Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

emanate from demographic trends. However, this is where the consensus
just about ends. Intense debates about the breadth and depth of
institutional reform, largely informed by the variety of national institutional
configurations and fed by a divergence in economic performance and
social welfare, have precluded the emergence of a more concrete policy
agenda. And they have left little, if any, room for binding coordination of
national market policy and institutional reforms at the EU level, merely
allowing for their soft “Lisbon-style” coordination.
Regardless of institutional and other divergence, those taking a pessimistic
if somewhat cynical view of government policy have pinned their hopes
for supply-friendly reforms to policy competition among national
governments. In effect they think of coordination as a means of entrenching
institutional inertia and maintaining meagre economic performance.
However, their case has been considerably weakened as the crisis has fully
unfolded. Consequently, expectations for comprehensive unilateral
structural reforms have been undermined.
The absence of binding coordination at the EU level would probably have
hurt the effectiveness of market policy and institutional reforms, had
cross-border policy spillovers been important. However, empirical
estimates of the expected effects of coordinated supply-friendly
institutional reforms have been modest, probably implying the incidence
of small cross-border policy spillovers. Yet, estimates of the expected
gains from joint action have been bigger when simulated policy
coordination at the EU level also entailed budgetary consolidation in
addition to market policy and institutional reforms. 12 Therefore,
challenging national policy preferences and institutional heterogeneity
might have been less justified, let alone politically tolerated. For this
reason, it may not be surprising that the Lisbon process has lacked a
strong normative dimension, that is, it has been short of legal obligations
and sanctions, having instead relied mostly on a strategic and a cognitive
dimension.
Thus, with regard to the strategic dimension, it has been suggested that
joint action in the area of market policy and institutional reform may give
rise to political economies of scale. A government may appeal to its
citizens’ “pride” in order to take measures that bring the economy on an
equal footing with the other member states’ reformed and revitalised
economies. Alternatively, it may attempt to give its own reform initiatives
a universal, ideologically unbiased quality, drawing attention to the fact
that the same or similar reforms are also implemented by governments
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After the crisis: A new socio-economic settlement for the EU