European market-making has implied a conscious EU effort to induce institutional change in the European peripheries. The EU has shaped their developmental pathways by foreclosing the option of ‘national champions’ and fostering reliance on FDI and market openness. However, the strategies of backyard management were dramatically different in the Eastern and the Southern/Eurozone periphery. In the South the main strategy was to ‘get the incentives right’: market integration would prompt public and private actors to build institutions designed to increase competitiveness. In the East, the strategy was ‘getting the institutions right’: the EU engaged in direct institution building, monitoring and assisting institutional change. These external strategies resulted in starkly different developments. The leading countries of the East converged with the core in their production profiles, but remained peripheral in their consumption patterns; but in the South, while consumption levels reached ‘core country’ levels, patterns of production lagged way behind.
