RJEA, Vol. 7, no. 4, December 2007

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Deepening Services Market Integration – A Critical Assessment

Jacques Pelkmans

Abstract:
The greatest asset of the European Union is undoubtedly its internal market. However, the internal market is not completed: it suffers from a giant hole with respect to many services. The present contribution addresses the status of services in the internal market and, in particular, the horizontal liberalisation (or, the lack of it) of services outside the two large sectors which greatly deepened market integration (6 modes of transport and 3 financial services markets). Because a horizontal perspective on services in the EU is still little understood, it is briefly summarized what services really are and how their regulatory logic in the internal market can help to classify them. The (strong) economic case for deepening services market integration is built on recent empirical economic analysis as well as simulation. This is followed by a discussion, with flowchart, of the Bolkestein draft directive, against the backdrop of the frustrating lack of, or at best, selective progress on services for decades. A survey of economic impact studies of the draft directive is provided, too, underpinning its importance even when the infamous origin principle is taken out. Some light is subsequently shed on the tumultuous politicisation of the services debate. Emphasis is laid on the socio-economic context (which, it is submitted, sharpened the discussion at times into polarisation) and a series of other factors such as the diversity of the national regulatory frameworks of services and the labour employed, the complexity of the draft directive, the potentially radical nature of the origin principle (especially for those not aware of the case law of the ECJ), the dominant role of the EP and the opportunism of leading national politicians. Finally, directive 2006/123 –meanwhile in force – is explained and briefly assessed. Apart from the conspicuous manifestation of ‘Angst’ in drafting the directive, the (de) merits are set out. The conclusion is that a badly drafted directive with excessive emphasis on exclusions and derogations, and which lacks a driving principle, nevertheless comprises several functional obligations in general (e.g single window, administrative cooperation in dedicated networks, etc.), significant advantages for free establishment (which imply equally significant economic gains) and a firm discipline for (or prohibition of) bad practices with respect to temporary provision of services.

Keywords: liberalization, market integration, services directive

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Real Convergence and Integration

Aurel Iancu

Abstract:
The study is based on the critical observations that competitive market forces alone are not able to assure convergence with the developed countries. These observations are grounded on the results of the computation of the marginal rate of return to capital (which contradict the neoclassical model hypotheses), as well as on the real process of polarisation of the economic activities, taking place worldwide and in accordance with the law of competition. Unlike those who trust the perfect competitive market virtues, the EU’s economic policy is realistic as it is based on the harmonisation of the market forces with an economic policy based on the principle of cohesion, which supports, by means of economic levers, the less developed regions and member countries. This paper deals with the evolution of the EU cohesion funds, as well as with the results of convergence.

Keywords: cohesion funds, convergence, divergence, marginal rate of return on capital, Neoclassical model, polarisation, Structural Funds, variation coefficient

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From Washington Consensus to Lisbon Agenda: What Lessons for Economic Models in Romania?

Valentin Cojanu

Abstract:
The path from command to market economics in Romania has been marked by two decisive conceptual clarifications at international scale, from the 1989 Washington Consensus to the 2000 Lisbon Agenda. In both cases, it was about a “how-to” policy list supposedly conducive to better economic performance. Prescriptions from both lists were integrated in national programmes, but doubts still persist as to the configuration of the right policy measures. This material discusses the context and practical implications of the two theoretical models.

Keywords: economic theory; development; European integration; competitiveness

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The Restructuring of Romanian Power Sector at the Crossroads: Competitive Markets or Neo-Colbertism?

Oana Diaconu, Gheorghe Oprescu, Russell Pittman

Abstract:
Despite efforts made by European Commission to liberalize electricity markets and foster integration, there are still significant barriers to free competition. Until now, Romania was one of the countries that have been compliant to the European Union’s electricity directives, being ahead of several older member states in this area. However, reforms have not started to pay out, suggesting that the model of combining state-owned non-competing generators with private/privatized distributors and suppliers may not be the best model of market deregulation. As a result, Romanian authorities have started to talk about plans to restructure the sector, by re-consolidating the unbundled generation companies and the state-owned distribution companies into one national energy company, aiming to create a national champion, competitive on the regional markets. However, these proposals are based on questionable economics and their adoption will have negative effects on market competition and, thus, on consumers.

Keywords: electricity sector, European Union, liberalization, Romania

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Some Considerations on Abuse of Dominant Position

Ovidiu Maican

Abstract:
Article 82 (formerly 86) EC contains four essential elements (an undertaking, a dominant position, an abuse of that position and the abuse must affect trade between member states). The term undertakings is subject to the same broad interpretation as that applied to article 81 (formerly 85) EC and covers the same activities, both public and private.
The Community interest must be also taken into account. Although it is not clear precisely what this element of article 86 requires, it will clearly curtail the scope of the exception provided under this article.
Although abusive behavior of undertakings in a dominant position is prohibited, it must be recalled that merely being in a strong position is not a problem in itself. It is necessary for major players in a market to be aware of their position because practices which would not fall foul of article 82 (formerly 86) EC, where an undertaking is not dominant, will do so where dominance is established. A refusal to deal by a non-dominant undertaking would not be an abuse within article 82 (formerly 86) EC, but it will be so where the undertaking is dominant.

Keywords: abuse manifestation, concentration of economic power, dominant position, forms of the abuse, jurisprudence

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Cross-border Romanian Students Mobility in a Comparative Perspective

Andreea Vass

Abstract:
Strategic management and greater policy coherence of Romania’s human resources is needed taking into account the interlinkages between demographic, education, labour market and migration flows changes. We focus in this paper on the high need of strengthening incentives for circular and repetitive migration of Romanian students. They represent the most relevant pool of the future-be skilled labour force. Overviewing the realities, it may come to no surprise that Romania has less higher education graduates than in EU. Nor that the expenses for the higher education represent nearly the same amount per capita as in the other EU countries, when adjusted with GDP. Nor that, according to international university rankings, Romanian universities score one of the lowest performance in Europe. Above all, today we risk that our best students migrate to western higher education schools without returning to their home country. A deep analysis of this phenomenon reveals an even harsher reality: the propensity of Romanian students to study abroad is even lower than in other neighbouring countries.

Keywords: brain drain, education policy, international students’ migration flows, university performance

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