The political economy of Europe has changed significantly in the last four decades because of globalization, the collapse of communism, and financial crises. This chapter first discusses the different varieties of capitalism that emerged in Europe after World War II. It looks at how they have been put under pressure by economic internationalization and the dominance of neoliberal ideas, which together have weakened economic management at nation-state level. The chapter also looks at the development of capitalism in Eastern Europe and explanations for variance in post-communist capitalist development. Finally, the chapter considers the challenges to the management of Europe’s political economy posed by the international financial crisis that dominated much of Europe’s politics after 2007, along with the initial response to the economic crisis caused by the coronavirus pandemic in 2020.
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Chapter
Amy Verdun
This chapter introduces economic and monetary union (EMU), describingthe key components of EMU and what happens when countries join. EMU was the result of decades of collaboration and learning, divided here into three periods: 1969–91, from the agreement to creation to its inclusion in the Treaty on European Union (TEU); 1992–2002, from having the plans for EMU to the irrevocable fixing of exchange rates; and 2002 onwards, with EMU established and euro banknotes and coins circulating in member states. The chapter reviews various theoretical explanations, both economic and political, for the creation of EMU and considers some criticisms of EMU. The chapter discusses how EMU has fared under the global financial crisis, the sovereign debt crisis, and the COVID-19 pandemic. These crises highlighted various imperfections in the design of EMU and provided opportunities for further development. This chapter discusses changes made since 2009 to address those flaws and what may be yet to come.
Chapter
Dermot Hodson and Uwe Puetter
This chapter discusses the European Union’s (EU) response to the euro crisis that emerged in late 2009, two years after the global financial crisis struck. It identifies the challenges this crisis has posed to the existing institutional set-up of economic and monetary union (EMU) and shows that it had a lasting impact on dicussions over the EU’s future well beyond its most dramatic moments. A timeline of the euro crisis is provided and the main changes to the institutional framework of European economic governance at the time of writing are reviewed. The chapter considers whether the crisis was caused by a deficit of centralized decision-making and whether it has served, in turn, as a catalyst for deeper economic and political integration in the euro area and the Union more generally. The consequences of the crisis for the EU’s legitimacy are also explored from competing theoretical perspectives.
Chapter
This chapter examines how the European Central Bank (ECB) has taken on new and controversial roles in relation to crisis management and financial supervision in the wake of the eurozone crisis. It also considers how the ECB’s transformation has encouraged a new wave of institutional theorizing about the Bank, placing emphasis, among other things, on the importance of credible commitments, path-dependence, strategic discourse, and the changing politics of European integration. The chapter first provides an overview of the ECB’s mandate and tasks before discussing its decision-making bodies. It then describes the ECB’s institutional design as well as its response to the euro crisis, along with various theories that explain the crisis, including historical institutionalism and the rational choice institutionalist perspective. The chapter concludes by assessing concerns about the ECB’s legitimacy.
Chapter
Amy Verdun
This chapter provides an introduction to economic and monetary union (EMU). It describes the key components of EMU and what happens when countries join. EMU was the result of decades of collaboration and learning, which have been subdivided here into three periods: 1969–91, taking us from the European Council’s first agreement to set up EMU to Maastricht, when the European Council included EMU in the Treaty on European Union (TEU); 1992–2002, from when plans for EMU were being developed to the irrevocable fixing of exchange rates; and 2002 onwards, once EMU had been established, and euro banknotes and coins were circulating in member states. Next, the chapter reviews various theoretical explanations, both economic and political, accounting for why EMU was created and looks at some criticisms of EMU. Finally, the chapter discusses how EMU has fared under the global financial crisis and the sovereign debt crisis. These crises brought to the fore various imperfections in the design of EMU. This section discusses what changes have been made since 2009 to address those flaws and at what we may expect in the years to come.
Chapter
Dermot Hodson and Uwe Puetter
This chapter discusses the European Union’s (EU) response to the euro crisis that emerged in late 2009, two years after the global financial crisis struck. It identifies the challenges this crisis has posed to the existing institutional set-up of economic and monetary union (EMU) and shows that it had a lasting impact on discussions over the EU’s future well beyond its most dramatic moments. A timeline of the euro crisis is provided and the main changes to the institutional framework of European economic governance at the time of writing are reviewed. The chapter considers whether the crisis was caused by a deficit of centralized decision-making and whether it has served, in turn, as a catalyst for deeper economic and political integration in the euro area and the Union more generally. The consequences of the crisis for the EU’s legitimacy are also explored from competing theoretical perspectives.
Chapter
This chapter examines the position of the European Union in the global political economy (GPE). It also considers key dimensions of change and development as well as the EU's impact on the operation of the contemporary GPE. To this end, the chapter discusses central ideas in international political economy and relates these to the growth of the EU. Furthermore, it analyses the EU's role in the GPE in three areas: European integration, the EU's engagement in the GPE, and the EU's claims to be a major economic power. It concludes with an assessment of global economic governance, focusing in particular on the EU's role in the financial, economic, and sovereign debt crises.
Book
John W. Young and John Kent
International Relations Since 1945 provides a comprehensive introduction to global political history since World War II. The text has been comprehensively updated to cover the period between 2001 and 2012. Discussing the World Trade Center bombing and concluding with the run-up to the 2012 US presidential elections, a new final section outlines broad developments including the changing world order and the global financial crisis. Three new chapters look at terrorism, the wars in Iraq and Afghanistan, and the rise of major new powers, including China. Student learning is supported by a range of helpful learning features, including biographies of key figures and chronologies of events.
Chapter
Ana Mar Fernández Pasarín and Francesc Morata
This chapter examines the different aspects of Spain’s adaptation to the European Union, and more specifically how Europe became a source of benefits and modernization for the country. Spain is the only country among all those which have joined the EU after 1958 whose political parties and citizenry were in full support of acccession. Europeanization has affected most policy areas, particularly economic and social policies in response to EU pressures during the financial crisis. The chapter first considers the pattern of Spain’s relations with the EU before discussing the overall assessment of its EU membership among public opinion and political parties. It then analyses the impact of EU membership on Spain’s political institutions and governance, judicial politics, and policy adaptation in areas such as the Common Agricultural Policy and environmental policy. The chapter concludes by exploring how Spain’s unconditional support for integration has become more conditional since the financial crisis.
Chapter
Colin Hay
This chapter discusses globalization's impact on states. There is no topic more controversial in the field of global political economy than the impact of globalization on the accountability, autonomy, capacity, and sovereignty of the nation state; and the controversy has only intensified since the onset of the global financial crisis. Arguably, the democratic character of governance in contemporary societies is at stake in such debates. The chapter reviews the extensive controversy that surrounds such questions, focusing attention on the principal mechanisms in and through which globalization is seen to impact upon the nation state and the empirical evidence that might either substantiate or question the existence of such mechanisms. It also provides a detailed assessment of the case for and against the globalization thesis, examining the extent to which global economic integration might be seen to restrict the parameters of domestic political autonomy. Moreover, the chapter differentiates between the politics of globalization and the globalization of politics. It concludes by considering the complex and sometimes paradoxical relationship between globalization, democracy, and the nation state.
Chapter
Ana E. Juncos and Nieves Pérez-Solórzano Borragán
The process of enlargement has transformed the European Union. It has had far-reaching implications for the shape and definition of Europe, and for the institutional set-up and the major policies of the Union. This has been accomplished through a number of enlargement rounds, which the first section of the chapter analyses in detail. This is followed by a review of the enlargement process itself, with a focus on the use of conditionality and the role of the main actors involved. The contributions of neo-functionalism, liberal intergovernmentalism, and social constructivism to explaining the EU’s geographical expansion are evaluated in the third section of the chapter. The success and prospect of future enlargement are discussed in the context of wider EU developments, especially the effect of the economic crisis in the euro area, ‘enlargement fatigue’, the domestic context in the candidate countries, and Brexit.
Chapter
Christopher Hill, Michael Smith, and Sophie Vanhoonacker
This chapter summarizes major common findings of the volume. It also stressing the different approaches and specialist areas covered by the chapters. It looks at the European Union’s (EU’s) substantive impact (or lack of it) on world politics, which has grown steadily in broad terms albeit with obvious gaps and setbacks. The three lenses introduced in Part 1, whereby the EU is analysed as a system of international relations, as a participant in wider international processes, and finally as a power, are then revisited to make possible the overall conclusions. The first conclusion is that while the EU has its distinctive attributes it is now largely integrated into the academic subject of International Relations, rather than being confined to European Studies. The second concluding thought is that the EU has significant powers as well as a wide-ranging presence in the international system, even if it may not yet be termed a ‘power’ The next conclusion is that the accelerating processes of change underway in the international arena continue to pose new challenges both for the EU and for analysis. The final conclusion is that the series of challenges which the EU has faced since the financial crisis of 2008 have produced some proactive responses but have also exposed its weaknesses as a collective actor on the world stage. The latest of the challenges, the war in Ukraine, has provoked the EU into an unusually rapid, forceful and united response. Only time will tell if that can be maintained.
Chapter
This chapter examines the field of political economy from a historical, comparative, and international perspective, focusing on how ideas, practices, and institutions develop and interact over place and time. It first provides an overview of political economy as a field of study before discussing some important theories such as Marxism, liberalism, and economic nationalism. It then considers key issues such as the interaction of states and markets and the North–South divide, along with Karl Marx's critique of international political economy (IPE). It also explores the post-war international economic order and the twin phenomena of globalization and regionalization in the post-Cold War era before concluding with an analysis of the ‘boom and bust’ episodes in the global capitalist economy such as the global financial crisis of 2008.
Book
Edited by Dermot Hodson, Uwe Puetter, Sabine Saurugger, and John Peterson
The Institutions of the European Union is the key text for anyone wishing to understand the functions, powers, and composition of the EU’s institutions. Written and edited by a team of leading international experts, the text offers a comprehensive analysis and explanation of all the most important organizations and their roles in the governance and management of the EU. The fifth edition has been substantially revised, featuring a range of newly authored chapters and including coverage of the most important developments affecting the institutions of the European Union as they contend with the changing dynamics of European integration. Up-to-date chapters examine current challenges, including the rise of populism and how it is wielded by politicians to target EU institutions, the climate emergency, and the EU’s bold new policy commitments to make the Union climate neutral by 2050, as well as the response to the COVID-19 pandemic. Authoritative yet accessible, The Institutions of the European Union is the best guide to how institutions work together to provide political direction, manage the European Union, govern policies, and integrate contrasting interests within the EU.
Book
Edited by Dermot Hodson and John Peterson
The Institutions of the European Union explains the functions, powers, and composition of the European Union institutions. From the Council of Ministers to the European Central Bank, all of the most important organisations are analysed and explained. Updates for the fourth edition include discussions of the impact of the ratification of the Lisbon Treaty and the financial crisis in the Eurozone on the EU’s institutions, as well as the rise of Euroscepticism. Authoritative yet accessible, it remains the best guide to how this range of different bodies work together to provide political direction, manage policies, and integrate contrasting interests within the European Union. Each chapter includes helpful features such as boxes, websites, and suggested further reading to aid learning.
Book
Edited by Michael Cox and Doug Stokes
U.S. Foreign Policy provides a comprehensive overview of the United States’s role in international politics. Chapters focus in turn on the historical background, institutions, regional relations, and contemporary issues that are key to the superpower’s foreign policy making. The second edition includes two new chapters on Barack Obama’s use of smart power and a debate on the nature of U.S. hegemony. All chapters have been updated with important developments including the effects of the global financial crisis, the on-going conflict in Afghanistan, and political uprisings in the Middle East.
Chapter
Peter Gowan and Doug Stokes
This chapter examines some of the central debates on how we should understand the United States’ efforts to reshape international economic relations since the 1940s. It first considers debates on the sources and mechanisms of American economic strategy before turning to debates about the substance of American efforts to shape the global economy. It approaches the debates about the substance of U.S. foreign economic policy since 1945 by classifying varying perspectives on this question in three alternative images. The first such image is that of America as the promoter of a cooperative, multilateral order in international economics. The second image is that of an American economic nationalism and the third is that of an American empire. The chapter goes on to analyse the global financial crisis and concludes with an overview of some of the main current debates about the strength of American capitalism in the world economy.
Chapter
This chapter examines significant challenges to the status quo in the West. President Obama’s domestic success was the extension of health care, while the fallout from the 2008 financial crisis resulted in heavy electoral losses for the Democrats in 2010. Nevertheless, he secured a second term in 2012 after some foreign policy successes, including arms reduction with Russia and the death of Osama bin Laden. Ultimately, Obama’s preference for diplomacy over force allowed Russia and Iran to fill the vacuum in Syria. Donald Trump became the oldest US president following the 2016 election. Controversially, he challenged conventional wisdom on climate change, free trade, and NATO, while sympathising with Brexit and Vladimir Putin. The aftermath of the 2008 crash, the failure of neo-liberalism, UK austerity, and Eurozone instability are examined in the second section. The chapter concludes with the reasons for the Brexit referendum, the result, and its consequences.
Chapter
11. The institutions of Economic and Monetary Union:
from the euro crisis to COVID-19
Dermot Hodson
Since 1999, a subset of EU member states—known collectively as the euro area—has delegated exclusive competence for monetary policy to the European Central Bank (ECB), while giving limited powers to the European Commission, ECOFIN, and the Eurogroup in other areas of economic policy. The euro crisis provided the first major test of the Economic and Monetary Union (EMU), as a sovereign debt crisis spread between member states and threatened to tear the single currency apart. The ECB and two new institutions—the European Stability Mechanism and Euro Summit—helped to keep the euro area together but at significant economic and political cost. EU institutions were better prepared for the initial economic consequences of the COVID-19 pandemic, but the crisis still produced important institutional changes. The COVID-19 recovery fund Next Generation EU gives the Commission and Council a major new role in economic policy, albeit a temporary one for now. The EMU illustrates three key dimensions of EU institutional politics: the tension between intergovernmental versus supranational institutions, leaders versus followers, and legitimacy versus contestation. It also reveals the explanatory power of new institutionalism among other theoretical perspectives.
Chapter
John Ravenhill
This chapter provides an overview of the current state of the world economy. The contemporary international economic system is more closely integrated than in any previous era. The global financial crisis and its aftermath provide a clear illustration of the relationship between trade, finance, international institutions, and the difficulties that governments face in coping with the problems generated by complex interdependence. The chapter then traces how the world economy evolved to reach its present state. Before 1945, the spectacular increase in economic integration that had occurred over the previous century was not accompanied by institutionalized governmental collaboration on economic matters. The end of the Second World War marked a significant disjunction: global economic institutions were created, the transnational corporation emerged as a major actor in international economic relations, and patterns of international trade began to change markedly from the traditional North–South exchange of manufactures for raw materials. Since the emergence of global political economy (GPE) as a major subfield of the study of international relations in the early 1970s, GPE scholars have generated an enormous literature that has employed a wide variety of theories and methods. Most introductions to the study of GPE have divided the theoretical approaches to the subject into three categories: liberalism, nationalism, and Marxism.
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