Case study 2.3: The EU as a set of competition states
The basis of our understanding of the strategies deployed by the states within the European economic arena is best encapsulated by the concept of the competition state. Initially developed by Cerny (1997) but with clear antecedence in the work of Strange (1996), the idea of the competition state is based on the understanding that the primary role of the state is to secure the enhanced welfare of its citizens through the securing of economic growth within its borders. Jessop (2002) extends this notion by suggesting that the process of growth extends beyond the borders of the state through actions designed to ensure that all businesses operating within the borders of the state (irrespective of where they operate) are able to flourish. The ultimate aim of the competition state is to enable those businesses operating within its borders to operate successfully internationally thereby further enhancing the welfare of all citizens within its borders. Consequently, the primary focus of competition states is to deliver competitiveness by creating the conditions (both economic and noneconomic) that are vital to secure competitive position both within domestic and international markets for products and factors of production.
The concept of the competition state was developed by Cerny as a means of understanding how states were adapting to the pressure of the global economy where often a ‘zero-sum’ mentality prevailed. These processes are reflected in the change of focus within government policy which now exhibits the following characteristics:
 a shift from macro- to microeconomic interventionism;
 a shift in focus towards developing flexible responses to changing economic conditions and away from selective interventionism within strategic industries;
 a focus on the maintenance of price stability and anti-inflationary policies shaped by neoliberal ideology to drive non-inflationary growth;
 a shift towards the promotion of enterprise, innovation and commercial sustainability of all economic agents (both public and private) and away from formal redistributive policies of welfarism.
The end point is that the state acts more like a market player that seeks to enhance the impact of global forces on the national economy. The result, as suggested, is a growth-focused state stressing supply-side measures where the differences between national and international

policies become increasingly blurred. Palan, Abbott and Deans (1996) identify a range of strategies states can deploy as competition states:
 join together in regional blocs;
 adopt the developmental state model based on high state intervention;
 embrace the social democratic model of selective global integration;
 hegemonic strategies either regionally or globally;
 exploit cheap and abundant labour resources;
 establish a parasitical niche such as becoming a tax haven;
 structurally impede interaction with the global economy.
These strategies suggest that, despite expectations to the contrary, states still have a role to play in the global economy. In some cases, this has had its most salient expression in the increased prominence of state capitalism deployed by states such as China. In many cases, states are vital to making global forces work by developing the right institutional structure.
However the sustenance of the competition state as a model for EU states is subject first to sustained confidence in the neo-liberal model and, secondly, that the decision made by states in relation to markets are always welfare enhancing for its citizens. Clearly, the financial crisis of 2007-8 brought these issues into sharp focus.
Case question:
How do the core benchmarks of competitiveness as identified by the World Economic Forum link to the concept of the competition state?