EC/IR 340 THE POLITICAL ECONOMY OF EUROPEAN INTEGRATION IES Abroad Paris BIA

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1 EC/IR 340 THE POLITICAL ECONOMY OF EUROPEAN INTEGRATION IES Abroad Paris BIA DESCRIPTION: CREDITS: 3 credits CONTACT HOURS: 45 hours LANGUAGE OF INSTRUCTION: English PREREQUISITES: This class demands both an Introduction to Macroeconomics (200) and an Introduction to microeconomics (200) prerequisite. Since formal methods will be addressed throughout sections of the seminar, it is recommended that students also have some preexisting knowledge regarding European Affairs. METHOD OF PRESENTATION: Lectures illustrated by examples Case Studies PPT presentations REQUIRED WORK AND FORM OF ASSESSMENT: 2 Oral Presentations 40% midterm evaluation 20% Final Exam 20 % Class Participation 10% 2 Media reports 10% Students are expected to be aware of current economic events within the EU through newspapers, economic magazines and journals. Students are expected to read the readings of the session and be able to discuss the contents in class as part of the participation grade. ASSIGNMENTS: Media report: Media reports that refers to the contents presented in class (both literature and lecture) pending approval. 2 pages long. Media reports are due on workshop session days. Oral Presentation: 10-minute presentation in pairs. The choice of oral presentations must be done with a minimum of a 3 week difference between the first and the second one. BIBLIOGRAPHY El-Agraa, Ali (ed.) The European Union: Economics and Policies, Cambridge, Cambridge University Press (8th ed.), SEMINAR ORGANIZATION: There are two sessions per week: one consecrated to the professor s lecture of the day, the other to a seminar where exercises will take place. Evaluation Criteria -Oral and written assignments will be graded as follows: Content, Clarity, Comprehensiveness, and Creativity. Presentations will be graded using similar criteria: Content, Clarity, Comprehensiveness, Creativity, Peer Evaluations, and Group Participation. 1. Content: Develops and supports a central thesis. Provides a focused argument throughout the essay/talk. 2. Clarity: Writes/speaks clearly by developing a coherent, well-organized paper; arranging sentences in a logical manner; using correct punctuation, spelling, and grammar; and providing correct citations.

2 3. Comprehensiveness: Has reviewed the relevant literature and material, shows an in-depth understanding of the topic, and uses multiple bibliographic sources (books, journal articles, interviews, web-based information). Does not use strictly web-based sources. Able to critique differing points of view on the topic. 4. Creativity: Draws the reader/listener in and engages him/her in the topic. Makes an original contribution to the topic. Presents material in an interesting or unique way that is particularly helpful to the reader. 5. Peer Evaluations: Each student in the class will be given an opportunity to criticize your presentation. Remember that your peers are your target audience and you want to engage them in a discussion of your topic. Their evaluations will be confidential and anonymous. 6. Group Participation: The majority of your presentation will be based on the work of your group. This component of your grade, however, will be based on your group s evaluation of your effort in developing the project. Their evaluations will be reported directly to me and will be confidential. contribute to developing the presentation. LEARNING OUTCOMES: By the end of the course students will be able to: To acquire a thorough understanding of the Economic integration process in the EU as a global process, from WWII to the present day To explore the different dynamics at play within the EU-building and the increasing role of EU law on Europe s economy. To explore the different dimensions of EU economic policies, among which competition, trade and cohesion. To understand the relation between national markets, EU institutions and global economic regulation. To deepen the student s knowledge on the enlargement process and the consequences attached to it in terms of market growth, industrial strategies and trade strategies of the EU to the horizon ATTENDANCE POLICY: Since IES courses are designed to take advantage of the unique contribution of the instructor and the lecture/discussion format is regarded as the primary mode of instruction, regular class attendance is mandatory. Each student may have no more than one absence in each course for whatever reasons. Your final grade in the course will be reduced by one fraction of a grade (i.e. A becomes A -) after that. CONTENT: Session Content Assignments SECTION I: The Road to a Single Economic Union Session 1 January 23 rd : The Political Economy of the EU: understanding the interplay between markets, institutions and societies Course introduction This session will serve as an introduction to the Political Economy of the EU. Being both an economic power and a political actor, external observers are frequently confused about Europe today, partly because of its permanent transformation and entrenched game of power between firms, societies, national constituencies and an emergent European polity. Basic methods and tools of the political economy literature will be presented in order to facilitate a global understanding these interactions - El-Agraa, Ali (ed.) The European Union: Economics and Policies, Cambridge, Cambridge University Press (8th ed.), Chap.I. -Alesina, Alberto and Roberto Perotti. A, The European Union: A Politically Incorrect View Journal of Economic Perspectives, 18(4;Fall 2004):27-48.

3 Session 2 January 25 th : Session 3 January 30 th : Session 4 February 1 st : Session 5 February 6 th : From a free-trade area to the common market: Europe s economic integration and the foundational treaties From a free-trade area to a fully-fledged common market, the EU has transited a long path. What does this transformation mean in concrete terms? This session will explore some theoretical concepts such as comparative advantages in factors endowments to explain the dynamics behind this evolution and the preconditions necessary to the emergence of economic regionalism. It will also draw on a large body of literature that distinguish the different types of regionalism (Schiff and Winters: 1998) and explain the interaction between markets and political institutions. This session will equally confront some IPE insights in order to explain the structural determinants behind market integration. -Case study 1: Modernizing the South? Spain accession to the European Economic Community explained -Case study 2: The role of Germany in the construction of the Common Market: A historical assessment from The Monetary Union in the EU: theory and praxis This session will provide a general historical overview of the evolution of the EU both in terms of positive and negative integration and the concrete impact it had on the emergence of a common monetary policy. It will explore the instruments devoted by European authorities to favor the convergence monetary policies, in terms of law harmonization, creation of incentives to achieve an optimal currency area. The Monetary Union in the EU: from consolidation to existential soul-searching. The 2008 financial crisis exacerbated the inconsistencies of the Eurozone in terms of real market integration and pointed out to the necessity of a better coordination of economic policies of participating members. An independent monetary policy and a coordinating Central Bank are not enough anymore to contain international markets pressures, but can the -Tsebelis, George and Geoffrey Garrett, The Institutional Foundations of Intergovernmentalism and Supranationalism in the European Union, International Organization, Volume 55, Number 2, Spring 2001, pp Mundell, Robert A. (1961). A Theory of Optimum Currency Areas. The American Economic Review 51(4): Alesina, Alberto & Summers, Lawrence H. (1993). Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence. Journal of Money, Credit and Banking 25(2): Varoufakis, Iannis The Greek Crisis Explained. Bruegel Papers N 2

4 cost be borne by economies under severe economic adjustment plans? Session 6 February 8 th : -MEDIA DIGEST 1 -Case study 3: Living without the common currency: the UK since Case study 4: EEC candidates to the EURO after 2008: from enthusiasm to circumspection? -Case study 5: Grexit? Why does it matter? Session 7 February 20 th : Session 8 February 22 nd : Session 9 February 27 th : SECTION II: An Efficient Market in the making: Industry, Trade and Competition Industrial Policies in the EU: From national champions to European Multinationals I. The European Realm exerts a major influence on national industrial decisions since the creation of the EEC in Significant changes have intervened since the ECSC was launched in 1948 and joint common industrial projects represent an important share of national industrial activities. The EEC and then the EU contributed to this evolution for 50 years combining positive and negative dimensions of both economic and legal integration. This session will explore the instruments devoted by European authorities to enforce the cohesion of markets and to harmonize endowments between countries (cohesion policies, joint- investment industrial ventures, etc.) Industrial Policies in the EU. From national champions to European Multinationals II Regulation has been one of the major governance instruments of the 1990s. It has resulted in the EU developing an extensive legal and institutional umbrella under which European firms operate today. This session will address the issue by comparing different industries and services, and students are expected to prepare prior to the session for a critical discussion in class on these two sectors. Into the market? Out of the Market? The coexistence of different market integration regimes in the light of the Brexit. This session will recapitulate the main elements of market integration theory and the empirical -Ardy, Brian (2007) "Industrial and Competitiveness Policy: the Lisbon Strategy" in El-Agraa, A. (ed.) The European Union:Economics and Policies, Cambridge, Cambridge University Press (8th ed.): pp Levi-Faur, D. (2004) On the 'Net Impact' of Europeanization. The EU's telecoms and electricity regimes between the global and the national in Comparative Political Studies, 37:1 p How Common is the Common External Tariff?: Domestic Influences on European Union Trade Policy Sean D. Ehrlich, European Union Politics, October 2009; vol. 10, 1: pp Article to Journal of European Politics and Society-ba

5 Session 10 March 1 st : Session 11 March 6 th : Session 12 March 8 th : Session 13 March 13 th : developments within the EU. It will address the coexistence of free market areas with common markets within the EU and the role of European countries that actively participate of the EUs economic vitality, while not necessarily participating of the most ambitious integration schemes. -Case study 6: European car manufacturers and Asia: Corporate EU responses to world competition -Case study 7: European aircrafts conquer the world: EADS success story revisited. - Case study 8: Electricité de France EDF and the conquest of the European Market Europe s Global Competitiveness and the Common Trade Policy Trade is one of the well-succeeded policies of the EU both in terms of reach and consensus obtained among national states. Part of the explanation lies in the success of the common market to generate common market preferences among each national state. However other economic determinants, such as factor endowments (Rogowski) and increasing scale returns help us understand the reasons behind the capacity of the EU to lead successful negotiations at an international level, resulting into a myriad of bilateral and multi-lateral trade agreements. Part of the session will be devoted to explain the interaction between the EU and its major partners under the premises of WTO negotiations. Midterm Exam -Case study 10: Lobbying for an exit strategy? The EU Banking sector vs European Governments on the aftermath of the 2008 crisis. -Case study 12: The 2002 Steel controversy: US Steel vs EU Steel at the WTO -Case study 13: Harnessing the Sun: Solar Panels controversies between the EU and China Midterm Correction and Roundup of the main themes of the first semester. -James Alt and Michael Gilligan, The Political Economy of Trading States: Factor Specificity, Collective Action Problems, and Domestic Political Institutions, Journal of Political Philosophy 2 (2), 1994, Ronald Rogowski, Political Cleavages and Changing Exposure to Trade, American Political Science Review 81 (4), November 1987,

6 Session 14 March 15 th : Session 15 March 20 th : Session 16 March 22 nd : Session 17 March 27 th : The EU competition policy From Maastricht to the Lisbon initiative Competition is one of the major areas of today s capitalist societies. The EU has generated a very important body of regulations aimed at ensuring competition on national and international operations on the European soil. This session will explore the strategies behind internal market development (strategic goals) and the internal market firms operations, and will examine how the EU competition policy ensures that provisions on mergers and acquisitions, cartels, firms with dominant position are effectively enforced. Finally, this session will show how the Lisbon Strategy has reinforced this trend while paving the way for a "better regulation" -Case study 14: The BOEING/McDonnell Douglass Merger in Case study 15: Dealing with French PharmaGiants: the Servier case. SECTION III: Deepening the Union: Enlargement, Cohesion and Innovation The Economics of enlargement: A short history of communism and State-managed economies The trajectories of socialist-led countries of the Eastern block is a fundamental component of the Europe s economic history of the XXth century. The importance of State planning, administered supply and demand and cumulative inefficiencies created a unique model that was extremely influential and led a long-lasting imprint in Eastern European countries that would become EU accession countries. The Economics of enlargement II: becoming a market economy. Even though the EU has successfully become a Single market, member states pursue alternative forms of capitalist development. The mid-range theory of Varieties of Capitalism, accounts for those factors intervening in The EU expansion towards EEC countries represented an opportunity for EU countries in terms of investments and the emergence of a larger European market. This session will examine one major instrument of EU positive integration (the Stability Pact in 1993) -Wilks, Stephen (2005) "Competition Policy: Challenge and Reform" in Wallace, Helen a.o. (eds) Policymaking in the European Union, Oxford, Oxford University Press: pp Hölscher, Jens and Johannes Stephan. Competition Policy in Central and Eastern Europe in the Light of EU Accession. JCMS 42(2; June 2004): Kornai, Janos, The Shortage Economy, Yale University Press, 1976 Selected chapters. Fish, S. Democracy from Scratch, Princeton University Press, 1991, Introduction - Peter Hille and Christoph Knill It s the Bureaucracy, Stupid : The Implementation of the Acquis Communautaire in EU Candidate Countries, European Union Politics, December 2006; vol. 7, 4: pp Baldwin, R.E., François, J.F, Portes R. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe", Economic Policy, 24/November 1997, pp

7 from the perspective of the enlargement towards Eastern European Countries in A special attention will be paid to the different structural funds: (European Regional Development Fund, the European Social Fund, the Cohesion Fund) )and operational Programs decided for the period Session 18 March 29 th : Session 19 April 3 rd : Session 20 April 5 th : Session 21 April 10 th : MEDIA DIGEST 2 Case study 16: Preparing the accession: Romania s troubled EU accession pathway. Case study 17: Iceland impossible accession to the EU Case study 18: Bulgarian crisis, European headaches? Assessing the limits of Bulgaria s market transformation. A cohesive Europe: regional policy, structural transformations and environmental protection. How important is geographic cohesion to an efficient market? Harmonization of initial inequalities has been a major task for European authorities, in order to ensure that factors of production do not only travel freely but also structural advantages can be progressively breached as to ensure harmonized prosperity and balanced development of the European continent Case study 19: A tale of two regions: Andalusia and Catalonia compared Case study 20: A region in pains: The Nord Pas de Calais rise and fall and the impact of EU regional aid. Case study 21: The INTEREG Program: origins and main guiding lines April 7th: Course-Related Trip to Geneva The Kyoto Protocol: is Europe becoming a Green Economic Giant? Environment issues have become paramount in the EU economic development strategy. Even though not all industrial sectors are equally affected, due to the specificity of their production processes, new environmental regulation and the extension of Kyoto agreements on greenhouse effects are already transforming production processes and global -Rieger, Elmar. "The Common Agricultural Policy." In Wallace, Ch. 6. -Iain Begg, Cohesion or Confusion: A Policy Searching for Objectives Journal of European Integration, Volume 32, Issue 1 January 2010, pages John Bachtler; Grzegorz Gorzelak, REFORMING EU COHESION POLICY A reappraisal of the performance of the Structural Funds Policy Studies, Volume 28, Issue 4 December 2007, pages Economist Intelligence Unit report on the Kyoto Agreements (forthcoming) - Maia David et Bernard Sinclair-Desgagné (2005), Environmental regulation and the eco- Industry, Journal of Regulatory Economics, Journal of Regulatory Economics; 28: ,

8 strategies of all corporate actors within the EU. The very ambitious plan of emissions reductions of the EU at the 2050 horizon represents in this respect a constraint to firms and national member-states, but it also provides a unique chance for the EU to become the avant-garde of the next industrial green revolution. -Blanchard, Olivier. The Economic Future of Europe. Journal of Economic Perspectives, 18(4; Fall 2004):3-26. Session 22 April 12 th : The Kyoto Protocol: is Europe becoming a Green Economic Giant? Case Study 22: The Energiewende: German Strategies towards sustainability Case Study 23: Is there a future for Nuclear Energy in Europe? Session 23 April 19 th : The Brexit and the pathway to a divided European market: a collective roundtable FINAL EXAM between April 24 th and 27 th. RECOMMENDED READINGS: Newspapers and Magazines -The Economist -Harvard Business Review -Le Monde -Financial Times -Guardian Websites