ABSTRACT
Ever since globalization began to gather pace after the fall of the Iron Curtain, modern political economy has paid increasing attention to the way competition between states is influencing political decision-making. A whole new theoretical concept – institutional competition – has been developed in order to explain how such processes work and what general outcomes they are likely to have.1 While recent political and economic changes triggered theoretical developments, it has always been recognized that interstate competition is not a new phenomenon. After all, during the Cold War the great powers competed intensively, albeit in ways very different from those analysed by the theory of institutional competition. There, the focus is not on military rivalries, arms races and so on, but rather on how nation states or members of federations compete for mobile factors of production. However, this type of competition is not new either. In the late nineteenth and early twentieth centuries, for example, capital and labour were highly mobile, and states competed intensively for them. In fact, economic historians and historically minded economists have begun to apply the term ‘first age of globalization’ to this period of economic history. What is more, at least some economic historians have observed intergovernmental competition for capital and labour at even earlier points in time.2
