Field Of Comparative Political Economy Research Articles

Fundamentos institucionales del crecimiento dirigido por la demanda: una nueva agenda de investigación

This paper presents an introduction to the theory of demand-driven growth models within the field of Comparative Political Economy. First, it offers an analytical scheme with the fundamental characteristics of this new research agenda proposed by Baccaro & Pontusson (2016), such as the typology of models and the main variables that determine them. Secondly, we analyze the existing relationship with demand regimes (wage-led/profit-led) and we propose an approach based on investment behavior as a determinant of growth models. Finally, we apply empirically this approach to five European economies in the period 1995-2018. The main conclusion is that the research agenda of growth models has the potential to renew both Comparative Political Economy and demand regime studies, as well as to provide a deeper interpretation of the recent evolution of European economies.

Baumol’s productive and unproductive entrepreneurship after 25 years

Purpose– The purpose of this paper is to consider the impact of Baumol’s work on entrepreneurship has had on framing the economic development puzzle.Design/methodology/approach– In many ways, the intuition behind the paper is straightforward. Entrepreneurs allocate their time and attention based on the relative payoffs they face in any given social setting. If the institutional environment rewards productive entrepreneurship, then the time and attention of entrepreneurial actors in the economy will be directed toward realizing the gains from trade and the gains from innovation. If, on the other hand, there are greater returns from the allocation of that time and attention toward rent-seeking and even criminal activity, alert individuals will respond to those incentives accordingly. The simplicity of the point being made is part of the brilliance in Baumol’s article. As with other classics in economics, once stated the proposition seems to be so basic it is amazing that others did not put it that way beforehand.Findings– It has been 25 years since Baumol published his paper in theJournal of Political Economy, and as pointed out, it has had a significant scientific impact. But to put things in perspective, James Buchanan’s “An economic theory of clubs” published in 1965 has accumulated roughly 3,500 citations, F.A. Hayek’s “The use of knowledge in society,” published in 1945 has over 12,000, and Ronald Coase’s “The problem of social cost” published in 1960 has over 28,000 citations. So Baumol’s paper would put him in rather elite company. The great strength of the paper is to focus the attention on the relative payoffs of productive, unproductive and destructive entrepreneurial activity. But one of the most significant disappointments of the subsequent history of this paper is a methodological one. The comparative case study approach that Baumol employed did not result in a renewed appreciation for narrative forms of empirical research in political economy. It could legitimately be argued that the sort of questions about the fundamental institutional causes of economic growth and development can only be captured with these more historical methods. Attempts to force fit this analysis into a set of methodological tools which have already revealed themselves to be inadequate to do justice of the role of institutions and disregard the underlying cultural norms and beliefs that characterize human sociability.Originality/value– In this paper, the authors will focus on the contribution made by Baumol’s 1990 paper on the field of comparative political economy, and in particular on the literature on transitional political economy. Section 2 places Baumol’s argument in the context of the failure of neoclassical growth theory. Section 3, the authors argue that although the Baumol framing was an improvement over the old comparative economic systems literature, contemporary transitional political economists have failed to fully realize the implications of the institutional revolution. They have therefore been unable to understand the causes of the heterogeneity of outcomes among those countries that transitioned from communism to the market economy in the 1990s. In Section 4, the authors argue that the political economy of transition will gain from a more sophisticated view of the economic process of the market economy, an appreciation of the entrepreneurial function, and a deeper understanding of the role of formal and informal institutions and their effect on entrepreneurship. The authors will illustrate the point with some examples from the recent history of the Russian political and economic transition. Credible commitment problems and the deficiencies of the institutional reforms of the early 1990s were responsible for the failure of reallocating the entrepreneurial talent that existed in the Soviet economy to productive economic activities. The framework can therefore be used to solve the puzzle of why the announced liberalization of Russian markets and privatization of previously state-owned resources led to economic stagnation, the growth of black markets, and the rise of organized crime, instead of economic development through the operations of smoothly operating markets. Section 5 briefly concludes.

A variety of capitalism … with Chinese characteristics?

The ‘varieties of capitalism’ framework represents an influential methodological innovation in the field of comparative political economy. It seeks to account for enduring spatial variations in national economic performance by recourse to macroinstitutional analysis, drawing ideal-type distinctions between liberal market economies, modeled on USA, and coordinated market economies, modeled on Germany. Moving beyond critiques of varieties literature—for instance, its methodological nationalism; its preoccupation with limited, formal registers of (national) institutional variety; its growing reliance on rational-choice, firm-centric methods; its failure to account for the pronounced interpenetration and mutual dependence of capitalist economies and its tendency to privilege typological elaboration over causal explanation—this article explores the critical (counter?) case of Chinese capitalism. It considers the extent to which the Chinese economy can be meaningfully characterized as capitalist; the character of its state form and recent development path and its position within—or beyond—conventional understandings of capitalist variety.

Institutional stickiness of democracy in post-communist states: Can prevailing culture explain it?

Structural explanation of political development offers a finite set of factors that cause democracy to consolidate or not (Acemoglu and Robinson 2006). This approach is, however, insufficient to explain political development of post-communist countries because it ignores a role of social arrangements in democratic consolidation. The field of comparative political economy is becoming more acceptable to the idea that social institutions have significant impact on political development (Boettke et al. Review of Austrian Economics 18(3–4): 281–304, 2005). Using transitional experience of post-communist countries, I demonstrate that institutional stickiness of democracy depends on a combination of causal factors, including underlying political culture (Boettke et al. American Journal of Sociology and Economics 67(2), 2008; Pejovich The Review of Austrian Economics 16(4):347–361, 2003).

What to Do (and Not Do) with Time-Series Criss-Section Data

We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these “panel-corrected standard errors” perform well. The utility of our approach is demonstrated via a reanalysis of one “social democratic corporatist” model.

Varieties of Capitalism and Capitalism « tout court »

The article reviews the “Varieties of Capitalism” (VoC) approach and its large impact on the field of comparative political economy. It situates the approach within the field, and stresses its specificities. The article argues that VoC's firm-centeredness, parsimony, and reliance on conceptual tools borrowed from economics, fit better than other approaches to a Zeitgeist formed in the context of the demise of Western capitalism's alternatives, and the globalization-induced shift of societies’ center of gravity away from politics towards firms and markets. The article then revisits major debates that have followed the publication of the seminal Hall-Soskice book. The debates have revealed that VoC's greatest strengths, in the end, turn out to be obstacles when it comes to analyzing problems of contemporary capitalism.

Importing Institutions to Enhance Performance: How Foreign Financial Institutions Ameliorate Institutional Deficiencies in China's Political Economy

The field of comparative political economy has shared a common, albeit often implicit, assumption that the key institutions of a well performing domestic political economy (measured on a range of social and economic metrics) are relatively mutually reinforcing and tightly interconnected. Whatever domestic institutional friction occurs in these well performing political economies remains manageable as long as external influences do not intrude to throw the domestic institutional interactions off kilter. This paper calls this conception of the domestic institutional integrity of well performing political economies the holistic view of political economy and argues that the recent experience of China's technological development challenges it by demonstrating that countries may be able import institutional influences from abroad to ameliorate domestic institutional deficiencies. In China, the firms most active in contributing to China's technological development are those which are the farthest removed from China's malfunctioning domestic system of finance. These same firms are actively reliant on the financial institutions of advanced capitalism, which despite the current global financial crisis still better allocate funds than their Chinese counterparts.

The New Comparative Political Economy

With the collapse of communism in the late 1980s the field of comparative political economy has undergone major revision. Socialism is no longer considered the viable alternative to capitalism it once was. We now recognize that the choice is between alternative institutional arrangements of capitalism. Progress in the field of comparative political economy is achieved by examining how different legal, political and social institutions shape economic behavior and impact economic performance. In this paper we survey the new learning in comparative political economy and suggest how this learning should redirect our attention in economic development.

Constitutions, Politics, and Economics: A Review Essay on Persson and Tabellini’s The Economic Effects of Constitutions

In this essay, I review the new book by Torsten Persson and Guido Tabellini, The Economic Effects of Constitutions, which investigates the policy and economic consequences of different forms of government and electoral rules. I also take advantage of this opportunity to discuss the advantages and disadvantages of a number of popular empirical strategies in the newly emerging field of comparative political economy.

Same as it Never Was: Temporality and Typology in the Varieties of Capitalism

Perhaps it is simply a generational artifact, but every 10 years or so certain positions in the field of comparative political economy become canonical. I suspect that The Varieties of Capitalism (VOC) literature will do exactly this in the coming decade, framing more research projects than any other perspective and shaping the way that an entire cohort of graduate students thinks about growth, employment and the critical issues of institutional convergence and divergence in a globalized economy. While the contributions to this literature are many, three works stand out: Kitschelt et al. (2000), Iversen et al. (2000), and Hall and Soskice (2001). The first iteration of this literature by Kitschelt et al., offered us a macrolevel model, where the proximate causes of domestic institutional transformation are exogenous changes in the global economy, and since such changes were seen to be mediated by institutions with increasing returns, divergence among national economic models remain (Kitschelt et al., 2000). In this first version of the Varieties literature, the action lay very much in the macro. Exogenous changes refracted through different sets of institutions to produce particular regime clusterings. The next iteration, Iversen et al. occupy a more meso level of analysis. For these authors, rather than simply intervening with external pressures in a passive way, certain meso-level variables, specifically; unions, employers and central banks, are seen as active agents that respond to external pressures. Thus, by focusing on the interaction of such agents divergent national outcomes are explained. Yet, despite invoking different variables to those employed by Kitschelt et al. they come to the same conclusion — a ‘dual convergence’ thesis where Liberal Market Economies (LMEs) stand apart, and Coordinated Market Economies (CMEs), in general, converge on the German model (Iversen et al., 2000). Hall and Soskice, in turn, provide us with a micro-level analysis of the same phenomena, and in doing so they offer us, in many ways, the most theoretically rich and complex version of the VOC literature. For Hall and Soskice, the locus of action and the mechanism through which outcomes are best explained CEP. ppl_cep_6110008 Swarna/Babitha 1–11

Wage-Setting Measures: A Survey and Assessment

Wage setting has been one of the most heavily studied institutions in the field of comparative political economy over the past two decades, and quantitative measures of wage-setting arrangements have played a major role in this research. Yet the proliferation of such measures in recent years presents researchers with a sizable array from which to choose. In addition, some scholars are rather skeptical about the validity and/or reliability of these measures. This article offers a survey and assessment of fifteen wage-setting measures. It attempts to answer questions about (1) how these indicators differ from one another in conceptualization and measurement strategy; (2) which are the most valid and reliable; (3) the strengths and weaknesses of measures of wage centralization versus those of wage coordination; (4) particular countries or time periods for which there are noteworthy discrepancies in scoring; (5) how sensitive empirical findings are to the choice of wage-setting measure.

What To Do (and Not to Do) with Time-Series Cross-Section Data

We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these “panel-corrected standard errors” perform well. The utility of our approach is demonstrated via a reanalysis of one “social democratic corporatist” model.

Political economy of central banks

Current developments in the field of comparative political economy have emphasised the role and influence of corporatist institutions in the determination of levels of economic and social performance. Without denying the importance of corporatism, the paper argues for the need to acknowledge and examine the impact of other institutions, such as central banks, on economic performance. Given the increasing role of monetary policy in fashioning economic development, central banks have assumed a key economic and political role in policy formation. Against this background, the paper explores the theoretical and empirical implications of central bank independence, and suggests that a greater emphasis should be placed on the nature and type of central bank independence and on the institutional linkages between central banks and other state institutions.

Distributional coalitions and other sources of economic stagnation: on Olson'sRise and Decline of Nations

One of the most important recent contributions to the field of comparative political economy is Mancur Olson'sThe Rise and Decline of Nations. In that work, Olson deduces, from his logic of collective action, a series of implications regarding the impact of social organizations—in particular, “distributional coalitions”—on economic growth that can explain variations in national growth rates across a wide range of time and space. This article considers the assumptions upon which that logic is founded, the plausibility of the several implications drawn from that logic, and the application of the theory to account for differences among five nations in rates of economic growth in the post-World War II era. The analysis suggests that the characteristics of group activity emphasized by Olson represent, at best, only a small— perhaps negligible—part of the explanation of cross-national differences in growth. Instead, it suggests that an important source of the variation among nations in growth rates is the international political and economic system. In particular, the discussion of the German, Japanese, and British cases suggests that stagnation (or growth) is, to a considerable extent, the product of a nation's position in the world economy, the policy responses through which governments seek to perpetuate or improve that position, and the constraints upon (or opportunities for) growth-oriented domestic economic policy posed by that position.