International Collaboration And The Politics Of Substitutive Governance: A Study Of The European Union

Abstract

Dominant theories and frameworks in comparative political economy expect domestic institutions to be highly determinative of macroeconomic policy outcomes. Such theories, while acknowledging contemporary liberalization pressures resulting from globalization and international markets, sustain that such institutions remain key in determining how countries liberalize their economies and the overall resulting policy outcomes. When looking at member states of the European Union today, I observe a puzzling convergence in de facto policy outcomes across these member states through supranational action despite variations in domestic de jure policies and preferences in the three components of the economic output equation: capital (fiscal policies), labor (labor policies), and technology (intellectual property policies). Based on an analysis of a chosen policy from each economic area and of field-based interviews in Europe, I argue that European institutions can now determine policy outcomes in many economic domains independently from domestic institutions and existing policies. I call this form of supranational governance, Substitutive Governance, and show the existence of a coalition between political and economic players who, through their dissociation from the nation-state, lead to its emergence. I link this form of governance to recent electoral upsets in Western democracies whereby candidates and parties opposing the existing international order are benefiting from greater electoral success. This project contributes to our understanding of contemporary transformations in international collaboration and provides additional insights that could help explain the growing discontent with the existing international economic order.