EU Economic Polity Under Neo-Functionalism

Running head: EU ECONOMIC POLICY UNDER NEO-FUNCTIONALISM
EU Economic Policy under Neo-functionalism
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EU ECONOMIC POLICY UNDER NEO-FUNCTIONALISM1
Introduction
There are several theories under which economic policies can be analysed in order to
examine the process of development of any economic policies. This paper mainly taken into
consideration the theory of regional integration such as neo-functionalism. The chosen policy for
this paper is economic policy of EU (Ecb.europa.eu 2020). Therefore, this paper discusses the
process of development of EU economic policy on the basis of neo-functionalist explanations. In
addition, to assess the development of the EU economic policy minutely, it is essential to focus
on other theories. As there is contribution of other theories as well on the development of the
policy. It helps to represent a different point of view to make the analysis fruitful. In this regard,
the policy is discussed with the help of the theories of intergovernmentalism. Other theories that
is illustrated in this paper include multi-level governance and constructivism.
Theories
Theories help to analyse the economic policies. There exists various theories, which
represents an opposite view (Europa.eu. 2020). The economic policy can be examined on the
basis of that policies as well. Here, the theory of regional integration neo-functionalism is used.
To represent the opposite view the theory of intergovernmentalism is implemented. On the other
hand, the application of theory of constructivism helps to examine the EU economic policy in a
better way.
Policy Areas
The economic and political union that consists of 28 member states of Europe is known
as the Europe Union (EU). The primary location for all member states of the EU is Europe. Thus,
there was an internal single market formed by the EU for all the EU member states that runs by a

EU ECONOMIC POLICY UNDER NEO-FUNCTIONALISM2
standardised system of laws. It is only applied in those areas where all the member states are
willing work together. This is how the economic policy of the EU had devolved. The main
objective of the policy is to ensure the free movement of the goods, people, capital and services
within the internal single market of the EU (Ec.europa.eu 2020). In addition, the legislation also
enacted in order to maintain internal affairs and justice. It also formulates common policies on
agriculture, regional development, trade and fisheries. In 1999, a monetary union for the EU
member states came into existence, which started its operation in 2002. The common currency
such as euro is used by all 19 member states of the monetary union. There were a wide range of
recent developments in EU economic policy. One of the vital member states of the EU, United
Kingdom (UK) planned to leave the single market of the EU. The deal of quitting single market
of EU is called Brexit. Therefore, Brexit brings many amendments in economic policy of EU.
Neo-functionalism
A theory of regional integration that emphasizes on the territory and does not consider the
globalization is known as neo-functionalism. The theory of neo-functionalism is applied in case
of the integration of Europe. The main aim of the European integration was to integrate all the
individual sectors in order to achieve the effects of spillover, which helps in further integration
(Niemann and Ioannou 2015). There are three main factors on which neo-functionalism based on
include growing economic interdependence between nations, the national regulatory regimes are
replaced by the supranational market and organizational capacity to construct international legal
regimes and to resolve disputes. Under neo-functionalism theory, the importance of the nation
state and nationalism decreases. There exists three mechanisms that drives the integration such as
the transfer of domestic allegiances, positive spillover and technocratic automaticity.
Economic Policy