State-permeated Capitalism in Large Emerging Economies (RIPE Series in Global Political Economy)

315 Pages·2019·1.823 MB·English

by  Andreas Nölke, Tobias ten Brink, Christian May, Simone Claar

“This important book broadens the scope of comparative capitalism in two dimensions. It goes beyond
the limits of the traditional ‘firm-based’ varieties of capitalism approach to analyse a novel model
of capitalism characterized by close state-business relationships. This book also pushes the usual
geographical boundaries of the genre, and focuses on usually neglected though increasingly important
emerging economies (Brazil, India, China, South Africa). A must read for any scholar of comparative
capitalism.”
— Bruno Amable, Professor of Economics at the University of Geneva, Switzerland.
“This is a challenging book. While mainstream economists continue to put all their coins in the
market, four political economists show that fast growing emerging economies adopt a state-permeated
capitalism. I oppose the successful developmental capitalism of China and India to the unsuccessful
economic liberalism of Brazil and South Africa – the four countries studied in this book. State-permeated
and developmental capitalism are the same thing – an economic system where the market coordinates
the competitive sectors, while the state, the non-competitive industries and the macroeconomy. Or, in
the words of the authors, a system where there is an “informal cooperation between individual national
capitalists and representatives of state agencies”.
— Luiz Carlos Bresser-Pereira, Emeritus Professor at the Getulio Vargas
Foundation and former Minister of Finance of Brazil.
“The research team has developed an eclectic and viable framework for a study of emerging market
economies based on, but going beyond, the Comparative Capitalism perspective, by adding in
important historical and comparative dimensions. Their method also transcends the firm-level focus
of the regional varieties of capitalism approach (VOC) and its more macro-foundations framework
will be warmly welcomed by scholars in political economy, development studies, sociology and
international relations. It is a timely and useful intervention in the context of the rapidly changing
balance of economic power in the contemporary world economy through focusing on the key
characteristics of the capitalisms of the larger and varied market economies of the Global South.”
— Vishnu Padayachee, Distinguished Professor and Derek Schrier and
Cecily Cameron Chair in Development Economics, School of Economic
and Business Sciences, University of the Witwatersrand, South Africa.
“This ambitious work takes the BRICS beyond an investment option to a systematic political and
economic examination. The analysis ranges widely across careful country studies while adding in
the international political economy usually lacking in the “varieties of capitalism” framework. Deftly
organized and deeply researched, this book greatly advances theoretical debates on comparative
capitalism in developing countries.”
— Ben Ross Schneider, Ford International Professor of Political
Science and director of the MIT Brazil program.
“Every so often you come across a book which imparts the smack of something original and important
enough to rank as a “must read” for a long time. This is such a book. It stands on the shoulders of three
main fields of knowledge about “the wealth of nations” – varieties of capitalism, comparative politics,
and international political economy; and paves the way for lots of follow ups. Believers in neoliberal
philosophy may not approve of much of it, but they should read it first and then pick a fight.”
— Robert H. Wade, Professor of Global Political Economy,
London School of Economics, UK.

State- permeated Capitalism in
Large Emerging Economies
This book systematically analyzes the economic dynamics of large emerging
economies from an extended Comparative Capitalisms perspective. Coining the
phrase ‘state-p ermeated capitalism’, the authors shift the focus of research from
economic policy alone, towards the real world of corporate and state behavior.
On the basis of four empirical case studies (Brazil, India, China, South Africa),
the main drivers for robust economic growth in these countries from the 2000s
until the 2010s are revealed. These are found, in particular, in mutual institutional
compatibilities of ‘state- permeated capitalism’, in their large domestic markets,
and beneficial global economic constellations. Differences in their institutional
arrangements are explored to explain why China and India have been more
economically successful than Brazil and South Africa. The authors highlight
substantial challenges for the stability of state-p ermeated capitalism and assess the
potential future growth, sustainability and likely pitfalls for these large emerging
economies.
Opening further avenues for empirical and theoretical research, this book
raises questions for the future of the global economic order and should appeal to
academics, graduate students and advanced undergraduates in politics, economics,
economic sociology and development studies. It should also prove a worthwhile
and provocative read for development practitioners and policy-m akers.
Andreas Nölke is Professor in International Political Economy/International
Relations at Goethe University Frankfurt, Germany.
Tobias ten Brink is Professor of Chinese Economy and Society and director of
the China Global Center at Jacobs University, Bremen, Germany.
Christian May is Senior Researcher at the Department of Political Science at
Goethe University, Germany.
Simone Claar co- leads the research group ‘Glocalpower’ at the Department of
Political Science at University of Kassel, Germany.
RIPE Series in Global Political Economy
Series Editors:
James Brassett, University of Warwick, UK,
Susanne Soederberg, Queen’s University, Canada and
Eleni Tsingou, Copenhagen Business School, Denmark
The RIPE Series published by Routledge is an essential forum for cutting-e dge
scholarship in International Political Economy. The series brings together new
and established scholars working in critical, cultural and constructivist political
economy. Books in the RIPE Series typically combine an innovative contribution
to theoretical debates with rigorous empirical analysis.
The RIPE Series seeks to cultivate:
• Field- defining theoretical advances in International Political Economy
• Novel treatments of key issue areas, both historical and contemporary, such
as global finance, trade, and production
• Analyses that explore the political economic dimensions of relatively
neglected topics, such as the environment, gender relations, and migration
• Accessible work that will inspire advanced undergraduates and graduate stu-
dents in International Political Economy.
The RIPE Series in Global Political Economy aims to address the needs of stu-
dents and teachers.
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Making the European Union’s Economic Partnership Agreements
Peg Murray- Evans
Informal Economies and Power
Anna Danielsson
The European Periphery and the Eurozone Crisis
Capitalist Diversity and Europeanisation
Neil Dooley
State- permeated Capitalism in Large Emerging Economies
Andreas Nölke, Tobias ten Brink, Christian May and Simone Claar
Japanese Resistance to American Financial Hegemony
Global versus Domestic Norms
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For more information about this series, please visit: www.routledge.com/RIPE-
Series- in- Global- Political-E conomy/book-s eries/RIPE
State- permeated Capitalism in
Large Emerging Economies
Andreas Nölke, Tobias ten Brink,
Christian May and Simone Claar
First published 2020
by Routledge
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© 2020 Andreas Nölke, Tobias ten Brink, Christian May and Simone Claar
The right of Andreas Nölke, Tobias ten Brink, Christian May and
Simone Claar to be identified as authors of this work has been asserted
by them in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
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British Library Cataloguing-i n- Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging- in- Publication Data
Names: Nölke, Andreas, 1963– author. | Ten Brink, Tobias, author. |
May, Christian, author. | Claar, Simone, author.
Title: State-permeated capitalism in large emerging economies / Andreas
Nölke, Tobias ten Brink, Christian May, Simone Claar.
Description: 1st Edition. | New York : Routledge, 2019. | Series: Ripe
series in global political economy | Includes bibliographical references
and index.
Identifiers: LCCN 2019027061 (print) | LCCN 2019027062 (ebook) |
ISBN 9780367203696 (hardback) | ISBN 9780429261145 (ebook)
Subjects: LCSH: Government corporations—Developing countries. |
Government business enterprises—Developing countries. | Developing
countries—Economic policy. | Industrial policy—Developing countries. |
Developing countries—Commercial policy.
Classification: LCC HD3850 .N65 2019 (print) | LCC HD3850 (ebook) |
DDC 330.12/2091724—dc23
LC record available at https://lccn.loc.gov/2019027061
LC ebook record available at https://lccn.loc.gov/2019027062
ISBN: 978-0-367-20369-6 (hbk)
ISBN: 978-0-429-26114-5 (ebk)
Typeset in Times New Roman
by Apex CoVantage, LLC.
Contents
ContentsContents
List of figures ix
List of tables x
Author biographies xi
Acknowledgements xii
Introduction 1
1 Extending Comparative Capitalisms: a framework for analysis 6
1.1 Capitalist diversity and emerging economies 6
1.1.1 The Comparative Capitalisms research program 7
1.1.2 Recent controversies about Comparative Capitalisms
scholarship 8
1.1.3 The developing field of emerging economies’
comparative institutional analysis 10
1.1.4 Towards an extended Comparative Capitalisms program
for emerging economies 14
1.2 Extending Comparative Capitalisms research: insertion into
the world economy, external pressures and internal capacities 15
1.2.1 Autonomy, dependency and transnational relations 16
1.2.2 Export orientation, domestic markets and the control
over external flows 18
1.2.3 Integration into an unstable world economy 20
1.3 Extending Comparative Capitalisms research: the role of
the state in emerging economies 22
1.3.1 Historical varieties of state activity 22
1.3.2 Industrial strategies of the East Asian developmental state 23
1.3.3 Comparative Capitalisms approaches on the state 24
1.4 Extending Comparative Capitalisms research: coordination of
state- business relations in emerging economies 25
1.4.1 State- business relations in modern capitalism 27
1.4.2 Economic coordination through interpersonal relations 29
viii Contents
1.5 Comparative Capitalisms extended: a framework for the
analysis of economic dynamics in large emerging economies 31
1.5.1 Historical conjuncture 32
1.5.2 Mode of coordination 33
1.5.3 Institutional domains 34
1.5.4 Complementarities and comparative institutional clusters 37
2 China: a success story in economic growth 40
2.1 Contemporary Chinese capitalism: global context and historical
evolution 41
2.2 Coordination in the Chinese political economy 46
2.3 The institutional foundations of Chinese capitalism 51
2.3.1 Corporate governance 51
2.3.2 Finance for investment 57
2.3.3 Industrial relations 59
2.3.4 Education and training 63
2.3.5 Innovation 65
2.3.6 Domestic markets 68
2.4 Comparative advantages, institutional complementarities and
contradictions of Chinese capitalism 71
3 India: enduring state- permeation in spite of economic liberalization 76
3.1 Contemporary Indian capitalism between liberalism
and protectionism 76
3.2 Coordination in the Indian political economy 84
3.2.1 State- business relations 85
3.2.2 Cronyism and reciprocity 88
3.3 The institutional foundations of Indian capitalism 90
3.3.1 Corporate governance 90
3.3.2 Finance for investment 95
3.3.3 Industrial relations 98
3.3.4 Education and training 101
3.3.5 Innovation 105
3.3.6 Domestic markets 108
3.4 Comparative advantages, institutional complementarities and
contradictions of Indian capitalism 110
4 Brazil: on the way to becoming a state- led economy (again)? 115
4.1 Contemporary Brazilian capitalism in global context
and historical evolution 116
4.2 Coordination in the Brazilian political economy 120
4.3 The institutional foundations of Brazilian capitalism 123
4.3.1 Corporate governance 123
4.3.2 Finance for investment 126
Contents ix
4.3.3 Industrial relations 129
4.3.4 Education and training 131
4.3.5 Innovation 134
4.3.6 Domestic markets 137
4.4 Comparative advantages, institutional complementarities and
contradictions of Brazilian capitalism 139
5 South Africa: destabilization through fragmentation? 145
5.1 Contemporary South African capitalism in global
context and historical evolution 146
5.2 Coordination in the South African political economy 151
5.3 The institutional foundations of South African capitalism 155
5.3.1 Corporate governance 155
5.3.2 Finance for investment 159
5.3.3 Industrial relations 162
5.3.4 Education and training 165
5.3.5 Innovation 168
5.3.6 Domestic markets 170
5.4 Comparative advantages, institutional complementarities and
contradictions of South African capitalism 172
6 The contours of state- permeated capitalism 175
6.1 The outcome: growth in global perspective 176
6.2 Identifying the ‘niche’: products for domestic
consumption 177
6.3 Selective insertion into global capitalism 180
6.4 Institutional features of capitalism in large emerging
economies 184
6.4.1 Corporate governance 185
6.4.2 Finance for investment 185
6.4.3 Industrial relations 187
6.4.4 Education and training 189
6.4.5 Innovation 190
6.4.6 State- permeation, not state-d irigisme: the state
and economic coordination 192
6.5 An ideal type of state-p ermeated capitalism 193
6.5.1 A distinct form of capitalism 193
6.5.2 Cohesion, complementarities and institutional
clusters 197
7 Perspectives and problems of state- permeated capitalism 201
7.1 From China to South Africa: country divergences 202
7.2 Contingent global conjunctures: further factors for
SME success 210