Comparative Political Economy Literature Research Articles

In search of a growth model for Italy: the failed attempt of an export-led recovery strategy?

We analyse Italy’s growth pattern from 2001 to 2019 using the demand and growth regime categories proposed in the post-Keynesian tradition and recently adopted in the comparative political economy (CPE) literature. We argue that after the Global Financial and Economic Crisis (GFEC), Italy followed an export-led recovery strategy. In this respect, Germany’s growth model emerged as the successful model to follow. In the dominant view, Germany’s economic success since the mid-2000s was attributed to a series of painful but necessary economic reforms. The success of Germany’s export-led mercantilist regime became particularly attractive to Italy given the similar export-oriented manufacturing industry. However, Italy has followed the ‘wrong’ German model based on wage compression and restrictive budget policies while the ‘true’ German model is based on non-price competitiveness factors.

The new political economy of public sector wage-setting in Europe: Introduction to the special issue

This special issue (SI) brings the industrial relations scholarship on the public sector into dialogue with the comparative political economy (CPE) literature on growth models/regimes. While the former has paid great attention to the public sector, in CPE the public sector has been analysed less, and mostly as subaltern to the export-sector’s actors, interests and institutions. We posit that the public sector matters for CPE in its own right for three reasons. First, the state remains today the single largest employer in virtually every European economy, providing incomes to a large segment of the middle class. Second, public employers’ wage bill – one of the largest items of governments’ current expenditures – is funded by the taxpayers. Hence, public sector wage policy is fiscal policy, ultimately pursued by public/political employers. Third, public employers are simultaneously public managers and political sovereigns acting in the shadow of hierarchy. Case-study contributions to the SI detail how these insights matter within different European growth regimes: (1) the Mediterranean demand-led growth regime (France, Italy, Spain and Portugal), (2) the German export-led growth regime, (3) the Nordic balanced growth regime (Denmark and Sweden) and (4) the FDI-led Eastern European growth regime (Czechia and Slovakia).

House price cycles, housing systems, and growth models

The paper provides a framework for theorising the role of house price cycles in national growth models. We synthesise Minskyan approaches with comparative political economy (CPE) by arguing that institutions influence the extent to which countries experience what we call ‘house-price-driven growth models’. First, we argue that house price dynamics have been undertheorised in existing growth models analysis. Finance-led models can be properly understood only against the background of rising house prices that stimulate consumption through wealth effects and investment through construction. Second, we identify behavioural and Minskyan theories of housing cycles as suitable frameworks to theorise the impact of housing on growth. However, this literature does not provide an analysis of cross-country differences in housing cycles. Third, drawing on the CPE literature on housing systems, we argue that factors such as private homeownership and mortgage-credit encouraging institutions can explain differences in the intensity of housing cycles. We provide preliminary empirical support for this framework from a cross-country analysis. Our results show strong cross-country heterogeneity in the intensity of housing cycles. Countries with more intense house price cycles also tend to exhibit more volatile business and debt cycles. Homeownership rates and mortgage-credit encouraging institutions are positively correlated with the volatility of house price cycles.

Bringing Household Finance Back In: House Prices and the Missing Macroeconomics of Comparative Political Economy

This article makes a key contribution to the comparative political economy literature by accounting for the macroeconomic role of household finance. Based on post-Keynesian theories of finance and the financialization literature, we place house prices and mortgage credit squarely at the center of the macroeconomy, as speculative house price cycles can facilitate homeowner consumption via the use of equity release mortgages. Through an econometric evaluation of eighteen advanced economies from 1980 to 2019, we demonstrate that household debt is determined by house price inflation, and that rising household debt contributes to GDP growth, while business debt has negative growth effects. These results are consistent across countries with different growth models and financial systems. This suggests that the varieties of capitalism's focus on corporate finance is misplaced and that the growth models approach needs a theory of house prices, mortgage credit, and financial cycles to adequately conceptualize how debt-driven growth operates across advanced economies.

The origin and evolution of entrepreneurship policies: the case of China

PurposeThis paper seeks to answer two questions: (1) where do a country's entrepreneurship policies come from? (2) How do they evolve and shape entrepreneurial activities?Design/methodology/approachDrawing upon the comparative political economy literature and the institutional perspective, this paper proposes a theoretical model of the origin and evolution of entrepreneurship policies. We use China as a case study to apply the theoretical model and demonstrate the evolution of entrepreneurship policies in three stages during the period 1978 to 2012.FindingsThe case analysis of China provides evidence and support for our theoretical model and unpacks the process by which entrepreneurship policies originate and evolve as the result of the interplay among constantly changing policymaking, production, and knowledge regimes.Research limitations/implicationsBecause of the research context, findings may lack generalisability. Additional studies on policymaking and production regimes of different kinds and their respective roles in shaping entrepreneurship policies are encouraged to further advance this line of research.Practical implicationsThis paper offers important implications concerning entrepreneurship policy and activities for policymakers, practitioners and other stakeholders in emerging economies.Originality/valueOur study fills a gap in the entrepreneurship literature by expanding scholarly understanding of the origin and evolution of entrepreneurship policies.

Varieties of peripheral capitalism: on the institutional foundations of economic backwardness*

This paper critically analyses the literature spawned by Peter Hall and David Soskice’s influential book on the varieties of capitalism. It takes as a starting point the critiques within the comparative political economy literature about the supply-side views on economic growth, and the problems with emphasizing the nature of firm behavior as the source of institutional variety. It argues that demand-led growth, as discussed by Post-Keynesian authors, provides an important alternative to the conventional approach to the explanation of varieties of institutional experience. It suggests that understanding the reasons for institutional variety within capitalism requires incorporating the work of Cambridge Keynesians which recovered the work of Classical political economy authors and extended Keynes’s ideas on effective demand to explain the process of accumulation. It also requires incorporating the ideas of Prebisch and the Latin American Structuralists, who analysed the limits to accumulation in peripheral countries. The paper also discusses the limitations of Neo-Kaleckian models of demand-led growth used by some authors in the comparative political economy literature, and it suggests a new taxonomy for ordering varieties of capitalism.

Comparative institutional disadvantage: Small firms and vocational training in the British manufacturing sector in comparative perspective

AbstractThis article asks why British manufacturing small and medium‐sized enterprises (SMEs) struggle to meet their intermediate technical skills needs. While the comparative political economy literature typically attributes the failure to train in Britain to collective action problems, we complement this perspective by pointing at the ill‐conceived policy design of the quasi‐market for vocational education and training. In particular, we shed light on the role of training providers, as they respond to the incentive structure of the quasi‐market, especially the output‐based nature of standards and the system of funding distribution. To strengthen our argument, we compare the British case with the Italian statist system, which enables SMEs to access technical skills through school‐based vocational education, and with the German collective system, in which SMEs develop skills through apprenticeships.

Permission to Say “Capitalism”: Principles for Critical Social Science Engagement With GGR Research

The grand scale of GGR deployment now necessary to avoid dangerous climate change warrants the use of grand interpretive theories of how the global economy operates. We argue that critical social science should be able to name the global economy as “capitalism”; and instead of speaking about “transforming the global economy” as a necessary precondition for limiting climate change, instead speak about transforming, or even transcending,capitalism. We propose three principles are helpful for critical social science researchers willing to name and analyse the structural features of capitalism and their relation to greenhouse gas removal technology, policy, and governance. These principles are: (1)Greenhouse Gas Removal technologies are likely to emerge within capitalism, which is crisis prone, growth dependent, market expanding, We use a broad Marxist corpus to justify this principle. (2)There are different varieties of capitalism and this will affect the feasibility of different GGR policies and supports in different nations. We draw on varieties of capitalism and comparative political economy literature to justify this principle. (3)Capitalism is more than an economic system, it is ideologically and culturally maintained. Globally-significant issues such as fundamentalism, institutional mistrust, precarity, and populism, cannot be divorced from our thinking about globally significant deployment of greenhouse gas removal technologies. We use a broad Critical Theory body of work to explore the ideational project of maintaining capitalism and its relation to GGR governance and policy.

The Externalization of China's Technical Standardization Approach

ABSTRACTInternational technical standardization has always been shaped by the externalization of the domestic standard systems of the most technologically advanced countries. China's growing technological footprint is no exception, and it has the potential to significantly reshape international technical standard setting. In contrast particularly to European standardization, which is realized through coordinated private self‐regulation, China has adopted a state‐centric approach. Based on the international and comparative political economy literature on China's global externalization, and through research on technical standardization, this article investigates 5G standard setting within formal international standard‐developing organizations and de facto standardization of railways within the Belt and Road Initiative. By triangulating data from interviews, policy documents and other primary and secondary sources, the article systematically analyses China's standardization practices, which also affords insight into the implications for international standardization.

Volte-Face on the Welfare State: Social Partners, Knowledge Economies, and the Expansion of Work-Family Policies

To what extent organized employers and trade unions support social policies is contested. This article examines the case of work-family policies (WFPs), which have surged to become a central part of the welfare state. In that expansion, the joint role of employers and unions has largely been disregarded in the comparative political economy literature. The article posits that the shift from Fordist to knowledge economies is the impetus for the social partners’ support for WFPs. If women make up an increasing share of high-skilled employees, employers start favoring WFPs to increase their labor supply. Similarly, unions favor WFPs if women constitute a significant part of their membership base. Yet the extent to which changes in preferences translate into policy depends on the presence of corporatist institutions. These claims are supported with statistical analyses of WFPs in eighteen advanced democracies across five decades and an in-depth case study of Norway. The article thus demonstrates that the trajectory of the new welfare state is decisively affected by the preferences and power of unions and employers.

Inclusion for All or Exclusion for Everyone? UK Unemployment Policies in the Age of Austerity

Whilst the comparative political economy literature has regarded the UK as among the least dualised countries when it comes to non-standard employment, thanks to its flexible labour market and predominantly means-tested system of social pro-tection, scholars in the precariousness literature have highlighted the increased pre-carity and insecurity of many non-standard workers, highlighting the extreme con-ditionality and punitive policies typical of the UK welfare system as an important contributory factor. This paper aims to bridge the gap between these literatures. It analyses the experience of social protection of a specific category of non-standard workers, namely temporary agency workers, in accessing both active and passive unemployment policies. It finds how welfare reforms introduced in the past two decades in association with a general welfare discourse centred on the concepts of deservingness and dependency have created important barriers in accessing un-employment protection, not just based on institutional features but also on social perceptions.

Between rule-makers and rule-takers: policy change as the interaction of design, compliance and feedback

ABSTRACT How do policies change? The article argues that dominant public policy theories overemphasize the stage of adoption of new policies and disregard the discrepancies that often take place between formal and substantive change. But can we really speak of change if formal changes do not trigger change in actors’ behaviour? And how can policy-makers achieve substantive change? Building on the comparative political economy literature, the article conceptualizes policy change as the interaction between rule-makers and rule-takers. It is argued that (i) rule-makers can use policy design strategically to minimize reliance on non-compliant rule-takers and (ii) the scope for rule-makers to side-line non-compliant rule-takers is greater if non-compliant behaviour produces negative policy feedback. Systematic process analysis of reform of German higher education over two decades lends support to the proposed approach.

Understanding wage restraint in the German public sector: does the pattern bargaining hypothesis really hold water?

AbstractGerman public sector wage restraint has been explained through the presence of a specific type of inter‐sectoral wage coordination in the industrial relations system—that is, export sector‐led pattern bargaining. First, as a literature‐assessing exercise, this paper reviews the literature in industrial relations and comparative political economy (CPE) and finds that (i) the origins and mechanics of inter‐sectoral wage coordination through pattern bargaining have never been laid out clearly; (ii) that the mechanisms of the pattern bargaining thesis have never been tested empirically; and (iii) that the CPE literature reveals an export‐sector bias. Second, as a theory‐testing exercise, hoop tests are performed to verify the pattern bargaining hypothesis. The key finding is that Germany cannot be considered a case of export sector‐driven pattern bargaining, opening a new research agenda for the study of public sector wage setting centred on public sector employment relations, public finance, public administrations and the politics of fiscal policy.

Underemployment and well-being in Europe

This article examines the consequences of underemployment for the well-being of workers in European countries. Previous studies of the impact of underemployment on well-being have tended to focus on a single country or occupational group and have examined single dimensions of underemployment. This article, by contrast, examines experiences across several European economies and explores two different dimensions of underemployment: the gap between hours of work and workers’ desired hours and the underutilisation of their skills and abilities. The article uses data from the 2015 European Working Conditions Survey (EWCS) and explains the consequences of underemployment for well-being by drawing on the international comparative political economy literature, particularly the theorisation and analysis of comparative employment and welfare regimes. We find that while underemployment is generally associated with lower levels of well-being, the nature and strength of relationships between different dimensions of underemployment and well-being vary between employment regimes. The article also highlights the detrimental consequences of ‘overemployment’ for workers’ well-being, and shows that the well-being of women tends to be lower than that of men, regardless of employment regime.

Institutional Dynamics in EU Financial Systems

This paper argues that the traditional dichotomous and static conceptualisations of financial systems fail explain how financial systems have changed as a result of transformative events (the 2007-2008 financial crisis in particular) and trends in recent decades. To shed light on developments in contemporary financial systems in the EU, this paper presents and analyses an index that seeks to capture the extent to which funding structures in non-financial companies subject them to financial pressures. The index reveals that the EU as a whole is distinctly “bank-based”, in the sense of private equity and bank credit matter more for funding of non-financial companies than listed equity or market-based credit. However, the EU and its Member States have become more market-based over the last decade. While this trend generally holds true, there is also increasing divergence between European financial systems. Developments in individual countries appears to be determined by competitive advantage specialization as well as how strong the country was hit by the 2007-2008 financial crisis. The paper thereby contributes to the comparative political economy literature on comparative financial systems, as well as the much neglected questions if, how and why institutional transformation in financial systems occur. It also contributes to the literature on how different national financial systems respond to economic shocks.

The comparative institutional analysis of energy transitions

Abstract The discussion on ‘The comparative institutional analysis of energy transitions’ gives us a state-of-the-art overview of the main theoretical and conceptual developments within the field of political economy. It invites us to broaden our knowledge on the changing realities of different geographical regions in energy transition. In this discussion forum, Finnegan discusses emerging themes in the comparative political economy literature of climate change. He identifies gaps and offers an outline for further research. Allen, Allen, Cumming and Johan take a closer look at the links between different types of capitalism and the natural environment. The authors stress the importance of adopting an institutional perspective to explain differences in environmental outcomes. Wood compares the transitions of energy usage and mixes between liberal and coordinated market economies from a historical perspective. He looks for parallels between the energy transition from coal to oil and gas to the current renewables. Nicklich and Endo answer the question ‘Do globalization and globally perceived occurrences of environmental problems lead to a convergence of energy supply?’. They compare the fields of German and Japanese wind power with a particular focus on Greenpeace after the Fukushima disaster in 2011. Finally, Lim and Tanaka focus on the question ‘When do energy transition policies enjoy broad-based acceptance?’. They conclude that the public acceptance of energy transition varies between Western and non-Western societies.

The politics of mortgage credit expansion in the small coordinated market economies

Recent contributions to the comparative political economy literature claim that liberal market economies are vulnerable to asset booms and busts because of financial deregulation, shrinking welfare states and a political ideology emphasising financial self-sufficiency. This article examines the rapid expansion of mortgage lending in three coordinated market economies (CMEs): Denmark, Sweden and the Netherlands. This expansion is puzzling given that all three countries are CMEs with generous welfare states. Yet the pattern of mortgage lending resembles the Anglo-Saxon or liberal market economies (LMEs) more than other CMEs. The article argues that mortgage bubbles in the small CMEs emerged as the unintended outcome of pairing neoliberal programmes to expand home ownership with collectivist housing institutions. This resulted in supply restrictions and rising property values which saddled households with extraordinarily high mortgage debts. In short, mortgage credit bubbles are not unique to Anglo-liberal welfare states and may have different origins.

The governance of decentralised cooperation in collective training systems: a review and conceptualisation

ABSTRACTCollective training systems are based on the cooperation of multiple public and private stakeholders in order to work. However, such cooperation is not self-sustaining and depends, for instance, on public policies, capable intermediary organisations and shared logics of action. In this conceptual paper, we first review the political economy literature on cooperation in collective skill formation and find that it has given insufficient attention to the systematic comparative analysis of cooperation at the decentralised level as well as the actual social practices of cooperation. The paper then develops a multidisciplinary analytical framework that allows future research to examine decentralised cooperation at the regional, sectoral and occupational levels more systematically. This framework is grounded in a synthesis of three strands of empirical research on vocational education and training, namely the comparative political economy literature on governance, corporatism and coordination, institutional labour and societal economics as well as the educational science literature.

Restarting convergence to reinvigorate output legitimacy: is the EMU Waiting for Godot, again?

ABSTRACTRelying on the insights of the Comparative Political Economy (CPE) literature and, mostly, from the structural institutional features implied by Varieties of Capitalism, this article challenges the idea of restarting convergence to have a smoothly functioning Eurozone. In literature, Europeanization and convergence have commonly been conceived as strictly related concepts. This conception persists once the institutional way forward from the crisis – epitomized by the Five Presidents’ Report – is also considered. A close investigation of the interrelation among Europeanization, convergence and output legitimacy reveals that the emphasis on convergence overshadowed the resilience of the domestic political economies structures. A support indicator for EC/EU membership, based on Eurobarometer data, is therefore built to display the functioning of this relationship. Eventually, the institutional heterogeneity characterizing the domestic political economies is individuated to be an important determinant of the cross-country paths of divergence that became visible even before the eruption of the Euro-crisis.

Competing With the Dragon: Employment Effects of Chinese Trade Competition in 17 Sectors Across 18 OECD Countries

China’s rapid rise on the global economic stage has substantial and unequal employment effects in advanced industrialized democracies given China’s large volume of low-wage labor. Thus far, these effects have not been analyzed in the comparative political economy literature. Building on pooled time-series data, we analyze the effects of Chinese trade competition across 17 sectors in 18 countries. We devote attention to a new channel, increased competition from China in foreign export markets. Our empirical findings reveal overall employment declines in sectors more exposed to Chinese imports. Furthermore, our results suggest that employment effects are not equally shared across skill levels, as the share of hours worked worsens for low-skilled workers.