The Political Economy of Compliance: The Services Directive and the Negative Impact of Administrative Efficiency on Compliance

Administrative efficiency is understood to be one of the most significant factors in determining rates of compliance with formal European Union (EU) rules.. While the literature is almost unanimous that administrative efficiency increases compliance, we argue that from a more political economy-oriented explanatory framework, one that is attentive to the interaction between societal actors and public administration, an opposite result emerges: in the case of highly salient policies administrative efficiency can reduce compliance. Through a nested design analysis of implementation of the highly contentious 2006 Services Directive, we demonstrate that administrative efficiency can be utilized to reduce the domestic impact of EU legislation even in policy areas that fall within the EU’s core competencies. We argue that this depends on the degree to which domestic opponents, such as unions and trade associations, have the support of national administrations to minimize the legal impact of EU legislation.