International Finance

The research project studies the effects that China’s growing economic engagement has on African economies, and how China’s economic presence is perceived by African citizens. To this effect, the key dimensions of trade, investment, aid, debt, and migration flows from China to Africa (and vice versa) are analyzed.

The Cluster for Economic Research on Africa focuses on enterprises and entrepreneurial potential in African markets, trade and investment policy, and issues of macroeconomic development, stability, and public finance. This research will strengthen evidence-based policy advice for German and European Africa policy and also engage and address African partners.

The purpose of the report is to provide a systematic overview of the relevant data related to Big Data and their potential for macroeconomic analysis (in particular business cycle monitoring and forecasting). In this context, both the possibilities and the challenges that may arise due to data availability, data quality, methodological requirements or the manageability of the data will be discussed in detail.

Since the Trump administration took office, US aid to Ukraine has come to a standstill, while Europe has consistently maintained its support, widening the gap in total allocations: The European continent has now allocated EUR 23 billion more than the United States. This is shown in the latest update of the Ukraine Support Tracker, which covers aids until February 2025. Smaller countries like Estonia and Denmark contribute disproportionately relative to their economic size—while larger economies such as Germany, France, and Spain are being called upon to play a more significant role.

Should the US permanently end its financial and military support for Ukraine, European states could fill the gap in many areas or even overcompensate. A new analysis by the Kiel Institute for the World Economy shows that this would be possible with relatively little additional effort, particularly in the financial sector. Replacing American weapons and ammunition assistance is more difficult, but here, too, Europe could deliver in important areas. There is currently no substitute for US military intelligence.

In order to increase their defense spending, Germany and Europe should take on debt and not insist on a balanced budget. A novel Kiel Institute dataset and analysis shows that military buildups of the past 150 years have typically been financed by deficits as well as taxes, but not through budget cuts. Europe's security should not be put at risk because of fiscal rules such as the debt brake, otherwise the serious mistake of the British austerity and appeasement policy of the 1930s could be repeated. Germany and Europe should invest quickly and sufficiently in defense to deter further Russian attacks from the outset.