From Cocktail to Dependence: Revisiting the Foundations of Dependent Market Economies

Abstract

Recent contributions to the comparative political economy of East European capitalisms have found that a distinctive variety of capitalism emerged in some new EU member states. The new variety has been dubbed "dependent market economy" (DME). This paper makes several contributions to this literature. First, it marshals evidence to show that this institutional variety now includes the political economy of Romania, a case previously excluded from it. More importantly, this analysis also finds that earlier scholarship on dependent capitalism has failed to capture crucial mechanisms of dependence created by transnationalized finance. Third, the paper suggests that some of the arguments made in the existing scholarship on the interests of foreign capital with regard to domestic innovation and labor training need to be qualified. Finally, by showing reflexivity towards select critiques of the dependent market economy framework, the analysis proposes by this paper is a self-limited attempt to bridge the differences between the varieties of capitalism and Polanyian analyses of capitalist diversity in semi-peripheral middle-income states.

Tensions in the periphery: Dependence and the trajectory of a low-cost productive model in the Central and Eastern European automotive industry

“…Located outside the strong CEE automotive cluster (Pavlínek, 2015, 2016), the Romanian automotive industry started to truly benefit from FDI inflows only in the late 1990s and early 2000s. Investments have since remained primarily dependent on the country’s cheap labour (Ban, 2013, 2014) and MNCs have kept their ties to global production networks while avoiding high levels of embeddedness in the local economy (Egresi, 2007). Export-oriented automotive suppliers have flocked, in particular, to the Western part of the country, which ensures easier access to export destinations as well as several traditional industrial centres, where skilled labour was more readily available.…”

International actors and trade unions during postsocialism and after: the case of Romania

“…All threats with protest and strikes failed to materialize and quickly fell moot. On the other side, the coming of dependent development starting with the mid-2000s (Nölke and Vliegenthart 2009;Ban 2013) gave foreign investors' associations ascendancy over the employers' movement and considerable leverage in addressing the government.…”

Exploring higher education governance in Poland and Romania: Re-convergence after divergence?

“…In this regard, recent observers have argued that Romania has increasingly demonstrated core features of the dependent market economy paradigm in the 2000s (Ban, 2013; Tarlea, 2015). This is reflected in an increasingly large share of inward foreign direct investment as a percentage of GDP, the sell-off of domestic industry to foreign enterprises and a focus on labour-intensive, low-scale commodities instead of upgrading domestic research, development and industrial innovation (Ban, 2013; Ioan and Ioan 2015). Despite this, the Romanian economy grew even more rapidly than that of Poland in the 2000s and deindustrialization was essentially halted.…”