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By studying the factors underlying differences in trade performance across European economies, this paper derives six different “trade models” for 22 EU countries and explores their developmental and distributional dynamics. We first introduce a typology of trade models by clustering countries on the basis of four key dimensions of trade performance: endowments, technological specialisation, labour market characteristics and regulatory requirements. The resulting clusters comprise countries that base their export success on similar trade models. Our results indicate the existence of six different trade models: the ‘primary goods model’ (Latvia, Estonia), the ‘finance model’ (Luxembourg), the ‘flexible labour market model’ (UK), the ‘periphery model’ (Greece, Portugal, Spain, Italy, France), the ‘industrial workbench model’ (Slovenia, Slovakia, Poland, Hungary, the Czech Republic), and the ‘hightech model’ (Sweden, Denmark, Netherlands, Belgium, Ireland, Finland, Germany and Austria). Subsequently, we provide a comparative analysis of the economic development and trends in inequality across these trade models. Inter alia, we observe a shrinking wage share and increasing personal income inequality in most of them, yet find that the ‘high-tech model’ is an exceptional case, being characterised by relatively stable economic development and an institutional setting that managed to counteract rising inequality.

The spread of the coronavirus has made economic conditions difficult in many economic areas and has led to skyrocketing youth unemployment in most European countries. On the basis of simple model calculations, we estimate the consequences of the COVID-19 shutdown on youth unemployment in the European Union for the year 2020. According to our estimations, youth unemployment will increase from 2.8 to 4.8 million. The youth unemployment rate will increase to 26%, and the number of young people not in education, employment and training (NEET) will increase from 4.7 to 6.7 million. Policymakers at the national and international level should react as quickly as possible and make great efforts to avoid these negative scenarios. We suggest the introduction of a new European Youth Guarantee to ensure fiscal relief for those countries that suffer the most economically. It should be financed jointly by the EU and the respective member states. We suggest a new formula-based co-financing model in order to guarantee solidarity between the member states. [ABSTRACT FROM AUTHOR]

In the context of unfettered international competition, free trade tends to undermine basic moral concepts such as justice, dignity, and fairness. Therefore, we suggest moving to a new understanding of markets in international trade, which we call ‘civilized markets’. A civilized market tries to ensure that free entrepreneurship and open markets are eventually compatible with those basic and universal values that also serve as moral cornerstones of the European project. In order to accomplish a civilized market, we propose to establish a new European institution with a mandate to set and enforce minimum standards for goods sold on the European market. [ABSTRACT FROM PUBLISHER]