Manufacturing Development: How Transnational Market Integration Shapes Opportunities and Capacities for Development in Europe’s Three Peripheries

According to the dominating perspective in the literature, transnational market integration has the uniform effect of decreasing the room for development in peripheral economies not having the economic and political power of countries like China or Russia. Challenging this perspective, this paper contrasts different integration strategies yielding dramatically different effects on developmental opportunities and capacities. We show that states in peripheral economies vary in their institutional capacities to exploit developmental opportunities and that the existence of such capacities depends on domestic political conditions. We also show that transnational integration regimes (TIRs) can shape both domestic capacities and political conditions. The paper examines the different integration strategies used by the largest TIR, the European Union (EU), in its three peripheries. The shallow mode of integration that allows for à la carte trade liberalization and regulatory integration helps to consolidate pre-existing rent-seeking alliances and with it, the conservation of the institutional status quo. In turn, countries that widely differed in their initial state capacities but were exposed to much deeper integration strategies before joining the common market, converged considerably in their developmental capacities. Once peripheral economies are under control of transnational markets, the EU has, however, limited capacities to mitigate frictions between domestic developmental needs and transnational regulatory requirements. Increasing contestation of liberal ideas is the result.