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Documents: 'Varieties of Capitalism' and Economic Governance in CE Europe (STACEE)
 

Industrial restructuring in Central Europe
Bob Hancké and Alexandra Janovskaia
NEWGOV Policy Brief no. 24, Spring 2008
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Final Report – Varieties of Capitalism and Economic Governance in Central Europe
Robert Hancké and Lucia Kurekova
This report will analyse the massive political-economic transition in Central Europe since the fall of the Berlin Wall in 1989. In many ways, the period of the mid-2000s when this project was conducted, was a good time to assess the establishment of democratic capitalism in the region. In May 2004, most of the Central European states had introduced democratic political systems and become functioning market economies, and many of them joined the EU as full members. Thus, in formal terms, the first (and often formative) stages of the transition were over, and this report analyses the effects of those first stages on the subsequent political-economic development in the region. Moreover, by the mid-2000s, the broad shape of the new political economies had firmed up, and even if it may be too early to draw hard conclusions about the ultimate outcome, the relative positions of the three key actors in democratic capitalist political economies – the state, (foreign) capital and (organised) labour – seem to be relatively fixed. Understanding how they interact and the broad political-economic consequences of these interaction patterns is the core goal of this report.
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Workshops/Conference STACEE
Robert Hancké
As part of both the dissemination process of NEWGOV/STACEE and an evaluation of the research project on Varieties of Capitalism and Economic Governance in Central Europe, the team organised four workshops between 7 April and 8 May 2008 in different capital cities in Central Europe (Prague, Bratislava, Warsaw, and Budapest). Participants included policy-makers, representatives of interest groups, policy advisors, and researchers. The project team concentrated on the three substantive empirical sections of the draft report, which discuss the types of sectors located in CEE, the type of companies locating in the CEE, and the effect on and policy responses of regional governments. The overall evaluation of the workshops by the team was very positive. The workshops allowed us to test out some ideas about economic governance in the new member-states, and to explore other issues and possible causalities more deeply.
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Varieties of Capitalism and Economic Governance in Central Europe - Draft Final Report
Robert Hancké and Lucia Kurekova
This report will analyse the effects of the massive political-economic change which occurred in Central and Eastern Europe after the fall of the Berlin Wall in 1989. In many ways, the period of the mid-2000s when this project was conducted, is a particularly favourable moment to assess the move toward democratic capitalism in the region. In May 2004, most of the Central European states had installed democratic political systems and become functioning market economies, and many of them joined the EU as full members. Thus, in formal terms, the first formative stages of the transition were over, and this report analyses the effects of those first stages on the subsequent political-economic development in the region. Moreover, by the mid-2000s, the broad shape of the new political economies had firmed up, and even if it is too early to draw hard conclusions about the ultimate outcome, the relative positions of the three players in democratic capitalist political economies – the state, (foreign) capital and (organised) labour – seem to be relatively fixed. Understanding how they interact and the broad political-economic consequences of these interaction patterns is the core goal of this report.
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How Coordinated Capitalism Emerges in Central Europe
Robert Hancké
This paper deals with the emergence of capitalism in Central Europe after the fall of the Berlin Wall in 1989. In the standard story, the successes of economies in CEE after their inevitable transition recession have been due primarily to the low level of regulation, and especially the ability of these economies to compete on wage costs (while offering relatively high skills). This argument then sees the region as increasingly divided into two, possibly three groups. The Baltic states are the first: their performance will be strong, precisely because they have adopted a combination of low wage costs, an extremely low corporate tax rate, and minimal regulation of economic activities. Among the others, performance will vary to the extent that they also have deregulated their economies, and especially their labour markets. This argument applies perhaps even more strongly to ownership structures: mass privatisations, in which the economy is handed to the citizens, who can then sell their shares in companies as they see fit, allowed markets to sort out the structure and organisation of the economy.
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Country Interim Reports – Part One
Alexandra Janovskaia, Robert Hancké
The goal of the paper “National production models and the automotive industry” is to embed the evolution of industrial capabilities in Central Europe in the literature on national production models and varieties of capitalism. The paper starts by presenting the main hypothesis of the research project, namely that the process of industrial upgrading is under way in Central European car manufacturing. In the second step, the paper tries to make sense of the paradox of upgrading and understand its internal logic. To do that the discussion on upgrading is related to the debate on the sustainability of the diversified quality production paradigm, on the one hand, and to the sectoral political economy literature, on the other. The common feature of these two strings of literature that also forms the analytical framework of this paper is their conceptualization of capital-labour compromise. In the third step, main development trends in the Central European car industry are presented. The paper concludes by explaining why automotive industry is an useful case study for understanding the emerging capital-labour compromise in Central Europe. The paper “The political economy of industrial upgrading in the Czech Republic: the case of the automotive industry” looks at the main trends in industrial and human capital development in the Czech car industry. It considers the empirical evidence looking at two distinctive levels: the sectoral and the firm level. It argues that the car manufacturing that is emerging in the country has some characteristics of a ‘high road’ in terms of industrial but also skill and employment upgrading. Using a case study of Skoda Auto, the leading car assembly plant in the country, it elaborates the evolution of production policies and supplier related strategies as well as managerial and employment practices. The deliverable includes a list of interviews by the STACEE project, carried out during December 2006 and June 2007.
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Explanatory note on the Database
Robert Hancké
This database, which covers deliverable D04, is a first complete version of basic economic and production indicators in Central and East European (CEE) economies organised along the lines of the analytical framework that underlies the NEWGOV/STACEE project. The database is organised along the ‘Leading sectors’ framework as originally developed by Greskovits (2005), which combines two dimensions: the intensity in skills and capital (operationalised as heavy v. light industry) and the complexity of the production process (basic v. complex). The structure of the database is relatively simple: per ACC-10 country the database groups industrial sectors in four categories: heavy-basic, heavy-complex, light-basic and light-complex. The database has two main purposes. The first is to systematise the material along these analytical lines, and assess to what extent different patterns of specialisation are emerging among the member-states in CEE. The second purpose of the database, which reflects the next stage of its development, is to relate these patterns of specialisation to different modes of coordination in the different CEE economies. By January 2008, the database will be nearing completion, and the key hypothesis can be tested systematically (possibly through regression or Boolean analysis) and reported in a comparative research paper which will be integrated in the final report.
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List of Planned Interviews
Abigail Innes and Robert Hancké
This project investigates the developing political economy of Central Europe in two key respects: in the first place, it seeks to map the changing role of the state in the economy, and the difficulties of developing any new form of social contract between state and society given the constant pressures for state retrenchment and austerity. The second strand of the research investigates the emergence of economic institutions beyond the state, and seeks to clarify and categorise the emerging models of capitalism. Between April and September 2005, 36 interviews have been planned in Hungary, the Czech Republic and Poland (of which 24 have been carried out in the summer of 2005). The empirical results will feed into the production of the interim country reports (D05).
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Background Document: Post-war European Political Economy and the Role of the State
Abby Innes
The research project investigates emerging models of capitalism in Central Europe. However, given the strong statist traditions of Central European political economy, one of the first issues to clarify is that of how the role of the state in the economy has changed in transition. This background document provides the hinterland to the first strand of the research, namely, that of the continuing capacity of the state to act as a coordinator in the political economy. The main point of this document is to highlight the a-historicity of the economics of post-communist transition insofar as it operates with an entirely negative conception of the state's role in the political economy, and thus ignores the historical fact that an activist state was central to the consolidation of European capitalist democracy in the twentieth century.
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