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Many also have sounder banking systems, while their public and private debt ratios, though rising, are still low

But the short-run policy tradeoffs that many of these countries face – damned if they tighten monetary and fiscal policy fast enough, and damned if they do not – remain ugly.

As it is widely known, transfer pricing is the major tool for corporate tax avoidance, and it creates current account deficit when a multinational company receives from its own branch

abroad, the previously transferred own profit, as a debt.

But competitiveness based on cost, rather than brand value or innovation, makes the Polish economy vulnerable.

And Poland’s cost advantage would disappear if the złoty were to strengthen sharply.

the country must be careful about joining the exchange rate mechanism (ERM II) – the narrow band within which applicant currencies must operate for at least two years prior to adopting the euro. Doing so could cause the złoty to strengthen, as it did to the Slovak koruna, and wipe out Poland’s competitive advantage.

One in four employees is on a fixed-term contract or self-employed.

But flexible labor markets have disadvantages, too. Companies tend not to invest in talent or develop new skills, and the quality of existing skills can suffer. In the longer run, flexible labor markets also increase structural unemployment and fuel the informal economy.

Finally, Poland needs sound public finances – that is, fiscal space for automatic stabilizers during economic crises.

The election of 1989 marked the first time in more than 60 years that a civilian president had handed power to an elected successor.

the repeated recessions of the 1970s and 1980s, the hyperinflation of 1989-90, the economic crisis of 2001 and now the possibility of another crisis to come.

But three deep-lying explanations help to illuminate the country’s diminishment. Firstly, Argentina may have been rich 100 years ago but it was not modern. That made adjustment hard when external shocks hit. The second theory stresses the role of trade policy. Third, when it needed to change, Argentina lacked the institutions to create successful policies.

Railways transformed the economics of agriculture and refrigerated shipping made it possible to export meat on an unprecedented scale: between 1900 and 1916 Argentine exports of frozen beef rose from 26,000 tonnes to 411,000 tonnes a year. But Argentina mainly consumed technology from abroad rather than inventing its own.

External shocks duly materialised, which leads to the second theory for Argentine decline: trade policy.

Argentina raised import tariffs from an average of 16.7% in 1930 to 28.7% in 1933. Reliance on Britain, another country in decline, backfired as Argentina’s favoured export market signed preferential deals with Commonwealth countries.

an existing policy of import substitution deepened; the share of trade as a percentage of GDP continued to fall.

High food prices meant big profits for farmers but empty stomachs for ordinary Argentines. Open borders increased farmers’ takings but sharpened competition from abroad for domestic industry.

“One-third of the country—the commodities industry, engineers and regional industries like wine and tourism—is ready to compete,” says Sergio Berensztein, a political analyst. “Two-thirds are not.”

Property rights are insecure

Statistics cannot be trusted: Argentina was due this week to unveil new inflation data in a bid to avoid censure from the IMF for its wildly undercooked previous estimates.

hort-termism is embedded in the system

“We have spent 50 years thinking about maintaining government spending, not about investing to grow,” says Fernando de la Rúa, a former president who resigned during the 2001 crisis.

The country’s Vaca Muerta (“Dead Cow”) shale-oil and gasfield is estimated to be the world’s third-largest. If Argentina can attract foreign capital, the money could start flowing within a decade.

In some countries, especially those with the highest youth unemployment rates, short-term contracts are nothing more than opportunities for employers to take advantage of the weak labor market.

But because of her work hours, she still does not qualify for the Netherlands’ monthly minimum wage of €1,477 (about $2,000), and her new career was a long way from where she had always hoped to end up.

An estimated 100,000 university graduates have left Spain, and hundreds of thousands more from Europe’s crisis-hit countries have gone to Germany, Britain, and the Nordic states for jobs in engineering, science and medicine. Many others have gone farther afield to Australia, Canada and the United States.

ransfers from a Luxembourg company to the US would have typically been subject to a withholding tax. Last year, after attracting the attention of Spanish tax authorities, Exxon quietly closed down the operation.

“Normally you would have to pay a 10 per cent withholding tax at source to send profits to the US,

Spain introduced the ETVE in the mid-1990s to encourage foreign investment, and better compete with Luxembourg and Holland for international companies seeking tax-efficient European holding structures. It also allowed for foreign companies to take advantage of Spain’s strong network of bilateral tax treaties with countries in Latin America, such as Argentina, Brazil and Mexico, which can offer more favourable tax rates than other countries. Once the ETVE has been established all overseas dividends that are paid into it are exempt from tax in Spain, and can be easily moved on to a final destination, providing a small number of conditions have been met. Most importantly, corporation tax must have been paid in the country of origin on the dividends being transferred, and companies using ETVEs to house shareholdings in foreign subsidiaries must not be resident in any country identified by Spain as a tax haven.

In fact, Linthal is an ETVE used by Ambev, a subsidiary of Anheuser-Busch InBev, the Belgian-based brewer, to distribute dividends from several Latin American beer brands, such as Argentina’s Quilmes and Cervecería Boliviana Nacional, to its holding company in Brazil.

levels of private and public debt, domestic and foreign, are still too high, and continue to rise as a share of GDP, owing to slow or negative output growth. This means that the issue of medium-term sustainability remains unresolved.

At the same time, the loss of competitiveness has been only partly reversed, with most of the improvement in external balances being cyclical rather than structural.

The euro is still too strong, severely limiting the improvement in competitiveness that is needed to boost net exports in the face of weak domestic demand.

a continuing credit crunch, as undercapitalised banks deleverage by selling assets and shrinking their loan portfolios.

The larger problem, of course, is that progress toward banking, fiscal, economic and political union, all of which are essential to the eurozone's long-term viability, has been too slow.

all imply that banks will have to focus on raising capital at the expense of providing the financing needed for economic growth.

Moreover the ECB, in contrast to the Bank of England, is unwilling to be creative in pursuing policies that would ameliorate the credit crunch.

Meanwhile, austerity fatigue is rising in the eurozone periphery.

And bailout fatigue is emerging in the eurozone's core.

But the eurozone's political strains may soon reach a breaking point,

but she is worried that the education she is getting, in a public system that she faults on quality, will not be enough to win her a place in a job market that she says is often skewed by bribery and favoritism.

“Students do not have an equal chance to succeed,” she said, adding that many parents had gone into debt trying to ensure that their children have some chance for a future by paying for them to study in private schools. “The quality of education all depends on the parents’ income.”

about one-third of the country’s civil servants work in the sector.

In his speech he called for mandatory foreign language training in university degree courses and a new emphasis on vocational and technical training.

In the 1980s, a political decision to reclaim the Moroccan identity resulted in a change in the language of instruction, with elementary and high school classes shifting to Arabic. Most higher education programs, however, remained in French.

Mr. Mrabet said other problems included an excessive focus in graduate training on quantity over quality; a failure to adapt courses to workplace opportunities; overcrowded lecture halls; student strikes; and school financing issues.

Instead of hiring graduates of the Moroccan public education system, recruiters tend to look for graduates educated abroad or the products of Moroccan private schools,

“Call centers are the biggest employers in Morocco with about 50,000 jobs that generally require good skills in French,” he said. “In some fields, like I.T., it is difficult to find people with the adequate training.”

Analysts say a revamped A330 would probably not be able to compete with the fuel economy of Boeing’s three-year-old 787 Dreamliner or with the updated 777, which in addition to new engines will have lighter wings made of carbon fiber instead of aluminum.

A more attractive price tag, combined with earlier availability — analysts say a revamped A330 could be ready for service in four years — would probably attract a wide range of customers.

Still, a revamped A330 would burn around 15 percent more fuel than its newer competitors, meaning that it could be a tough sell, even at a discount.

"Will you end up selling any more than you would have if you stuck with the old version and cut the price?” asked Mr. Cunningham, the London analyst. He noted that the current low interest-rate environment was already reducing customers’ sensitivity to list price, while the recent instability in the Middle East was refocusing attention on the risk of rising oil prices.

“There is much more fragmentation” of the wide-body jet market, Mr. Lasou said. “Each aircraft type is covering a smaller range of routes. The market is becoming much more specialized.”

“I definitely expect that things will get worse,” he said.

The European Union exported agricultural goods worth 11.8 billion euros, or $15.8 billion, to Russia last year, and sales have been rising at a rate of almost 15 percent a year.

The economic data and news that Russia was massing troops and military equipment on the Ukrainian border caused stock prices to fall across Europe on Wednesday.

Separately, the German Federal Statistical Office reported on Wednesday that new industrial orders in Germany fell 3.2 percent in June compared with May. Analysts had expected orders to increase.

For Italy, the deteriorating economy puts greater pressure on Prime Minister Matteo Renzi, who less than a week ago promised not to impose any more government budget cuts and to invest in improving the country’s roads and other infrastructure. Such promises will be difficult to keep if slower growth, which usually translates into higher unemployment and lower corporate profits, limits tax receipts.A slower economy also endangers Italy’s ability to comply with eurozone rules on budget deficits.

Italy’s 2.1 trillion euro government debt equals 136 percent of its annual gross domestic product, the second-highest debt ratio in the eurozone, after Greece.

They said Italy’s problems stemmed more from its failure make changes needed to improve the performance of its economy.

The slow pace of structural reforms is worrisome,” said Paolo Manasse, a professor of macroeconomics at Bologna University. He said there was no sign of progress on necessary steps like selling off state-owned assets or overhauling the labor market or public pension system.

This is forcing vulnerable countries into deflation, which raises the real level of their debt.

Furthermore, it is clear that the ECB would be taking on credit risk. It would be charged with monetary financing of governments. I believe it should go ahead. But the row between northern and southern Europe would surely be deafening.

It also hopes that, through this and other programmes it has announced, it will be able to expand its balance sheet

Moreover, the range of measures taken reinforce the ECB’s forward guidance. It has locked itself into ultra-accommodative monetary policies for years, as it should.

this year Germany’s current account surplus might be as big as 8 per cent of gross domestic product.

Spain’s grid is barely connected to France so its wind farms cannot export their production when it exceeds domestic demand. Similarly, solar and wind energy from southern Italy is wasted because it is not effectively linked to the industrial north.

Full energy convergence needs more than interconnectors. Widely divergent electricity prices are often determined by national tax rates. Grids that can respond to demand further afield in a continent-wide “supergrid” will need more direct (rather than alternating) current infrastructure. While it took Spain and France more than three decades to build a 64.5km interconnection, some 52,000km of lines need to be built or upgraded across the continent.

Poland argues that Gazprom has confidential data on each country it deals with, knowing its gas prices and infrastructure vulnerabilities. It can then use this data to its advantage, pushing some countries into more onerous contracts than others.

The advantage of a hub would become more apparent when new supplies from Azerbaijan and the eastern Mediterranean are integrated into the market by means of the so-called southern corridor supply route.

Geoffrey Feasey of the European Network of Transmission Systems Operators for Electricity says one-third of the most vital projects to connect Europe are being held up by “permitting and public acceptance”.

To be sure, one can reasonably argue that austerity in the eurozone has been excessive, and that fiscal deficits should have been much larger to sustain demand. But only governments with access to market finance can use expansionary fiscal policy to boost demand.

Had Greece not received financial support in 2010, it would have had to cut its fiscal deficit from more than 10% of GDP to zero immediately. By financing continued deficits until 2013, the troika actually enabled Greece to delay austerity.

Of course, Greece is not the first country to request emergency financing to delay budget cuts, and then complain that the cuts are excessive once the worst is over. This typically happens when the government runs a primary surplus. When the government can finance its current spending through taxes – and might even be able to increase expenditure, if it does not have to pay interest – the temptation to renege on debt intensifies.

The practical problem for Greece now is not the sustainability of a debt that matures in 20-30 years and carries very low interest rates; the real issue is the few payments to the IMF and the ECB that fall due this year – payments that the new government has promised to make.

 Second, it is the responsibility of the leading centrist parties to recognize the options explicitly. If they do not, extremist parties either of the right or the left will take control of the debate, and convert what is a conflict between different economic sectors into a nationalist conflict or a class conflict. If the former win, it will spell the end of the grand European experiment.

First, as long as Spain suffers from its current debt burden, it does not matter how intelligently and forcefully it implements economic reforms. It will not be able to grow out of its debt burden and must choose between two paths

Most currency and sovereign debt crises in modern history ultimately represent a conflict over how the costs are to be assigned among two different groups

They were in charge of the regulatory leniency that permitted the banks in their jurisdictions to engage in lender forbearance (extend and pretend/delay and pray) and to overstate the fair value of their assets.

To avoid the cyclical stagnation in the eurozone turning into secular stagnation, four policies are required.

The second measure is a temporary fiscal stimulus (say 1 per cent of eurozone GDP per year for two years, concentrated in the countries with the largest output gaps, that is, in the periphery), which is permanently funded and monetised by the ECB.

this will be a reminder that the most important asset of central banks – the present value of future seigniorage profits – is off-balance sheet.

Finally, to achieve debt sustainability for the eurozone sovereigns, radical supply side reforms are required that boost the growth rate of potential output to at least 1.5 per cent in Italy, Portugal and other sclerotic countries.

American, European and Chinese regulators have put in effect energy-efficiency rules that phase out the use of incandescent bulbs. Big multinationals that make light bulbs like Philips, Osram and General Electric have responded by embracing light-emitting diodes, which use one-fifth of the electricity of incandescent bulbs and half the electricity of fluorescent bulbs.

Many Chinese producers also have a poor and worsening reputation for quality, which may hurt them in the long term.

The industry, for instance, is highly segmented.

Lighting accounts for about 6 percent of the world’s emissions of greenhouse gases, and LEDs have the potential to steeply reduce them.

Prices have fallen by nearly half in the last year for low-end, low-wattage LEDs made in China, and by 15 to 20 percent for the higher-wattage versions made elsewhere, buyers and manufacturing executives said.

“We do not buy Chinese LEDs,” said Mike Pugh, the procurement director at Xicato in San Jose, Calif., a large provider of indoor lighting systems for retailers and hotels. “We just can’t take that chance.”

Xicato instead buys LEDs from multinationals like Cree of Durham, N.C.; Philips Lumileds, based in San Jose, Calif.; and Osram Opto Semiconductors of Regensburg, Germany.

Three-quarters of China’s electricity still comes from burning coal, which contributes to severe air pollution as well as global warming.

She earns $500 a month plus medical benefits and free food and lodging in an air-conditioned dormitory where employees sleep four to six i

the solar and LED industries in China received huge loans at low interest rates from state-owned banks following directives from Beijing

The goal is to be able to ship gas to Ukraine at an annual rate of more than three billion cubic meters by the time the heating season begins in the autumn, increasing the flow to up to 10 billion cubic meters annually by next spring. Last year Ukraine imported nearly 30 billion cubic meters of gas, according to a recent report by the Oxford Institute for Energy Studies.

Part of his message is that, even though gas demand in Europe has been weak because of sluggish economies, imports from Russia actually rose last year by about 16 percent as other sources of supply including Norway and Algeria declined. Europe, he warned, is simply not prepared to do without gas from Russia.

But with the gradual introduction of more competitive pricing in the European markets, the gas business has become much less attractive for ENI and other big gas middlemen. They are stuck with high-priced long-term contracts to a handful of suppliers like Gazprom and Sonatrach, the Algerian state-owned company, while their customers are able to secure gas at often lower spot market prices — assuming the gas is flowing.

The pipeline would be a major new source of Russian gas for energy-hungry Europe. But European Union authorities have become deeply skeptical about the South Stream plan, seeing it as just another way of making Europe more dependent on Russian energy.

hose outages in 2006 and 2009 are a top reason that the European Union had already been trying to chip away at Europe’s dependence on Russia even before the Crimea annexation.

That is partly because powerful Eastern European countries like Poland argue that such clean-energy policies would impede their ability to reduce Russian dependence by mining more coal or developing their own shale gas resources.

nd this month, the European Commission issued rules aimed at reducing the subsidies that governments use to support the wind and solar industries,