The developmental phases of Russia, Kazakhstan, South Korea and Singapore - a comparative institutional analysis
2 Modeling State Capitalism
“In order to seek truth, it is necessary once in the course of our life, to doubt, as far as possible, all things.”
By now an overview of state capitalism has been given. But it is the aim of this study to understand state capitalism and explain its puzzling performance differences with the help of a theoretical framework. This will be presented below in the form of foundations of NIE. Subsequently, a more thorough look into the current state of the literature on state capitalism is taken. A model of state capitalism will be developed and, as a reference model, a model of market capitalism will be presented. This serves not only to differentiate state from market capitalism, but also allows for the creation of a taxonomy of state capitalism. This is a first step to understand performance differences in state capitalist variations. Finally, institutional change within, towards and away from state capitalism can be observed. These phenomena are addressed in the concluding section.
Keywords: New Institutional Economics, Literature on State Capitalism, Model of Market Capitalism, Theory of State Capitalism, Constituting Principles, Institutional Change
2.1 Fundamentals of New Institutional Economics
An institutional approach appears to be fruitful for analyzing politico-economic systems, because institutions are ubiquitous. Economic activity is to an utmost extent about economic exchange.1 And reality reveals that this exchange almost never works frictionless. Transaction costs abound, i.e. the costs for searching,...
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