CRISIS, AUSTERITY AND GROWTH
The objective of the research programme is to investigate the impact of the Eurozone crisis in South East Europe and the development of pro-growth policies in the context of continuing EU integration through a set of integrated projects, building on previous LSEE research in this area. The research projects included in the programme investigate (i) the spill-over effects of the Eurozone crisis and the effects of anti-crisis policy measures with a focus on the relationship between institutions, policy and growth; (ii) entrepreneurship, externalities and growth focusing on innovative firms, enterprise zones, business-education linkages and inclusive growth in small and medium sized enterprises; and (iii) the political economy of public sector reforms in an age of austerity with a focus on health systems reform. The first project runs for twelve months from September 2012; the other two projects will be carried out at a later phase of research. The programme is directed by Drs Will Bartlett and Vassilis Monastiriotis with research assistance from Helios Reveli.
Project Summaries
Political Economy of Austerity and Growth in South East Europe
This project investigates the relationship between austerity and growth policies in SEE in the wake of the global financial crisis and the Eurozone crisis, building on recent LSEE research (See LSEE Publications: Bartlett and Monastiriotis, 2010|; Bartlett and Prica, 2012|; Bartlett and Prica 2013|). It will theorise the political economy of the crisis through the concept of the ‘super-periphery’, situating this within the emerging literature on the core and periphery of the Eurozone. This will provide a framework for the investigation of the effectiveness of austerity and growth policies in the region. The project will gather data on the transmission channels of the crisis in SEE (international bank credit, FDI, exports, remittances) and their effects (on GDP growth, unemployment) as well as the anti-crisis policy responses adopted by both governments and international organisations such as the IMF and EU. Relevant macroeconomic data will be gathered from national statistical offices and central banks to track the effects of anti-crisis measures in the region. The research will be carried out in partnership with researchers based at the Faculty of Economics at the University of Belgrade and elsewhere in the region. Statistical analysis of the relationship between economic growth and anti-crisis measures will be based on panel data analysis.
Entrepreneurship, Externalities and Growth
Support for innovative high-growth small and medium sized enterprises (SMEs) are an essential element of a new growth policy. Such firms underpin the improved competitiveness required to facilitate faster economic growth and are a major source of future job creation. Such firms also contribute to local economic development in regions of severe industrial decline. The research will investigate the hypothesis that policies that provide incentives to productive entrepreneurship will be more successful than those that encourage unproductive entrepreneurship and rent-seeking behaviour. Previous research carried out by LSEE staff has shown that both institutional and financial barriers exist to the entry and growth of innovative SMEs in the economies of the region (See: Bartlett, 2011|). Innovative small firms are also affected by externalities and spillovers, both positive and negative, from foreign owned firms financed by foreign direct investment (FDI) (See: Monastiriotis and Alegria, 2011|). The project will combine quantitative and qualitative research methods to investigate the barriers to the growth facing innovative SMEs in enterprise zones and technology parks and the externalities that are generated through linkages with universities, research institutions, regional development agencies and FDI.
The political economy of public sector reform in SEE
The adoption of austerity measures to reduce government budget deficits raises the urgency of public sector reform to achieve efficiency savings in the delivery of public services especially in the fields of health, education, pensions and social protection. Reform of such services is however subject to significant political constraints as well as pressures from a variety of advocacy coalitions including domestic political interests and external organisations including donors, international financial institutions and the EU. The project seeks to understand the main drivers and obstacles to public sector reform and relate these to the evolving varieties of capitalism and welfare regimes in the region. The research will initially focus on a case study of reforms in thehealth system, building on earlier LSEE work on health system reforms in SEE (See: Bartlett, Bozikov & Rechel, 2012|) which demonstrated that health care systems in the region display a mix of public and private modes of organisation and financing and varying degrees of reform in relation to the legacy of the communist period. In some countries primary care has been privatised although this may give rise to perverse incentives to raise costs and reduce quality. Using a combination of qualitative and quantitative methods, the research will assess whether reform and modernisation could improve the cost effectiveness of of health care systems.
Project Outcomes
Reports on progress with the research project and relevant outputs will be uploaded on this page as they become available.