Building a Transnational Developmental State in Europe: Lessons from the Big Bang enlargement for the next integration round

Why should the EU care about the developmental externalities of enlargement? To answer this question, we bridge the enlargement literature, which studies rule transfer prior to accession, and the political economy literature, which examines how economic actors from less developed EU member states adapt to these rules in the post-accession period. Each has its own blind spots. The enlargement literature does not explain why the EU cares–or should care–about anticipating and mitigating the longer-term negative externalities of rule transfer. The political economy literature offers insights into how new member states cope with these externalities but it does not examine in detail how and why the EU takes - or should take - market-correcting measures while integrating less developed economies into the Single Market. In this paper, we show that during the Eastern enlargement the EU laid the foundations of a short-lived Transnational Developmental State (TDS) to correct market outcomes. We also identify three mechanisms that compelled EU insiders to address the negative externalities of rule transfer. Beyond its theoretical contribution, our analysis provides crucial lessons for the next round of EU integration and especially for managing Ukraine's EU accession.