Differentiated integration - political economy perspective

Differentiation and differentiated integration (DI) in the European Union (EU), both internal (intra-EU) and external (extra-EU), is an answer to and a consequence of growing heterogeneity in Europe. Heterogeneity can be grasped in a number of ways, and thus is researched in many various methods, predominantly from the perspective of political science. We approach it from the political economy perspective, applying the Varieties of Capitalism (VoC) framework. Our inquiry tries to explain the position of a specific country on a particular orbit of differentiated integration system by looking at the characteristics of the capitalism version that is developed in that country’s specific national economy. The main objective of the analysis aims to explain the correlations and potential causality between the level, scope, and depth of differentiation in the European integration process on one side, and, on the other, the socio-economic parameters that define the varieties of capitalism in specific EU Member States. Our research design explains the concentric circles set up of European differentiated integration as a dependent variable, and the independent variables to be employed in our explanations consist of socio-economic parameters nested in the varieties of capitalism theorizing. This means embracing its key areas of interest: corporate governance, industrial relations, and the education & training regime. Such an interdisciplinary approach enriches the existing scholarship on European integration studies on the system of differentiation with an in-depth application of the political economy perspective. So far, the economic factors determining the European differentiated integration have been integrated into research designs only in a minimalist way. In other words, we seek to test whether the institutional complementarities of economic systems explain the position of specific states on the map of differentiated integration in Europe. As such, this study connects the two streams of academic literature that deal with two sides of one coin, namely, the European integration process (and in particular its differentiation) and the varieties of capitalism which provide the explanatory variables of the research. This analysis contributes to the better understanding of differentiated integration by employing economic determinants into the research design.