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Path Dependence and Financial Markets: The Economic Geography of the German Model, 1997–2003

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  • Gordon L Clark
  • Dariusz Wójcik

Abstract

The academic community seems divided into two camps: those who emphasise global finance and capital market integration and those who emphasise the economic geography of distinctively local regimes of accumulation. In the first instance, flows of capital and the corrosive forces of global economic competition are assumed to drive institutional convergence. In the second instance, the stability of relationships and inherited institutions presupposes the necessity of path dependence. There is hardly ever dialogue between these camps except for mutual disregard and antagonism. In this paper we seek a rapprochement between these two world-views. In doing so, we focus on recent developments in continental Europe and particularly in Germany. In contrast with Anglo-American expectations, we argue that the German model is hardly a model at all; it has a distinctive economic geography apparent in capital market structure and performance. We also argue, moreover, that the past is not the future: there is evidence of the adoption of financial practices and institutions consistent with the Anglo-American model and inconsistent with the inherited German model. Our goals are twofold. We demonstrate the significance of economic geography for understanding German capital market structure and we seek to explain how path dependence may unravel and the forces driving institutional convergence can emerge within the context of the past. In this respect, our goals are both empirical and theoretical and have implications for conceptualising the status and significance of economic geography.

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  • Gordon L Clark & Dariusz Wójcik, 2005. "Path Dependence and Financial Markets: The Economic Geography of the German Model, 1997–2003," Environment and Planning A, , vol. 37(10), pages 1769-1791, October.
    • Handle: RePEc:sae:envira:v:37:y:2005:i:10:p:1769-1791
    DOI: 10.1068/a3724
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    References listed on IDEAS

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    1. Barca, Fabrizio & Becht, Marco (ed.), 2001. "The Control of Corporate Europe," OUP Catalogue, Oxford University Press, number 9780199247424.
    2. Gordon L. Clark & Dariusz Wójcik, 2005. "Financial Valuation of the German Model: The Negative Relationship Between Ownership Concentration and Stock Market Returns, 1997–2001," Economic Geography, Taylor & Francis Journals, vol. 81(1), pages 11-29, January.
    3. Marco Becht & Colin Mayer, 2002. "Corporate control in Europe," Revue d'économie politique, Dalloz, vol. 112(4), pages 471-498.
    4. Meric S. Gertler, 2001. "Best practice? Geography, learning and the institutional limits to strong convergence," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 5-26, January.
    5. Clark, Gordon, 2000. "Pension Fund Capitalism," OUP Catalogue, Oxford University Press, number 9780199240487.
    6. Clark, Gordon L., 2003. "European Pensions & Global Finance," OUP Catalogue, Oxford University Press, number 9780199253647.
    7. Gordon L. Clark & Paul Tracey, 2004. "Global Competitiveness and Innovation," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-00773-4.
    8. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
    9. Dore, Ronald, 2000. "Stock Market Capitalism: Welfare Capitalism: Japan and Germany versus the Anglo-Saxons," OUP Catalogue, Oxford University Press, number 9780199240616.
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    1. Ahmed A. Sarhan & Basil Al‐Najjar, 2023. "The influence of corporate governance and shareholding structure on corporate social responsibility: The key role of executive compensation," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4532-4556, October.
    2. Choi, Chang Gyu & Lee, Sugie & Kim, Heungsoon & Seong, Eun Yeong, 2019. "Critical junctures and path dependence in urban planning and housing policy: A review of greenbelts and New Towns in Korea’s Seoul metropolitan area," Land Use Policy, Elsevier, vol. 80(C), pages 195-204.

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