Advantages And Disadvantages Of Italy

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The aim of this paper is to highlight disadvantages of institutional settings in Italy. In order to provide a detailed view on those disadvantages, it is necessary to define the form of capitalism that is present in Italy. Hall & Soskice (2001) state that there exist two types of economies: coordinated market economies (CMEs) and liberal market economies (LMEs). LMEs CMEs Distinctive Coordination Mechanism Competitive markets and formal arrangements Inter-firm network, non-market relations Corporate Governance Outside shareholders Insider shareholder/Concentration Industrial Relations Market based, low collectivism High collectivism (national to global), collaboration Education General skills, formal education Vocational training, company or industry specific Innovation Radical, transfer based on formal contracts Incremental, important role of joint ventures Legal system Complete & formal contracts Incomplete & informal contracting Table 1: Overview of LMEs & CMEs Adaption of Three Varieties of Capitalism (Nölke & Vliegenhart 2009, p.680) Table 1 shows an overview of the key factors and key differences between LMEs and CMEs. “Liberal market economies (LMEs), such as US, have a more aggregate demand management regime than coordinated market economies (CMEs) such as Germany” (Soskice 2007). In LMEs “firms coordinate their activities primarily via hierarchies and competitive market arrangements” (Hall & Soskice 2001). Some examples of LMEs are United Kingdom, Australia,
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