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The field of comparative political economy has been interested for many years in understanding how differences in the organization of national political economies condition aggregate economic performance. Behind such inquiries lies the intuition that more than one economic model can deliver economic success. But what are the central features that distinguish the operation of one political economy from another, and how should countries be categorized along these dimensions of difference?
For the developed economies, the answers usually given to these questions in each era have corresponded to the principal challenges confronting those economies. During the 1960s, when economic modernization was high on the agenda, efforts to identify distinctive types of capitalism emphasized variation in the character of state intervention into the economy.1 When inflation rose to new heights during the 1970s, the emphasis shifted to the contributions of neo-corporatism to wage and price moderation.2 In recent years, scholars have been seeking approaches salient to an era of globalization.3
The object of this analysis is to subject one of the most prominent of these new approaches to a set of empirical tests. We focus on the 'varieties of capitalism' perspective introduced in a volume edited by Hall and Soskice and now widely referenced in the literature.4 Applying the new economics of organization to the macroeconomy, this approach distinguishes between capitalist economies by reference to the ways firms and other actors co-ordinate their endeavours. It suggests that nations cluster into identifiable groups based on the extent to which firms rely on market or strategic modes of co-ordination. From these formulations follow many important contentions about variations in economic performance, comparative institutional advantage, national responses to globalization and comparative public policy.
The varieties-of-capitalism approach is grounded in a rich set of comparative case-studies, but efforts to assess it using statistical analysis on larger numbers of cases are still at an early stage.5 Those efforts have been limited partly because we do not yet have good measures for the character of co-ordination, the concept at the heart of the analysis. As a result, the position of many countries within those categories remains ambiguous. We seek indicators for co-ordination that will allow us to test some basic tenets of this approach and that others...