Beata Farkas is Head of the Institute of Finance and International Economic Relations at the University of Szeged, Hungary, and author of Models of Capitalism in the European Union: Post-crisis Perspectives. In this short article, she explains why a new vision is required for successful European integration: an outlook that includes comparative economics.

The European Union is at a crossroads. This frequently made statement can hardly be disputed. In such a situation, knowledge should be collected from different fields (e. g. political science, economics, law, sociology, and social psychology) to find a future path for European integration.

Following debates on possible scenarios for the EU, my impression is that one aspect is certainly missing: the aspect of comparative institutional economic analysis. The idea that “institutions matter” is widely accepted but the field of institutional analysis is dominated by political scientists and sociologists. Similarly, economists have almost disappeared from the participants of interdisciplinary European Studies conferences.

My research on the models of capitalism in the EU suggests that a comparative economic approach leads to insights which must not be ignored in discussions on the EU’s future. A thorough comparison of the socio-economic systems of EU members from an economic viewpoint, which focuses on competitiveness, indicates that:

• Differentiation between old and new member states has become out-dated as deeper institutional differences can be revealed between the Nordic countries, North-Western (English-speaking and continental) countries and the Southern (Mediterranean), Central and Eastern European countries than in the former division;
• Regular discourse is misleading as it assumes that deeper economic integration depends on the members’ political will and willingness to give up more sovereignty, and that Eurozone members would form the inner circle of deeper integration. One of the most fundamental problems of economic integration is that institutional competitiveness of member states does not comply with their Eurozone membership. The discourse should be about capacities and abilities for deeper integration;
• Opportunities for central regulation and centrally driven reforms are limited. The effectiveness of the conditions and regulations imposed by the external EU level decreases, and the significance of the commitment of the given state or society increases, if productivity growth is ensured from a higher income level and with a more complex adaptation process. Breaking with path-dependency often exceeds even the national governments’ capacity. Thus, in EU integration an alternative solution should also be foreseen if reforms are not, or are only partly, successful in some countries.

These are examples which show that comparative economics is able to deliver an important contribution to the dialogue on the EU, even if it is painful to accept the lessons of a comparative economic analysis. The Central and Eastern European countries have to face up to the realisation that their FDI-based modernization does not ensure their place among the core countries in the EU and world economy, and there is still a long way ahead of them to get there. The Mediterranean countries have to face that the pre-crisis convergence successes were the results of one-off factors rather than deeper structural, institutional adjustment. The continental core countries and the Brussels bureaucracy have to face that they are not able – as policy shapers – to simply extend their traditional integration model to the other countries as to policy takers. The enlargements have changed the European integration step by step since the 70’s not only in quantitative but also in qualitative terms. However, only the 2008 global crisis revealed the real significances of these changes. We need a new vision for European integration, which is an unprecedented project in history to maintain peace and prosperity among diverse nations. Comparative economics may help to create stable economic background for this amazing project.