Thursday , April 25 2019
Home / IFO Hans-Werner Sinn & Clemens Fuest / Changes of Government Have a Negative Impact on Non-Binding International Agreements

Changes of Government Have a Negative Impact on Non-Binding International Agreements

Summary:
Changes of government have a negative impact on compliance with non-binding international agreements. This is the result of recent research by the ifo Institute in Munich. "We have examined how changes in government have affected the 2014 Nato states' agreed goal of increasing military spending to two percent of annual economic output by 2024. Without a change in government, the average growth rate of defence spending was 6.1 percent. In countries with a small change of government, spending increased by only 3.8 percent and in countries with a large change of government by only 0.9 percent," says Niklas Potrafke, head of the ifo Center for Public Finance and Political Economy. "Interesting applications of our method are also likely to emerge for other policy areas

Topics:
Clemens Fuest considers the following as important:

This could be interesting, too:

Clemens Fuest writes Germany: ifo Export Expectations continue to Decline

Clemens Fuest writes Allemagne: Prévisions des exportations une nouvelle fois revues à la baisse

Clemens Fuest writes Allemagne : Chute de l’indice du climat des Affaires de l’Institut ifo

Clemens Fuest writes ifo Business Climate Index Falls

Changes of government have a negative impact on compliance with non-binding international agreements. This is the result of recent research by the ifo Institute in Munich. "We have examined how changes in government have affected the 2014 Nato states' agreed goal of increasing military spending to two percent of annual economic output by 2024. Without a change in government, the average growth rate of defence spending was 6.1 percent. In countries with a small change of government, spending increased by only 3.8 percent and in countries with a large change of government by only 0.9 percent," says Niklas Potrafke, head of the ifo Center for Public Finance and Political Economy. "Interesting applications of our method are also likely to emerge for other policy areas such as climate policy."

The figures are based on countries below the two-percent target. A major change of government is defined as one from left to right or vice versa. A small one from a centre government to the left or right. Potrafke adds: "These averages indicate that new governments that had particularly little to do with the previous government in terms of party politics are less likely to adhere to the two-percent target than governments that agreed at the Wales Summit and were still in office for several years afterwards. International agreements and conventions must be designed in such a way that compliance is still incentive-compatible even after changes of government. This is particularly sensitive in intergovernmental organisations such as Nato, where agreements are not so binding that they entail sanctions in the event of non-compliance."

Publication (in German)

  1. Blum, Johannes and Niklas Potrafke, "Internationale Abkommen und Regierungswechsel: Evidenz zum NATO-Zwei-Prozent-Ziel", ifo Schnelldienst 72 (03), 2019, 18–21 | Details | PDF Download

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

Leave a Reply

Your email address will not be published. Required fields are marked *