Changing varieties of capitalism and revealed comparative advantages from 1990 to 2005: a test of the Hall and Soskice claims

Abstract

In this paper, the varieties of capitalism (VoC) approach by Hall and Soskice (2001) is tested with longitudinal data and with measures covering all four institutional spheres differentiated in this approach. Among 26 OECD countries, we find various institutional configurations including a group of liberal market economies (LMEs) and of coordinated market economies (CMEs). However, these configurations are not stable. From 1990 to 2005, Denmark, Finland, the Netherlands and Sweden all moved from the CME model closer to the LME model. Capitalist variety is strongly linked to sector-specific comparative advantages, as predicted by Hall and Soskice—CMEs export more heavily in medium high-tech industries, and LMEs in high-tech industries. In addition, the economies that have moved towards the LME model have also specialized more strongly in high-tech over time. In sum, we find mixed evidence for the claims made by Hall and Soskice. Comparative advantages develop as predicted in the VoC approach, but the types of capitalism are more varied and more dynamic than the VoC approach suggests.