International Finance and Geopolitics

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.

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.

Over the past 3 years of war, donor countries have provided a low but continuous flow of support to Ukraine, with a value of about EUR 80 billion per year. European donors have been the main source of aid to Ukraine since 2022, especially when it comes to financial and humanitarian aid. At the same time, we observe a shift towards weapon procurement. In the initial phase of the war, military aid to Ukraine mostly came from existing arsenals of donor countries, but these have emptied over time. Today, the large majority military aid is newly produced weaponry from Western defense industries—with a small but growing role of multilateral weapon procurement initiatives. These are the findings of the latest update of the Ukraine Support Tracker, which tracks aid up to December 2024.