Can the EU anchor policy reform? The case of the Euro-Med Partnership

Alfred Tovias and Mehmet Ugur ()

No 3980, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: The emerging literature on ‘anchoring’ draws attention to non-conventional benefits of regional integration arrangements, which include increased policy credibility. Nevertheless, this literature tends to view the anchoring of policy reform as an exogenously given option for a reforming country. We demonstrate that anchoring is an endogenously determined choice, which may guarantee neither optimal levels of policy reform nor effective anchoring unless the relevant contracts are both complete and incentive compatible. We examine the economic pillar of the Euro-Med Partnership (EMP) to ascertain the extent to which its contractual provisions satisfy these conditions. Our findings suggest that the EMP leaves too much room for discretion and does not internalize the positive externalities associated with policy reform. These findings enable us to elaborate on why the EU cannot be expected to function as an effective anchor for policy reform for its trading partners.

Keywords: aid; anchoring; bargaining; conditionality; European Union; Euro-Med Partnership; free trade areas; policy reform; Mediterranean Partnership (search for similar items in EconPapers)
Date: 2004-12
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Citations: View citations in EconPapers (3)

Published in European Union Politics 4.5(2004): pp. 395-418

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Persistent link: https://EconPapers.repec.org/RePEc:gpe:wpaper:3980

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