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Archive for May, 2016

Brexit could push British universities down global rankings

By Blog Admin, on 28 May 2016

by Sultan Orazbayev – Current PhD Candidate

Research shows that visa restrictions between countries reduce scientific collaboration of researchers in those countries. If Brexit results in an increase in the administrative barriers to mobility, then this could harm the global standing of British-based researchers and British universities.

 

Donaldson Reading room, UCL. source: Wikicommons

Researchers believe that Brexit will affect the ranking of UK universities.

Recent comparative study of European and US researcher mobility documents that researchers in Europe (including non-EU countries) move less frequently within Europe compared to inter-state mobility of US researchers (Kamalski and Plume, 2013). The same study shows that countries with higher rates of mobility are associated with high-impact research. Additional supporting evidence on the importance of researcher mobility can be found in the recent Parliamentary report on EU membership and UK science.

There is no clear understanding of how Brexit will affect the administrative barriers to mobility, both for UK researchers’ access to EU countries and access to UK by EU researchers. A close case study is provided by Switzerland, see a detailed examination in a blog post by Galsworthy and Davidson (2015). In the extreme case of imposition of ‘paper walls’, for example travel visa requirements between UK and EU, there is likely to be a significant drop in UK-EU scientific collaborations and knowledge flows. This would exacerbate the impact of the reduction in overall funding of UK science which is likely to follow Brexit.
Research shows that higher ‘paper walls’ between countries (immigration policy, travel visa requirements) reduce bilateral knowledge flows and collaborations (Orazbayev, 2016). EU researchers are collaborators for about 40% of the UK collaborative research, thus even a small increase in collaboration costs is likely to lead to a sizeable drop in joint projects.

As a consequence of the negative impact of Brexit on UK (and EU) science, British universities would slide down in the global university rankings. International university league tables place a significant weight on research performance of a university, which is proxied by the citations to work generated at the university. For example, QS World University Rankings places 20% weight on citations per faculty as a measure of research impact. The decrease in citations to UK research (reflecting reduced knowledge flows), especially to the recent research, will push British universities down the league tables.

 

Please note: Views expressed are those of the author(s) and do not reflect those of UCL, SSEES or SSEES Research Blog

 

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Will Brexit affect growth prospects in the EU Members of Central and Eastern Europe?

By Blog Admin, on 26 May 2016

Chiara Amini – Teaching Fellow in Economics and Business and Raphael Espinoza – Lecturer in Economics
UCL SSEES Centre for Comparative Studies of Emerging Economies

It is a common view that a UK exit from the European Union would cause significant damage to the UK and to the EU.  The Treasury claims that Brexit would make Britain significantly poorer and could result in GDP contracting by as much as 6%. Such a significant impact would not be so surprising, given that trade and investment between the UK and Europe has grown significantly in the last 40 years. In 2014 a study by Ottaviano et al showed that Brexit trade losses would amount to 3.6% of UK GDP, as a result of an increase in taxes, quotas and regulatory legislation. What’s really striking is the fact that these losses have the potential of reaching 10% of GDP, if we consider the dynamic effect of trade on innovation and competition. Earlier this year, JPMorgan estimated that Brexit could reduce GDP growth by as much as 1% between 2016-17. At the same time the bank also warned that Brexit could decrease Eurozone GDP by 0.2-0.3%.

Policymakers in the EU countries of Central and Eastern Europe have been vocal in expressing their concerns about Brexit. The countries this specifically refers to are: The Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Slovakia and Slovenia.  Recently Poland’s President, Andrzej Duda, warned that Brexit could have dramatic consequences for the Polish economy. However, formal analyses estimating the impact of Brexit on the region number on the fingers of one hand. Erste Bank argues that direct economic consequences on the region would be relatively minor as UK trade amounts to only 3-6% of total trade. However, countries such as Poland, Czech Republic, Hungary, Latvia, Lithuania and Slovakia, that run trade surpluses with the UK, are predicted to be most affected. After looking at the macro data, we can argue that Central and Eastern Europe would not only be affected by Brexit directly via a fall in flows from the UK, in terms of migration and remittances, trade and financial flow, but also indirectly through its effect on the Eurozone. As economic shocks spread easily from one country to another, a phenomenon known as ‘financial contagion,’ the impact of Brexit on the Eurozone would further reduce inflows to Central and Eastern Europe.

 

Financial flows from the UK to Central and Eastern Europe appear moderate (see Figure 1).  The median of UK financial flows to GDP is less than 1%.  Trade flows (import and export) are much more important, and they represent around 2.5% of GDP in Central and Eastern Europe.

Figure 1– Median Flows UK- Central and Eastern Europe

 

fig 1

 

 

 

 

 

 

 

 

 

 

However, taken together, UK trade and financial flows make up a sizeable share of the total flows to the region.  The proportion of UK remittances to total remittances in Central and Eastern Europe is as high as 8%. As far as trade is concerned, this ratio is 4%. Inevitably, some countries in the region have even stronger links with the UK; for instance, in the Czech Republic, foreign direct investment from the UK constitutes 14% of its total foreign direct investment.  Also in the Czech Republic, bank loans from the UK represent 2.5% of GDP. UK remittances also constitute an important part of total remittances sent to Latvia and Lithuania, over 20% of the total.

Moreover there has been a high degree of correlation in the economic growth between Central and Eastern Europe and the UK. This could be the result of financial contagion via other, third party countries. Alternatively, it could stem from both regions’ high integration with the two largest world economies, the US and the Eurozone.  However, the correlation between growth in Central and Eastern Europe and the UK (at 0.56) is higher than that between the US and Central and Eastern Europe. (0.43, see Figure 2) Disentangling such correlations so as to understand how economic shocks are transmitted between countries has been done in a variety of models.

 

Figure 2 – Real GDP growth (Year-on-Year; source: OECD and IMF)

fig 2

 

 

 

 

 

 

 

 

 

 

Our analysis shows that the UK is a significant source of financial contagion for Central and Eastern Europe. If, as a pessimistic example, estimated by PwC earlier this year, UK GDP fell by 5% as a consequence of Brexit, this would reduce GDP growth in Central and Eastern Europe by no less than 2.5%, as a consequence of third party financial contagion. Since the model is linear, if the fall in UK GDP was only 1%, the impact on Central and Eastern Europe would be only 0.5%.

 

Historically, shocks to UK GDP have contributed around 20 % of the variance in growth in Central and Eastern Europe. In our research for this piece, we employed a well-known statistical methodology, Vector Auto Regression, to examine how growth in Central and Eastern Europe relates to the economic performance of the UK, US and Europe. The historical decomposition of growth in Central and Eastern Europe (Figure 3) attributes the good performance of Central and Eastern Europe in the first decade of this century to strong growth in the UK. This occurred at a time when growth in the Eurozone was disappointing.   

Figure 3. Historical decomposition on GDP growth in Central and Eastern Europe (YoY)

 

 

 

fig 3

 

 

 

 

We have come to the conclusion that, although it is uncertain what the short-term impact of Brexit on the UK will be, there are good reasons to think that it will have negative repercussions on Central and Eastern Europe.

 

Please note: Views expressed are those of the author(s) and not those of SSEES, UCL or SSEES Research Blog.

 

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Stalin in Manhattan

By Blog Admin, on 20 May 2016

By Dr Elisabeth Schimpfossl – Leverhulme Early Career Fellow at UCL SSEES

Elisabeth is giving a talk on 23rd May on ‘Russia’s New Rich and Their Attitudes to The West’ at UCL as part of the UCL Festival of Culture

(Seminar room 20, Wilkins South Wing, 18.00)

During my last trip to New York I was invited to attend the annual PR event of a chic Russian-owned Manhattan antiques shop. Everything was fancy; the location in one of the trendiest streets in Upper East Side that attracts a cosmopolitan jet-set crowd, the subtly tanned maître de, a young man with a gym-honed physique complemented by the most perfect manicure possible, and the champagne-sipping ladies elegantly balancing on pencil thin heels. I chatted with the wife of the new owner, a very pleasant thirty-something, who appears genuinely natural, despite being perfectly turned out, thanks to Botox, good dentistry and professional fashion styling.

Masha was born into an engineers’ family in Novosibirsk. Her family left for Spain in the early 1990s. After graduating from an international school, Masha did an economics degree at a UK business school. She worked for her father’s company for a few years before meeting Vadim, the son of a Forbes-listed oil and gas businessman. Vadim had some of his business in Latin America, so the young couple settled in New York City. He had a longstanding passion for antiques, and the year before he finally decided to realise his dream of owning a small antiques boutique. Masha was all up for it. She loves meeting new people, the quirky antique art dealers and the international ladies of fashion whom she primarily considers her husband’s clients, and also the people from the neighbourhood, some of them proper New Yorkers, who pop by every so often for a glass or two.

 

 

 

 

 

 

 

 

 

 

 

Masha and I got to talk about the Moscow metro; how it is superior to the New York subway, not least because of the resources which were put into it by some of the best engineers of the early 1930s; and how little surprising it is that this greatly helped boost Stalin’s popularity. Stalin was not only good though, Masha adds. I nod quickly, affirming to her that that was indeed very much the case. Then I learned I had not nodded to the same idea. Stalin did not go far enough, she says, with the kind of un-Russian, professional smile on her face, learned at her international school.

Yes, it was crucial to eliminate all those Trotskyists and Leninists who would have only sabotaged the Soviet Union’s leap into an industrialised future. Stalin had never been a Leninist, hence Lenin’s suspicion towards him shortly before his death in early 1924. Both Lenin and his wife, Nadezhda Krupskaya, became very wary of Stalin. Lenin had only endured young Stalin before the First World War for successfully staging bank robberies to fill up the party’s fighting fund. At the time Lenin’s party was working underground and any source of income was highly appreciated. So obviously Stalin had to settle his accounts with Lenin, his heritage and all his living memory.

Masha went on to explain why Stalin had to liquidate other revolutionaries and their sympathisers, for example the old Bolshevik Bukharin, a fellow traveller of Lenin. Bukharin had great charisma and was very popular, but he sided with the rich peasants. No industrialisation would have gone ahead with them clinging to their old ways of production; hence Stalin had to get rid of him. He also went on to liquidate the Red Army’s high command in 1937. Masha was now quite animated and in full flow. No matter how Bolshevik Marshall Tukhachevsky and the other senior commanders perceived themselves, they had a Tsarist mind-set. They would have become a massive problem, hindering more courageous military strategies during the Second World War.

If anything, Stalin was not tough enough. This is evident in the fact that there were still massively damaging saboteurs left, such as the Red Army general Vlasov who collaborated with the Nazis after his capture in 1942. At this point Masha’s husband waved his wife over to introduce her to a new customer who was interested in a fine pair of lacquered armchairs. The antique shop staff started collecting the empty Ruinart bottles and champagne glasses. The two pieces I liked most and would have loved to buy if I was rich, a 1940s cabinet for $35K and an art nouveau coffee table for $40K, had red stickers on them to indicate that they had been sold, and I left into the fresh air of a relatively clear New York September night.

 

As cosmopolitan and sophisticated as Masha is in most aspects of her lifestyle, her expensive European schooling and university education had failed to convert her to Western-type humanistic thoughts. Patriotic thinking, including seeing Stalin as the great moderniser and overseer of the Soviet Union’s rise to global superpower, was clearly more persuasive to her. As we saw in the case of Kremlin TV presenter Dmitry Kiselyov, even repressions in one’s own ancestry suffered during Stalin’s terror do not necessarily outweigh the deeply conservative views that began flourishing in the Putin era, supported by nostalgic feelings towards the Soviet period, primarily associated with solid traditional family values. Stalin is associated as much with the glory of the Soviet victory in the Second World War and with the country’s economic development as he is with atrocities and terror.

 

The tendency to hold such strong convictions arises within the context of clashing historical narratives. Western education, lifestyle and permanent residence do not necessarily have great influence on this view; on the contrary, they can rather cement it: the Western schooling Russians are presented with as gospel truth could not deviate more from what they have heard from relatives, seen on Russian television and read in Russian textbooks. In the Soviet Union, the only channels for alternative versions of history were close friends and family. Patriotism – and with it nostalgia for Russia’s lost status as a superpower – is such a strong component of national identity that Western takes on history are not perceived as pluralistic views, but as a sharp knife stabbed into Russia’s heart. Western textbook writers are partly to blame. It has happened to me, not just once, that when I asked a full lecture hall of history students in England who won the Second World War, the Soviet Union was conspicuous by its absence from their list of victorious countries. Those full of pride in their culture and history (to some extent almost every Russian), if not socialised into a belief in superiority, will necessarily defiantly reject an unsubtle Western understanding of their country and society.

Note: This article gives the views of the author(s), and not the position of the SSEES Research blog, nor of the School of Slavonic and East European Studies, nor of UCL.

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Could Brexit lead to Frexit – or Czexit?

By Blog Admin, on 10 May 2016

By Dr Sean Hanley – Senior Lecturer in Comparative Central and East European Politics

This post reproduced with author’s permission

 

A powerful coalition of forces – ranging from the driest of conservatives to Greens and the radical left and taking in big business,  trade unions, churches and universities – has come together to underline the negative economic, social and political consequences of Brexit.

The UK leaving the EU, it is argued, will not only do lasting damage the country’s economic prospects and political influence, but could have wider repercussions and might even  cause the Union to start unravelling.

This is not simply a matter of absorbing a mighty economic shock, the complexities of negotiating the terms of Brexit, or the umpredictable effects of a sharply changed balance of forces within a downsized Union – the greater weight of Eurozone vis-a-via the non-Eurozone, for example – but the new political dynamics that might take hold.

Some have argued that, emboldened by the example of Brexit, eurosceptics across the EU, will start to push for the exit option, triggering a kind of ‘domino effect’.  Writing for France Inter. Bernard Guetta gloomily takes for granted that post-Brexit

… so many politicians and political parties would follow headlong down this route to get a slice of the action. The pressure for similar referendums would arise all over Europe. The defenders of the European ideal would find themselves on the defensive. In such a crisis it would be very difficult to rebuild the EU.

Available evidence does suggest potential for such a process.  Polling by Ipsos Mori shows high public demand for referendums on EU membership in with significant minorities France (41%), Sweden (39%) and Italy (48%). favouring withdrawal. Other polling even suggested that post-Brexit a majority of Swedes would support exiting the EU.

French, Dutch and Danish electorates do have experience of rejecting EU treaties in referendums – with voters in the Netherlands getting further practice in last month’s referendum on EU-Ukraine trade deal, whichsome see a dry run for a Nexit vote.

And demands for exit from the EU – or referendums about it – have been raised by expanding parties of the populist right pushing their way towards power: Geert Wilders’s Freedom Party in Holland advocates Nexit, while French Front National plans to organise a referendum on Frexit within six months of coming to power.

FN leader Marine Le Pen, who relishes the idea of becoming Madame Frexit, also recommends that every EU member should have one (although her offer to visit the UK and help out the Brexit campaign has been abruptly turned down).

The Danish People’s Party, once regarded as on the radical right, but now considered respectable and modernised enough to sit with the British Tories in the European Parliament, is pondering the idea of pushing for a referendum Dexit (Daxit?).

The logic of such exit options among richer states seems to similar the case now being made by UK Brexiteers: that wealthy West European states might be economically strong enough to make it – and perhaps even thrive – in (semi-) detached relationship with (what remains of) the EU, trading economic some losses for sovereignty and the freedom to follow immigration and welfare policies tailored to national requirements.

Domino effect

There even been reports that some Central and East European countries might be in the line to exit the Union they joined little over a decade ago. In February Czech Republic’s deputy minister for European Affairs, Tomáš Prouza, told reporters that Brexit could push Czexit onto the political agenda for his country’s eurosceptic conservatives and hardline  Communists.

And to some extent he has a point.  Czechia’s mercurial President Miloš Zeman, although himself a eurofederalist firmly in favour of EU membership, thinks Czech voters should have their say in a Czexit referendum. The Czech parliament recently voted to discuss a resolution on a Czexit referendum proposed by the populist Dawn grouping (but ran out of parliamentary time to do so).

Despite this Mr Prouza and his boss Czech prime minister Bohuslav Sobotka were probably laying on the Brexopocalypse rhetoric rather too thick. Having flirted with rejection of EU membership in the to accession in 2004, both the conservative Civic Democrats (ODS) and Communists had reconciled themselves to membership of Union, while hoping to steer it in a political direction more in tune with their visions of European integration and Czech statehood some time in the future.

And, while there is plenty of scepticism about the EU across the CEE region – polls, for example, show a majority of Czechs deeply sceptical about the future of the European project and opposed to the adopting the Euro – as in Western Europe ‘hard euroscepticism’ has been the province parties of the radical right and left. It is hard to find any out-and-out outers in the region.

For poorer, economically less robust newer member states EU membership was not only the best option for economic development, but a civilisational choice confirming their ‘Return to Europe’ and status as fully fledged democracies.

And while the Brexit referendum is a contest between two (semi-)plausible futures both of which draw high levels of public support – centring a debate over the trade-offs between economic growth and recovered sovereignty – CEE states have no credible economic options outside the Union.

For this reason, ‘hard’ Eurosceptics in the region have often been big on critique and vision but quiet on concrete proposals for getting their countries out of the Union. Instead their implicit hope seems to be that eurosceptic and anti-federalist coalitions prepared to roll back integration – either between governments or parties – will emerge, or that the European Union would suffer a sudden collapse, leaving CEE societies, as in 1918, to make a break for national independence amid the rubble.

 

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Something rotten in the state of Czechia?

By Blog Admin, on 3 May 2016

klima coverThe Czech Republic has been in the news recently because of its politicians’ somewhat quixotic campaign to rebrand the country to the world as ‘Czechia’. But among political scientists and businesspeople the country’s name has long suffered worst damage than this.

Widely seen in the first decade after 1989 a leading democratiser with high standards of governance overseen by a well-established set of West European-style political parties, the country has since acquired a reputation for engrained political graft and high level corruption, which blemished its record of reform and modernisation.

In successive elections in 2010 and 2013, the established Czech party system collapsed like a house of cards as – as elsewhere in Central and Eastern Europe – voters turned to a diverse array of protest parties promising to address the country’s ills by killing off political dinosaurs, fighting corruption and promoting the direct democracy. Political scientists quickly clocked thiselectoral turbulence and the unusual new parties it gave rise to, but few stopped to wonder why and how earlier judgements of the Czech party system as an ersatz, but basically functional, equivalent of West European party politics had been off the mark.

Michal Klíma’s  new book Od totality k defektní demokracii: Privatizace a kolonizace politických stran netransparentním byznysem [From totalitarianism to defective democracy: the privatisation and colonisation of parties by non-transparent business] tackles this issue head-on, suggesting that rather than being a normal party system distorted by elements of corruption, the Czech Republic’s post-1989 party-political settlement was a deeply corrupt system overlaid with a facade of left – right competition. His book sets out to chronicle and explore how and why this evolved, drawing on the rich seam of Czech investigative journalism and focusing on the two principal pillars of post-1989 party system: the centre-right Civic Democratic Party (ODS) and the Czech Social Democrats (ČSSD ).

Regional ‘godfathers

klima3

Photo:  author

By far the book’s most impressive achievement is its careful reconstruction of the subversion and takeover of parties and party organisations at the regional level by ‘godfathers’ (kmotři). Far from providing an impetus for political and economic development, EU-mandated regionalisation and the coming on stream of structural funds, managed by regional agencies and spent by regional authorities, triggered the takeover of party organisations by corrupt vested interests. Their usual modus operandi was the recruitment of fake or paid for party members (in Czech political parlance so-called ‘dead souls’) which allowed the capture of first local local and then regional party organisations and often opened up the way to national influence.

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