Browsing by study line "Politics and the International Economy"

In the past 10 year, the inequality discourse has been greatly shaped by Piketty’s capital accumulation theory presented in Capital in the 21st Century. Although it has popularized the capital-income dichotomy in inequality research, the missing role of institution has severely restricted the model’s explanatory power. Illuminated by the concept of factor concentration and the decomposition analysis in recent literature, this thesis will analyze the role of one special form of capital -housing- in inequality formation. The omnipresent influence of government (or institution) in housing welfare allocation will be explained. Moreover, it will pay extra attention to the Nordic countries who are arguably featured with high degree of equality and deep state intervention. It will be shown the inequality measured by some indices is surprisingly high in those societies. However, after taking into consideration their welfare regimes the measuring methodologies, the results do not seem so gloomy. The universalistic embodied in their system and a relatively stronger macro level welfare state are not reflected in the data but are effective in defending housing-related welfare. The thesis aims at incorporating welfare states theory and housing economics literature into inequality discourse. It will be demonstrated that the welfare institution in a society has strong effect on shaping wealth and ultimately welfare distribution. Through this empirical discussion, the importance of including qualitative literature in interpretating quantitative results will be emphasized.

Abstract Introduction. International migration is one popular and challenging issue in Central Europe for decades, especially after the collapse of the communist bloc. This thesis explores, how international migration correlates with the level of economic development in six Central European countries (Austria, the Czech Republic, Germany, Hungary, Poland, and Slovakia) during the years 1995-2019. In this context international migration is divided into two types: immigration and emigration. This thesis aims to help policymakers to determine the international migration policy by understanding the correlation between international migration and economic development better. Methods. This study explores the correlation between international migration and economic development in Central European states and reflects it against the historical, political, and economic context. National-level migration and macroeconomic data related to Central European states were collected from the World Bank, Eurostat, OECD, UNCTADstat, WIID, UIS, UNHCR and ETH Zurich databases in the period 1995-2019. The endogeneity issues in panel data analysis were noted. Macro-econometric models and spatial autoregressive models were conducted through Stata. Results. The empirical analysis confirmed the following hypotheses: (1) an increase in immigration correlates with a higher level of economic development in receiving countries. (2) An increase in emigration correlates with a lower level of economic development in sending countries. As expected, the empirical results further displayed a positive (negative) correlation between female immigrants (emigrants) and the economic development of receiving countries (sending countries). Conclusion. This thesis presents that (1) an increase in immigration strongly correlates with a higher level of economic development in receiving countries; (2) an increase in emigration significantly correlates with a lower level of economic development in sending countries. This study also emphasises the correlation between female migration and economic development in Central Europe.

The efficient market hypothesis EMH (efficient market hypothesis) has long been a cornerstone theory in finance, serving as the basis for understanding the behaviour and efficiency of financial markets. This thesis tests the market efficiency in the Nordic stock market by the momentum and the short-term reversal strategies and finds strong evidence against the EMH. By comparing the trading strategies’ excess returns over the benchmark in different market conditions, this thesis found that the market stocks of smaller sizes, lower valuation, and lower liquidity are less efficient. Besides, the results of this thesis are also consistent with the traits of the Nordic stock market, such as its focus on technology stocks, and dominance of a small number of highly liquid stocks.

China, as a rising power, has transformed the global aviation market. Since the 1990s, China has flexibly used "aviation diplomacy" to bring its political ties with Europe closer. Is the $37 billion aircraft order between China and Airbus in 2022 a continuation of China's “aviation diplomac” with Europe? This thesis aims to analyse the political and diplomatic behaviour of Chinese and European Airbus in civil aviation through a historical comparison, especially in official documents and leaders' statements. It also examines the birth and development of 'aviation diplomacy', focusing on how China has used this diplomatic strategy. Another point is the analysis of Airbus as a product of European political and economic alliances. The paper argues that understanding China's 'aviation diplomacy' strategy is essential for studying China-Europe relations.

This thesis is aimed to investigate the long-run and short-run relationship between renewable, nuclear energy consumption, economic growth and CO2 emissions in Finland. The historic development and current situations of the energy consumption, economic growth and CO2 emissions are discussed. Then Johansen cointegration test and Vector Error Correction Model (VECM) are applied in the empirical analysis to further exploit the causal relationships between the variables. There are four variable employed in this thesis: renewable energy consumption (REC), nuclear energy consumption (NUC), Gross Domestic Product (GDP) and CO2 emissions (COE). The data of the variables span from 1977 to 2020 and mainly come from official databases and reports from the Finnish government and international organizations, such as Statistics Finland, Our World in Data, World Bank, etc. The results indicate that there is the positive bidirectional long-run relationships between NUC, REC and GDP. Also, the unidirectional long-run relationships of GDP, REC, NUC with COE are estimated. The increase in GDP and NUC are estimated to increase COE in the long run, while REC is estimated to decrease COE. Furthermore, the negative short-run relationships between REC, NUC and COE are found, which shows that, in the short run, renewable and nuclear energy consumption in Finland is estimated to reduce the CO2 emissions. The findings from the thesis indicate renewable energy consumption is both economic and environmental-friendly. Nuclear energy is also good for economic growth in the long run and environment in the short run, but needs to be cautiously treated with regard to environmental protection in the long-run strategies. Also, there has been the trend of impact decoupling in Finland in the short term. However, further research is needed to test the EKC hypothesis and its turning point.

Since the 1990s, the international capital flow between countries has shown a sharp rise. Most of the transition economies such as Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) have adopted new measures to reform their financial systems, which not only brought important sources of overseas capital for their own economic development, but also guided their financial systems to develop in a more rational direction. However, such a model that relies heavily on the foreign capital has also brought serious financial hidden dangers. The declining trend of international capital flows after the financial crisis further confirms the existence of the "Lucas Paradox". Based on the sorting and research of previous literature, this dissertation takes CEE and CIS countries with unique background and status in transition economies as research objects. After summarizing the transition background and characteristics of these two types of transition economies, each aspect of financial development and transition is analyzed (banking, securities, financial regulation). Then, it analyzes the situation of international capital inflow in different stages in detail. In addition, the international capital flow data and financial development data of 19 transition economies from 1995 to 2019 were selected, and macro-control variables were considered. Meanwhile, this dissertation establishes a panel data model rely on FGLS estimation and systematic GMM method to discover the quantitative relationship between financial development and international capital flow. The empirical results show that with the improvement of the level of financial development, direct investment and international loans show a positive inflow, while indirect investment has a reverse outflow phenomenon. At the macroeconomic level, real economic growth rates and real interest rates affect total capital inflows, and the quality of national institutions affects direct and indirect investment inflows. In addition, increased financial development can significantly boost indirect investment and debt-based capital inflows in EU-acceded countries (CEE), but non-EU-acceded countries (CIS) are somewhat unattractive for international indirect investment.

Obtaining advanced technology through FDI technology spillover is generally regarded as a crucial channel for transition economies to achieve technological progress. However, in the actual research, the efficiency of technological progress and the intensity of FDI technology spillover in Central and Eastern Europe exhibit noticeable spatial differences, closely related to different countries’ different innovation capacities. Existing literature has proved the existence of FDI technology spillovers and theoretically discussed the implications of innovation capacities on FDI technology spillovers. Nevertheless, this moderating effect’s nonlinear characteristics and threshold effects have not yet been sufficiently explored in transition countries in Central and Eastern Europe. Therefore, this study utilises the macroeconomic data of 11 transition countries in Central and Eastern Europe from 2005 to 2019 to construct a threshold regression model to analyse the moderating effect of innovation capacities on FDI technology spillovers. According to the empirical findings, the country-level innovation capacity of transition countries in Central and Eastern Europe has a significantly and positively moderating effect on FDI technology spillovers, with an apparent single threshold characteristic. This moderating power diminishes when the innovation capacity crosses the threshold. A striking finding is that the threshold effect of the innovation capacities’ moderating effects on FDI technology spillovers disappears when differences in resource endowments between countries are considered.

This research investigates the intricate relationship between labour market institutions, in-come inequality, and welfare state typologies. Employing regression analysis, the study examines the influence of employment protection regulation (EPR), the tax wedge, and the unemployment rate on income inequality. The findings demonstrate a significant negative correlation between EPR and income divergence, suggesting that stricter labour protection is associated with reduced income inequality. However, the impact of EPR on inequality is contingent upon the employment rate and specific economic conditions. Surprisingly, a higher tax wedge is found to be linked to lower income inequality, contrary to previous research. The effect of the tax wedge on labour market outcomes varies depending on la-bour market conditions, and progressive taxation can contribute to decreasing income ine-quality. Additionally, the study reveals that the unemployment rate affects income inequali-ty through its interaction with labour market institutions. Countries with high unemploy-ment tend to benefit from stronger labour protection regulations, leading to higher labour market participation rates. Furthermore, the analysis compares different welfare state ty-pologies and their association with income inequality. The findings highlight that social democratic welfare states exhibit relatively low levels of income inequality, while con-servative and liberal welfare states display varying degrees of inequality. This study en-hances our understanding of the complex relationship between labour market institutions, income inequality, and welfare state typologies, underscoring the importance of consider-ing specific economic contexts and employment dynamics when designing labour market policies.

This master’s thesis examines the interplay between personal experiences and the socioeconomic environment to understand the temporality experienced by highly skilled Indian immigrants in the information, communication and technology (ICT) industries in Finland. It begins with introducing the research context that highlights Finland's transformation into a technologically advanced nation attracting skilled migrants seeking better economic prospects and high quality of life. However, the acceptance of immigrants remains a polarized topic, necessitating a balance between economic growth and social inclusion. The theoretical framework incorporates temporality and locality considerations in migration studies to provide a comprehensive understanding. Drawing on interview data with four people working in the ICT industry, two in other sectors and two people involved in the policy-making process, the analysis demonstrates the significance of social factors in immigrants' decisions to stay, emphasizing the role of social networks in job hunting. However, discriminatory barriers and prejudice persist, hindering career progression and utilization of immigrants' qualifications and skills. Overall, immigrants face challenges in building long-term career trajectories due to deskilling, limited job prospects, and time-consuming application processes, creating obstacles to successful career integration in Finland. Considering the flexibility of ICT industry itself when relocating in different countries, it might not be a cost-effective choice for the immigrants to invest their time into integrating into Finland in the long term.

Following the collapse of the Soviet Union, Kyrgyz society got entangled in discussions about what it means to be Kyrgyz. Even though Kyrgyzstan has experienced a surge in nationalism over the last decades, it is only since recently that non-heteronormative sexualities are increasingly constructed as a threat to the continued existence of the Kyrgyz nation. Based on five in-depth interviews with Lesbian, Gay, Bisexual and Transgender (LGBT) individuals, I explore how they rationalise the increasing homophobia in Kyrgyz society and what kind of behavioural strategies they adopt to cope with the hostile environment. In particular, I assess whether the discursive exclusion of LGBT individuals from the Kyrgyz nation alters their relationship with the nation and the state. The research participants demonstrate an awareness for the connection between increasing nationalism and worsening attitudes against LGBT people and report corresponding adjustments in their behaviour, ranging from adaptation and hiding strategies to activism and emigration. While all respondents have a negative relationship with the Kyrgyz state, most report a decreasing sense of belonging to the Kyrgyz nation amid growing homophobia as well. These results suggest that the increased emphasis on the purportedly heteronormative nature of the Kyrgyz nation succeeds in redefining individual belonging to the nation and shifting the imagined boundaries of the nation.