Neofunctionalism is a theory of regional integration which downplays globalisation and reintroduces territory into its governance. Neofunctionalism is often regarded as the first European integration theory developed by Ernst B. Haas in 1958 as part of his Ph.D. research on the European Coal and Steel Community. Neofunctionalism seeks to explain the European integration process and why states accept to become a part of supranational organization. Jean Monnet's approach to European integration, which aimed at integrating individual sectors in hopes of achieving spillover effects to further the process of integration, is said to have followed the neofunctional school's tack.
Ernst B. Haas, later declared the theory of neofunctionalism obsolete, a statement he revoked in his final book, after the process of European integration started stalling in the 1960s, when Charles de Gaulle's "Empty Chair" politics paralyzed the institutions of the European Coal and Steel Community, European Economic Community, and European Atomic Energy Community. The theory was updated and further specified namely by Wayne Sandholtz, Alec Stone Sweet, and their collaborators in the 1990s and in the 2000s (references below). The main contributions of these authors was an employment of empiricism.
Today, neofunctionalism is one of the best-known theories of European integration. In the last decades Haas' theory has been revived by several authors, who describe the neofunctionalist theoretical legacy left by him as able to speak directly to current EU studies and comparative regionalism, if it is seen as a dynamic theory that corresponds to established social scientific norms with disciplinary openness.
Key theoretical arguments
Neofunctionalism describes and explains the process of regional integration with reference to how three causal factors interact: Growing economic interdependence between nations Organizational capacity to resolve disputes and build international legal regimes Supranational market rules that replace national regulatory regimes
Early neofunctionalist theory assumed a decline in importance of nationalism and the nation-state; it predicted that, gradually, elected officials, interest groups, and large commercial interests within states would see it in their interests to pursue welfarist objectives best satisfied by the political and market integration at a higher, supranational level. Haas theorized three mechanisms that he thought would drive the integration forward: positive spillover, the transfer of domestic allegiances and technocratic automaticity. Positive spillover effect is the notion that integration between states in one economic sector will create strong incentives for integration in further sectors, in order to fully capture the perks of integration in the sector in which it started. Increased number of transactions and intensity of negotiations then takes place hand in hand with increasing regional integration. This leads to a creation of institutions that work without reference to "local" governments. The mechanism of a transfer in domestic allegiances can be best understood by first noting that an important assumption within neofunctionalist thinking is of a pluralistic society within the relevant nation states. Neofunctionalists claim that as the process of integration gathers pace, interest groups and associations will transfer their allegiances away from national institutions towards the supranational European institutions. They will do this because they will, in theory, come to realise that these newly formed institutions are a better conduit through which to pursue their material interests. Greater regulatory complexity is then needed and other institutions on regional level are usually called for. This causes integration to be transferred to higher levels of decision-making processes. Technocratic automaticity described the way in which, as integration proceeds, the supranational institutions set up to oversee that integration process will themselves take the lead in sponsoring further integration as they become more powerful and more autonomous of the member states. In the Haas-Schmitter model, size of unit, rate of transactions, pluralism, and elite complementarity are the background conditions on which the process of integration depends. Just as Rosamond put it, political integration will then become an "inevitable" side effect of integration in economic sectors.