International Economy

Geopolitical uncertainties and the recent US shifts on monetary and climate policy have created a rare opening for the euro. With the international monetary order shifting, the euro has the potential to strengthen international role. With strong green finance rules and the European Central Bank integrating climate risks, the EU can position the euro as the world's leading green currency. As ECB President Christine Lagarde put it: this is Europe's "global euro moment." But how can Europe seize this opportunity? And what are the concrete policy steps needed to make the euro the currency of choice for financing the green transition? Speakers: Agnieszka Smoleńska (London School of Economics), Jens van 't Klooster (Universtity of Amsterdam) and Heather Grabbe (Bruegel). Moderator: Katie Martin (Financial Times).

The Social Guarantee refocuses progressive politics on human relations, on how we care for each other, and on the importance of investing in the social infrastructure on which the rest of the economy depends. It draws on current thinking about the foundational economy, the care economy, and sustainable economic prosperity It offers a coherent, ethical, and well-evidenced basis from which to address such issues as investment, regulation, and carbon mitigation.

This paper has argued that an active industrial policy that is context appropriate, coherent, and adaptable can be utilised to address this challenge. Nevertheless, one must acknowledge that the necessary green transition on the EU level comes with transition costs, challenges, and opportunities that affect distinct people, firms, and countries very differently, and hence bears the threat of rising inequalities, both within and among countries. Central to the success of a green transition is, therefore, the EU’s adequate reaction to this fact. This reaction can then enable and facilitate a green transformation that really leaves no one behind.

A green transformation of the economy will require a major commitment to green investment to reduce and respond to environmental degradation. The main objective of this paper is to explore the macroeconomic implications of green investment in the transformation to a green economy.

This paper links two things that are often dealt with separately when discussing what we mean by the word “just” in the notion of a “just transition”. On the one hand, activists and reformers see this as an opportunity to empower marginalised populations and redistribute wealth-generating assets using the state in the form of green industrial policy. On the other hand lies private finance, especially in the form of asset managers, who own huge swathes of global companies. These competing notions of “just” are used as a way to discuss how to have a transition that leverages the investments of the private sector without once again simply giving capital everything it wants at the expense of everyone else.

This paper questions the extent to which standard market-fixing and macroeconomic expansionary measures will be able to direct and shape new industrial ecosystems in economies across the Atlantic. Moreover, it advances a strategic industrial policy approach for deep industrial restructuring, followed by a discussion on specific industrial policy instruments and how conditionalities and policy alignments are central to balancing risks and rewards in the process of green transition.

Sustainability transition perspectives are receiving increasing attention in policy and practice. This paper discusses how they can be used to address the net-zero energy transition, which is an extraordinary challenge given its complexity and urgency. It highlights six key principles to guide “transitions based” decarbonisation policies: system transformation, effectiveness, sensitivity to context, adapting policies to transition phases, policy evaluation and learning, and politics.

People may arrive in one or the other of these camps for many reasons. Advocates of the investment-centred approach tend to link climate policy to broader concerns over economic justice. Developments like the Gilets Jaunes protests in France, and more recent responses to rising energy prices in the wake of the war in Ukraine, have raised doubts about the viability of aggressive carbon pricing, making an investment-centred approach more attractive. More subtle, but equally important, are the different underlying economic visions behind the two approaches to climate policy. This paper brings these submerged differences to the surface.

What is the role of financial markets in a green transformation? There are two key aspects to this question. First, what should be the balance between private and public funding of the transformation? Second, what are the dangers that our modern financial market structure poses to a successful green transformation?

The green turn in central banking has generated considerable controversy. Some voices have questioned central banks’ growing engagement with climate issues, arguing that unaccountable technocrats do not have the tools or the political legitimacy to intervene in (or possibly highjack) the low-carbon transition. Others question the continued emphasis on voluntary decarbonisation, even among green champions in the central bank community. This paper intervenes in and nuances this “too little vs too much” debate.

This paper critically examines whether the European fiscal framework will be sufficient to stabilise the macro economy in the aftermath of the multiple crises, let alone achieve the goals of a green transition that leads to full capacity utilisation of the economy. The  reader will come to understand that private finance alone is neither sufficient nor desirable to achieve the goals of a socially just green transition.

This article wants to provide food for thought on what a long-term economic policy could look like. In the context of the climate crisis, increasing inequality, the loss of biodiversity and financial instability, the challenge is to craft a strategic approach that can set the course for long-term success.

This publication series aims at contributing to the emergence of a transformative economic thinking, integrating environmental, social, and economic dimensions, after the wreckage of neoliberal economic thought that clearly has reached its date of expiry. It is the product of a collaboration of the Heinrich-Böll-Stiftung, the ZOE Institute for future-fit economies, and Finanzwende Recherche.

This paper attempts to overcome the polarisation between inclusive green growth and degrowth. The authors suggest that the idea of “post-growth” can serve as a unifying concept and define the pillars of a progressive economic policy agenda that can help Germany, the European Union, and the United States achieve their net-zero ambitions while ensuring prosperity and reducing inequality.

Transport makes a significant contribution to global employment and provides economic opportunities for millions across the world, acting as a key enabler for trade, manufacturing and mobility. In Europe alone, the transport industry directly employs around 10 million people. However, the human costs of transport – both present and future – cannot be ignored.

The undeniable connections among the multiple crises that humanity faces today -- climate change, biodiversity loss, inequality, poverty, and the Covid-19 pandemic -- demand interconnected, rather than segmented, macro solutions. Responses must be systemic and address the structural dynamics and shortcomings of governance, economics and finance. A feminist and decolonial framing provides a lens for proposed reforms.

The momentous African Continental Free Trade Area (AfCFTA), which went into effect on 1 January 2021, demonstrates the continent’s desire to carve its own economic destiny. But as Africa’s biggest trading partner, the European Union’s actions will have a strong impact on the project’s chances of success. The EU’s historical record suggests it would benefit from more serious listening to what its African partners want on trade.