Diverging developmental strategies beyond “lead sectors” in the EU’s periphery: the politics of developmental alliances in the Hungarian and Polish dairy sectors

Abstract

Due to its focus on high tech sectors and the role played by FDI, the literature dealing with developmental opportunities in Central and Eastern European (CEE) economies underestimates the room for domestic developmental agency. In this paper, we contrast diverging strategies of positioning the Polish and Hungarian dairy sector in European markets. In Hungary, ‘outsourcing’ the integration of fragmented producers to multinational corporations (MNCs) led to competitive downgrading, providing a fertile terrain for economic nationalism in the wake of the financial crisis. In Poland, a developmental alliance between state and farmers upgraded the competitiveness of domestic cooperatives under the constraint of EU accession. Contrary to narratives that describe passive competition states in CEE, we show that the domestic politics of developmental alliances determined whether EU integration resulted in the neoliberal outsourcing of development to MNCs or gave rise to a sector-level developmental state. Using the notion of dynamic institutional complementarity, we explore why lesser-developed countries with similar initial conditions diverge in developmental strategies and outcomes within the same transnational integration regime that imposes the same rules and provides the same opportunities to member states.