GLOBEEU2016 Flashcards
What is Anders Fogh’s government especially known for?
Strict immigration policies focused on not letting foreigners misuse the benefits of the Danish welfare system.
As of 2016, what is the country of Denmark and its economy known for?
- Good economy with low unemployment (3,3 %)
- Positive current account
- High GDP per capita - one of the richest countries in the world
- Happiest population in the world
- Most equal society in the world (income)
- Short workweeks
- Rated as the best place in the world to do business.
- One of the leading countries in green energy
Who united the Danish Kingdom and when was it?
Margrethe 1 in the 14th century united DK, Norway, Sweden, Finland, Faroe Islands, Iceland and Greenland under the Danish Crown.
The Lutheran reformation strengthened the bond (sharing religion).
About what percentage of the Danish workforce is part of a labor union?
Some of the most profound and strongest labor unions in the world. Unions with 80 % of the workforce.
Who invented the “flexicurity” system?
Poul Nyrup came up with “flexicurity”
What are some of the keywords behind Denmark’s success?
- Probusiness (liberal and open economy)
- Prounion (happy employees, work-life-balance, good conditions)
- Pro-education (high skilled labor)
What is it that the US (especially Bernie Sanders) find interesting about Denmark?
Danish socialist capitalism. Left-winged welfare system.
Happiness, income equality and competitiveness all together.
What are the primary factors it has been hard for Danish politicians to create jobs after the crisis in 2008?
- Private consumption is lacking as people pay off their debt (Denmark had a world record in private debt as the crisis started).
- Public consumption could not be increased, as our yearly public deficit could not exceed 3 % (The Stability and Growth Pact)
“Only” option is to be competitive and EXPORT (Foreign demand).
What characterized the Danish private sector from 1880-1980? (early capitalism)
- Many small and medium-sized businesses (imagine the city of Copenhagen where the size of the buildings are the businesses)
Changed in 1980’s to LARGE CORPORATIONS (even globally). Imagine skyscrapers.
2009: The 5 largest companies by revenue (Mærsk, ISS, Carlsberg, Novo Nordisk and Vestas) had a total revenue equivalent to 32 % of the Danish GDP (in 1994 it was 10 %).
When did Denmark start running current account surpluses?
From 1989 and onwards (despite 1993).
What are the four phases of capitalism in the Nordic region?
- Early liberalism (1850s-1880s): weak states, small public sector, conflicts internally in the state, liberal markets, SMEs, economic periphery = Germany, UK and USA as drivers. All big corporate founders had been abroad in their 20s to these countries to get inspiration.
- Organized capitalism (1890s-1920s): More active states, organized labour markets cartelization and export. Everything got more organized.
- Welfare capitalism (1930s-1970s): Triangle of welfare states, organized labour and industries (mixed economies)
- Market-based capitalism (1980s-xxxx): Economic integration, strong state emphasis on markets capitalism.
What was the two fundamental problems with Martin and his co-authors conclusions about the four phases of capitalism in the Nordic region?
- The phases did not explain change - why did it happen? How did we move from one layer to another
- The phases reflect changes in most West European economies (too general to be specifically Nordic).
What was the primary idea behind the Treaty of Rome in 1957?
Economic integration leads to more competition and more efficiency.
Supply/demands role increases.
Increased specialization.
European economic integration is based on neo-liberalism.
What is the argument of economic sociologists?
Neo-liberalism will not work alone. When P = MC the suppliers will start to cooperate and form allies and potentially monopolies (competition will be destroyed).
⇒ REGULATION is also one of the main drivers for economic efficiency
How can you illustrate different political economies in terms of competition and regulation?
- X-axis with: Restrictive vs. competitive
- Y-axis: with public regulation vs. private regulation
What is and what characterizes a bazaar economy?
Very competitive that is privately regulated.
Extremely unstable situation as things will be negotiated all the time.
(Utopia - rarely exists in real life)
What is and what characterizes a cartel economy?
Restricted economy that is privately regulated.
No antitrust laws.
Instead, businesses will form cartels.
What is and what characterizes a planned economy?
Restricted economy that is publicly regulated (this does not need to be communism but in extreme situations it is).
What is and what characterizes a common market?
Very competitive economy that is publicly regulated.
Free market with the strong state. This is the mix of neo-liberalism for the market itself and regulation of common market ⇒ EU.
What is meant by co-operative liberalism?
Co-operative: help for self-help and solidarity
Liberalism: free market, individual rights and a strong reliance on access to the surrounding markets.
What were the 5 periods Denmark’s capitalistic development was split into, and what are some keywords?
- The early liberal society (1857-1898): Bank establishments, Receiving compensation for loss of Schleswig-Holstein and the Sound Dues (Øresundstold)
- Regulation and internationalization (1899-1932): Stationsbyer = SMEs, Technical education, Merging-period (“United”), Increased public expenditure due to Social Democrats in power, economic crisis as Germany and UK was hit by WW1
- Industrial growth under protective restrictions (1933-1956): Kanslergadeforliget, Marshall Plan, Organization for European Economic Co-operation (OEEC) ⇒ Focus on lowering tariffs
- Export orientation and the expanding welfare state (1957-1981): EEC, EFTA and OECD large players in increasing exports. Increasing public expenditure (public jobs)
- The global division of labor (1982-2007): Immigrants from 3 % to 9 % of population in the time period. Poul Schlüter saving Denmark’s public finances by cutting public expenditure.
What characterized the period of the early liberal society (1857-1898)?
- First banks established. Completely free and un-regulated market (Privatbanken first in 1857, Landmandsbanken 1871, Handelsbanken 1873)
- Compensation for the loss of the Sound Dues and Schleswig-Holstein made the Danish government financially stable and Denmark became a net creditor. Also, the industrial companies could lend money at low interest rates.
Competitive market and private/market regulation.
What characterized the period of Regulation and internationalization (1899-1932)?
- Stationsbyer (railway) in especially Jutland gave rise to many industrial SMEs
- A period strongly focused on technical education institutions
- Entrepreneurs more or less all had a technical background and ALL big Danish entrepreneurs in this period, had been to UK, Germany or USA to seek inspiration
- Fx. Wilhelm Hellesen with the dry battery
- Merger-period: all companies named “United …..” ⇒ The liberal market became a problem as it gave the opportunity for merging into monopolies
- The agricultural sector benefitting from increasing grain-prices due to increasing demand as the European population increased.
- Landowners became much richer as the value of their real estate more than doubled in 30 years time.
- This led to co-operative farms and dairies who started exporting to the UK as the Danish market with stagnating prices was not profitable ⇒ Increased quality and exported (Lur butter etc.)
- Labor rights: unions started forming
- The Danish economy in crisis after WW1 as both Great Britain and Germany (the two biggest export markets) were hit hard by the war.
- The social democratic/social liberalism was in power from 1929-1940 and increased public expenditures. As always, it was hard to draw these economic benefits back and the new liberal/conservative government failed to do so
More and more restricted economy and getting less and less privately regulated.
What characterized the period of Industrial growth under protective restrictions (1933-1956)?
- Unemployment peaked at 38 % in 1932
- Kanslergadeforliget (in Staunings apartment - liberals and social democrats)
- Devaluation of the Danish currency to help the agricultural sector + reduction of the property tax, conversion of debts, bulk purchasing of beef and prolongation of contemporary crisis settlements
- The employers’ demand of a 20 % salary reduction was AVERTED. However, real salaries still decreased due to devaluation.
- Venstre (Liberal Party) confirmed that it would not oppose the implementation of the social reform prepared regarding
- Accident insurance for the employers to pay
- New social insurance with increased grant-in-aids for medical treatment
- New general public assistance that succeeded the poor law of 1891 under which recipients lost their civil liberties
- Unemployment insurances
- Labor market agreements improving the rights in 1952, 1954 and 1956
- Family-owned farms started to disappear due to lack of competitiveness. Bigger farms and companies were created.
- Marshall Plan helping out European countries with financial aid and cheap loans after WW2
- Organization for European Economic Co-operation (OEEC) ⇒ Focus on lowering tariffs
The economy starts getting more competitive again but this time with public regulation.
What characterized the period of Export orientation and the expanding welfare state (1957-1981)?
- DK one of the fastest growing European economies from 1957-1970 due to:
- Growth of export-oriented industries ⇒ EEC, EFTA and OECD playing a large role.
- An explosive expansion of domestic service industries, particularly in the public sector
- H.C. Hansen formed one of the only majority governments in Danish history (Social democrats).
- Strongly increased public spending focused on improving health care, education, retirement support and infrastructure
- H.C. Hansen formed one of the only majority governments in Danish history (Social democrats).
The economy gets more and more competitive again with public regulation.
What characterized the period of the global division of labour (1982-2007)?
- Immigrants from 3 % of population in 1980 to 9 % in 2007 whereas only ⅓ was from western countries (immigrants from especially Middle East and Africa)
- Poul Schlüter’s government
- Cutting public spending to improve government finances
- Focus on liberalization and creating growth on private initiatives (attracting FDI)
- Increased privatization of all industries (even state-owned companies)
- European integration despite “no” to the original Maastricht treaty
- Danish companies started merging (economies of scale), investing (R&D for productivity) and expanding internationally.
- Arla Foods, Danske Bank, Danish Crown, ISS,
- Flexicurity system
- Improved the current account balance through “Kartoffelkuren”, which limited private consumption and of course also led to some unemployment
- WTO
Very competitive market formation with public regulation (common market).
Who was C.F. Tietgen and what did he mean for Denmark?
The most important business man in Denmark in 1860s and 1870s.
He focused on technology regarding infrastructure: Telegraphy, telephone and railways.
Also part of founding DFDS (shipping), The Great Northern Telegraph Company
…and part of a lot of mergers with Privatbanken such as with: Tuborg Fabrikkerne, De Danske Spritfrabrikker, Faxe Kalkbrud, Burmeister & Wain etc.
What were the three phases of structural changes that the financial sector undertook? (Danske Bank)
- Phase 1: Preparing for international competition through a number of large mergers e.g. Danske Bank, Handelsbanken and Provinsbanken (1990)
- Phase 2: Diversification through acquisition of national insurance companies, real estate agents and mortgage-credit institutions in order to create “financial supermarkets” catering to all needs of corporations and private customers
- Phase 3: Internationalization - Had taken place since 1970, but the deregulation of national banking laws in Europe in late 1980 and the creation of EU in 1993 made large-scale international operations possible and attractive
How did the market structure in Denmark change over time in regards to competition laws? (1850-2000):
- Very slow in implementing laws against monopolies
- 1937: still legal to have cartels with price agreements but the agreements should be registered as the Danish state wanted to show power and be able to estimate taxes
- 1989: No longer a monopoly law or council but a COMPETITION law.
How big are EU as an international player?
- EU 28 is the biggest single market in the world measured by nominal GDP (US is close)
- +500 mio. people (US 335, China 1.4 billion, India 1.3 billion)
What are some similarities between EU-member states?
- Low fertility rate and an elderly population
- Neo-liberal policies since 1990 (after Soviet Union and Yugoslavia breakdown)
- All threatened by the emerging markets around the world (especially Asia) in the perception of Europe being the old economic player now getting overrun by new players.
What are some differences between EU-member states?
- Level of public spending and size of welfare state
- Big difference in size of economies
- Big difference in GDP per capita
What are the four different social models of the first 15 EU member states?
- Nordic model: high public spending, focus on active labor and flexicurity, high skilled labor and new technologies
- Anglo-Saxon model: (UK and baltic similar) ⇒ Low unemployment protection, the free market, weak labor unions
- Continental model: insurance-based benefits, strong labor unions (but weakening) - France, Germany, Belgium, Austria etc.
- Mediterranean model: low social spending, family networks sharing the burden
What were the goals of the EU 2020 plan?
- Employment: 75 % of 20-64 year olds to be employed
- R&D_ 3 % of GDP to be invested in R&D
-
Climate change and energy sustainability:
- Greenhouse gas emissions to be at least 20 % below 1990-levels
- 20 % of energy to come from renewables
- 20 % increase in energy efficiency
-
Education:
- Early school leavers rate to fall below 10 %
- At least 40 % of 30-34 years old to have tertiary education
- Fighting poverty and social exclusion: 20 million fewer people to be in or at risk of poverty and social exclusion
What is worth noting about EU members and competitiveness and ease of doing business?
- Northern European countries (Scandinavia, UK, Netherlands, Germany) ranks in the top of the world
- Eastern European and Southern European are far from the same level
Big difference in competitiveness; big part of what led to the EURO-crisis.
How can you describe the size distribution of European business?
Large MNCs and SOEs are important. SMEs are underdeveloped but still very important for the European market.
State-owned enterprises (SOEs) also play a very important rule with 80 % of the value added for Russia and 48 % for Norway to give some examples.
In short, how are European firms doing in terms of global services and manufacturing?
European firms are central to the global services industry but are declining in importance in manufacturing.
What are the benefits to Europe of SMEs?
- SMEs acts as vehicles for knowledge spillover which can be accessed by LSEs
- SMEs creating an increased degree of competition in the input market which, in turn, promotes innovation and the spread of new ideas
- Increasing the degree of diversity within the marketplace.
What are the different forms/levels of economic integration?
- Free trade area (FTA)
- Tariff and quota-free trade between member states
- Goods from third-party countries usually enters via the member state with the lowest tariff
- Customs union
- Free trade WITH a common external tariff
- Single market
- Freer mobility of factors of production: Goods, services, capital, and labor
- Cooperation of development of other policies such as competition and regional policies
- Economic and monetary union (EMU)
- Limits on the independent actions of states
- Monetary stability as an accompaniment to economic unification achieved via fixed exchange rates or a single currency
- More fulsome centralized supranational power
- Policy harmonisation
When was the first step towards European integration taken?
With the Treaty of Paris back in 1951.
Establishment of ECSC with Belgium, France, Italy, Luxembourg, Netherlands and West Germany.
Since when has Europe had a common agricultural policy?
Since the Treaty of Rome back in 1957 with the establishment of CAP; the Common Agricultural Policy
When did the UK and DK buy into European economic integration?
In 1960 with the creation of the European Free Trade Area (EFTA).
UK, Norway, Sweden, Denmark, Austria, Iceland, Portugal and Switzerland joined.
When was the Single European Act (SEA) signed and what was the key features?
SEA in 1985 ⇒ Focus on establishing the single market the Treaty of Rome back in 1957 had called for.
- More qualified majority voting to the Council of Ministers ⇒ Making it easier to implement the program quickly
- Increased role of the European Parliament ⇒ making it more democratic (voice of the people with bigger role).
- Enhanced policy competence to the European Commission regarding environment, R&D, technology and economic and social cohesion.
- Creation of a new court - Court of First Instance (CFI) to relieve the heavy burden on the European Court of Justice (ECJ)
When was the Maastricht Treaty signed and what was the key features?
Signed by most countries in 1992 despite Denmark who voted no with 50,7 %. Thus, the Edinburgh agreement was established with 4 opt-outs for Denmark and was finally signed and put into place in 1993 working from November 1, 1993.
- The European Community governing and regulating the single market, CAP, and new elements such as EMU
- More power to European Parliament with a veto-right
- Ombudsman created to receive complaints from citizens
- European Court of Justice could now give fines to member states
- Common foreign and security policy (CFSP) - a unified Europe
- Cooperation in justice and home affairs (one of DKs opt-outs)
- Includes asylum policy, controls on external borders, immigration policy and residence rights of third country nationals, police, customs etc.
What was the most important elements of the Amsterdam Treaty?
1997.
- Anti-discrimination became a key objective:
- gender ,racial, ethnic origin, religion or belief, disability, age or sexual orientation
- European Parliament’s role further enhanced
- President of EC gained rights to object to appointments of Commissioners and to allocate and reshuffle portfolios
What were the main features of the Lisbon Treaty?
(came into force in 2009)
- European Council and Council of ministers formally separated
- Powers of European Parliament to be extended via application of co-decision procedure to more policies, especially in areas of justice, security and immigration
- MEPs to be reduced to 751
- Citizens’ initiative ⇒ If signed by a million EU citizens, an initiative can require the EC to submit proposals in specific policy areas
- Common energy policy and a strategy on global warming
- “Solidarity clause” if a member state is subject to terrorist attack or the victim of a man-made or natural disaster.
What is the trend regarding EU citizens view of the future of the EU? (optimistic/pessimistic)
What is the trend regarding EU citizens view of the EU image? (positive/negative/neutral)
What is the size of the European Parliament and which countries have the largest amount of seats?
751.
Germany (96)
France (74)
UK (73) ⇒ LEAVING = changes in the political structure within EP.
Who is the current president of the European Commission?
Jean-Claude Juncker (Luxembourg) from 2014-2019.
What is the structure of the European Court of Justice and where is it based?
Based in Luxembourg.
- 28 judges - one from each member state.
- 9 advocate-generals who deliver preliminary opinions on cases brought before the Court to assist the judges in their deliberations.
Despite EP, EC and the European Council (and Council of the EU), which other institutions does the EU have?
- European Court of justice; making sure that member states adhere to the laws
- The European Economic and Social Committee (EESC):
- Involve representatives of civil society in the creation of the common market. 353 members from employers, workers and groups representing professional and community associations, youth organizations, women’s groups etc.
- The Committee of the Regions
- The European Central Bank (ECB)
- Focus on the EURO and price stability
- Major role in the banking union as supervisor or systematic banks (Single Supervision Mechanism (SSM)).
- The Court of Auditors
- Ensures that spending takes place in line with the Union’s budgetary rules and for the purposes for which it was intended.
- The European Investment Bank (EIB)
- Provides long-term loans for capital investment to promote EU development, integration etc.
- The European Investment Fund (EIF)
- Ombudsman
What does article 50 say in the EU?
Article 50: when you want to leave the EU, you have 2 years to negotiate some agreement with the EU.
If you don’t come to an agreement you are OUT as in only having the same rights or links to EU as any other country in WTO.
Why is it important for both the EU and UK to find an agreement?
-
UK:
- Internal market access
- Leading financial center (capital) - they will most likely lose this position
- FDI in UK (services) ⇒ UK headquarter hub (will move to Germany, France etc.)
- 50-70 % of business related laws/regulations are made in the EU
-
EU:
- Losing UK is already a HUGE backlash to the EU. The mission failed so to speak.
- UK is one of the biggest markets
