ABSTRACT

This chapter provides and discusses the results of an empirical study, based on the application of the subspace clustering method, aimed to identify the models of capitalism in 11 CEE countries in the institutional area: product market competition. The analysis carried out in the chapter involves 23 variables of qualitative and quantitative natures. The variables employed represent the institutional architecture (input variables) and outcomes or economic performance in the area concerned (output variables). The results show that in terms of product market competition, the EU countries are not highly differentiated. The CEE region does not constitute its own distinct cluster. Based on the method applied, only two clusters were identified. Greece, Italy and Slovenia make up one cluster, called the regulation-driven cluster, while the remaining 22 EU countries form another cluster, called the liberal cluster. This outcome suggests that the overwhelming majority of CEE11 countries have implemented institutional reforms which made their product markets performance comparable to that prevailing in the incumbent Western EU member states. The bulk of these reforms were aimed to facilitate establishing and running private businesses, dismantling bureaucratic hurdles faced by private entrepreneurship, increasing the scope of economic freedom, reducing product markets regulations and so forth. This may be interpreted as one of the key reasons why the CEE countries have not formed their own cluster in the product market competition area. During the 2005–2014 period, the CEE11 economies were subject to a clear-cut convergence toward the liberal cluster.