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An evaluation is made of potential ways in which product market competition can be operationalized as part of a panel data econometric analysis. As with corporate governance, it is necessary to identify suitable proxy variables. The OECD's NMR index is chosen as the most plausible measure of product market competition, an assessment reflected in its widespread utilization in the empirical economics literature.

An analytical framework is outlined with three social actors: blockholders, insider labor, and outsiders. Each has differing corporate governance preferences. Blockholders and insider labor are represented by conservative and Left parties respectively. Outsiders do not have their own party, and represent a potential source of new votes for both parties. However, they require a commitment to pro‐shareholder corporate governance reform in order to win their support. As long as economic rents are substantial (due to low levels of product market competition), neither the Left nor conservative parties are willing to solicit the support of outsiders. Both of their core constituents benefit from the sharing of economic rents. However, if economic rents decline, insider labor no longer has an interest in sustaining a self-regulatory blockholder model of corporate governance. In contrast, conservative parties remain the apologists of the blockholder model.

A panel data econometric analysis of corporate governance change is undertaken utilizing a data set of fifteen nonliberal market economies covering the period 1975–2003. The results of this analysis suggested that the interaction of partisanship and competition is a highly significant determinant of corporate governance change. In particular, significant shifts in a pro‐shareholder direction are associated with Left government – but not conservative government – in the context of high levels of competition. In contrast, neither Left nor conservative government is associated with corporate governance change in a low‐competition environment.

This chapter presents results from cluster analyses of five institutional areas: product-market competition, the labour market, the financial sector, social protection, and the education system. It is shown that the clusterings of countries are not necessarily identical to the theoretical typology of capitalism presented in the previous chapter. Usually, one specific institutional area (labour market, welfare state, etc.) is privileged even when others are taken into account, and the typologies derived are partial. Thus, it is necessary to take into account all the possible complementarities between the five institutional areas in order to come to an empirical classification of capitalism.

This chapter explores globalization in the twenty-first century and the nature of labor markets in today's globalized world. Four points are made: First, for the most part, because of restrictions on international migration, poor people in the developing world are not able to sell their labor where it will command the highest return. Second, labor markets throughout the world are linked by an unprecedented degree of labor market competition. Third, labor markets are highly competitive because numerous industries face an unprecedented degree of product market competition on the global level. Such globalization increasingly limits the scope for national, subnational, and local action, e.g., individual country governments, individual labor unions, and so on. And fourth, in today's globalized world, few competitive advantages are sustainable; most advantages are likely to be short-lived.