ABSTRACT
According to an analysis by Hall and Soskice (2001), “liberal” market economies differ from “coordinated” and/or “social” ones not by their generally better capacity for innovation, but merely by a different type of innovation (cf. also Albert 1992; O’Sullivan 2000: 11–40). While liberal market economies tend to support more radical innovations involving profound change, the special quality of coordinated market economies rests in incremental innovations of the permanent refinement of products and processes without any profound change. This contrast can be assessed when taking into account that the quota of openings and closures of companies in the research-intensive industry in coordinated market economies like Germany, Japan, Switzerland, Sweden and Finland is clearly lower than in liberal market economies such as the UK and the USA. A similar trend can be discerned for knowledge-intensive services, where coordinated market economies like Denmark, the Netherlands and France display nevertheless high levels of openings and closure (EFI 2008: 58). Each of these two types of market economy possesses its very special qualities with regard to its capacity for innovation. Hence, according to Hall and Soskice, both types can assert themselves only with their own specific policies strengthening their own qualities against competition, which has been aggravated by globalization. From this point of view, the type of coordinated market economy has good opportunities to cope with the challenges of globalization. We are going to discuss this thesis in this chapter.
