Out Now: MAXCAP Working Paper No. 17

The MAXCAP Working Paper No. 17 "Development by Stealth: Governing Market Integration in the Eastern Peripheries of the European Union" by László Bruszt and Julia Langbein has been published. You can download the Working Paper here.

Why and in what ways did the European Union care about the potential developmental consequences of integrating the economies of Central and Eastern Europe? The relevance of these questions is given by the fact that thus far the Eastern enlargement is the only successful case for the deep market integration of economies at lower levels of development. EU insiders had no formal obligation to care about the developmental effects of integration and, according to the standard literature, enlargement was solely about rule transfer without any need to consider the interests of rule takers. We challenge this view and show that due to increased economic interdependence, the Eastern enlargement was a case for large-scale experimentation with mechanisms to manage developmental consequences of rule transfer. Using contract theory, we identify three mechanisms that could force stronger actors to care about the developmental effects of integration on weaker actors. We also show that the key governance challenge of deeper market integration is to manage uncertainty and develop mechanisms to match uniform market rules with diverse local developmental needs. In the case of Eastern enlargement EU insiders could define alone the scope of developmental interventions that were limited to preventing large-scale dislocations, without greater politicization or publicity, hence ‘by stealth’. Our insights do not only open up new avenues for research on how to manage the integration of economies at different levels of development but also have direct implications for the way the EU manages existing economic disparities in its internal market.

It is the objective of the MAXCAP Working Paper Series to disseminate the research results of the research consortium to a wide audience, including the academia as well as the general public. Thus, all Working Papers can be downloaded free of charge from our website.


Tue, 2015-11-17 16:00