agreement hot off the press merits applause even from those who complained that the European dimension of German politics was being ignored. For what the “traffic light” coalition has agreed upon is a strong commitment to more European integration in a number of decisive areas. Here is a short take on some of the agreement’s most interesting passages:

“He who has the benefit must also bear the damage” is how Walter Eucken summed up the principle of liability, a cornerstone of functioning market economies. This also applies to climate policy. From an ordoliberal point of view, it is not acceptable to make profits while socializing environmental damage.

Germany’s recent election brings an end to the long tenure of Angela Merkel. Malte Zabel, Co-Director, Europe’s Future at Bertelsmann Stiftung in Germany, and Brandon Bohrn, Project Manager, Transatlantic Relations at the Bertelsmann Foundation in Washington, D.C., reflect on what might be expected of the new “traffic light” coalition.

Hardly a day passes without further escalations in the conflict between the Polish government and the EU. The Polish Constitutional Tribunal’s ruling on October 7, rejecting the primacy of EU law over the Polish constitution, marks a dramatic escalation.

In June 2021, the European Union and the United States agreed to establish the Trade and Technology Council (TTC). Even though the submarine deal between Australia, UK, and US (AUKUS) cast a shadow on EU-US relations recently, the inaugural meeting of the TTC took place as planned on September 29, in Pittsburgh. In this blog post, we provide some basic information on the TTC.

During her chancellorship, Angela Merkel played an outsized role in the EU’s various crises. She leaves behind an EU whose citizens have faith in the bloc’s potential but remain concerned about its future direction.

On September 9th and 10th, EU Foreign Affairs Representative Josep Borrell met with President Kais Saied and representatives from politics and civil society in Tunis to get a picture of the political and economic crisis in the flagship Arab democracy. The way out of the crisis is complex, and there is a threat of national bankruptcy. European assistance will be a balancing act between supporting and demanding.

GED blogpost series on China’s role(s) in the world economy (Part 2)

In the first part of our series on China’s role in the world economy, we gave a brief overview of the political and economic background of China’s rise as a global super power.

An unending search for efficiency maximization currently characterizes the international division of labor. By, for example, just-in-time production and cooperation with the most favorably priced supplier worldwide – deviations from agreed supply relationships are not allowed. If a disruption occurs, as has happened with some regularity in recent years, this causes production stops and supply bottlenecks.

Part 4 in our series Putting a Price on Carbon

Carbon Pricing makes CO2 emissions more expensive and therefore drives them down. In this installment of our series “Putting a price on carbon,” we take a closer look at the short-term and the long-term economic effects of the price hike.

Three questions. Four different takes. Our GED team reflects on Biden’s first 100 days from the lens of their work. Emily Benson looks at his record on domestic U.S. economic policy and Christian Bluth on his U.S.- E.U. relations record. Cora Jungbluth focuses on his record on U.S.-Asia relations, and Thomas Rausch wraps up with a look at his record on multilateral economic policy. Four trade policy experts discuss Biden’s 1st hundred days.

In February, the EU published the “Trade Policy Review,” its new trade strategy. A month later, the “Integrated Review” by the UK was put forward, sketching what “Global Britain” means post-Brexit. The two strategies are similar in their diagnosis of what is going on in the world – yet differ when it comes to what to prioritize.

Part 2 in our – Putting a price on carbon series

The reason for the trend toward pricing carbon is the negative effect of the rise of carbon emissions on the environment and society. In this second entry of our blog post series “Putting a price on carbon,” we go a bit more into the details of this problem.

First in our new series: Putting a price on carbon

On March 22, top executives from major oil companies expressed their support for the Biden administration’s carbon pricing plan. The embrace of carbon pricing by “Big Oil” – its longtime most-fervent opponent – is probably the clearest sign of it moving to near-universal support. This weekly series of blog posts will take a closer look at this emerging global economic dynamic. Follow us on this journey!

Meritocracy adds mental insult to social injury

Meritocracy is a good thing. Wrong, claims Michael J. Sandel in his book “The Tyranny of Merit”! On the way to proving his point, Mr. Sandel indicts globalization as a culprit for rising inequality and eroding social bonds. Let’s take a closer look at his arguments.

What does the concept of terms of trade (TOT) mean, and what does it tell us about a country’s international competitiveness?

The meaning of Terms of Trade

The Terms of Trade of one country indicate how many units of an imported good (or units of a bundle of imported goods) the country receives for one unit of its exported good (or one unit of a bundle of exported goods).

The main themes of the new book by Christian Bluth

The nature of globalization is changing. The US and China make increasingly use of geoeconomic instruments in their big power competition. The EU will have to react in its new EU trade strategy to this development and come up with responses to the challenges posed to its trade policy by climate and demographic change, technological developments, a weakening of multilateral institutions, and an increased politicization of trade policy.

The WTO is entering the final stages of choosing a new Director General. On October 7th, the final contenders out of an initial group of eight were announced: Ngozi Okonjo-Iweala (Nigeria) and Yoo Myung-hee (South Korea). What do these candidates stand for and what agenda lies ahead for the new WTO Director General and global economic governance? This discussion was held online on October 14th at 2pm CEST.

According to recent estimates by the United Nations Conference on Trade in Development (UNCTAD), global foreign direct investment (FDI) flows have decreased by 42 percent year-on-year in 2020 and will most probably not start to recover until 2022. Even though developed countries have experienced the highest fall, developing countries are also losing a lot. Since FDI, however, could be considered as a tool to help esp. developing countries coping with the coronavirus crisis, India for example has tried to facilitate the inflow of FDI.

Major events in 2021: Last year around this time, we wrote a blog post with the 11 events likely to change the world economy in 2020. Like everyone else, we missed the most important one: the COVID-pandemic. But we also got some stuff right: something was in the works with RCEP, the US election (OK, that wasn’t too difficult), and that the German EU-Council presidency would face a few challenging issues. So, we decided not to be discouraged and have another shot at prognosticating  which events might shape 2021.

Economic Outlook 2021: The world economy in 2020 was dominated by a massive economic slump in the spring, followed by a rapid recovery in the summer. Then the rising number of infections in the fall halted the recovery process. Economic development in 2021, as it did in 2020, will depend to a large extent on the Coronavirus pandemic.

When we publish our studies, we usually focus on two or three key results. But they often contain substance for a lot more. So, here is the ultimate list of the most intriguing findings from our publications on trade, innovation, and globalization from the last twelve months that we have NOT highlighted in our communication activities – and what they mean when looking toward 2021!

The sharp economic downturn caused by the COVID-19 pandemic has created “a crisis like no other.” Advanced economies now need to overcome national reflexes and help developing countries.

The United States Trade Representative (USTR) is the key person in charge of trade issues in the President’s administration. The current USTR, Robert Lighthizer, was instrumental in crafting and implementing Trump’s trade policy. On December 9th, several news outlets reported that President-elect Joe Biden will be nominating Katherine Tai for this role. In this blogpost we introduce her and the challenges she is facing.

4 reasons why the exchange rates of industrialized countries have been relatively stable during the corona pandemic 

In severe economic crises, experience shows that in addition to considerable fluctuations in the stock and raw material markets, there have been severe fluctuations in the currency markets. The exchange rate changes in the currencies of advanced economies are still relatively moderate – compared to the financial and economic crisis 2008/09. Why?

A new survey from the project eupinions shows that around two-thirds of Germans and Europeans expect innovation and digitization to impact their lives over the next 15 years positively. Expectations are particularly high in the areas of mobility and energy supply. Meanwhile, the greatest need for support is seen in the health sector, in job creation, and in the fight against climate change.

The G20 could play a vital role in orchestrating a non-protectionist, sustainable, and inclusive global recovery. Their special Summit on the Corona crisis in March produced some promising results. In previous years, however, in the past, the group of twenty very diverse developed and developing countries has had difficulty finding common ground on important global issues, such as international trade and climate change. It is questionable whether the pandemic will substantially change this. Moreover, Mr. Trump’s legacy and rising geopolitical tensions loom ahead.

The size and age structure of a population can play an outsize role in any country’s economic development in numerous ways, including international competitiveness. Population composition affects competitiveness via propensities to save and consume, companies’ investment behavior, capital intensity of production, and global and regional labor supply.

On November 2, Germany will join the ranks of developed countries introducing additional national measures to slow down the spread of Covid19. What will they mean for the German economy and where do the biggest risks lurk going forward?

The corona pandemic has severely affected international supply chains. Starting with the first production stoppages in China at the beginning of the year, production has also come to a standstill in Germany. In many sectors, important components and preliminary products from the most important supplier country for the EU and Germany were missing. However, the closing of borders within Europe has also considerably slowed down the movement of goods and economic activity.

The WTO is entering the final stages of choosing a new Director General. On October 7th, the final contenders out of an initial group of eight were announced: Ngozi Okonjo-Iweala (Nigeria) and Yoo Myung-hee (South Korea). What do these candidates stand for and what agenda lies ahead for the new WTO Director General and global economic governance? This discussion was held online on October 14th at 2pm CEST.

What the Selection of a New Director General Means for Global Trade Governance

The WTO is entering the final stages of choosing a new Director General. On Wednesday 7th, the final contenders out of an initial group of eight were announced: Ngozi Okonjo-Iweala (Nigeria) and Yoo Myung-hee (South Korea). What do these candidates stand for and what agenda lies ahead for the new WTO Director General and global economic governance?

What the Selection of a New Director General Means for Global Trade Governance

The WTO is entering the final stages of choosing a new Director General. On Wednesday 7th, the final contenders out of an initial group of eight were announced: Ngozi Okonjo-Iweala (Nigeria) and Yoo Myung-hee (South Korea). What do these candidates stand for and what agenda lies ahead for the new WTO Director General and global economic governance?

Economic impact of coronavirus: Last year we published the first issue of our megatrend report, which examines the central interactions between the megatrends of globalization, digitalization, and demographic change and their effects on people’s employment and income opportunities. In the second issue, we discuss the impact we expect the Corona pandemic to have on the medium and long-term development of digitalization and globalization

Our "Globalization Report 2020" is now available

As announced last week, we are publishing the “Globalization Report 2020” today. The answer to the question of which of the 45 industrialized and emerging countries studied was able to achieve the largest globalization-induced growth in real gross domestic product per capita between 1990 and 2018 per capita and in euros is Japan. In this post, we present the five key findings of the report.

Two years in the making: Our “Globalization Report 2020” comes out next week

Next week we publish our “Globalization Report 2020”. Every two years since 2014, we have used this report to examine the impact of advancing globalization on the real gross domestic product (GDP) in industrialized and emerging markets.

New Globalization survey: The public thinks the social and ecological dimension of globalization needs more attention!

The corona crisis has many people worried about the negative side-effects of economic interdependence. Our 2020 Globalization Survey shows that public attitudes toward international trade and investment had already turned more negative by the start of the pandemic.

Things are improving – at least for the moment

Economic impact of coronavirus: When corona infections first appeared in Europe in February, an economic crisis loomed on the horizon. The full extent of the crisis, however, was not yet foreseeable. Half a year later, it is clear that the recession triggered by the corona crisis is much greater than the economic downturn caused by the Lehman bankruptcy. But as of now, it looks as if European economies have touched the bottom and rebounded.

Cities and globalization: Cities all around the world see themselves exposed to several megatrends. They are directly confronted with the needs of their citizens and obliged to offer competitiveness, resilience and a high-quality of life for a long-term sustainable development.

Eleven years later, in 2019, Italy had still not yet reached the real economic output it had before the Lehman bankruptcy. Now the country is again suffering above-average economic consequences from the Corona pandemic. The already high national debt is rising. Credit-ratings are under considerable pressure.

The book ‘Good Economics for Hard Times’ by 2019 Nobel Prize winners Abhijit V. Banerjee and Esther Duflo is a walkthrough of past decades’ central contributions to the economic literature. It introduces the concept of “randomized controlled trials” to a broader audience. In light of the current corona crisis, their ideas have become highly relevant.