European integration and weak states: Romania’s road to exclusionary development

Abstract

This paper challenges approaches that expect unavoidable decline in developmental state capacities as a result of European market integration. Using Romania’s automotive industry as its case study, the paper shows that deep integration with the EU forecloses protectionist strategies and builds state capacities for FDI-based development instead. While Romania was initially a weak state, deep integration with the EU helped develop its core state institutions and sectoral developmental state capacities. The EU strengthened state autonomy vis-à-vis domestic actors and increased its ability to broker win-win deals among these actors and multinational corporations. It also helped create elementary state institutions that could foster industrial upgrading. The Romanian state used these capacities to enable the initial investment of multinational corporations and to incentivize them to engage in further expansion and upgrading, rather than merely to use Romania as an assembly platform. However, the state has, to date, made little effort and little use of the EU funds to broaden the scope of the beneficiaries from market integration, thereby contributing to an MNC-led exclusionary developmental pathway. While weak states might not fully use the opportunities offered by deep integration with the EU, this integration still provides more opportunities than threats for their developmental agency.