Economic integration and state capacity

Abstract

We investigate whether and how economic integration increases state capacity. This important relationship has not been studied in detail so far. We put together a conceptual framework that highlights what we call the Montesquieu, Weber and Smith channels to guide our analysis. Each of these corresponds to a series of mechanisms in three distinct institutional arenas: judiciary, bureaucracy and competition policy. To test our framework, we introduce a new panel of institutional reform measures that allow us to investigate how changes in these three arenas interact with each other and what sequence of changes yields increases in state capacity. The yearly data set covers all the 17 candidate countries to join the European Union (EU) after the 1995 enlargement. Deep integration, we find, can induce broad institutional change by providing incentives for simultaneous change in core state institutions. Bureaucratic independence and judicial capacity seem to be the key engine of the process engendered by the prospect of EU membership. Yet early and abrupt removal of external anchors might generate significant backsliding, or reversals, in domestic institutional change.

Beyond state capacity: bureaucratic performance, policy implementation and reform

“…(2017) examine how various ‘capacity factors’ affect the delivery of urban infrastructure in India. Bruszt and Campos (2019) couch their sophisticated study of institutional reform and economic integration in terms of state capacity. The capacity metaphor also extends beyond government organisations, for instance in the large literature on the development of ‘community capacity’ to resolve governance challenges (e.g.…”

Untitled

“…The importance of state capacity is also emphasised by Bruszt and Campos (2019) in the context of EU enlargement in 2004 and 2007 to include some countries with weaker state capacity.…”

“…Bruszt and Campos (2019) contains a review of the limited economics literature on economic integration and state capacity.…”

Impact of Integration Process for Development of Economic Agents

“…They defined potential of interregional cooperation of the Black Sea economic region, specialties of the black sea economic region development in terms of European integration etc. [17][18][19][20][21].…”