Explaining Telecoms and Electricity Internationalization in the European Union: A Political Economy Perspective

European University Institute Robert Schuman Centre for Advanced Studies Working Paper No. 2009/62

30 Pages Posted: 30 Apr 2010 Last revised: 18 May 2010

See all articles by Judith Clifton

Judith Clifton

University of Cantabria

Daniel Díaz-Fuentes

Universidad de Cantabria; Universidad de Cantabria, Department of Economics

Julio Revuelta

University of Cantabria - Department of Economics

Date Written: April 29, 2010

Abstract

One consequence of the liberalization of certain services in the European Union was that a number of formerly inward-looking incumbents in telecommunications and electricity rapidly transformed themselves into some of the world’s leading Multinationals. However, the precise relationship between liberalization and incumbent internationalization is contested. This article tests three persuasive arguments derived from the political economy literature on this relationship. The first claims that those incumbents most exposed to domestic liberalization would internationalise most. The second asserts the opposite: incumbents operating where liberalization was restricted could exploit monopolistic rents to finance their aggressive internationalisation. The third argument claims that a diversity of paths will be adopted by countries and incumbents vis-à-vis liberalization and internationalization. Using correlation and cluster analysis of the sample of all major EU telecoms and electricity incumbent Multinationals evidence is found in favour of the third hypothesis. Internationalization as a response to liberalization took diverse forms in terms of timing and extent and this is best explained using a country, sector and firm logic.

Keywords: Electricity, European Union, Internationalization, Liberalization, Telecommunications, Political

JEL Classification: L96, L94, F23, F16

Suggested Citation

Clifton, Judith and Diaz-Fuentes, Daniel and Diaz-Fuentes, Daniel and Revuelta, Julio, Explaining Telecoms and Electricity Internationalization in the European Union: A Political Economy Perspective (April 29, 2010). European University Institute Robert Schuman Centre for Advanced Studies Working Paper No. 2009/62, Available at SSRN: https://ssrn.com/abstract=1597766 or http://dx.doi.org/10.2139/ssrn.1597766

Judith Clifton (Contact Author)

University of Cantabria ( email )

Avda. Los Castros, s/n
Santander 39005
Spain

Daniel Diaz-Fuentes

Universidad de Cantabria, Department of Economics ( email )

Av. Los Castros s/n
Santander 39005, Cantabria 39005
Spain
+34 942201624 (Phone)

HOME PAGE: http://personales.unican.es/diazd/

Universidad de Cantabria ( email )

Av. Los Castros s/n
Santander 39005, Cantabria 39005
Spain
+34 942201624 (Phone)

HOME PAGE: http://personales.unican.es/diazd/

Julio Revuelta

University of Cantabria - Department of Economics ( email )

Av. Los Castros s/n
Santander 39005, Cantabria 39005
Spain

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