The reform of EU institutions Time for a radical re think：欧盟机构改革的时间彻底的重新思考.ppt

Broken Levees: Europe’s Answer to the Global Changes in the Division of Labour Richard E. Baldwin Professor of International Economics, Graduate Institute of International Studies, Geneva Munich, 5 May 2006 Access to new markets Market opening ? new opportunities ? adjustment. 2 broad types of adjustment: #1. Cross-sector specialisation (North-South). #2. Within-sector specialisation scale economies. Pains Gains from trade. Winners win more than the losers lose, but … Adjustment more difficult politically for #1 Higher ratio of pains/gains. New markets Former Soviet bloc nations. India China. Look at size how different. 10 New Member States China India EU export pattern Opportunities on Production Side “Unbundling” Old days: ‘national systems’ Skilled unskilled labour + capital, management technology. Cost of moving people, goods ideas ? People ?, goods ??, ideas ????. New Century way: fragment production. European technology managers re-bundled with labour capital in Central Europe, Asia. Trade in productive factors. Pains gains Old days: Bundle ? artificial reward to labour, capital and technology. Unbundling ? winners losers, but winners win more than losers lose. Wages of unskilled labour especially cheap in China Central Europe. Low productivity but even lower wages. … but, shortage of other talents. Potential for mutually beneficial exchange. Europe’s answer Europe’s companies: responded well. Europe’s governments: responded badly. Economic malaise Unbundling: Europe’s low medium skilled workers were overpriced. High productivity, but higher wages. Implied: 1. Price adjustment (relative wages fall) 2. Quantity adjustment (unemployment) Winners Losers Government failure Mass unemployment: Short-run vs permanent. Tax burdens, disincentives, social exclusion. Traffic jam: Insiders vs Outsiders. Failure to see big picture, what Europe could be. Passing Parade Parable End Thank you for listening. http://www.hei.unige.ch/baldwin/ EU ma