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The increasingly rapid transnational movement of capital, commodities, services, information, and technology force labour institutions everywhere to respond to new challenges and pressures. This is evident in the effects of structural adjustment on political unionism in countries such as India and Mexico, in the shifts in employment practices and labour processes accompanying the privatization of state‐owned enterprises in post‐communist Europe and in China, and even in unanticipated shifts in industrial relations in Japan. This introductory chapter sets the stage for the rest of the volume by considering how the analysis of recent changes in industrial relations under conditions of economic transformation also serves to illuminate the social forces that frequently influence the politics of economic reform while helping to more effectively bridge the fields of comparative industrial relations and political economy. The chapter also emphasizes how the comparison of the changing experiences of workers and labour institutions in late‐industrializing and post‐socialist settings can be employed to systematically explore the meaning and limits of the currently fashionable concept of “globalization” in settings with different historical inheritances and institutional structures. Four specific points are highlighted in terms of the distinctiveness of the studies collected here. First, by comparing post‐socialist and late‐industrializing countries within a framework that combines industrial relations and political economy, this volume goes beyond the experiences of advanced industrial economies. Second, this volume elaborates the various historical process and social structures that shaped the distinctive formal and informal institutional arrangements designed to manage the complex relationships between labour, management, and the state, in very different kinds of economies. Third, in contrast to those comparative studies of industrial relations that ignore external effects, it explores how transformations in the global economy have affected existing institutions related to labour‐management relations while posing certain common challenges and opportunities for key economic factors in each country. Finally, in contrast to those who view “globalization” as a dominant force leading to the erosion of distinctive national economic institutions, this study focuses on labour institutions in order to detail how historical legacies and external constraints and opportunities are incorporated into distinctive strategies employed by labour and by other economic factors as they negotiate new pacts and reconsider existing institutional arrangements.

In the first part of the chapter, views are discussed on the changing arrangements for social protection that have occurred in the last decade of the twentieth century in many, if not all, of the industrialized nations. Some see these changes as a marginal adjustment in the borders of the welfare state, while others perceive the changing landscape of industrialized welfare states as the embodiment of major revisions in the principles and philosophy of social protection. Most welfare state analysts acknowledge that the reforms are spurred by the need for greater labour force adaptability and productivity in a global economy, by concerns on the erosion of individual responsibility, and by new institutional arrangements for social protection involving market competition. The last part of the chapter addresses the two main theories on how welfare states evolve – convergence under the pressures of broad impersonal structural forces, or divergence into distinct regimes responding to human interventions shaped by socio‐political factors.

This chapter examines responses to the destabilization of the employment relationship and labour market insecurities coming in its train. The regulation of principal focus is the ILO Recommendation on the Employment Relationship (2006), marking a shift from equal treatment to effective protection. The empirical focus is Industrialized Market Economy Countries experiencing a rise of self‐employment resembling paid employment, a subset of which was precarious, in the late 20th century. Two approaches to self‐employment are scrutinized: the approach advanced in Australia at the federal level, characterized by the promotion of independent contracting, and the approach pursued in several EU countries as well as at the Community level, characterized by measures supporting entrepreneurship while aiming to limit insecurities among the self‐employed. Among these approaches, EU‐level proposals addressing ‘economically dependent work’ hold promise. However, even they retain the binary division between paid or subordinate employment and self‐employment rather than extending labour protection to all workers.

The expansionist tendencies inherent in industrial developmental policies became overexpansionist when, by virtue of success itself, access to foreign capital eased. Two foreign debt crises ensued, one in Latin America starting in 1982, and the other in East Asia starting in 1997. The economic and political costs of financial disequilibria were enormous, involving prolonged falls in output and wages in Latin America and greater foreign political intervention throughout the developing world. This chapter examines how the institutions centred around the developmental state in late industrializing countries absorbed external shock and adapted to a more advanced stage of development internally.

This chapter examines the degree to which the number of children lowers the income status of female-headed households. The US situation is compared with that of other industrialized countries. In the United States, female heads of households are relatively well educated, have a relatively larger number of children, and are more likely to work. At the descriptive level, their after-tax income status is the highest among those in these six countries. Yet, after public and private income transfers are distributed, their income status plunges to the second lowest, next only to Canadians’. In the Nordic and European countries, social policy interventions have improved the income status of households with children, particularly female-headed households. The provision of various forms of public income transfers, including children’s allowances, maternity benefits, Social Security benefits, unemployment insurance, and workers’ compensation, has effectively smoothed out the distribution of disposable household income, mitigating the impact of children on the income status of female-headed households in these countries.

This chapter introduces the phenomenon of the rise of a handful of countries outside the North Atlantic —the rest—to the ranks of world‐class competitors in a wide range of mid‐technology industries, so that, although in 1965 the rest had supplied less than a twentieth of world manufacturing output, by 1995 it supplied nearly one‐fifth. The divide among backward countries that had already appeared by the end of the Second World War in the form of manufacturing experience is noted: while the rest (Argentina, Brazil, Chile, Mexico, Turkey, India, China, South Korea, Taiwan, Malaysia, Indonesia) had acquired sufficient manufacturing experience, ‘the remainder’, which had been less exposed to factory life pre‐war, failed to achieve the same industrial diversification. Various characteristic aspects of the rise of the rest are discussed, including: their acquisition of knowledge‐based assets; innovative control mechanisms imposing discipline on economic behaviour and revolving around the principle of reciprocity; globalization in relation to national ownership (with discussion of manufacturing experience and the policy paradox of income distribution); and institution building (with specific reference to Thailand's reciprocal control mechanism).

Successful late industrializing countries (the rest) all allocated intermediate assets to the same set of mid‐technology industries, and in almost all cases, these industries started as import substitutes. What differed among countries was how vigorously and rapidly exportables were extracted from a sequentially rising number of import substitution sectors. The wide variation among countries in export coefficient—share of exports (manufactured and non‐manufactured) in GDP—depended on structural characteristics (population size and density), investment rates, and price distortions. Even controlling for these variables, however, some countries became overexporters while others remained underexporters. The reasons behind this disparity—rather than its importance for growth—are explored in this chapter, which addresses in particular the trading institutions of the latecomers and the influence of earlier industrializers on them—notably Japan and its Asian emulators, the USA and its South American emulators, and (later) Europe as a role model.

After floundering for a century, the successful late industrializing countries (the rest) succeeded in creating professionally managed, large‐scale, national firms, although their importance varied by country. The mix of a country's business structures by size and ownership (private or public, foreign or national) influenced the level of its investment in skills. The long‐term strategic ‘make‐or‐buy’ technology choice was a function of firm composition. The process whereby a latecomer succeeds or fails to create a corps of ‘national firm leaders’ is the subject of this chapter. A national leader may be understood as a nationally owned and controlled firm that is ‘targeted’ by government (it receives a disproportionate share of ‘intermediate assets’), which allows it to become a dominant player in its ‘competitive base’ (domestic market), in exchange for which it is obliged to invest heavily in proprietary knowledge‐based assets; these assets, in turn, allow it to globalize through exporting or outward foreign direct investment.

One of the most controversial aspects of the rise of the successful late industrializing countries (the rest) was the role played by the government. As seen in this book, governments in the rest all intervened in markets in a deliberate and deep way because their economies had too few knowledge‐based assets to compete at world market prices even in modern labour‐intensive industries. But government failures were institutionally bounded: the set of institutions that framed the whole process of late industrialization was specifically designed to minimize the ill effects of interventionist policies. In this chapter the controversy over the role of the state is connected with the rise of the rest: first, a look is taken at Alexander Gerschenkron's theory on the process of catching up; then the underlying assumptions of the ‘assets approach’ taken are stated; next, a summary is made of what it means for market theory and its policy prescription of laissez‐faire to drop the assumption of perfect knowledge; and, finally, a few remarks are made about countries that have stumbled back and those that are (possibly) at the forefront in ‘the remainder’ (countries that have so far failed to industrialize).

The successful late industrializing countries (the rest) followed a ‘low road’ to industrial development between 1850 and 1950 for lack of proprietary technology and related know‐how and skills. Although manufacturing experience accumulated, and the growth rate of output may even have increased, the rest could not industrialize fast enough just to keep pace with the North Atlantic. Few firms had been able to make the ‘three‐pronged investment’ to which the success of the modern business enterprise has been attributed: in up‐to‐date machinery and plants of optimal scale (large‐scale production units and capital investment); in managerial hierarchies and technological skills, as exemplified by the railroad industry; and in distribution networks. This chapter examines each of these qualifications in turn to try to understand why progress in the rest was so halting, covering high bankruptcy rates and low rates of return, imprudent financial practices, cheating, and fraud, and the role of North Atlantic emigration in the accumulation of manufacturing experience and skills. The final part of the chapter looks at finance in particular—investment, supply of capital, economic surpluses and fattening profits, speculation, and the ‘little push’ into heavy industry, as exemplified by the iron and steel industry.

The developmental state of successful late industrializing countries (the rest) was predicated on performing four functions: development banking; local‐content management (control of performance standards); ‘selective seclusion’ (opening some markets to foreign transactions and keeping others closed); and national firm formation. As a consequence of these functions (the first two are examined in this chapter), the rest finally made the requisite three‐pronged investment to enter basic industry: in large‐scale plants, in hierarchical managements‐cum‐technological skills, and in distribution and marketing networks. Two principles guided developmentalism: to make manufacturing profitable enough to attract private enterprise through the allocation of ‘intermediate assets’ (subsidies), and to induce such enterprises to be results‐oriented and to redistribute their monopoly profits to the population at large. Step by step, governments groped towards a new control mechanism. The new mechanism ultimately shared credit with private initiative for a Golden Age of industrial expansion.

This chapter is concerned with state policies and institutional arrangements that have figured prominently in the recent East Asian ‘economic miracle’, and assesses the significance of the financial crisis that overtook the newly industrializing countries (NICs) at the end of the 1990s. It employs a historical perspective within which to view the rapid transition of the NICs in the final quarter of the twentieth century.

In theory, technology transfer should enable a backward country to achieve world productivity norms, but in practice, because technology is ‘tacit’, and never completely codifiable, the best technology transfer rarely achieves productivity parity between buyer and seller. The more tacit a technology is, the more difficult it is to transfer, and the more monopolistic the power of the seller and the lower the skills and organizational capabilities of the buyer, the worse the transfer. A shyness of foreign investors left the successful late industrializing countries (the rest) with a serious skill deficit that grew over time relative to that of the North Atlantic and Japan. The tacitness problem arose early because of the sectoral composition of the manufacturing output of the rest; whatever the source of manufacturing experience, all countries tended to share the same sequential industry mix based on natural resources, and because the specific properties of a natural resource vary by location, a successful technology transfer requires substantial investments in local learning and adaptation. Japan set a benchmark for learners that began with technology transfer; it started to industrialize rapidly only in the 1890s, at about the same time as China, and slightly after Brazil, India, and Mexico, but, given its engineering capabilities and basic knowledge, its absorption of foreign know‐how was more proactive, systematic, and thoroughgoing than that of other countries, and is analysed below in the case of the silk industry.

Countries in the successful late industrializing countries (the rest) that industrialized rapidly after the Second World War had accumulated manufacturing experience in the pre‐war period, and this differentiated them from countries in the unsuccessful ‘remainder’. In the previous chapter an analysis was made of how premodern artisanship and North Atlantic emigration affected the accumulation of manufacturing experience. In this chapter an analysis is made of how colonial rule and Chinese emigration affected it, focusing on Malaysia, Indonesia, Taiwan, Thailand (with no formal colonial ties), and South Korea (with no Chinese emigration). The strengths and weaknesses of different types of manufacturing experience are then summed up for the rest as a whole. The introduction to the chapter presents a statistical analysis of aggregate cross‐country data that demonstrates that manufacturing performance (per capita output) in a given period depends on the accumulation of prior experience in manufacturing as opposed to other types of economic activity.

This chapter provides a more detailed look at the landscape of American poverty, including the manner in which poverty is measured, lessons learned with respect to the patterns and features of U.S. poverty, the extent of poverty in the United States compared with poverty in other Western industrialized countries, and an understanding of the human meaning and pain associated with poverty.