Is the ‘European Model’ viable in a globalized world?

This paper will presented at the 27th Annual Conference of the Portuguese Economic and Social History Association on “Globalization: Long-Term Perspectives” Lisbon, 16-17 November 2007, and is forthcoming in P. Della Posta, A. Verdun and M. Uvalic (eds), Interpreting globalization: a European Perspective, Basingstoke: Palgrave Macmillan. We are grateful to Jeff Frieden for a stimulating discussion of this paper and would also like to thank the editors of the above-referred volume as well as Erik Jones, Phil Schmitter, Francesco Farina and other participants in our conference panels at the EUI in Florence in 2006 and at the ECPR meetings in Pisa in 2007 for their useful comments. Any remaining errors and omissions are of course our responsibility.The issue of whether the ‘European model’ is viable in a globalized world raises the question as to what defines and conditions any European model and its competitiveness in the context of globalization and the new economy. For the sake of sustainability of its model but also to sustain support for globalization the European Union (EU) needs to take economic advantage of globalization and the knowledge-based economy. Challenges in a high-cost, high-productivity economy mean that there is a premium on dynamic efficiency gains from the liberalization and reform of markets and an economic and institutional framework that fosters innovation and flexible adjustment. The paper examines how the EU deals with governance issues and political economy factors from this perspective. The EU model, if able to legitimize itself with respect to the European integration process may as well contribute to a legitimate political governance of globalization.Research Fellow at IEEI and Professor and Research Coordinator at IEE-UCP, Lisbon, respectively. They are both regular visiting professors at the National Institute for Public Administration (INA). This paper is part of an FCT research project on Economic Growth, Convergence and Institutions (research grant POCI/EGE/55423/2004, partially funded by FEDER)