Enlarging the Varieties of Capitalism: The Emergence of Dependent Market Economies in East Central Europe

Abstract

This article enlarges the existing literature on the varieties of capitalism by identifying a third basic variety that does not resemble the liberal market economy or coordinated market economy types. The dependent market economy (DME) type, as it is named by the authors, is characterized by the importance of foreign capital for the socioeconomic setup and is located in postsocialist Central Europe. Since the collapse of state socialism in the late 1980s, the Czech republic, Hungary, poland, and the slovak republic have introduced a rather successful model of capitalism when compared with other postsocialist states. This article identifies the key elements of the DME model and discusses their interplay. DMEs have comparative advantages in the assembly and production of relatively complex and durable consumer goods. These comparative advantages are based on institutional complementarities between skilled, but cheap, labor; the transfer of technological innovations within transnational enterprises; and the provision of capital via foreign direct investment

Varieties of entrepreneurship: exploring the institutional foundations of different entrepreneurship types through ‘Varieties-of-Capitalism’ arguments

“…Regarding financial markets, foreign direct investment is by far the most important source of capital. Domestic bank lending, the second most important source of finance, is dominated by transnational companies (Hancké et al 2007;Nölke and Vliegenthart 2009).…”

Varieties of Capitalism and institutional comparative advantage: A test and reinterpretation

“…Despite much criticism (Allen, 2004;Blyth, 2003) and alternative theoretical frameworks for comparing institutions (Amable, 2003;Crouch & Streeck, 1997;Whitley, 1999), the Varieties of Capitalism framework continues to have a uniquely powerful hold on the field. Critics have made various important claims about the categorization of countries and how this changes over time: the parsimony of Varieties of Capitalism may overlook substantial institutional variety within the LME and CME categories (Yamamura & Streeck, 2003), emerging and transition economies cannot be understood using this approach (Nölke & Vliegenthart, 2009;Redding & Witt, 2007), and its emphasis on complementarities and path dependence systematically overstates institutional stability and underestimates institutional change (Crouch, 2005). These criticisms notwithstanding, recent evidence supports the notion that advanced industrialized nations do indeed cluster very broadly into LMEs and CMEs (Witt & Redding, 2013).…”

Formation of the theoretical framework for the comparative analysis of post-socialist countries

“…They were, as we know, for instance Hancké, Rhodes and Thatcher (2007), Nölke andVliegenthart (2009), or Heyes, Lewis andClark (2012). These authors did not identify the CEE as "a separate variety of capitalism of equivalent analytical status to the rest; they 'simply wish to indicate by this term their [emerging economies] transitional character and that their respective mixes of modes of coordination (both market and non-market) are embryonic in some cases, more developed in others, but in all cases still in a process of institutional construction.'"…”