Widening and Deepening: Reforming the European Union

14 Pages Posted: 9 Jun 2008

See all articles by Erik Berglöf

Erik Berglöf

Institute of Global Affairs, London School of Economics and Political Science

Mike Burkart

Swedish House of Finance; London School of Economics and Political Science, Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Elena Paltseva

Stockholm Institute of Transition Economics (SITE); New Economic School (NES)

Date Written: February 2008

Abstract

This short paper analyses the tension between "widening" and "deepening" of organizations such as the European Union. Members have the same consumption benefit of reform but weak and strong members differ in their cost of exerting reform efforts. As decisions are taken by unanimity, the reform level is determined by the weakest member. However, strong members can coerce weak members to exert more effort by threatening to form a "club-in-the-club". Widening (bringing in additional members into the Union) can have different effects on deepening (more reform effort). When a new member is stronger than the weakest incumbent member, deepening and widening are complements, that is, the Union-wide reform efforts increase. When a new member is weaker, deepening and widening can be substitutes, and the reform efforts in the Union may fall. Our analysis helps to understand the history of the EU treaties, in particular the differences between enlargement waves such as the Northern vs. the Eastern Enlargement. It also rationalizes the general move from unanimity voting to different types of majority.

Keywords: Club-in-the-club, Reform, Resistance to change, Unanimity

JEL Classification: D71, D72

Suggested Citation

Berglöf, Erik and Burkart, Mike C. and Friebel, Guido and Paltseva, Elena, Widening and Deepening: Reforming the European Union (February 2008). CEPR Discussion Paper No. DP6672. Available at SSRN: https://ssrn.com/abstract=1140954

Erik Berglöf

Institute of Global Affairs, London School of Economics and Political Science ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Mike C. Burkart (Contact Author)

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

London School of Economics and Political Science, Department of Finance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

HOME PAGE: http://www.cepr.org/default_static.htm

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Guido Friebel

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Elena Paltseva

Stockholm Institute of Transition Economics (SITE) ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

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