Varieties of Capitalism and Institutional Complementarities in the Political Economy: An Empirical Analysis

TLDR

Assessing institutional reform impacts requires accounting for interaction effects across political‑economic subspheres. The study statistically examines the core claims of the varieties‑of‑capitalism framework in comparative capitalism. The authors build OECD‑based indices, test labor‑relations and corporate‑governance complementarities on growth, and analyze institutional change in the 1980s and 1990s to evaluate theory predictions.

Abstract

This article provides a statistical analysis of core contentions of the ‘varieties of capitalism’ perspective on comparative capitalism. The authors construct indices to assess whether patterns of co-ordination in the OECD economies conform to the predictions of the theory and compare the correspondence of institutions across subspheres of the political economy. They test whether institutional complementarities occur across these subspheres by estimating the impact of complementarities in labour relations and corporate governance on growth rates. To assess the durability of varieties of capitalism, they report on the extent of institutional change in the 1980s and 1990s. Powerful interaction effects across institutions in the subspheres of the political economy must be considered if assessments of the economic impact of institutional reform in any one sphere are to be accurate.