Politics-Business Interaction Paths

40 Pages Posted: 27 Jun 2012

See all articles by Marianna Belloc

Marianna Belloc

Sapienza University of Rome - Department of Economics

Ugo Pagano

University of Siena - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: December 30, 2009


Most pre-crisis explanations of the various corporate governance systems have considered the separation between ownership and control to be an advantage of the Anglo-American economies. They have also attributed the failure of other countries to achieve these efficient arrangements to their different legal and/or electoral systems. In this paper we compare this view with the co-evolution approach based on the hypothesis that politics and corporate governance influence each other, generating complex interactions of financial and labour market institutions. Countries cluster along different complementary politics-business interaction paths and there is no reason to expect, or to device policies for, their convergence to a single model of corporate governance. We argue that this hypothesis provides a more convincing explanation of the past histories of major capitalist economies and can suggest some useful possible scenarios of their future institutional development. Bayesian model comparison suggests that the co-evolution approach turns out at least as influential as the competing theories in explaining shareholder and worker protection determination.

Suggested Citation

Belloc, Marianna and Pagano, Ugo, Politics-Business Interaction Paths (December 30, 2009). CESifo Working Paper Series No. 2883, Available at SSRN: https://ssrn.com/abstract=1529646 or http://dx.doi.org/10.2139/ssrn.1529646

Marianna Belloc (Contact Author)

Sapienza University of Rome - Department of Economics ( email )

Via del Castro Laurenziano 9
Rome, 00161

Ugo Pagano

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
I-53100 Siena
+39 057 7232614 (Phone)
+39 057 7232661 (Fax)

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