Transcript presentation

Comparative Institutions and
Globalization
Anne Wren (Stanford University)
With critique by Tom Kenyon (Princeton University & IFC)
Varieties of Capitalism (VOC)
• Can use VOC literature to derive policy
preferences of firms and workers
• VOC predicts existence of ‘complementarities’
across national economic sub-systems
• Distinguishes two principal variants
(coordinated and liberal market economies)
Institutions and Specialization
• Different institutional environments favor
different types of industrial specialization:
• CMEs: favor long-term investment in skills and
incremental innovation (autos, capital goods, engines)
• LMEs: favor flexibility and radical innovation
(software, biotech, telecoms)
Policy Preferences - Firms
CME-type firm
LME-type firm
CME
Favor openness
institutional (e.g. German autoenvironment maker)
Lobby/outsource
(e.g. German software
company)
LME
Lobby/outsource
institutional (e.g. US auto-maker)
environment
Favor openness
(e.g. US software
company)
Policy Preferences – Workers
Favor openness
CME
institutional
environment
Skilled & unskilled
workers, employers
LME
institutional
environment
Skilled workers
Favor
protection/compensat
ion
Women – less heavily
invested in existing
institutions
Unskilled workers
Operationalization?
• How do we tell what a CME/LME-type firm
looks like?
• How do we measure ‘radical’ vs. ‘incremental’
innovation (Taylor 2004)
• Sector, technological/skill intensity or stage of product
cycle?
• How do we tell what a CME/LME economy
looks like?
Data – Variables and Indicators
Variables
Indicator
Corporate governance
Minority shareholder
protections; equity market
development, takeover activity
Ratio of equity market cap. to
banking sector deposits
(Global Financial Data, IMF)
Labor market regulation
Legal restrictions on union
membership & activity, wage
bargaining structures
Union density (Golden, Lange
& Wallerstein), degree of wage
bargaining coordination
(OECD)
Prod. market regulation
Barriers to entry, competition
enforcement
Composite indicator for 7
industries (OECD)
Social protection & training
Unemployment insurance,
employment protection, active
labor market policies
Employment protection index
(OECD), decommodification
index (Scruggs)
Cluster Analysis Groupings
1
Australia post-1990
Canada
France post-1996
N. Zealand post-1988
Sweden post-1997
UK post-1980
US
2
Belgium
Denmark
Finland post-1985
Germany post-1990
Ireland post-1996
Netherlands
New Zealand to 1987
Sweden to 1997
Switzerland
UK to 1979
3
Australia to 1989
Austria
Finland to 1984
France to 1995
Germany to 1989
Ireland to 1995
Italy
Japan
Norway
Grounds for Skepticism
• CME/LME distinction questionable:
• H&S categories do not hold up: countries
switch over time & by organizational sub-type
(e.g. Ireland)
• H & S overstate extent of complementarities,
see trend away from coordination since 1980
• Need alternative indicator of coordination:
continuous? by institutional sub-grouping?
To Sum Up
• VOC approach promising, but problematic to
operationalize
• Trade-off between theoretical sophistication
and cross-national scope of application
• Think more carefully about underlying
complementarities outside OECD
• Develop cross-national core and regional
modules? (e.g. WB ICA)