Local vs. Global Location of Firms and Industries

Jovanovic´, Miroslav N. 세종대학교 국제경제연구소 2003 Journal of Economic Integration Vol.18 No.1

Where economic activity will locate in the future is one of the most important questions in economics. Even though advances in technology have reduced the cost of rtansport, communication and information gathering and processing, hence curtailing the 'distance penalty', local proximity (clusters) of firms that produce similar, competing and/or related products together with supporting institutions still matter. Economies of scale, activity-specific vackward and forward linkages (indivisible production), accumulated knowledge and skills, innovation, existence of sophisticated customers and a fall in transportation costs play relevant roles in the 'protection' of clusters and absolute locationsal advantages of certain locations, 'Globlal'competitiveness often depends on highly concentrated 'local'knowledge, capabilities and common tacit codes of behaviour which can be found in a geographical concentration (cluster) of firms.

Is Globalisation Taking us for a Ride?

( Miroslav N. Jovanovic ) 세종대학교 경제통합연구소 (구 세종대학교 국제경제연구소) 2010 Journal of Economic Integration Vol.25 No.3

Globalisation is one of the great economic and political stories of our times. It was supposed to be one of the great new ideas. The current wave of globalisation is just a subset of huge structural changes that are the outcome of the Schumpeterian evolution in technology, and spatial intensity and scope of interactions between many actors at all levels of the economy. There is, however, a lot of confusion and disagreement in discussions since the process of globalisation means different things to different people. If globalisation is the outcome of the behaviour of transnational corporations, then this process is made possible by new technologies that permit spatial fragmentation of production and value chain, as well as reduction in the cost of transport and communications. The power of firms is increased to the detriment of the power of the state. Even so, governments supported by the general public and non-governmental organisations are able (but not always willing) to cap the globalisation process. Globalisation brings many amenities to society. There were once hopes that globalisation would benefit everyone. As time passes, globalisation`s downside becomes more and more apparent. If the goal of globalisation is to introduce and force the same standards everywhere and for everyone (including in the way in which people think), then there may be no room for differences.

Saving Multilateralism in a higgledy-piggledy Trading System

( Miroslav N. Jovanovic ),( Jelena Damnjanovic ) 세종대학교 경제통합연구소 2015 Journal of Economic Integration Vol.30 No.1

Whether international economic integration arrangements result in a more liberal trade at the multilateral level cannot be proven with ease. Integration may start this process, but it may also reverse it. New mega-integration deals such as the Trans-Pacific Partnership, Regional Comprehensive Economic Partnership and Transatlantic Trade and Investment Partnership are under negotiation. The American policy of creating trade rules for decades to come without the involvement of China in rulemaking may backfire. If China faces a choice of capitulation or exclusion, it may create a parallel trade and payments system. The World Trade Organization still has important assets: to convene meetings and to settle trade disputes. If the World Trade Organization transforms its role from trade liberalisation forum into an institution which supervises and administers international trade rules and obligations, this may be a realistic development given the Doha Round agony and the meagre final result in Bali (2013).

Was European Integration Nice while It Lasted?

( Miroslav N,Jovanovic ) 세종대학교 경제통합연구소(구 세종대학교 국제경제연구소) 2013 Journal of Economic Integration Vol.28 No.1

The principal goal of integration in Europe has always been the safeguarding of peace through economic integration. The European Union (EU) has overseen splendid economic achievements. A sign of that great success has been the EU`s continuous enlargement. The eurozone is the crown jewel in the process of European integration, but it is also its weakest component. The EU`s most glorious attribute, the eurozone is now synonymous with harsh austerity measures, protests and no prospect of any remarkable growth in many countries for years to come. Obvious rifts between the EU`s countries are shaking its foundations like never before. The EU passed through many crises (approximately one a decade), and it always exited stronger. This time may be different. The EU may weather the storm. It may, however, end up as a big and important group, but not a very happy family of nations. The first decade of the 21st century was ``lost`` for the EU, while the second decade may prove to be the epoch of its diminished global relevance. This is a pity as Europe has taken the reins in many global issues (e.g. environment). Compared with Europe, integration in Southeast Asia started from a very different point and at a different time. Nonetheless, the region provides certain context-specific lessons for the integration path. Given the circumstances in Southeast Asia, it is suggested that the region integrate but follow a light institutional model coupled with simple rules of origin to support efficient supply chains and production networks

Local vs. Global Location of Firms and Industries

( Miroslav N. Jovanovic ) 세종대학교 경제통합연구소 (구 세종대학교 국제경제연구소) 2003 Journal of Economic Integration Vol.18 No.1

Where economic activity will locate in the future is one of the most important questions in economics. Even though advances in technology have reduced the cost of transport, communication and information gathering and processing, hence curtailing the ‘distance penalty’, local proximity (clusters) of firms that produce similar, competing and/or related products together with supporting institutions still matter. Economies of scale, activity-specific backward and forward linkages (indivisible production), accumulated knowledge and skills, innovation, existence of sophisticated customers and a fall in transportation costs play relevant roles in the ‘protection’ of clusters and absolute locational advantages of certain locations. ‘Global’ competitiveness often depends on highly concentrated ‘local’ knowledge, capabilities and common tacit codes of behaviour which can be found in a geographical concentration (cluster) of firms.

Is the Eurozone Rescue Strategy Tantamount to the Rearrangement of the Deckchairs on the Titanic?

Miroslav N. Jovanovic 세종대학교 경제통합연구소 2012 Journal of Economic Integration Vol.27 No.1

The eurozone is the crown jewel in the process of European integration. This monetary zone includes the most advanced integration grouping of countries in the European Union. The eurozone has been expanding the number of its participants, a sign of success in any economic or political union. Politicians promised citizens stability and perpetual economic progress at the time of the eurozone inauguration (1999). This monetary integration has been a predominantly political process which neglected certain economic fundamentals for long term durability. These include federal-type intra-group fund transfers and orientation towards economic growth. Certain eurozone flaws appeared, raising powerful doubts about its survival. Some of the internal troubles of the eurozone such as an endemic lack of respect of rules, were amplified by the global credit crunch, bringing into question the initial promises made to citizens. A series of rescue operations commenced in 2010. Too much political and economic capital has been invested in the eurozone, to the extent that its statesmen will do everything they can to rescue it. If its participants believe the deal to be beneficial, the eurozone will continue its existence, but several federal-type amendments are necessary. Otherwise, the eurozone may join the ranks of a series of European monetary zones that have disintegrated over the past two centuries. The bloc’s citizens (and others) are unwitting observers of a slow motion eurozone train crash. Even though the eurozone burdens some of its member countries with high costs, its break-up or countries’ departure from it may prove even worse, but not inconceivable.

EU Eastern Enlargement :Economic Effects on New Members 2000~2012

( Miroslav N Jovanovic ),( Jelena Damnjanovic ) 세종대학교 경제통합연구소 2014 Journal of Economic Integration Vol.29 No.2

The European Union (EU) has a splendid record concerning enlargement. Judging by the increasing number of EU member countries, enlargement has been the most successful EU policy ever. The economic side of its eastern enlargement is, however, a hybrid bag of effects for the EU`s eastern countries because membership in the EU is not a tide that lifts all boats. This article, as a statistical primer, provides consistent data for the period 2000~2012. Majority of data is from Eurostat, where the data on eastern EU member countries are scattered around in various parts of Eurostat database. In the effort to present the data in a consolidated and straightfoward way to reveal the real economic effects on enlargement on the new EU member countries, we took the task to cherry-pick the relevant data. It shows that economic growth, expansion of trade, and increase in foreign direct investment to the east of the EU are obvious gains for the new eastern EU countries. That said, it entails costs. The size of domestic and foreign debts have been accelerated to finance their successes. Our concern is that this debt burden stands a chance of suffocating the newly acquired economic vigour especially at a time when one is anxious about the future of the eurozone and the EU.

Eastern Enlargement of the EU: a Topsy-Turvy Endgame or Permanent Disillusionment

( Miroslav N. Jovanovic ) 세종대학교 경제통합연구소 (구 세종대학교 국제경제연구소) 2004 Journal of Economic Integration Vol.19 No.4

The Treaty of Nice (2001) strongly protects the interests of the current 15 European Union member countries. The new voting structure in the enlarged European Union preserves the existing members blocking influence over new policies. In addition, there is a cap on the Unions total expenditure. It is on these terms that the European Union is ready to enlarge eastwards. Eight countries with economies in transition (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia) and two market economies (Cyprus and Malta) are due to join the European Union in 2004. Bulgaria and Romania may follow, but not before 2007. The final operational entry conditions set by the European Councils in Brussels and in Copenhagen (2002) are such that this enlargement may be relatively cheap for the European Union in financial terms, but much costlier and slower for the accession countries than expected by politicians, both in the European Union and in the accession countries. The reasons for this include the self-imposed limits on European Union expenditure and the increasingly stringent standards that come from the ever-growing acquis communautaire that are costly to introduce, implement and enforce, but enlargement will take place for political reasons.

Where are the Limits to the Enlargement of the European Union?

( Miroslav N. Jovanovic ) 세종대학교 경제통합연구소 1999 Journal of Economic Integration Vol.14 No.3

Protection of the Single Market, monetary integration, institutional and policy reform, as well as enlargement are hot topics in the European Union. This article considers only the economic dimension of the enlargement. Five countries with economies in transition (the Czech Republic, Estonia, Hungary, Poland and Slovenia), and one market economy (Cyprus) negotiate full membership with the European Union. Although there are general grounds for the enlargement of the European Union, the process will be much slower than expected by the politicians in both the European Union and the acceding countries. The reasons for such conclusion include high standards that come from the ever growing acquis communautaire which are costly to introduce, implement and enforce. (JEL Classification: F15)