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1. Not All Firms Are Created Equal SMEs and Vocational Training in the UK, Italy, and Germany

Author:
Chiara Benassi, Niccolò Durazzi, and Johann Fortwengel
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Why do skill formation systems put SMEs at greater disadvantage in some countries than others vis-à-vis large employers? By comparing vocational education and training (VET) institutions and their differential effect on firms of different sizes across three countries (UK, Italy, and Germany), we show that the design of VET has profound implications for shap- ing the ability of SMEs to use institutions as resources. In particular, quasi-market institu- tions in the UK amplify SMEs’ disadvantage, while non-market coordinating institutions in Italy and Germany narrow the gap between SMEs and large employers. By unpacking the comparative disadvantage of SMEs, we offer important nuances to the argument that institutions help firms coordinate their business activities in different varieties of capitalism.
Topic:
Political Economy, Capitalism, and Vocational Training
Political Geography:
United Kingdom, Europe, Germany, and Italy

2. Has the “External Constraint” Contributed to Italy’s Stagnation? A Critical Event Analysis

Author:
Lucio Baccaro and Massimo D'Antoni
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Has the strategy of the “external constraint” (voluntarily limiting the country’s policy-mak- ing discretion by tying it to the European mast) contributed to Italy’s stagnation over the past twenty-five years? The existing literature is divided on this question. The dominant in- terpretation is that Italy’s stagnation is due to insufficient liberalization, and that the exter- nal constraint has had no negative and even a positive influence. An alternative interpreta- tion emphasizes the demand compression and supply-side effects of the external constraint. Based on three case studies of public debt management, privatization, and labor market policy, this paper reconstructs the process by which the external constraint has affected out- comes. It argues that it has had a negative impact, but more as a necessary condition than as a sufficient one. In other words, it would probably have been possible to manage the exter- nal constraint differently to produce better outcomes, but without the external constraint, the stagnation would likely have been less deep.
Topic:
Political Economy, European Union, Economic Growth, and Liberalism
Political Geography:
Europe, Italy, and Southern Europe

3. The Political Economy of Industrial Policy in the European Union.

Author:
Fabio Bulfone
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The Great Recession renewed calls for a return of state activism in support of the European economy. The widespread nationalization of ailing companies and the growing activism of national development banks led many to celebrate the reappearance of industrial policy. By reviewing the evolution of the goals, protagonists, and policy instru- ments of industrial policy since the postwar period, this paper shows how state intervention never ceased to be a crucial engine of growth across the EU. It argues that the decline of the Fordist wage-led production regime marked a turning point in the political economy of industrial policy with the transition from inward-looking to open-market forms of state in- tervention. The main features of open-market industrial policy are then discussed referring to the cases of the internationalization of national champions in public service sectors and the proliferation across the EU of industrial clusters. Finally, the paper reviews postcrisis in- stances of state intervention and highlights how, rather than breaking with past tendencies, the Great Recession further accelerated the shift towards open-market industrial policy.
Topic:
Development, Economics, Political Economy, Regional Cooperation, European Union, Integration, and Industry
Political Geography:
Europe

4. The German Undervaluation Regime under Bretton Woods How Germany Became the Nightmare of the World Economy

Author:
Martin Höpner
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Germany is an undervaluation regime, a regime that steers economic behavior towards deterioration of the real exchange rate and thereby towards export surpluses. This regime has brought the eurozone to the brink of collapse. But it is much older than the euro. It was established during the Bretton Woods years and has survived all subsequent European currency orders. The regime operates in two steps: competitive disinflation against trading partners; and resistance against correcting revaluations. The Bretton Woods order provid- ed perfect conditions for the establishment and perpetuation of the regime: it was flexible enough for sufficient macroeconomic policy autonomy to bring about differential inflation rates, and sticky enough to delay and minimize revaluations.
Topic:
Political Economy, Regional Cooperation, Capitalism, and Inflation
Political Geography:
Europe, Germany, and Central Europe

5. Changing Perspectives in Political Economy

Author:
Renate Mayntz
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The history of a research field called political economy dates back to the eighteenth century, giving rise to a variety of disciplinary approaches, and experienced a renaissance as a mul- tidisciplinary field after the Second World War, combining economic, political science, and sociological approaches. The divergence between economic globalization and the nation- ally restricted scope of economic policy directs interest to the relationship between politics and the economy. A quantitative analysis of the articles published in two dedicated political economy journals shows major trends of the developing research field. The relationship between politics and economy is interpreted rather widely, and research is largely focused on Western capitalist nations. In conclusion, two avenues for further research in the field are briefly discussed.
Topic:
Political Economy, Regional Cooperation, Capitalism, and Global Political Economy
Political Geography:
Europe, Germany, Central Europe, and Western Europe

6. Der kollektive "Buddenbrooks-Effekt"

Author:
Christoph Deutschmann
Publication Date:
05-2008
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper views the current financial crisis in light of long-term structural socioeconomic changes in advanced industrial societies. In Western Europe, the United States and Japan, the period of economic prosperity after the Second World War led to a remarkable accumulation of wealth among the middle class that had surprisingly little effect on the substantial fortunes of the wealthiest upper class. This affluence gave rise to pension and investment funds emerging as a new type of collective actor in global financial markets, while the economy was marked by increasing instability, declining growth rates and financial crises. The paper tries to clarify the interconnections between these phenomena using the framework of a multilevel analysis that culminates in a model I call the “collective Buddenbrooks effect” (“Buddenbrooks” being a family saga by Thomas Mann): Structural upward social mobility will lead to an increasing imbalance in capital markets, since the volume of financial assets looking for profitable investment will rise as the social reservoir of solvent debtors and promising investment opportunities decline. Advanced industrial economies are thus characterized by a bias towards capital export and excessive financial liquidity, with the well-known consequences of low economic growth rates and the danger of speculative bubbles on global capital markets. The middle class that originally benefitted from postwar prosperity is negatively affected, too. I argue that the current crisis cannot be understood sufficiently without taking this structural socioeconomic background into account.
Topic:
Economics, International Political Economy, International Trade and Finance, Political Economy, and Political Theory
Political Geography:
United States, Japan, and Europe

7. Wie viel Erbschaftssteuern?

Author:
Jens Beckert
Publication Date:
10-2007
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Germany introduced a federal inheritance tax in 1906. Historically, the share of its revenues compared to total tax revenues has always been low. Currently, less than one percent of total revenues are generated from inheritance tax. In countries like France, the United States and England, inheritance tax revenues are higher. With its ruling in 2007 the German supreme court has forced parliament to revise regulations on inheritance taxation. Various proposals are currently the subject of intense political debate. I take this discussion as the starting point for an investigation of fundamental arguments for and against estate taxation. Proposing that inheritances be taxed as a further type of income within the context of the income tax, I examine the impact of inheritance taxes on economic performance, family solidarity and the political community as well as the relationship between inheritance taxation and important value principles of individual freedom, social justice and equality of opportunity.
Topic:
Government and Political Economy
Political Geography:
Europe, France, and Germany

8. Corporate Values in Local Contexts: Work Systems and Workers' Welfare in Western and Eastern Europe

Author:
Marta Kahancová
Publication Date:
02-2007
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Increased international competition poses challenges to companies' organizational practices, including human resource management. For multinational companies operating simultaneously in diverse local conditions this challenge implies a decision between either opting for universal best practices or adapting their employment strategy to differing local standards in host countries. What influences whether work practices are similar or differ when deployed in differing conditions? Why are some companies committed to their workers' welfare while others are not? This paper attempts to answer these questions by studying work practices, namely work systems and fringe benefits, in a Dutch multinational company (MNC) and its manufacturing subsidiaries in Western and Eastern Europe. Evidence suggests that the observed patterns are best explained by the interplay of three factors. Rational economic interest, company values, and local institutions yield subsidiary work practices that are embedded in, but not adapted to, local standards. The MNC's value system accounts for the fact that generous benefits are offered without a direct relation to the company's profit maximization and without external societal and institutional pressures to provide such benefits.
Topic:
Economics, Government, and Political Economy
Political Geography:
Europe

9. Trade Policy Lobbying in the European Union: Who Captures Whom?

Author:
Cornelia Woll
Publication Date:
10-2006
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
What role do firms play in the making of EU trade policy? This article surveys the policy domain and lays out the instruments firms can employ to influence decisions on trade. It underlines that European trade policy is characterized by a high degree of institutional complexity, which firms have to manage in order to be successful. In particular, the European Commission works intensively to solicit business input in order to gain bargaining leverage vis-á-vis third countries and the EU member states. This reverse lobbying creates a two-channel logic of trade policy lobbying in the EU. Corporate actors have a very good chance of working closely with the European Commission if they can propose pan-European trade policy solutions. This can be either trade liberalization or EU-wide regulatory restrictions on trade. Demands for traditional protectionist measures, especially those that reveal national interest divergences, are difficult to defend at the supranational level. Protectionist lobbying therefore goes through the national route, with corporate actors working to block liberalization by affecting the consensus in the Council of Ministers. The chapter illustrates this two-channel logic by studying business—government interactions in agricultural trade, textiles and clothing, financial services, and telecommunication services.
Topic:
Economics, Government, and Political Economy
Political Geography:
Europe

10. Lobbying Systems in the European Union: A Quantitative Study

Author:
Andreas Broscheid and David Coen
Publication Date:
05-2006
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper presents and tests a micro-theoretical model of EU lobbying across policy domains. In particular, we focus on two questions: first, we want to know why the number of interest representatives differs across policy domains and, second, we investigate why we find institutionalized fora for interest representation in some policy domains but not in others. Our argument focuses on the Commission's need for expert information and its costs of managing contacts with a large number of interest representatives. Both factors provide incentives for the Commission to create restricted-access fora as the number of interest representatives increases. Using cross-sectional data on interest representation in a wide range of policy domains, we find some support for our hypotheses.
Topic:
Development, Government, and Political Economy
Political Geography:
Europe

11. Collective Bargaining Practices in Eastern Europe: Case Study Evidence from Romania

Author:
Aurora Trif
Publication Date:
10-2005
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
There are several studies on recent developments in collective bargaining in Eastern Europe, but there is still a debate about the extent to which collective bargaining practices resemble those in continental Western Europe. This paper aims to contribute to this debate, by examining primary data on collective bargaining practices in Romania using an actor-centred institutionalist approach. It focuses on collective bargaining in four large chemical companies. Comparisons are made to other countries in order to highlight the developments in Romanian cases. Unexpectedly, the study's findings point to an increase in state intervention in establishing the terms and conditions of employment after 1989, due to the state’s new roles during the transformation process that affected job security. The study suggests a considerable increase in the influence of top managers in determining pay and working conditions, while trade unions retained the considerable influence over social benefits in large companies. The findings show continuance of certain pre-1989 practices, such as a persistence of high state intervention and a limited independence of the trade unions from the management. This paper contributes to a deeper understanding of institutional changes in the context of a shift from a centrally planned economy to a market-based economy.
Topic:
Economics, Markets, and Political Economy
Political Geography:
Europe, Eastern Europe, and Romania

12. No Exit from the Joint Decision Trap? Can German Federalism Reform Itself?

Author:
Fritz W. Scharpf
Publication Date:
09-2005
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The unique institutions that make up Germany's "unitary federal state," long considered part of the country's post-war success story, are now generally perceived as a "joint-decision trap" impeding effective policy responses to new economic and demographic challenges at both levels of government. Nevertheless, a high-powered bicameral Commission set up in the fall of 2003 failed to reach agreement on constitutional reforms. The paper analyzes the misguided procedural and substantive choices that led to this failure, and it discusses the possibility of asymmetric constitutional solutions that might enhance the capacity for autonomous action at both levels.
Topic:
Economics, Government, and Political Economy
Political Geography:
Europe and Germany

13. Strategic Unionism in Eastern Europe: The Case of Romania

Author:
Aurora Trif and Karl Koch
Publication Date:
07-2005
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The shift from centrally planned economies to market-oriented economic models presented trade unions in Eastern European countries with crucial choices in relation to their roles as industrial relations actors. This paper investigates whether (and why) unions have chosen adversarial and/or co-operative relationships with the employers, based on a strategic choice conceptual framework. It focuses on trade union relations with employers at national, sectoral and company levels in Romania. It is argued that adversarial and co-operative relations between unions and employers developed simultaneously after 1989, but co-operation was the prevalent approach. Evidence suggests that ideological legacies, former institutions and the initial decision to participate in the macroeconomic transformation played a key role in shaping unions' choices towards co-operation with employers. Although this paper confirms the widespread view that labour is rather weak in Eastern Europe, it indicates that unions can be proactive and shape their own future if they have the capacity to mobilise their members and union leaders have the skills and willingness to use both conflict and co-operation in their relationships with employers. The comparison of evidence from Romania with other Eastern European countries reflects on the stage of Romanian transformation and also illustrates a wider possible applicability of the theoretical framework employed for the study.
Topic:
Economics, Industrial Policy, and Political Economy
Political Geography:
Europe, Eastern Europe, and Romania

14. Economic Reform and the Political Economy of the German Welfare State

Author:
Wolfgang Streeck and Christine Trampusch
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The key to economic reform in Germany is a significant reduction in the high costs of labour.The main factor driving up German labour costs is the funding of the extensive German welfare state through social insurance contributions that in effect operate like payroll taxes on employment. The paper discusses the political causes of the rise in non-wage labour costs since the 1970s. It then proceeds to show how a variety of opportunities for political blockade in the German political economy dim the prospect for effective reform in the foreseeable future.
Topic:
Economics, Industrial Policy, and Political Economy
Political Geography:
Europe and Germany

15. Business Interest Representation and European Commission Fora: A Game Theoretic Investigation

Author:
Andreas Broscheid and David Coen
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The relationship between business and the EU institutions has evolved from its corporatist origins into a complex elite pluralist arrangement centered around industrial fora and policy committees. We view the growth of forum politics as the direct consequence of the unprecedented boom in economic and public interest lobbying in the early 1990s: While the increase in European interest representation provided greater legitimacy for the European integration program, it put a strain on the existing open pluralist European business-government relationship. One of the European Commission's (EC) informal solutions was to create restricted-entry policy fora and select committees, which it hoped would provide fast and reliable decision-making. Employing a formal model of industrial fora and committees, we specify the mechanisms that we believe caused the establishment of the current elite pluralist system of interest representation in the EU. We argue that in the process of establishing selective-entry fora for interest representation, the European Commission acted not only as policy entrepreneur, but also as a political entrepreneur, fostering collective action.
Topic:
Government, International Trade and Finance, and Political Economy
Political Geography:
Europe

16. The European Social Model: Coping with the Challenges of Diversity

Author:
Fritz W. Scharpf
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
European integration has created a constitutional asymmetry between policies promoting market efficiencies and policies promoting social protection and equality. National welfare states are legally and economically constrained by European rules of economic integration, liberalization, and competition law, whereas efforts to adopt European social policies are politically impeded by the diversity of national welfare states, differing not only in levels of economic development and hence in their ability to pay for social transfers and services but, even more significantly, in their normative aspirations and institutional structures. In response, the "Open Method of Coordination" is now applied being in the social-policy field. It leaves effective policy choices at the national level, but tries to improve these through promoting common objectives and common indicators and through comparative evaluations of national policy performance. These efforts are useful but cannot overcome the constitutional asymmetry. Hence there is reason to search for solutions which must have the character of European law in order to establish constitutional parity with the rules of European economic integration, but which also must be sufficiently differentiated to accommodate the existing diversity of national welfare regimes. The article discusses two such options, "Closer Cooperation" and a combination of differentiated "framework directives" with the Open Method of Coordination.
Topic:
Civil Society, Economics, and Political Economy
Political Geography:
Europe

17. Minority Governments and Party Politics: The Political and Institutional Background to the "Danish Miracle"

Author:
Christoffer Green-Pedersen
Publication Date:
01-2001
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The performance of the Danish economy in the 1990s has been successful to the extent that scholars are talking about a "Danish miracle". The importance of government policies to Denmark's economic success is taken as a point of departure in investigating why Danish governments have been able to govern the economy successfully in the 1990s. The paper argues that two factors have been important. First, the functioning of Danish parliamentarianism has been reshaped to strengthen the bargaining position of minority governments, which became the rule in Danish politics after the landslide election in 1973. Today, Danish minority governments can enter agreements with changing coalitions in the Danish parliament. The paper thus challenges the conventional wisdom about minority governments as weak in terms of governing capacity. Second, the changed socioeconomic strategy of the Social Democrats after returning to power in 1993 has been important because it has created a political consensus around a number of controversial reforms.
Topic:
Economics, Government, Political Economy, and Politics
Political Geography:
Europe and Denmark

18. Employment and the Welfare State: A Continental Dilemma

Author:
Fritz W. Scharpf
Publication Date:
07-1997
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Estimates of the comparative health of the North American and Western European economies and societies have had their fashion cycles - from Servain-Schreiber's warnings that Europe was falling behind, rather than catching up with, American technological leadership in the 1960s, to European exasperation over American trade and budget deficits in the 1970s, to anxieties over Eurosclerosis in the early 1980s and over the American loss of international competitiveness in the late 1980s. Presently, by all accounts, the sick man is again Europe, with higher unemployment and much lower rates of job creation over the last two decades or so. The main problem is a rising level of long-term unemployment that mainly affects unskilled workers and, in most countries, young job seekers with low levels of schooling.
Topic:
International Cooperation and Political Economy
Political Geography:
America, Europe, North America, and Western Europe