The Open Method as a New Mode of Governance: The Case of Soft Economic Policy Co‐ordination

Abstract

Taking economic co-ordination in EMU as a starting point, this article explores the development of the open method of co-ordination, addressing whether it is a new form of governance from two related perspectives. First, to what extent can the method be effectively applied outside the scope of economic policy? Second, will it lead to policy transfer to the EU and hence act only as a transitional mode of governance? Identified at the Lisbon European Council, the method codified practices such as benchmarking, target-setting and peer review developed in the Luxembourg, Cardiff and Cologne processes. The method offers a new approach to governance of the EU as a heterarchical, decentred and dynamic process. It supports and radicalizes the principle of subsidiarity; offers an alternative to the treaty rules on enhanced co-operation; and addresses some of the legitimacy issues inherent in the EU. In EMU, the method arose out of a specific policy framework with a common monetary policy complemented by the coordination of national economic policies. The recent recommendation issued against Ireland is the first example of the operation of the method in EMU and shows how debate can be stimulated and how different and arguably equally valid perspectives defended. The particular experience of EMU with a sound money, sound finance paradigm, a long history of projectbuilding by key elites and the central role of the European Council suggest similar conditions are required for the effective application of the method in other policy spheres. The context within which the method has operated to date is contingent and could change either over time or between policy fields. If so, the very openness of the method may serve to reconfigure the boundaries of competence between the Member States and the Union, after all.

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“…• The open method of coordination thus follows a kind of "third way" between the classical search for harmonization and mere recommendations or intergovernmental agreements 9,12,13,14 . This process attempts to inaugurate the transition from a strategy of harmonizing institutions to one of harmonizing policy objectives.…”

An empirical investigation into the Europeanization of fiscal policy

“…If there is more than one party in a coalition government, the government's index value is an average of the separate index values of all coalition partners, weighted by their seats in parliament. Budge et al (2001) and Klingemann et al (2006) i In addition to the SGP, a complex set of other economic coordination processes under the Open Method of Coordination (OMC, Hodson and Maher 2001) has sought to provide a framework for the conduct of economic policies which may touch upon fiscal policies.…”

Economic Stability and Choice of Exchange Rate Regimes

“…7 According to this report, "open method of coordination" was first used by Hodson andMaher (2001) andRodrigues (2002). This method, already used at the Organisation for Economic Co-operation and Development (OECD) as well as in the business world, comprises four elements: (i) set common guidelines for member policies, (ii) develop performance indicators to compare best practices, (iii) demand that members adopt action plans for implementing the guidelines, and (iv) jointly monitor the results.…”