Ladislava Grochová

Evaluation of Competitiveness in the European Union: Alternative Perspectives

Abstract The paper deals with different approaches to evaluation of competitiveness of the EU countries. Alternative measures of competitiveness indicators are applied and compared in the paper. The traditional approach of cost-based productivity measures is applied in the analysis. In addition, the set of infrastructure and human capital quality indices reflecting the countrys potential to attract firms to establish and conduct competitive high-tech business is suggested to examine competiveness from the firm-level perspective. Internally homogenous clusters of EU countries with similar competitiveness characteristics are identified using the Ward agglomerative method in the analysis. Also, the dynamics and convergence processes of the EU core, periphery and CEE countries are examined using the measure of average distances within clusters. The results of countries’ competitiveness evaluation show differences using both alternative approaches. Whereas the division between core, periphery and CEE countries is obvious using traditional cost-base productivity measures, unstable disparate clustering structures were identified using the firm-level approach. The results also show slow and steady convergence of CEE towards the core countries from the perspective of infrastructure and human capital quality dimension.

How Does Corruption in Central and Eastern Europe Hurt Economic Growth? Granger Test of Causality

The paper explains theoretical framework of how corruption hurts economic growth and reveals its application difficulties. Comparing views on corruption in terms of the problem of agency and the problem of rent-seeking we argue that corruption in general is the problem of legal setting and its enforcement and, if badly established, it does not promote economic growth. To verify the theoretical argument we present empirical Granger causality test to demonstrate that corruption precedes economic growth in Central and Eastern Europe. This means that legal setting and its enforcement rather allow for rent-seeking than promote economic growth. As a consequence we emphasize the necessity to focus on institutional framework to fight corruption and support economic growth.

Alternative Approaches for Assessing the European Countries Economic and Social Results

Abstract The European Union has been passing a complicated period over the last years. The EU economy lags behind its own development goals as well as, behind the results achieved by its economic partners and competitors – USA and Japan. Due to lower competitiveness in the international market environment, the persisting or even expanding problems on the domestic labor markets are evident. Many EU countries demonstrate relatively high unemployment which leads to weakening the income situation of households and strengthening the social tension in society. Particularly worrying is situation of young graduates and also people approaching retirement age and seniors. In context of such arguments, the strategy for perspective development of the EU – the strategic document Europe2020 – has been proposed. Its key objective is to strengthen the economic competitiveness of the European Union, its member countries and particularly the competitiveness of its firms. It is expected that the Europe 2020 objectives will create favorable environment for reducing the social tension across the EU countries and finally lead to the better life of majority of its citizens. All the EU2020 goals are difficult. To achieve them it is necessary to identify precisely the current positions of individual countries and their distances from these ambitious goals in order to select the optimal strategies to their fulfillment. Our paper aims to contribute to identification of the current competitiveness position of the EU and its member states in international market environment and to estimate the chances for achieving the EUROPE 2020 strategic goals.

On power comparison of normality tests of error terms in regression models

Verification of regression models constitutes one of the most important steps in applied regression analysis and is primarily based on analysis of error terms. Some statistical procedures used in the testing of linear regression model such as t-test or F-test are based on assumption of normality of error terms. Failure to assess non-normality of the error terms may lead to incorrect results of usual statistical inference techniques. This contribution aims at assessment of a power of several robust and non-robust normality tests of error terms in regression models. For this purpose using a Monte Carlo simulation technique we simulate the dependent variable by p-location outlier models and estimate the ordinary least square residuals. Finally we test the normality of residuals to explore the power and robustness of selected robust and non-robust normality tests.

Performance of the OLS estimator in presence of autocorrelation

In this paper we show behaviour of some estimators for linear panel data models with autocorrelated idiosyncratic noise. This contribution then discusses properties of widely used estimators as ordinary least square, and Prais-Winsten estimator, respectively, in case of temporally correlated panel data. By a Monte Carlo study we assess the bias and efficiency of the correction methods under different data generating processes. Using Monte Carlo simulation we investigate how the performance of the OLS and GLS estimators varies according to increasing dependence in time dimension, i.e. we expect an increasing bias of the OLS estimator as temporal correlation augments.

On exchange rate misalignments in the Eurozone's peripheral countries

In this paper we model equilibrium exchange rates for the Eurozones countries on the basis of the Behavioural Equilibrium Exchange Rate approach, which assumes, that equilibrium exchange rates are in the long run affected by economic fundamentals. To assess the degree of exchange rate misalignment for the Eurozones peripheral countries - Portugal, Ireland, Greece and Spain - the gap between the actual and the modelled equilibrium exchange rate value is calculated. Our results show that Spain, Portugal and Ireland had their real exchange rates in equilibrium when they joined the Eurozone; however their real exchange rates have been persistently overvalued since the beginning of the 2000s. Greece, on the other hand, has experienced diminishing undervaluation at the beginning of its membership in the Eurozone and since 2009 has exhibited an overvalued real exchange rate.

Corruption, Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories

Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, chap 5). The modern Public Choice proponents argue that corruption and lobbying might influence the efficiency of the rule of law. While Chicago Public Choice scholars model how legal lobbying, which is corruption in Virginia Public Choice perspective, improves efficiency of the rule of law and thus the overall economic efficiency, the Virginia Public Choice models explain how corruption reduces efficiency of the rule of law and thus the overall economic efficiency. In this short paper, we present a brief survey distinguishing between arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption influences economic efficiency. We argue that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic rent-seeking.

Sustainable Development in the EU

The challenges of globalisation, technological progress and limited world resources that are typical of elevated consumption must be necessarily addressed in a manner that reflects both socio-economic and environmental problems. One relevant approach to these problems is represented by so-called sustainable economics. This approach cannot address traditional measures of economic performance such as GDP or GNP and requires a new methodology for the measurement of socio-economic activities in the environmental context. In this chapter, we present widely used indicators of sustainable development, namely, the Better Life Index, the Ecological Footprint, the Happy Planet Index, and the Environmental Performance Index. The content and appropriate uses of these indices in the EU countries are discussed, devoting special attention to the CEE countries. We also investigate relationships among those indices. Based on a quantitative analysis, we identify clusters of EU countries with similar levels of sustainable development. Furthermore, we classify the EU countries according to their effective use of natural resources relative to economic output.

The Competitiveness of the EU Countries: A Multi-dimensional Cluster Analysis Approach

Considering the changing concepts of competitiveness in current economic literature, the chapter evaluates competitiveness using various approaches to definition and measurement across the EU countries. In particular, three dimensions of competitiveness evaluation were identified and used in the analysis. In the first dimension, the traditional cost-based measures were applied to assess and compare competitiveness and its development over time in the EU countries. The second dimension captures the potential of a country to attract firms to establish and sustain high-skilled enterprises in a country. Descriptive comparative analysis is used to evaluate the EU countries using the traditional cost-based competitiveness measures approach. The analysis of the second and third dimensions concentrates more on evaluating the similarity of countries in terms of the entire sets of competitive indicators examined in each dimension. Hence, the multi-dimensional cluster analysis is applied for clusters’ identification. Also the dynamics analysis was applied to examine changes in clustering structures over time. The paper finds that, although traditional cost-based measures of competitiveness suggest a clear division between the core EU countries and the periphery, in addition to the new member states, measures based on infrastructure, human capital and the institutional environment do not confirm the existence of these three country groups. However, when innovation potential is included as a measure of competiveness, a stable division of two country groups consisting of core countries, on one hand, and the periphery plus the new member states, on the other, emerges.

Ecology versus economic growth in europe: How to improve relative efficiency?

Historical and political changes in Eastern and Central Europe resulted in the adoption of market capitalism typical of evaluation of material accumulation with lacking concern about environment in which and thank to which economic activities can take place. Fortunately, the attitude toward ecologic issues has been improving even if the institutional background is not ideal. Performing Data Envelopment Analysis the paper evaluates to what extent the EU countries are efficient in reaching both environmental and economic goals within their institutional frameworks. Moreover, policy recommendations related to the improvement of current state situation are formulated.