International relations theory and European integration: The political economy of the European Monetary System and the Single European Act

This thesis's objective is to explain recent initiatives in European integration with a theoretical framework. Applying the historical insights of international relations theory, the framework connects two levels of analysis: at the regional level, integration is defined as the deliberate and peaceful inducement of interdependence; at the international level integration is defined as power transformation. The main assumptions of the framework are that integration advances only in the aftermath of disturbances that might emanate nationally, regionally, or internationally; integration is pursued only if national and international solutions to particular national and/or regional problems are not available; integration contributes to the conversion of dispersed regional power potentials into European power capabilities, a process that is termed power transformation.;Since the theoretical assumptions focus on structural as opposed to institutional interdependence, the development of economic interdependence in the European Community since World War II is examined. Particular attention is paid to converging levels of intra-regional trade and the synchronization of European economies. The findings suggest that while interdependence abated in the 1970s and reasserted itself only in the late 1980s, levels of interconnectedness did not decrease. In addition, high levels of regional interconnectedness contributed to a swift transmission of international and regional problems among the Community member-states.;The theoretical framework is then applied to the formation of the European Monetary System and the Single European Act. In both cases, major theoretical assumptions are borne out. It is shown that European integration has been dependent not only on regional interdependence, but also on the availability of international solutions to international problems. Thus regional monetary integration was resisted until the Bretton-Woods regime had declined and a system of floating rates proved to be detrimental to highly interconnected European economies. A major contributing factor in the establishment of the single market was the perception of European economic decline vis-a-vis the United States and Japan, in particular after 1980.;In sum, the major theoretical findings of this thesis are that explanations of integration need to have a historical perspective and must include international variables that shape regional integration.