LOST IN TRANSITION: HOW IRELAND AND THREE OTHER SMALL OPEN ECONOMIES RESPONDED TO EUROPEANISATION 1987-2013 Submitted in fulfilment of the requirements for Philosophiae Doctor Degree by David T Begg, 2014 Lost in Transition: How Ireland and Three Other Small Open Economies Responded to Europeanisation 1987-2013 Author: David T Begg, MA Qualification: Philosophiae Doctor Degree Institution: National University of Ireland at Maynooth Faculty: Sociology Date of Submission: March, 2014 Head of Department: Professor Mary Corcoran Supervisor: Professor Seán Ó Riain Contents Tables:.......................................................................................................................... iv Figures: ......................................................................................................................... v Boxes: .......................................................................................................................... vi List of Abbreviations: ................................................................................................... vii Summary............................................................................................................. 9 CHAPTER 1: Introduction................................................................................... 11 Purpose of Thesis ................................................................................................................................. 19 The Research Question ........................................................................................................................ 21 Theoretical Foundation ....................................................................................................................... 25 Structure of Thesis ............................................................................................................................... 41 CHAPTER 2: Research Methodology .................................................................. 47 Introduction ......................................................................................................................................... 47 Periodisation ........................................................................................................................................ 48 Research Methods – Qualitative Interviews ........................................................................................ 53 A Conceptual Framework for Analysing Interdependence – Ireland ................................................... 56 Alternative Methodological Approaches Considered .......................................................................... 65 Conclusion ........................................................................................................................................... 66 CHAPTER 3: Katzenstein’s World and The Comparator Countries ....................... 67 Introduction ......................................................................................................................................... 67 FINLAND ...................................................................................................................... 69 The History and Political Economy of Finland ..................................................................................... 69 1986-1994: Finland Moves Towards a Post Industrial Stage of Development ................................... 71 DENMARK ................................................................................................................... 75 The History and Political Economy of Denmark .................................................................................. 75 1986 – 1994: The Danish Concept of a Negotiated Economy ............................................................. 77 THE NETHERLANDS ...................................................................................................... 82 The History and Political Economy of The Netherlands ...................................................................... 82 1986-1994: Dutch Corporatism Re-emerges as an Alternative to State Intervention and Becomes Standard Operating Procedure at Times of Crisis. ............................................................................... 84 IRELAND ...................................................................................................................... 90 The History and Political Economy of Ireland ...................................................................................... 90 Ireland Turns the Corner: The Single European Act to Maastricht: 1986 – 1994 ............................... 96 Convergence and Divergence of the Four Countries .................................................... 101 CHAPTER 4: 1994-2001 The Age of Employment Miracles ................................ 114 Introduction ....................................................................................................................................... 114 FINLAND .................................................................................................................... 116 Recovery to the Dotcom Decline: 1994-2001 .................................................................................... 116 DENMARK ................................................................................................................. 122 The Danish Employment Miracle 1994 to 2001 ................................................................................ 122 i THE NETHERLANDS .................................................................................................... 131 The Netherlands Welfare State Reform and the ‘Jobs Miracle’1994-2001 ....................................... 131 IRELAND .................................................................................................................... 139 The Job Creating Machine – Maastricht to Nice: 1994 – 2001 .......................................................... 139 Conclusion ......................................................................................................................................... 147 CHAPTER 5: 2001-2008 European Integration Intensifies ................................. 150 Introduction ....................................................................................................................................... 150 FINLAND .................................................................................................................... 152 EMU to the Onset of the Global Crisis: 2001-2008 ............................................................................ 152 DENMARK ................................................................................................................. 154 Structural Reform Intensifies in Denmark: 2001-2008 ...................................................................... 154 THE NETHERLANDS .................................................................................................... 158 ‘Polder’ Model of Consociational Democracy Challenged – Immigration Concerns Influence Politics and Undermine Commitment to European Integration: 2001-2008. ................................................ 158 IRELAND .................................................................................................................... 163 The False Boom: Nice to Lisbon: 2001 – 2008 .................................................................................. 163 Conclusion ......................................................................................................................................... 173 CHAPTER 6: Beyond 2008: Coping With The Crisis ............................................ 177 Introduction ....................................................................................................................................... 177 FINLAND .................................................................................................................... 179 DENMARK ................................................................................................................. 186 THE NETHERLANDS .................................................................................................... 192 IRELAND .................................................................................................................... 198 Conclusion ......................................................................................................................................... 217 CHAPTER 7: Unpacking Ireland’s Polity From A New Institutionalist Perspective221 Introduction and Recap on Methodology.......................................................................................... 221 The Irish Approach to European Integration ............................................................... 223 National Government – Rational Actor Model/Rational Choice Institutionalism ............................. 224 Capabilities and Practices of Institutions /Historical Institutionalism ............................................... 228 The Politics Paradigm/Sociological Institutionalism .......................................................................... 234 Summary ............................................................................................................................................ 239 Economic and Monetary Union .................................................................................. 242 National Government-Rational