Developmental Agency under the Radar: Developmental States and Coalitions in Dependent Market Economies and Low-Tech Sectors

In a recent paper co-authored with László Bruszt and published in a Special Issue of Review of International Political Economy, we identify a developmental state in the least likely  of times – the period of hegemonic neoliberalism in the 1990s and early 2000s –  and the least likely of places, namely the post-socialist Central Eastern European (CEE) economies conventionally described as FDI-dependent Dependent Market Economies (DMEs). 

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Structural polarisation and path dependent development models in the EU

The macroeconomic consequences of the CODID-19 pandemic in the EU economy are materializing against the background of underlying structural challenges. Ensuring long-term convergence and stability between EU countries will require coordinated fiscal, wage and industrial policies. This blog post finds that EU countries are stuck on different trajectories in their economic development. Core countries, periphery countries, East European countries and financial hubs have responded differently to increasing European economic integration. This leaves Europe mired in structural polarisation, where political tension relates to diverging economic developments and increasing gaps in the evolution of technological capabilities. As a consequence, counteracting polarisation and promoting convergence requires a coordinated strategy that includes fiscal, wage and industrial policies.

Several EU countries were already on diverging macroeconomic development paths when the COVID-19 pandemic hit, but the macroeconomic consequences of the crisis must be expected to further accelerate existing divergences. Even though large parts of the EU experienced an economic upswing in the years running up to the COVID-19 pandemic, this temporary upswing in the business cycle served to mask the underlying tendencies towards structural polarisation in Europe, which will become more apparent over the course of the current crisis.

In a study recently published in the Journal of Evolutionary Economics, I argue with Claudius Gräbner, Jakob Kapeller and Bernhard Schütz that essential factors for explaining the long-term polarisation between EU countries are to be found in the unequal regulatory conditions in the context of the European ‘race for the best location’ (for example, in the areas of labour market, tax and corporate law or financial market regulation), as well as in the different technological capabilities across EU countries.

We show that technological capabilities in EU countries are distributed unequally; EU countries remain structurally polarised, i.e. they are stuck on different developmental trajectories that contradict the political goal of ensuring convergence and stability in the EU. Notwithstanding short- and medium-term cyclical developments, existing differences in technological capabilities will continue to fuel a process of economic disintegration in the EU if policy-makers fail to counteract the polarisation trend by introducing a coordinated policy strategy that should include fiscal, wage and industrial policies.Read More »

Market Power = Trade Power? Why the Strong Don’t Always Win in Trade Negotiations

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Do stronger countries always get what they want in trade negotiations? My new book – Power in North-South Trade Negotiations – suggests not. In it, I ask how African, Caribbean and Pacific (ACP) countries were able to extract a series of concessions from the European Union in negotiations for free trade agreements over the last two decades. In doing so, I explore the underlying reasons why power relationships in trade politics are more complex than they appear at first glance. Read More »

Can Latin America Learn from Europe’s Mistakes? Divergence in Regional Economic Integration

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By Collin Constantine (Kingston University) and Johanna Renz (University of Oxford)

A powerful core and a powerless periphery – these are features of the European Monetary Union (EMU). The union has gone much further than Latin America and the Caribbean (LAC) in its integration efforts and has suffered from a severe economic crisis. Since LAC’s economic integration is still ongoing, it can and should learn from the EMU’s mistakes before it is too late.

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