WELFARE, WEALTH AND WORK A NEW GROWTH PATH FOR EUROPE A European research consortium is working on the analytical foundations for a new socio-ecological growth model Varieties of Capitalism and Welfare States Policy and Performance Markus Ahlborn (Ms Uni Göttingen; Intern IfW), Rainer Schweickert (IfW) Presented at MET Seminar @ Aston 25 th February 2013
Background of WWWforEurope project Research questions for comparative country study: Which variety of capitalism (VoC) evolved in CEECs? How do this systems correspond to worlds of welfare states (WWS)? Do capitalist systems in CEECs converge towards standard prototypes in VoC or WWS literature? Lessons from transition success or failure? Literature on CEECs has clear results for Estonia (LME) and Slovenia (CME) Interesting cases of Slovakia (from late comer to star performer?) and Hungary (from pole position to multiple-crises country?) Design of comparative country study: Macro cluster analysis of government policy and economic performance Slovak study focuses on macro context and quantitative analysis Hungarian study focuses on welfare system and qualitative analysis 2 Area 1 Workshop, January 25th, 2013
Concept for Cluster Analysis Traditional VoC analysis based on micro variables: Inter-firm relations, corporate governance, vocational training and education, industrial relations Neglects role of government (welfare state, regulation [>=WWS]) and macro economic target system (income, equality, stability) Micro and macro aspects of mode of governance represented by government actitiv (overall, transfer, regulation = Economic Freedom of the World [Frazer Institute]) Target system represented by innovation (World Bank Knowledge Assessment), income distribution (Gini), public debt (%of GDP) Macro -Cluster analysis six indicators on policy and performance History of phases of transition (1995=initial, 00-03, 04-06, 07-09=start) analysis of principal components 3 Area 1 Workshop, January 25th, 2013
Cluster Analysis 2007-09 Nordic Continental MME CEEC CME CEEC LME Liberal 4 Area 1 Workshop, January 25th, 2013
07-09 04-06 00-03 95 Australia Liberal Liberal Liberal Liberal Canada Liberal Liberal Liberal Liberal Ireland Liberal Liberal Continental Liberal Results of Cluster Analysis New Zealand Liberal Liberal Liberal Liberal Switzerland Liberal Liberal Liberal Liberal UK Liberal Liberal Liberal Liberal USA Liberal Liberal Liberal Liberal Japan Outlier 1 Outlier 1 Outlier 1 Outlier Austria Continental Conti/MEEC Continental Conti/Nordic Belgium Continental Conti/MEEC Continental MME 2 France Continental Conti/MEEC Continental Conti/Nordic Germany Continental Conti/MEEC Continental Conti/Nordic Netherlands Continental Nordic Continental Conti/Nordic Denmark Nordic Nordic Nordic Conti/Nordic Finland Nordic Nordic Nordic Conti/Nordic Norway Nordic Conti/MEEC Nordic Conti/Nordic Sweden Nordic Nordic Nordic Conti/Nordic Czech Republic CEEC CME Conti/MEEC CEEC CME CEEC CME Slovenia CEEC CME Conti/MEEC CEEC CME CEEC CME Croatia CEEC CME Conti/MEEC MEEC LME Hungary CEEC CME Conti/MEEC Nordic Conti/Nordic Poland CEEC CME MME CEEC CME CEEC CME Slovakia CEEC LME CEEC LME CEEC CME CEEC CME Estonia CEEC LME CEEC LME Baltics/ESP/PT CEEC LME Latvia CEEC LME CEEC LME Baltics/ESP/PT CEEC LME Lithuania CEEC LME CEEC LME Baltics/ESP/PT CEEC LME Romania CEEC LME CEEC LME CEEC LME CEEC LME Bulgaria CEEC LME CEEC LME CEEC LME MME Greece MME MME MME MME Italy MME MME MME MME2 Portugal MME MME Baltics/ESP/PT MME Spain MEEC CME MME Baltics/ESP/PT MME Turkey 5 Area 1 Workshop, January Outlier 25th, 2 2013 Outlier 2 Outlier 2
Results of Cluster Analysis Further Clusters: 2007 2009 CEEC LME + Turkey Continental + Nordic MME + CEEC CME Liberal + Japan Conti/Nordic + MME/CEEC CME Liberal + CEEC LME Continental/Nordic/ MME/CEEC CME Last 2 Clusters CEEC LME/Liberal Further Clusters: 2004-2006 Conti/CEEC CME + Nordic CEEC LME + Turkey MME + Japan MME + CEEC LME Liberal + MME/CEEC LME Last 2 Clusters Conti/CEEC CME/Nordic EEC2/MME/Liberal Further Clusters: 2000-2003 Continental + Nordic MME + Japan CEEC CME + CEEC LME Baltics/ESP/PT + Turkey Baltics/ESP/PT + CEEC LME/CME Baltics/ESP/PT/CEEC + MME Continental/Nordic + CEEC/MME Last 2 Clusters Continental/Nordic/ Liberal CEEC/MME Further Clusters: 1995 Conti/Nordic + Japan MME2 + MME Continental /Nordic + CEEC CME Liberal + MME Liberal/MME + CEEC LME Continental/Nordic/ CEEC CME Last 2 Clusters Liberal/MME/CEEC LME 6 Area 1 Workshop, January 25th, 2013
Results of Cluster Analysis Clusteranalysis 2007-2009: Cluster-Averages Liberal Nordic Continental MME Innovation Equality of Distribution Fiscal Debt Regulation Government Size Transfers/ Subsidies CEEC LME CEEC CME -1.5-1 -0.5 0 0.5 1 1.5 2 7 Area 1 Workshop, January 25th, 2013
Results of Cluster Analysis Clusteranalysis: Values of CEEC Slovenia Czech Rep Hungary Poland Croatia Estonia Lithuania Latvia Innovation Equality of Distribution Fiscal Debt Regulation Government Size Transfers/ Subsidies Slovakia Romania Bulgaria -2-1.5-1 -0.5 0 0.5 1 1.5 2 2.5 3 8 Area 1 Workshop, January 25th, 2013
Results of Principal Component Analysis PC Share of Explained Variance 1 0.37 2 0.63 3 0.81 4 0.91 5 0.96 6 1 PC1 PC2 PC3 Transfers/Subsidies -0.80-0.43 0.07 Government Size -0.82-0.17 0.28 Regulation -0.03-0.93-0.21 Fiscal Debt -0.29-0.004-0.93 Equality of Income Distribution -0.71 0.19 0.18 Innovation -0.59 0.65-0.24 9 Area 1 Workshop, January 25th, 2013
PC2: Low Regulation / High Innovation Results of Principal Component Analysis 2.5 2 1.5 CAN CH NZL AUS 1 DK UK USA 0.5 IE Continental 0-0.5-1 -1.5 SWE NL AT FL BE CZ GER FR NW HUN SVN CRO IT SVK ESP LAT PL EST BUL LIT ROM Nordic CEEC CME MME CEEC LME Liberal -2 GRE PT -2.5-3 -2-1 0 1 2 3 PC 1: Low Spending / Low Equality 10 Area 1 Workshop, January 25th, 2013
Results and Questions Allowing for heterogeneity of clusters, CEECs still form separate clusters. The two CEEC-clusters fit to the overall distinction between LME and CME Three poles of attraction : Nordic, Liberal, MME How to consider informal government activity, i.e. state or business capture? Quo vadis CEECs? Convergence or new model? Development problems vs. inconsistencies? 11 Area 1 Workshop, January 25th, 2013
WELFARE, WEALTH AND WORK A NEW GROWTH PATH FOR EUROPE A European research consortium is working on the analytical foundations for a new socio-ecological growth model Varieties of Capitalism and Welfare States Policy and Performance Markus Ahlborn (Ms Uni Göttingen; Intern IfW), Rainer Schweickert (IfW) Presented at MET Seminar @ Aston 25 th February 2013
Results of Cluster Analysis Liberal CEEC LME MME 1 CEEC 95 MME 2 Nordic/CEEC Continental 1 2 Dendogram 2: Panel Approach 13 Area 1 Workshop, January 25th, 2013
Results of Cluster Analysis Panel-Approach: Cluster-Averages Continental Nordic/CEEC MME 2 CEEC95 2 CEEC95 1 MME 1 Innovation Equality of Distribution Fiscal Debt Regulation Government Size Transfers/ Subsidies CEEC LME Liberal -3-2 -1 0 1 2 3 14 Area 1 Workshop, January 25th, 2013