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Country clustering in comparative political economy

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  • Ahlquist, John S.
  • Breunig, Christian

Abstract

In the comparative political economy of rich democracies there is a long tradition of classifying countries into one of a small number of categories based on their economic institutions and policies. The most recent of these is the Varieties of Capitalism project, which posits two major clusters of nations: coordinated and liberal market economies. This classification has generated controversy. We leverage recent advances in mixture model-based clustering to see what the data say on the matter. We find that there is considerable uncertainty around the number of clusters and, barring a few cases, which country should be placed in which cluster. Moreover, when viewed over time, both the number of clusters and country membership change considerably. As a result, arguments about who has the right typology are misplaced. We urge caution in using these country classifications in structuring qualitative inquiry and discourage their usage as indicator variables in quantitative analysis, especially in the context of time-series cross-section data. We argue that the real value of both Esping-Andersen's work and the Varieties of Capitalism project consists of their theoretical contributions and heuristic classification of ideal types.

Suggested Citation

  • Ahlquist, John S. & Breunig, Christian, 2009. "Country clustering in comparative political economy," MPIfG Discussion Paper 09/5, Max Planck Institute for the Study of Societies.
  • Handle: RePEc:zbw:mpifgd:095
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    1. Lane Kenworthy & Alexander Hicks, 2002. "Varieties of Welfare Capitalism," LIS Working papers 316, LIS Cross-National Data Center in Luxembourg.
    2. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    3. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    4. Taylor, Mark Zachary, 2004. "Empirical Evidence Against Varieties of Capitalism's Theory of Technological Innovation," International Organization, Cambridge University Press, vol. 58(3), pages 601-631, July.
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    Cited by:

    1. Markus Ahlborn & Joachim Ahrens & Rainer Schweickert, 2016. "Large-Scale Transition of Economic Systems – Do CEECs Converge Toward Western Prototypes?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(3), pages 430-454, September.
    2. PREDA Bianca & SERBAN Mariuta & STEFAN Raluca-Mariana, 2013. "Hierarchical Clustering Algorithms And Data Security In Financial Management," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 65(6), pages 147-158.
    3. Fritz W. Scharpf, 2009. "The Asymmetry of European Integration - or why the EU cannot be a Social Market Economy," KFG Working Papers p0006, Free University Berlin.
    4. Scharpf, Fritz W., 2009. "The double asymmetry of European integration: Or: why the EU cannot be a social market economy," MPIfG Working Paper 09/12, Max Planck Institute for the Study of Societies.
    5. Scharpf, Fritz W., 2010. "Community and autonomy: Institutions, policies and legitimacy in multilevel Europe," Schriften aus dem Max-Planck-Institut für Gesellschaftsforschung Köln, Max Planck Institute for the Study of Societies, volume 68, number 68.
    6. Chávez Bustamante, Felipe O. G. & Mondaca-Marino, Cristian & Rojas-Mora, Julio, 2018. "Dinámicas laborales regionales y su relevancia en el agregado nacional: Una aplicación de Clusterización de Series Temporales para Chile/Regional Labor Dynamics and their Relevance in the National Agg," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 36, pages 961-978, Septiembr.

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