View All

The Necessity of a Renewed European Economic Integration Concept

Beata Farkas

The financial and economic crisis and the crisis management in the EU indicate that the current integration concept is not appropriate framework any more. This paper outlines some new challenges in the crisis aftermath and analyses the necessary changes in the theoretical background of economic integration. The strengthened economic governance in the Euro-zone will mean a deeper division between insider and outsider countries than it had ever existed in the EU. However, there are further issues which split the EU into different country groups and slow down convergence. The FDI-based catching-up model of the new member states should be modified. The management of debt crisis and stricter financial regulation decrease the capital available to these countries. The social market economy model should be given up in the Mediterranean countries in order to regain their competitiveness. The one-way migration from peripheral countries might cause long-lasting loss in their economic potential.The idea of economic and monetary union is built on a combination of neoclassical theory and Cartesian rationalism in European institutional design. However, the EU cannot think itself any more as Newtonian economic machinery where the well-designed integration institutions guarantee a developed, more or less homogenous area, the realization of which is only a question of time. The severe differences in institutions which have been revealed by the crisis (e.g. between northern and southern countries) can be investigated if the neoclassical theory is completed by an institutional approach. The result of this wider approach is a less ambitious, more humble but more realistic integration concept.

The abstracts and papers on this website reflect the views and opinions of the author(s). UACES cannot be held responsible for the opinions of others. Conference papers are works-in-progress - they should not be cited without the author's permission.