Comparative institutional advantage in the context of development*

Abstract

This chapter discusses how the theory of comparative institutional advantage might be applied in the context of development. In so doing, it draws on the work of Hall and Soskice on Varieties of Capitalism (2001) and the author's own work on Labour Laws and Global Trade (2005), which argued that nations prosper in a globalised economy, not by becoming more similar in their labour laws, but by building their institutional advantages on a floor of fundamental human rights. The chapter develops this argument in the context of national responses to economic crisis. It considers the issue of comparative advantage in trade, questioning assumptions relating to the sources of such advantage, and proposing innovative regulatory means of addressing current shortcomings. It advocates positive interaction of local, national, regional, and international measures which empower workers' voices.