This article analyses the transformations of state policies in the European Union and explores the patterns of their convergence or divergence in the context of increased economic transnationalization. The starting point is the thesis that in the globalized, post-Fordist economy welfare states are transforming into Competition States concerned primarily with increasing the competitiveness of their territory and aiming at labour recommodification rather than decommodification. The article offers an operationalization of the concept of Competition State and uses cluster analysis to examine to what extent different European states converged on this model from mid-1990s to 2007. The results show that Eurozone members over time converge to a single cluster that is less oriented towards increasing competitiveness than are the states outside of the EMU, while the latter indeed experience transformations towards Competition States. However, rather than finding a single ideal-Type, the analysis actually identifies three different types of Competition States.