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Published: February 13, 2002

 
 

Recent Studies

Why Europe Isn't in Space
Klaus-Peter Ludwig and Stefan Hess, "Toward a European Space Policy," Internationale Politik, German Council on Foreign Relations, Summer 2000. www.dgap.org

Over the past 35 years European companies and governments have spent about 150 billion euros (about $150 billion) on space activities. But European space initiatives are not as advanced as they could be for all this money. Klaus-Peter Ludwig, of Dornier's satellite division, and Stefan Hess, of the German Aerospace Industries Association, believe conflict of interest among countries is holding back European space policy and new ventures.

The European Space Agency (ESA) was founded in 1973 as a civil development organization, focused on scientific purposes, but with no specific industrial development mandate. Fourteen European nations (plus an associate member, Canada) participate in ESA-funded programs and projects. Separately, national governments also fund their own space projects.

Each ESA member has one vote regardless of its size. And typically, every country takes a share of a project, rather than participation being based on which countries can do the job best.

This practice (known as the principle of geographical returns) is problematic, because it encourages member countries with the largest budgets and top aerospace corporations to favor their own national ventures over ESA projects. For example, the French government, which has the largest space budget among the 14 ESA members, spent 10.6 billion euros (about $11.3 billion) on national projects in 1999, versus only 3.9 billion euros (about $4.1 billion) on ESA projects. Further, ESA is often left to fund second-tier projects.

When Germany decided not to spend money on ESA's program to create reusable launchers, French companies, instead, were funded to develop parts German firms could have supplied. France, Italy, and Great Britain are using ESA funds to develop synthetic aperture radar, but ESA is ignoring German companies that lead the world in this technology. The result? "More often than not," Mr. Ludwig and Mr. Hess write, "maintenance of national capabilities is still favored over effective concentration of European resources."

In May 1999 executives of the European Commission and ESA ministers announced they would unveil a "coherent" European space strategy by the end of 2000. Among the changes expected: a common European procurement procedure and applications of space technology to steer European policy in nontraditional areas like forestry and agriculture, urban development, and traffic planning.



Why Britain and the Netherlands Are Europe's Tigers
Steve Nickell and Jan van Ours, "The Netherlands and the United Kingdom: A European Unemployment Miracle?" Economic Policy, Blackwell Publishers, April 2000. www.blackwellpublishers.co.uk/journals/ECOP/descript.htm

While many European nations suffer double-digit unemployment rates, Britain and the Netherlands are keeping unemployment in the single digits. Professor Steve Nickell, of the London School of Economics, and Professor Jan van Ours, of Tilburg University in the Netherlands, point to two reasons unemployment in their countries is lower than in other countries in Europe: more compliant unions and more restrictive unemployment benefits.

British unemployment rates fell from an average of 10.5 percent in 1983-88 to 6.2 percent by 1999, while the Netherlands saw unemployment drop from 10.5 percent to 3.4 percent during the same period.

British Prime Minister Margaret Thatcher's war on the unions did cut British union membership from 70 percent of the labor force in 1980 to 47 percent by 1994. Weakened union membership checked wage inflation and made the labor force more flexible and dynamic.

Unions in the Netherlands, under the Wassenaar Agreement of 1982, agreed to allow part-time employment, eliminate obstacles to temporary work, and end the indexing of wage increases to inflation, all in return for a shorter workweek. This agreement, combined with the Dutch government's reductions in taxes and social insurance costs, resulted in "a more consensual approach to labor relations" and lower unemployment rates.

Some reforms have reduced long-term subsidies to people physically able to work. In 1987 the Netherlands restructured its unemployment benefits to allow unrestricted aid only for the first six months of unemployment. After six months, highly educated workers have to accept jobs even if the jobs are below their level of education. After 18 months, unemployed workers have to accept any suitable job offered them.

In 1996 the Netherlands tightened the rules still further. Strict sanctions were imposed, including reductions in benefits, if people did not follow the rules (e.g., refusing to look for work or refusing job offers). In extreme cases some people had to repay part of their benefits if they received them for the wrong reasons. In 1997 the Netherlands placed some sanction on 36 percent of those receiving unemployment benefits, a rate higher than that of any other European nation.

Some work remains to be done. British housing subsidies for the unemployed (including rent subsidies and property tax rebates) have no term limits, although they are drastically reduced when an unemployed person re-enters the labor force. These subsidies are a major reason the British haven't reduced their unemployment rate to below 6 percent.

In the Netherlands, workers under age 50 can still be declared disabled by an employer if no job exists for them at their educational level and in their occupation, enabling them to have up to five years of disability benefits at 70 percent of their last wage. Though disability rules have been toughened, there are still, according to the authors, an "ex-tremely high number of workers with disability benefits" in the Netherlands who might re-enter the labor force if disability benefits were reduced.



Do Consumers Want Global Brands?
Alan Mitchell, "Global Brands or Global Blands?" Journal of Consumer Studies and Home Economics, Blackwell Publishers, June 2000. www.blackwell-synergy.com/Journals/toc.asp?IssueID=3032

Globalization has been a steadily rising force for decades, but 1999 was a watershed for consumer products manufacturers. It was the year Procter and Gamble (P&G) reorganized, eliminating regional divisions and creating global product lines. Then-CEO Durk Jager vowed to sell off products that lacked global potential, and bought companies like Tampax, whose products are used in scores of nations. Other multinational companies, including Heinz, Kimberly Clark, Nestle, and Unilever, have completed similar reorganizations.

But Alan Mitchell, a journalist specializing in marketing, believes these multinationals are globalizing without seeing what consumers really want. "Are consumers really crying out for global brands?" he asks. Or are these brands being created because "companies want them for their own internally focused financially driven and operations-driven reasons?"

"Globalness" is a powerful attraction for the consumer only under certain circumstances, writes Mr. Mitchell. For example, consumers like knowing they can use Visa and MasterCard around the globe, and that they don't have to fly on the national airline when they go to a particular country. The rise of Federal Express and United Parcel Service, and increased competition among national postal services, are also popular among consumers.

But, he argues, consumer attraction does not apply to a product like Kit Kat, Nestle's popular candy bar. In this instance, globalness is simply Nestle's desire to sell more chocolate bars to more consumers in many markets. Similarly, it doesn't matter to people doing their laundry in Acton or Azerbaijan whether their washing powder is a global brand.

Mr. Mitchell notes most consumer goods companies aren't really all that global. According to the international brand consultancy Interbrand Group, Pepsi is the 17th leading global brand in the world, but 80 percent of Pepsi's sales are in the United States. Heinz has been a multinational for more than a century, but 90 percent of its profits come from six countries · only one of them (Italy) non-English speaking.

Nor has popular culture become more global: America's share of the world music market has fallen from 50 percent in 1987 to less than 20 percent today, as consumers prefer local musicians to international ones.

Rather than transcending national differences, a far better strategy for companies is to practice what management consultant Kenichi Ohmae calls "insiderization," having consumers assume your company is a local one.

British consumers for decades thought Ford Motor and Heinz were British firms, Mr. Mitchell claims. Coca-Cola recently hired pop star Ang Mei to represent the firm in China because, among other reasons, she does not speak English.

Globalization, Mr. Mitchell argues, will succeed only if global brands truly represent better value than local brands.


Authors
Martin Morse Wooster, Martin Morse Wooster is an associate editor of The American Enterprise, a visiting fellow at the Capital Research Center, the education book reviewer of the Washington Times, and a contributing editor to Reason and Philanthropy.
 
 
 
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