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When Small States Make Big Leaps

Institutional Innovation and High-Tech Competition in Western Europe

by Darius Ornston

Publication Year: 2012

At the close of the twentieth century, Denmark, Finland, and Ireland emerged as unlikely centers for high-tech competition. In When Small States Make Big Leaps, Darius Ornston reveals how these historically low-tech countries managed to assume leading positions in new industries such as biotechnology, software, and telecommunications equipment. In each case, countries used institutions that are commonly perceived to delay restructuring to accelerate the redistribution of resources to emerging enterprises and industries.

Ornston draws on interviews with hundreds of politicians, policymakers, and industry representatives to identify two different patterns of institutional innovation and economic restructuring. Irish policymakers worked with industry and labor representatives to contain costs and expand market competition. Denmark and Finland adopted a different strategy, converting an established tradition of private-public and industry-labor cooperation to invest in high-quality inputs such as human capital and research. Both strategies facilitated movement into new high-tech industries but with distinctive political and economic consequences. In explaining how previously slow-moving states entered dynamic new industries, Ornston identifies a broader range of strategies by which countries can respond to disruptive challenges such as economic internationalization, rapid technological innovation, and the shift to services.

Published by: Cornell University Press


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p. 1-1

Title Page, Copyright Page

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pp. 2-7


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pp. vii-viii

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pp. ix-x

This book first began at Swarthmore College with the admittedly arbitrary decision to apply for a Fulbright scholarship in Finland in 2000. While my research into the politics of European integration yielded few concrete results, I was struck by the disjuncture between what I observed in Finland at the height of the dotcom bubble and ...

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Introduction: Recasting Corporatism

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pp. 1-6

This book was inspired by the puzzling ability of several western European states to compete in rapidly evolving high-tech markets. We would not expect continental European economies to succeed in such markets. European capitalism is more commonly associated with sluggish growth and mounting unemployment. ...

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1. The Paradox of High-Tech Corporatism

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pp. 7-27

Traditionally, many western European economies relied on institutionalized cooperation among state actors and encompassing producer associations (industry and labor) to manage economic adjustment. This “neo-corporatist” approach to governance differs from the decentralized competition among individual firms and employees that prevails in liberal market economies ...

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2. The Crisis of Low-Tech Production in Denmark, Finland, and Ireland

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pp. 28-54

To the extent that Denmark, Finland, and Ireland relied on neo-corporatism before 1980 it was conservative in nature. In financial markets, banks issued large long-term loans to firms in exchange for ownership stakes and used their institutionalized influence to support interfirm cooperation within production cartels and marketing consortia. ...

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3. From Price-Fixing Cartels to Research Consortia: Rapid Restructuring in Finland

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pp. 55-91

In the 1970s, Finland was one of Europe’s least innovative countries. By the end of the 1990s, it was a high-tech leader. What caused this transformation? Increasing dependence on the Soviet Union, an acute economic crisis, and external EU-imposed constraints discredited established stakeholders and traditional policy routines. ...

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4. From Social Protection to Skill Formation: Diversified High-Tech Production in Denmark

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pp. 92-125

Finland was not the only neo-corporatist country to enter new high-tech markets during the 1990s. Denmark defied its common characterization as a low- and medium-tech economy by entering a diverse array of industries including telecommunication equipment, software, and biotechnology. ...

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5. A Low-End Producer in High-Tech Markets: Economic Adjustment in Ireland

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pp. 126-164

Ireland also relied on neo-corporatist bargaining to facilitate entry into new high-tech industries. Like Denmark and Finland, policymakers struck bargains with vulnerable stakeholders to facilitate restructuring, in some cases actively replicating creative corporatist strategies. ...

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6. Comparing Corporatisms

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pp. 165-187

The Danish, Finnish, and Irish cases challenge popular narratives about the causes and consequences of rapid technological change. During the 1990s, scholars predicted convergence on a liberal economic model, as arm’s-length financial arrangements, flexible labor markets, and limited state intervention facilitated the redistribution of resources ...

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Conclusion: Explaining Institutional Innovation

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pp. 188-204

Economic globalization and technological change has clearly failed to induce convergence on a liberal economic model in which policymakers unilaterally implement sweeping pro-market reforms. How do we explain this variation? When do countries defend conservative corporatist institutions, and under what circumstances do they abandon them? ...


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pp. 205-226


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pp. 227-264

E-ISBN-13: 9780801465963
E-ISBN-10: 0801465966
Print-ISBN-13: 9780801450921
Print-ISBN-10: 0801450926

Page Count: 240
Publication Year: 2012

Edition: 1