Wim Meeusen

Social Protection Competition in the EMU

Every step towards the completion of European integration appears to be greeted with renewed, not to say increasing, concern over its possible unwanted negative social side-effects, particularly as regards protection against social risks (unemployment, sickness and invalidity, age, ...) and poverty. Not only the governments of the different Member States but also the two EU Commissions headed in the past by Delors were deeply worried about the ability of the Member States, by applying incomes policies and social security measures, to pursue beggar-my-neighbour policies in an integrated market and all the more so in a monetary union. The EMU would provide an even greater temptation for them to do so because other economic policy instruments such as trade policy or monetary policy are kept under tight control, thereby increasing the relevance of incomes policy as an instrument at their disposal. Moreover the very creation of a single market would allow potentially more substantial gains from a competitive advantage as competition and the price elasticity of the demand of “tradables” increases. This applies in particular in a monetary union in which international transparency increases with the removal of transaction costs.

The Network of Joint Research Projects and Alliances

In this chapter, we will present results of a graph-theoretical analysis of the Belgian network of research co-operation and research agreements as it is operationalised in the projects falling under the general heading of the R&D Framework programmes of the EU, the projects of the EUREKA initiative, and finally the private agreements and other forms of co-operation registered in the MERIT/CATI database.

Efficiency Wages and Inequality

Since the seminal articles of Stiglitz (1974, 1976), Solow (1979, 1980), Akerlof (1982), Shapiro and Stiglitz (1984), Akerlof and Yellen (1985) and Summers (1988), efficiency wage approaches have been considered as providing a major explanation for involuntary unemployment. Whatever their economic and/or sociological driving mechanisms, efficiency wages create involuntary unemployment by generating wage rigidity because firms set a real wage that is higher than the market clearing wage.

Technological Performance and Performance in International Trade

In the previous chapter, we examined the technological performance of Belgium in the strict sense. But technological performance of a nation is, of course, not a goal in itself. A strong technological position should be instrumental in terms of higher rates of economic growth, welfare, etc. Indeed, the performance of countries is measured in the first place by very basic economic indicators like the level and evolution of per capita income, the relative inequality of the distribution of income, the unemployment rate, and the degree of indebtedness to the rest of the world. For very open economies like Belgium, one of the main determinants of these basic variables is its share in world trade and the evolution of that share. As it happens, the Belgian market share in OECD exports of manufactured goods, although still high relative to the size of the country, has shown a marked decline since the beginning of the 1970s: from about 6.0% in the early 1970s to about 5.5% in the early 1990s (see Figure 9.1). This is a drop of more than 8% in relative terms.