Organization

The research in CREA evolves from its past focus on Luxembourg competitive attractiveness studies as inherited from the Gabriel Lippmann research center and commits into new challenging directions in Economic Science. In order to achieve international excellence in research, CREA concentrates its effort on a limited number of challenges. Hence, for the year 2009-2013, CREA develops the following three main programs and the general heading will be:

Economic Development and Globalization:

• The Economic Development and Globalization Program attempts to explain the location of economic activity and agents and how this affects productivity and living standards in different countries and regions. How will firm and individual location decisions respond to increased globalization? In what sectors can countries forecast to get a comparative advantage? How far do trade barriers and transport costs explain inequalities of income between countries? What will be the impacts of environmental concerns and regulations on countries’ development in a broad sense? What will be the impact of new technologies? These questions apply to countries but they also apply within countries.
• This program in CREA is divided into three main areas of research. The first focuses on regional economics and, in particular, new economic geography (see Nobel Prize Krugman), which includes the study of agglomeration and clustering of economic activities and the emergence of dominant regions and big cities. The second theme focuses on international migration issues. The emphasis will be set on the identification of the determinants of the migration flows as well as their composition in terms of skills. The possible determinants include variables such as distances, colonial links, wage differentials, networks and of course migration policies. The last area concerns the impact of sustainable development and environmental challenges on economic outcomes.

Macroeconomics

• The Macroeconomic Program focuses on the aggregate economic performance of countries and regions. The program aims at identifying crucial mechanisms explaining the evolution of those performances like growth, accumulation of human capital, investment and aggregate consumption It addresses a variety of issues, with a focus on the international dimension.
• One important area in this program is the study of the impact of international migration on the macroeconomic performances of the source and the receiving countries. One example is provided by the brain drain issue that looks at the impact of South-North migration flows. While the basic intuition would emphasize the detrimental effects of the outflows of skilled workers for source countries, a set of macroeconomic effects suggest that the brain drain can have also positive consequences for those countries. Another issue is the impact of integration and liberalization on the dynamics of financial markets. A related but different issue also involves the role of financial development on the competitiveness and the attractiveness of the economy. Other issues like the role of market rigidities in the transmission of stabilization policies could also be of interest.

Industrial Economics

• Competition in product markets is a vital way in which productivity and welfare are improved in market economies. CREA research examines the role that competition plays in affecting productivity, innovation and management practices and regulations and how regulation affects competition between local economies and their attractiveness. Those studies apply to various sectors like the public sector, banking, and others.
• This Industrial Economics Program will be divided into four main areas of research. The first focuses on Luxembourg economic studies, which encompass independent studies of the market places in Luxembourg and its region. The second concentrates on industrial economic studies applied to the banking industry. The third focuses on the economics of innovation and information technologies. The final focuses on FDI and its implication for the economy.